Second Department, May, 1908. [Vol. 126. 554. See, too, Potter v. Merchants' Bank, 28 id. 641, citing STORY, J., in Wild v. Passamaquoddy Bank, 3 Mason [U. S.], 505), and the facts show that he was the chief managing officer of it. STORY, J., in Wild v. Passamaquoddy Bank (ut supra), said: "The cashier of a bank is, virtute officii, generally entrusted, with the notes, securities and other funds of the bank, and is held out to the world by the bank as its general agent in the negotiation, management and disposal of them." (See, too, United States v. City Bank of Columbus, 21 How. [U. S.] 356, 364.) "The cashier of a bank is ordinarily its chief executive officer, through whom the financial operations of the bank are conducted. Directly, or through subordinate officers, he receives and pays out its moneys, collects and pays its debts, and receives, discharges and transfers its commercial securities." (21 Am. & Eng. Ency. of Law [2d ed.], 862; Coats v. Donnell, 94 N. Y. 168, 176; Merchants' Bank v. State Bank, 10 Wall. 604, 650. See, too, Morse, supra, § 157, and cases cited; id. § 160, and cases cited.) There was the legal right to impose confidence in Ahlmann in everything within the scope of his duties. (Scott v. Depeyster, supra, especially at 540, 541.) It does not appear but that the cashier, with the securities at hand in the bank and under his control, could not as readily have abstracted them and disposed of them as he did from the safe deposit box in Manhattan. He did not obtain them. from the safe deposit box in Manhattan and fly. But he took them therefrom and sold them in the market as for account of the bank, and received a check therefor in favor of the bank. The bank cleared with a bank in Manhattan, and the securities were a reserve fund kept near the financial district to raise money speedily if required. The fact that they were kept there did not make the cashier immune from producing them, if called upon to do so, any more than if they had been kept in the bank vaults. The point of this discussion is that the mere place of deposit and the absolute control of the cashier thereat do not necessarily in themselves indicate any greater laxity than if the securities had been kept in the bank under the normal control of the cashier. The reports were prepared by Ahlmann, or under his supervision, and were then brought over by Ahlmann to Prentice, who would look them over, and consult with his son, who App. Div.] Second Department, May, 1908. would make suggestions. The conversations over the affairs of the bank on such days were protracted beyond the usual hour, and were about the details of the report. Prentice would take time to consider the report before he signed it. Wood began to work in the bank in 1887, rose to assistant cashier in 1895, and became a director in 1896. He was paying and receiving teller, and always at the bank save vacation time. He examined the daily balance book every day. "To some extent" he was in supervision. of the bookkeeping, and the routine work thereof in a general way was in his charge. He had no suspicion at any time that anything was "wrong about that bank," and so far as he knew everything was in proper shape and in good order until Ahlmann killed himself. Ahlmann came then to Prentice with the reports as the managing agent of the bank, who apparently had administered its affairs under the scrutiny of the bank examiners successfully and with diligence for many years. He was the chief executive officer, the practical power in the bank, and had so far as the evidence shows achieved a reputation in his community such as attaches to a substantial man of affairs, diligent, constant and attentive about his business. He owned, as I have said, the great majority of the stock in the bank. And he, too, then represented himself to Prentice as prepared to take his oath to the same report. All these circumstances might not be sufficient to acquit the president, but they are of the atmosphere of the case. It is true that it is argued that Prentice had warning of Ahlmann's character by his lapse in 1890 in the matter of the forgery of two notes, but the learned court charged the jury that there was no evidence that permitted a finding that the forgeries ever existed. It seems to me that the question whether the president was negligent in failing to see the securities at the time he made the verification of the report was a question of fact for the jury and was not to be disposed of as one of law. Prentice is to be regarded as a trustee (Hun v. Cary, 82 N. Y. 65; Bosworth v. Allen, 168 id. 157, 165), bound to exercise care and prudence in his office in the same degree that men of common prudence ordinarily show in their own affairs. (Hun v. Cary, supra.) The measure of that care is dependent on the subject to which it is due, and each case must be determined by the circumstances thereof. (Morse, supra, Second Department, May, 1908. [Vol. 126. § 128, citing Briggs v. Spaulding, 141 U. S. 132.) The discussion in the dissenting opinion lays much stress on the fact that Prentice had warning of the character of Ahlmann by knowledge of his prior misconduct in the affairs of the bank involving his fabrication or forgery of two notes to make up a deficit. Even if such forgery by Ahlmann had been proved and made known to Prentice, that bit of evidence would not have directly borne upon my proposition that an exception was well taken to an instruction as to the law, which was fatal to the judgment. Such fact would be germane to the question whether the evidence was sufficient to uphold a judgment against the defendant for his negligence. It would only be relevant to the question which I discuss in so far as it involved the subsidiary question whether the error was substantial or fatal. It is quite true that I myself make mention of the circumstance and hence in a sense invite the comment of my brother, but that was in the course of showing the atmosphere of the case. But while the court did instruct the jury that there was evidence in the case that Prentice was informed in March, 1890, that the cashier had admitted the forgery of the two notes, I repeat that the learned court without objection and exception charged that there was no evidence in the case from which the jury could find that the notes were forged. I repeat that I do not assume to say that if the learned court, who tried the case with much fairness and ability, had instructed the jury as to the terms of the oath required by the statute and had submitted the case to the jury without instruction as to Prentice's negligence as matter of law and thereupon a like verdict had been returned, we would have cause to disturb it. But I am convinced that we cannot uphold this verdict on the ground that the trial was without substantial error to the prejudice of the defendant. The judgment must be reversed and a new trial granted, costs to abide the event. HOOKER, RICH and MILLER, JJ., concurred; GAYNOR, J., read for affirmance. GAYNOR, J. (dissenting): The law in respect of the duty of bank directors to their bank is settled in this State. They are trustees of the bank, and are "bound App. Div.] Second Department, May, 1908. to exercise care and prudence in the execution of their trust, in the same degree that men of common, prudence ordinarily exercise in their own affairs"; and for failure in this they are liable in damages to the bank (Hun v. Cary, 82 N. Y. 65). The measure of the care and supervision required of a director who is also president of the bank (as was the case here) is this and something more, according to his extra duties of care and supervision as president required generally by law, or put upon him by the power and duties entrusted to his position by his directors, by the by-laws, or by the custom or course of business in his bank. The learned trial Judge charged the jury that the duty of the deceased president, for whose negligence this action is brought by the receiver of the bank against his administrator, "was to exercise the same care in respect of the execution of the functions of his office, both as director and as president, as a man of ordinary business capacity and prudence would exercise in the conduct of his own interests". This was so fully explained and reiterated that the jury must have fully understood it, and the charge of the learned trial Judge may not be understood as departing from that to some other rule, unless it does so expressly or by necessary implication. The cashier of the bank stole securities of the bank, and the question was whether the negligence of the president, measured by the requirement of his duty of care and supervision, as laid down by the learned trial judge as stated above, enabled or encouraged him to steal them. The evidence showed not only general inattention by the president to the bank's business during several years before the theft, but also that he had during the same time signed and sworn to the quarterly reports to the state banking department, giving, as the law requires, a particular statement of the items of assets of the bank, without ever looking to see whether the securities so reported were among the bank's assets. There was also evidence by the state superintendent of banks that after an examination of the affairs of the bank in 1890 (two to three years before the theft) he and the examiner who had made the examination went to the president and informed him that they had found a deficiency of $5,810 in the bills discounted compared with the amount shown by the ledger as the total amount of such discounts, and that after the APP. DIV.-VOL. CXXVI. 30 66 Second Department, May, 1908. [Vol. 126. discovery, and while the examination was in progress, two notes amounting to such deficiency, and purporting to be made one by "II. Kirchner" and the other by "Chas. Beinert", which they exhibited to the president, were put among the bills and found there by them before their examination was completed, and that the cashier when spoken to by them about such notes, and shown them, admitted that he had made them. The witness kept them and produced them on the trial. It is minimizingly said that although this information was communicated to the president, there was really no evidence that the notes were forgeries within the requirements for a conviction under the Penal Code. This technicality is entirely aside from the point, and does not diminish the force of the evidence. The president was informed of the deficiency, and that the cashier had privily slipped in two notes to make it up, and when confronted by the bank superintendent with them acknowledged that he had made them, i. e., that they were fictitious or forged by him. Having such information of the cashier his duty of care and supervision over the affairs and assets of the bank was certainly increased if he was to permit the cashier to retain his position under him, or remain president over such a cashier, which he did. This being the state of the case, it was claimed on the trial that the neglect of the president to examine the securities, and his continually making the quarterly reports to the banking department of their possession by the bank without looking to see if that was true, encouraged the cashier to believe, and taught him, that he could take them without danger of such a derelict president making discovery of his theft, and that in that way the neglect of the president led to such theft. This naturally led the learned trial Judge to charge on that head, and no exception was taken to his entertaining that view of the case. The exception principally relied on is to his charge that it was the president's duty "to have such knowledge of and such acquaintance with the several matters stated in the quarterly reports that he could truthfully make oath that the said reports were true in all respects"; and later on that it was his duty "to keep himself informed, sufficiently familiar with the affairs of the bank and the conduct thereof -- not alone by the cashier, but the general conduct, and the investment of securities, and the securities on hand, to enable him truthfully and faithfully to comply with |