Mary Malone, Catherine Malone, Elizabeth Malone, and Ellen Malone v The Belfast Banking Company, Ltd

• Jurisdiction: Ireland
• Judge: K. B. Div.,Appeal.
• Judgment Date: 19 February 1912
• Court: Court of Appeal (Ireland)
• Docket Number: (1910. No. 12916.)
• Date: 19 February 1912

Mary Malone, Catherine Malone, Elizabeth Malone, and Ellen Malone

and

The Belfast Banking Company, Limited (1).

K. B. Div.

Appeal.

(1910. No. 12916.)

CASES

DETERMINED BY

THE KING'S BENCH DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL,

AND BY

THE COURT FOR CROWN CASES RESERVED.

1912.

Principal and agent — Banker and customer — Banker and banker's agent — Dual capacity of agent as branch manager and trustee — Constructive knowledge of bank of agent's fraud — Liability of bank to customer in respect of agent's fraud.

Held, that the defendants were liable.

New Trial Motion.

The action was brought to recover the sum of £1535 6s., whereof the sum of £1476 was claimed as due and owing to plaintiffs for moneys payable by the defendants to plaintiffs for moneys found to be due from the defendants to the plaintiffs on accounts stated and settled between them on the 5th day of February, 1909, and for money had and received by the defendants for the use of plaintiffs. The particulars were as follows:—1909, 1st January:—Balance due to plaintiffs this day admitted by the defendants' agent and manager, the late John George Donaldson, of the Belfast Banking Co., Cookstown, under his hand, £1476 5s.; interest to 1st January, 1910—£59 1s.; total, £1535 6s.; further interest till payment. The defendants, by their defence, traversed the several averments in the statement of claim, and pleaded that J. G. Donaldson was not acting as agent and manager for the defendant company when he made the admission (if any) referred to in the statement of claim; that the said J. G. Donaldson had no authority as manager and agent for them to make such admission, but that same was made (if at all) by him outside the scope of his authority as manager and agent for the defendant company, and solely in his personal capacity or as executor of the will of one Peter Malone, deceased. They further pleaded that the plaintiffs' claim was barred by section 20 of 16 & 17 Vict. c. 113.

The action was tried before the Honourable Mr. Justice Dodd and a special jury, on the 8th and 9th days of May, 1911, when the following facts were proved. J. G. Donaldson had been for upwards of thirty years the manager of the defendant company's branch bank at Cookstown, and continued to act as such manager up to the year 1909. The bank and the manager's residence formed one building, and Donaldson kept his own private account in the bank.

Prior to the year 1886, one Peter Malone was a customer of the bank at Cookstown, where he had a current account. The said Peter Malone, by his will, dated the 29th March, 1881, inter alia devised his house and licensed premises. where he carried on business, to his wife, Catherine Malone, for her life, with remainder to his son Robert; and he thereby bequeathed a policy of insurance for £500 on his own life to his five daughters, including the four plaintiffs, with benefit of survivorship; this sum the testator directed his executors (of whom Donaldson was named as one) to invest for his daughters and each of them “until the death or marriage of my wife, or until the marriage of my said daughters, or until they commence business on their own account, whichever event shall first happen, but in no case until they personally attain the age of twenty-one years.”

Peter Malone died on the 29th June, 1886, and his said will was proved by J. G. Donaldson alone of the executors named in it.

At the date of Peter Malone's death, the premises devised by him to his wife were subject to a mortgage for £300, then vested in one Samuel Brown, and the policy of insurance bequeathed to the testator's daughters was vested in the defendant company under an assignment of the 2nd August, 1867, as security for an overdraft, which overdraft at the date of Peter Malone's death amounted to £161 13s. 10d.

On the death of Peter Malone a sum of £690 14s. 10d., representing the proceeds of the said policy of insurance, was paid to the bank as assignees of the said policy of insurance, and was credited to Peter Malone's account, thereby extinguishing his overdraft and leaving a balance to credit of £529 1s. This balance was by a cheque signed by Donaldson, as executor, paid out to the latter on the 23rd October, 1886, and on the same day Donaldson lodged the sum of £303 6s. 5d. to the credit of his own private account in the bank, which was then overdrawn very largely in excess of a limit of £200 allowed him by the defendant company. On the 26th October Donaldson lodged a further sum of £313 2s. 5d. to the credit of his own private account in the bank. Peter Malone's account in the bank was then closed, and no new account was opened in Donaldson's name as executor or otherwise.

On the 20th October, 1887, the sum of £300, portion of the plaintiffs' trust funds, was, with their consent, and that of their mother, Mrs. Malone, invested by Donaldson on a transfer of the mortgage debt of £300 on the house and premises devised by Peter Malone to his wife, and the said mortgage was on that date vested in Donaldson. Interest on the said mortgage debt was thenceforth, during her lifetime, paid regularly by Mrs. Malone, who drew a cheque each year for £12, and gave it to the plaintiff, Mary Malone, and the latter handed the cheques to Donaldson to be added to the plaintiffs' money in the bank. A number of lodgment-dockets, in the ordinary form used by the defendant company, and headed “Belfast Banking Company, Limited, Cookstown Branch,” were put in evidence showing lodgments for the credit of Donaldson, “per self,” and which included the several sums of £12 so paid by Mrs. Malone on foot of the interest on the mortgage, these sums appearing in the particulars endorsed on the dockets of the sums lodged, in some cases after the name “Miss Malone,” in others after the names “P. Malone, deceased”; “P. Malone,” “P. M. D.,” or “Malones.”

The plaintiff, Mary Malone, deposed to a conversation between her and Donaldson in or about the time of the transfer of this mortgage, in the course of which, referring to the proceeds of the policy, she asked Donaldson, “Is that the money we now have lying in the bank?” To which Donaldson replied, “Yes.”

In the month of August, 1893, Mrs. Malone, the mother of the plaintiffs, who also had a private account in the bank, she being in need of money to repair her house, asked her daughters for the loan of £134. Mary Malone accordingly went to the bank with her mother's pass-book, and on her explaining what was required, Donaldson entered the sum of £134 in Mrs. Malone's pass-book to the latter's credit. He then told Mary Malone that it would be necessary for Mrs. Malone and her son to sign two promissory notes, one for £100 and one for £34, stating to her that “he wished to keep the bank safe, and himself safe,” and two undated bills for the said amounts, in the form used by the bank, were signed by Mrs. Malone, and given to Donaldson. This sum of £134 was subsequently repaid by Mrs. Malone, and appeared to the credit of plaintiffs in the accounts hereinafter mentioned.

On the 17th August, 1898, Mrs. Malone, the mother of the plaintiffs, had lodged in the bank a sum of £300 on a deposit receipt in the names of “Mrs. Catherine Malone and Miss Ellen Malone, Cookstown, payable to either, or their survivor”; this deposit was headed, “not transferable.” In September, 1901, Mrs. Malone wished to make a present to her daughters, the plaintiffs, of the moneys so deposited, and accordingly, on the 7th September, 1901, she handed it to her daughter, Ellen Malone, who brought it to the bank. Donaldson was not present on this occasion, and Ellen Malone handed the deposit receipt across the counter to a junior official of the bank, and told him the money was to be added to the plaintiffs' other money in the bank. The deposit receipt was endorsed by Mary Malone, who signed her mother's name, and by Ellen Malone. It was further endorsed with the words “cash for investment,” and the words “Principal, £300; Interest, £13 4s. Total, £313 4s. Paid 7th September, 1901; examined by J. H. S.,” the words “cash for investment” and the figures being in Donaldson's handwriting, and the initials “J. H. S.” being those of a junior official in the bank. The deposit receipt remained in the custody of the bank, and on the same day Donaldson made out a lodgment docket of lodgments to his own private account, including a lodgment of the said sum of £313 4s.

A large number of accounts furnished annually by Donaldson to the plaintiffs was put into evidence, the first of which was dated the 17th July, 1888, and was in the following form:—

Amount due by Mrs. Malone & Son to trustees of daughters, viz.,	£303 12 1
£100 with interest, say at 2 per cent. up to 1st August, 1888,	104 0 0
One half year's interest on £300 mortgage on premises to 1st May, 1885,	6 0 0
	£413 12 1

Brought down, ¨ £413 12 1

Mortgage, ¨ 300 0 0 £713 12 1

(Signed), J. G. Donaldson.

17th July, 1888.

On the 30th January, 1891, Donaldson furnished the plaintiffs with an account (which was written on bank paper and stamped Cookstown Branch) headed “Peter Malone's daughters' account,” and containing the following items:—

Balance to credit, 31st December, 1890,	£455 0 0
Interest on £300 mortgage paid by trustees to 1st November (one year),	12 0 0
Interest on £455 for one year to 31st December, 1890,	13 13 0
Credit to 31st December, 1890,	£480 13 0

(Signed), J. G. Donaldson.

On the 1st January, 1892, Donaldson furnished an account headed, “Statement Peter Malone, deceased. Executor's account,” and containing the following items:—

“Jan. 1. 1891. Balance as furnished,	£480 13 0
”” 1892. Interest 12 months,	14 7 0
””” Interest on mortgage loan to 1st November, 1891,	12 0 0
	£507 0 0

“(Signed) J. G. Donaldson.”

On the 1st January, 1894, Donaldson furnished an account, headed, “Cookstown...