but more frequently suffered losses. The whole course of the transactions would have disclosed to an ordinary observer, fully informed of the facts, that Cassatt was gradually losing, and that some funds owned or controlled by him must have been gradually eaten into by the losses from time to time incurred and the margins put up. The defendants themselves must have known this prior to and at the time they received the drafts sued upon, unless they willingly suffered themselves to be deceived.

of C. B. Congdon & Co., as aforesaid. Said transactions were all kept secret from the bank by said Cassatt.

"Eighth. There is no evidence from either side, other than the foregoing, tending to show that the said Cassatt was or was not a man of means, independently of his holdings in the said First National Bank of Pella. Both the firm of C. B. Congdon & Co. and the corporation of C. B. Congdon & Co. knew that Cassatt was president of the bank, and had access to its funds, but made no inquiry as to whether said Cassatt had means, independently of his holdings in said bank, and made no inquiry of said Cassatt, the other officers of the bank, or anyone else likely to know, whether said Cassatt was using his own means in the speculative transactions aforesaid, and no inquiry looking in that direction.

"Wherefore, the court finds the issues for the plaintiff and against the defendants, and assesses the plaintiff's damage at the sum of $2,323.61, of which $2,000 is principal and $323.61 interest. P. S. Grosscup, Judge."

"Sixth. The said Cassatt, in order to carry on his deal with the said firm and defendants, kept two accounts in the said First National Bank of Pella, one in his own name, and the other in the name of E. R. Cassatt & Co. During the period of said deals Cassatt remitted to the said firm, on account of the margins aforesaid, from time to time, drafts similar to the drafts sued on "Ninth. The court finds that the avails of in these cases, including the drafts sued up- the drafts sued upon in this case through on; that is to say, the drafts signed by the the means already described, were taken purFirst National Bank of Pella, by E. R. Cas- posely by the said Cassatt, without authorsatt, president, drawn upon the Nationality of law, but as an act of theft and embezBank of Illinois, and payable to the firm. zlement from the funds of said bank, and These drafts drawn in favor of the firm of that the defendants, in receiving the avails C. B. Congdon & Co. bore the dates, and were of said drafts, were in fact receiving the for the amounts, as follows: 1894: Jan- moneys stolen by said Cassatt from said uary 10th, $400; January 24th, $200; Feb- bank. The court further finds that reasonruary 10th, $500; February 16th, $600; able and prudent men, having no selfish inApril 25th, $500; May 12th, $500; May 15th, terests to subserve, would have been led, by $500; May 17th, $1,100; July 18th, $600; the facts in possession of the firm of C. B. July 20th, $400. Also, there were sent to the Congdon & Co. and of the defendant, to susdefendant the corporation of C. B. Congdon pect that said Cassatt might be unlawfully & Co., drafts as follows: 1894: October 3d, using the funds of said bank to supply the $2,000; 1895: January 23d, $2,000. Said margins transmitted to the firm of C. B. drafts, having been received by the said firm Congdon & Co. and the corporation of C. B. of C. B. Congdon & Co. and the said corpora- Congdon & Co., respectively. tion of C. B. Congdon & Co., and credited to the said Cassatt on their books, respectively, were indorsed on the back by the said firm of C. B. Congdon & Co. and the said corporation of C. B. Congdon & Co., respectively, and deposited to the credit of their account in their bank of deposit in Chicago, the Corn Exchange Bank, by which bank they were passed to the National Bank of Illinois, and charged by said last-named bank to the first National Bank of Pella. Such drafts were, at a date subsequent to their issue, duly credited to said National Bank of Il linois, and charged to some account on the books of said Pella Bank having a credit balance appearing upon said books of sufficient amount to pay or offset such charges, except, however, in so far as the facts stipulated in this paragraph may be modified by the following statement, to wit, that at the time of the failure of the Pella Bank the books of said National Bank of Illinois showed that drafts to the amount of $3,000 had been drawn by said Pella Bank upon said National Bank of Illinois and not credited to it upon the books of said Pella Bank. "Seventh. None of said drafts were used or intended to be used to pay off any debt or obligation of said bank, but all were used to supply the margins in the private transac tions of the said Cassatt with the said firm of C. B. Congdon & Co. and said corporation

In No. 561 the findings, with a change of the names of the defendants, are the same, with the following exceptions:

The fifth commences with this statement: "Fifth. The said Cassatt began to have business dealings with the defendants, commission merchants on the Board of Trade, in the city of Chicago, in 1884, continuing to have such transactions down to and including a portion of the year 1894,"-and also contains the following: "The money which was sent to Milmine, Bodman, & Co. to pay the losses aforesaid was in turn paid out by Milmine. Bodman, & Co., for the purpose of discharging the contracts made in behalf of Cassatt by them, upon which the losses occurred, and no profit resulted to Milmine, Bodman, & Co. by reason of any of the dealings with Cassatt, except the commissions which they earned as brokers in negotiating the transactions for him."

The sixth, after the first sentence, proceeds as follows: "During the period of said deals, Cassatt remitted to the defendants, on account of margins aforesaid, from time to time prior to the drafts sued on in this case, twenty-seven drafts, each of which was ex

In No. 561 the following:

(1) "The defendants were under no duty to inquire into the facts of transactions anterior to, and entirely separate and distinct from, the transactions to which they were parties."

(2) "The court erred in entering judgment against the defendants, when the findings showed that Cassatt had paid the bank for every one of the drafts. Goshen Nat. Bank v. State, 141 N. Y. 379; Wilson v. Metropolitan Elev. R. Co. 120 N. Y. 145; Han over Nat. Bank v. American Dock & T. Co. 148 N. Y. 612; Cowing v. Altman, 71 N. Y. 435, 27 Am. Rep. 70; Indiana & I. C. R. Co. v. Sprague, 103 U. S. 756, 26 L. ed. 554."

U. S. App. 302, 71 Fed. Rep. 797, 19 C. C. A. 118; Gerard v. McCormick, 130 N. Y. 261, 14 L. R. A. 234: Anderson v. Kissam, 35 Fed. Rep. 699, 703. (b) The form of these drafts put plaintiffs in error upon notice. Anderson v. Kissam, 35 Fed. Rep. 699, 703; Chrystie v. Foster, 26 U. S. App. 67, 61 Fed. Rep. 551, 9 C. C. A. 606; Moores v. Citizens' Nat. Bank, 15 Fed. Rep. 141, 111 U. S. 156, 28 L. ed. 385; Claflin v. Farmers' & C. Bank, 25 N. Y. 293; Gerard v.. McCormick, 130 N. Y. 261, 14 L. R. A. 234; Wilson v. Metropolitan Elev. R. Co. 120 N. Y. 145; Shaw v. Spencer, 100 Mass. 382, 384, 1 Am. Rep. 115, 97 Am. Dec. 107; First Nat. Bank v. Wagner, 93 Ky. 525; Germania Safety Vault & (3) "The fact that the bank had allowed T. Co. v. Boynton, 37 U. S. App. 602, 71 Fed. Cassatt, for a period of seven years prior to Rep. 797, 19 C. C. A. 118. (c) The defect apthe dates of the drafts in suit, to draw drafts pearing upon the face of the drafts, the docin a manner exactly like the manner in trine of Bank of Edgefield v. Farmers' Cowhich he drew the drafts sued on, estab- op. Mfg. Co. and Goodman v. Simonds, cited lished a course of dealing which estops the by plaintiff's in error, does not apply. (d) bank to deny that Cassatt had a right to act The circumstances of the case of Goshen Nat. according to this established course. Bron-Bank v. State were radically different from son v. Chappell, 12 Wall. 681, 20 L. ed. 436; Martin v. Webb, 110 U. S. 7, 28 L. ed. 49; Merchants' Nat. Bank v. State Nat. Bank, 10 Wall. 604, 19 L. ed. 1008; Hooe v. Oxley, 1 Wash. (Va.) 19, 1 Am. Dec. 425; McDon-president, in payment of the president's debt, nell v. Branch Bank, 20 Ala. 313; Martin v. Great Falls Mfg. Co. 9 N. H. 51; Weaver v. Ogletree, 39 Ga. 586; New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30; Hanover Nat. Bank v. American Dock & T. Co. 148 N. Y. 612."

(4) "One who receives a bank draft, fair on its face, signed by the officer duly authorized to sign drafts, may take it as currency, even though he receives it from the officer who signs it, and in payment of the latter's debt. Goshen Nat. Bank v. State, 141 N. Y. 379; Goodman v. Simonds, 20 How. 343, 15 L. ed. 934; New York & N. H. R. Co. v. Schuyler, 34 N. Y. 30; Bank of Edgefield v. Farmers' Co-op. Mfg. Co. 2 U. S. App. 282, 52 Fed. Rep. 98, 2 C. C. A. 637, 18 L. R. A. 201; Swift v. Smith, 102 U. S. 442, 26 L. ed. 193."

(5) "Even if Milmine & Co. had inquired, they could not possibly have found out the secret reasons existing between Cassatt and the bank why it was improper for Cassatt to draw these drafts."

Per contra, for the defendant in error the following:

(1-3) Questions of practice.

(4) "The receipt by the plaintiff in error of the drafts of the Pella National Bank, signed by Cassatt in his official capacity, to be used as margins for his personal trades, put the plaintiff's in error upon notice that Cassatt was using the bank's funds without authority, and plaintiffs in error took such drafts at their peril, and are accountable to the receiver for the avails thereof. (a) The distinction asserted in counsel's brief as to this point does not exist. Hanover Nat. Bank v. American Dock & T. Co. 148 N. Y. 612; Moores v. Citizens' Nat. Bank, 15 Fed. Rep. 141, 111 U. S. 156, 28 L. ed. 385; Germania Safety Vault & T. Co. v. Boynton, 37

that at bar. (e) The fact that by common usage bank drafts are treated as cash, if that be a fact, cannot be availed of by one who receives the bank's draft, signed by the

to relieve the recipient from the operation of the rule that he who knowingly receives from an agent, and on the agent's account, that which belongs to the principal, does so at his peril. Anderson v. Kissam, 35 Fed. Rep. 699, 703; Shaw v. Spencer, 100 Mass. 384, 1 Am. Rep. 115, 97 Am. Dec. 107; Moores v. Citizens' Nat. Bank, 15 Fed. Rep. 141, 111 U. S. 156, 28 L. ed. 385."

(5) "Having failed to make inquiry, the plaintiffs in error are bound by the actual facts as they existed, and will not be heard to contend that inquiry would have been unavailing. Shaw v. Spencer, 100 Mass. 384, 1 Am. Rep. 115, 97 Am. Dec. 107; Germania Safety Vault & T. Co. v. Boynton, 37 U. S. App. 602, 71 Fed. Rep. 797, 19 C. C. A. 118; Jonathan Mills Mfg. Co. v. Whitehurst, 37 U. S. App. 664, 72 Fed. Rep. 502, 19 C. C. A. 130."

(6) "The course of dealing between the bank and plaintiffs in error did not create a presumption, upon which plaintiffs in error could rely, that the draft sued upon was properly obtained by Cassatt, and that the plaintiffs in error were entitled to receive its avails in payment of a debt due from Cassatt. There was no implied authority for his act. Chrystie v. Foster, 26 U. S. App. 67, 61 Fed. Rep. 551, 9 C. C. A. 606; Anderson v. Kissam, 35 Fed. Rep. 699, 703; Wright's Appeal, 99 Pa. 425; Hill v. C. F. Jewett Pub. Co. 154 Mass. 172, 13 L. R. A. 193; Powell v. Rogers, 105 Ill. 318; Berwind v. Schultz, 25 Fed. Rep. 912; Clews v. Bardon, 36 Fed. Rep. 617; Briggs v. Spaulding, 141 U. S. 132, 35 L. ed. 662; Percy v. Millaudon, 8 Mart. N. S. 68, 74, 75."

(7) "The court found, in effect, that the transactions on account of which these drafts were forwarded were gambling deals. Therefore the avails of the drafts could be

Birdsall v. Russell, 29 N. Y. 220; Cleveland Woolen Mills v. Sibert, 81 Ala. 140; Knapp v. Bailey, 79 Me. 195.

recovered by the receiver, whether the brok| Assuming, arguendo, that the form of the ers were or were not put on notice. (a) draft was such as ought to have created susThe finding is that neither party intended picion that Cassatt might be improperly actual sales or purchases, but purely specu- using the funds of the bank in payment of lative transactions in 'futures. The intent his individual debt, and that defendant was governs. Irwin v. Williar, 110 U. S. 499, 28 charged with the duty of inquiry, and made L. ed. 225; Boyd v. Hanson, 41 Fed. Rep. 174; none, it is only chargeable with a knowlMutual L. Ins. Co. v. Watson, 30 Fed. Rep. edge of such facts as it would have learned 653: Kirkpatrick v. Adams, 20 Fed. Rep. 287; by the exercise of ordinary diligence. Embrey v. Jemison, 131 U. S. 336, 33 L. ed. 172; 2 Benjamin, Sales, 6th Am. ed. 828. (b) The broker is particeps criminis. Irwin v. Williar, 110 U. S. 499, 510, 28 L. ed. 225, 230. (c) The intent is a question for the jury (in this case for the court to find, as a question of fact). Kirkpatrick v. Adams, 20 Fed. Rep. 287. (d) A principal may recover moneys gambled away by his agent. McAllister v. Oberne, 42 Ill. App. 287; Smith v. Ray, 89 Ga. 838; Mason v. Waite, 17 Mass. 560, Corner v. Pendleton, 8 Md. 337; Caussidiere v. Beers, 2 Keyes, 198, 1 Abb. App. Dec. 333; Burnham v. Fisher, 25 Vt. 514; Pierson v. Fuhrmann, 1 Colo. App. 187."

Messrs. Dupee, Judah, Willard, & Wolff, for plaintiff in error in No. 555:

There was nothing in the form of the draft sued on to create a suspicion that Cassatt was using the funds of the bank in the payment of his individual indebtedness.

Goshen Nat. Bank v. State, 141 N. Y. 379; Claflin v. Farmers' & C. Bank, 25 N. Y. 293; Bank of New York Nat. Bkg. Asso. v. American Dock & T. Co. 143 N. Y. 564; Huie v. Allen, 87 Hun, 516; Dike v. Drexel, 11 App. Div. 77; Goodman v. Simonds, 20 How. 364, 15 L. ed. 940; Bank of Edgefield v. Farmers' Co-op. Mfg. Co. 2 U. S. App. 282, 52 Fed. Rep. 98, 2 C. C. A. 637, 18 L. R. A. 201; Atlas Nat. Bank v. Holm, 34 U. S. App. 472, 71 Fed. Rep. 489, 19 C. C. A. 94; Kaiser v. First Nal. Bank, 41 U. S. App. 637, 78 Fed. Rep. 283, 24 C. C. A. 88; Anderson v. Kissam, 35 Fed. Rep. 699; Kissam v. Anderson, 145 U. S. 435, 36 L. ed. 765.

The directors of the Pella bank were guilty of culpable negligence, which far outweighed any slight negligence of defendant. The course of dealing between the bank and the defendant and its predecessor firm of the same name created a presumption upon which defendant could rely, that the draft sued on was properly obtained by Cassatt, and that the defendant was entitled to receive its avails in payment of a debt due from Cassatt. There was implied authority for his act.

Martin v. Webb, 110 U. S. 7, 28 L. ed. 49; Hanover Nat. Bank v. American Dock & T. Co. 148 N. Y. 612.

Cassatt paid for the draft by the use of the credits the bank had given him. He defrauded the bank in his obtension of the credits, but that was another transaction. So long as the credits subsisted they could, as between the bank and the defendant, be used as they were used.

Wilson v. Metropolitan Elev. R. Co. 120 N. Y 145.

Mr. D. M. Kirton for plaintiffs in error in No. 526.

Messrs. Green, Honore, & Peters and John P. Wilson for plaintiffs in error in No. 561.

Messrs. John H. Hamline, Frank H. Scott, and Frank E. Lord for defendant in error.

Woods, Circuit Judge, delivered the opinion of the court:

It is not important to inquire whether the court erred in admitting evidence of immaterial facts stated in the special findings. The one question upon a special finding or verdict is "of the sufficiency of the facts found to support the judgment." In determining that question, of course, every relevant and material fact found must be considered, and every irrelevant or immaterial fact rejected; and when the fact has been excluded from consideration there can remain no harm from the error of admitting the evidence by which it was established. The spe cial findings recite many facts and circum stances which, though not irrelevant, are of an evidentiary character only. The ultimate facts on which the rights of the respective parties must be determined are few. They are comprehended in the statement that Cassatt, being president and practically in sole control of the bank, without authority, and without the knowledge of any other officer or stockholder, discharged his individual liabilities to the plaintiffs in error, respectively, by sending them drafts of the bank, payable to their order, and drawn upon the bank's correspondent in Chicago, with which it had sufficient moneys out of which the drafts, after indorsement by the payees, were duly paid. Much discussion has been expended upon the effect of the form of the drafts, in connection wtih the use to which they were put, as notice to the payees that they were drawn without au thority; but, before entering upon that in quiry, it will be well to dispose of minor contentions.

Assuming that the plaintiffs in error, when the drafts were tendered them, were put upon inquiry, it is asked, What would have been the subject of inquiry? and what facts would have been developed? It is not accurate to say that the inquiry would have been, "Did Cassatt pay the bank for the drafts?" Payment for the drafts, doubtless, would have been important evidence, but not necessarily conclusive upon the true point of inquiry, which was, "Did Cassatt

have authority to draw the drafts?" He been theretofore authorized, or then had might have had money in the bank, or have their approval. As contended, it was clearly put it there at the time of drawing the no duty of the plaintiffs in error to underdrafts, and yet have been without authority take an examination of the books, which, to draw them; and without money on depos- once they commenced inquiry into the manit, and without present payment, his author-agement of the bank, they would have ity to draw in the form and for the purpose learned had been wholly in the keeping of proved might have been beyond dispute. If, Cassatt, and of clerks who could not be extrusting to his integrity and individual re pected to testify against him. Inquiry of sponsibility, the directors authorized him to Cassatt, too, it is to be presumed, would use the drafts of the bank for his individual have been useless, and therefore, if made, purposes, whether paid for at the time or would not have met the requirement of the not, any loss resulting from a misuse of that law. The one thing necessary to be known authority ought, of course, to fall upon the was whether Cassatt had authority to make bank, rather than upon a third person, who the proposed use of the bank's paper. The in good faith had paid value for the paper; authority could have come only from the diand the question of good faith would be de- rectors, by direct resolution or by acquiestermined by the ordinary rules applicable to cence or implied assent, and the plain, unthe transfer of mercantile paper. The fal- mistakable course was to push the inquiry, lacy or inapplicability of the supposed case wherever begun, to the source of authority. of John Doe, living at Pella, and procuring It is a perversion of speech to say that of the bank a draft payable to the order of a "the findings showed that Cassatt had paid distant creditor, and forwarding the draft to the bank for every one of the drafts," or that the creditor in discharge of the debt, is evi- if the defendants had gone to Pella, and had dent. It is, doubtless, a not unusual prac- ascertained the facts, they would have found tice for debtors to obtain and send to their that Cassatt was a depositor in the bank, creditors bank drafts, drawn payable to tho that he had charged each draft to his accreditors, and, of course, in every such case count, that he had on deposit ample funds to the creditor knows that the money of the meet the charge, that he gave due credit on bank is being used to pay to him the debt of the books of the bank to its Chicago corre another, in the case supposed, the debt of spondent for the amount of each draft, and John Doe. But in such cases the creditor that no step in the transaction was hidmay accept the draft without inquiry, not, den from the bank, but was known to it as counsel have said, because of a presump- and recorded in its books, and that a statetion that the debtor had paid for the draft, ment of the transactions to the bank could but because the draft had been drawn by the have caused no surprise, because the bank authorized officer of the bank in the usual knew of each as it occurred during the whole course of business, acting without apparent period of twelve years. The entries on the or known personal interest in the transac books, it may be said, tended to show the tion. The receiver of such a draft, though facts as stated; but the entire finding shows named as payee, and on the face of the paper that Cassatt was not a depositor, and in no apparently a party to the original execution way made good to the bank the moneys taken thereof, is not so in fact, but, as against the from it by. means of the drafts, which takdrawer, is in effect an indorsee, affected only ings, it is expressly found, were acts of theft by vices or infirmities of which he had notice or embezzlement. That finding of the ultibefore he accepted it. He might know that mate fact of wrongful and unauthorized apthe draft had not been paid for, and yet take propriation cannot be overcome by proof of it on the assumption of regular and proper book entries, which, even if honestly made, execution upon some other consideration would amount only to evidence tending to than payment. The inquiry, therefore, show the contrary. False entries took no which these plaintiffs in error should have money out of, and put none into, the bank; made was whether Cassatt had authority to and it was not for the fraudulent bookkeepdraw drafts of the bank upon funds of the ing, or forgeries, or any other wrong or bank in possession of its correspondents for series of wrongs which preceded the execu use in his individual transactions. Such an tion of the drafts, that the plaintiffs in erinquiry involved no difficulty beyond com- ror were held responsible. On the contrary, municating to the directors of the bank, we agree that, if they are to be compelled to other than Cassatt, the fact that such a draft make restitution, it is because the particuor drafts had been tendered in discharge of lar sums which they received were wrongliabilities incurred in dealings upon the fully taken by Cassatt from the bank, and Board of Trade in Chicago, and asking they were parties to the wrong. This propowhether the execution of the paper had been sition does not depend upon, and cannot be authorized. There can be little doubt what refuted by, the bookkeeping disclosed in the would have been the result of such an in- special finding. It embraces the three propquiry, accompanied with a frank and full ositions contended for by counsel, namely: statement of the facts as they were known to the payees of any of the drafts in suit at the time of execution. It would not have needed a discovery of Cassatt's fraudulent bookkeeping to enable the directors to say whether the execution of such paper had

"(1) The person from whom restitution is sought must have been a party to the particular transaction in which the wrong was accomplished. (2) The particular transaction to which such person was a party must have been hidden from the wronged party.