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U.S. Supreme Court

Aldrich v. Chemical National Bank, 176 U.S. 618 (1900)

Aldrich v. Chemical National Bank

No. 58

Argued October 20, 1899

Decided March 8, 1900

176 U.S. 618


H., as vice-president of a Cincinnati bank, made application to a New York bank for a loan of $300,000. The request was granted and that amount was placed to the credit of the Cincinnati bank upon the books of the New York bank. Immediately thereafter, H. fraudulently caused himself to be personally credited upon the books of his own bank with a like sum of $300,000. The action of H. in negotiating the above loan with the New York bank was unauthorized by the board of directors of the Cincinnati bank, but after the arrangement had been made, that bank drew out by check the money that had been placed to its credit by the New York bank and used the same in discharging its valid obligations. Held that, by so using the money obtained from the New York bank by H. in his capacity of vice-president, the Cincinnati bank became bound to account for the same as for money had and received, and could not escape liability to the New York bank upon the mere ground, supposing it to be true, that it was not permitted by its charter to borrow money. The fraud perpetrated by H. upon his own bank in having himself personally credited upon its books with the amount of the loan was a matter with which the New York bank had no connection, and its right to recover could not be affected thereby. The liability of the Cincinnati bank rested upon the fact, and the implied obligation arising therefrom, that that bank used in its business and for its benefit the money which the other bank placed to its credit in consequence of the loan negotiated by H., who assumed to represent it.

There is nothing in the acts of Congress authorizing or permitting a national bank to appropriate and use the money or property of others without incurring liability for so doing.

This case and Western National Bank v. Armstrong, 152 U. S. 346, distinguished.

The statement of the case will be found in the opinion of

the Court.

Page 176 U. S. 619

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