at he was not indebted to the bank; and that proper accounts would be kept and adequate examination of his transactions made. The statements were false in every detail and were known so to be by the officers making the applications, at the time they were made. In reliance upon the statements the surety companies wrote the bonds in question indemnifying against embezzlement, fraud, dishonesty, theft, etc. The bonded officers were guilty of defalcations prior to the date of the certificates and engaged in embezzlements on a large scale. Suit was brought on the bonds by the receiver. HELD: That the bank having taken part in procuring the bonds of the officers and employes it was its duty to disclose any knowledge of past and existing defaults; that authority of the officers of the bank to give the information contained in the application may be inferred from their custom in that regard covering a period of years; that the surety companies are entitled to the benefit of that inference; that when concealments and misrepresentations for which an employer is responsible are directly related to the transaction to which the suretyship will attach and affect the liability of the surety in material respects the sureties are released from the bond; and that a banking corporation is liable to innocent third persons where a representation is made in the course of its business by an agent while acting within the scope of his authority though he is perpetrating a fraud on the principal.
First National Bank of McVille vs. Gutru.
The owner of land leased the same under a written lease whereby the lessee was to receive one-half the crop, but reserving title and possession to all the crop in the lessor, and whereby the lessor agreed to deliver to the lessee one-half the grain raised, or the proceeds thereof, if sold, after deducting from any such share any just costs or disbursements incurred by the lessor and any indebtedness owing from the lessee to the lessor. The lessee gave a chattel mortgage on one-half of a threshing machine note and a coal account for the operation of the threshing machine, and at maturity paid them. The amounts so paid were deducted when settlement was made. The lessor did not know of the mortgage until the claim of conversion was made. The transferee of the chattel mortgage on the lessee's share of the crop sued the lessor in conversion. HELD: That the advances made were made with the consent of the lessee; that the items paid constitute an “indebtedness” within the meaning of the lease; that the stipulation is valid as against the holder of a mortgage; and that the owner is not guilty of conversion under the facts.
Nelson vs. Wallrod et al.
One Nelson conveyed the land in controversy to his wife, who thereafter was adjudged insane and was committed to the hospital for the insane. While on parole from the hospital the wife reconveyed the land to her husband. At the time of conveyance she was under the husband’s guardianship and was not adjudged restored to sanity and capacity for more than two years after the conveyance. Shortly after her adjudged restoration she was again committed to the hospital as insane. Later the husband obtained a divorce on the ground of incurable insanity, and thereafter executed a mortgage on the land as a widower. Upon de-
