Case ID: ohio-app_22/html/0369-01.html
Source: Caselaw Access Project
Author: {"author": "Williams, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

United States Fidelity & Guaranty Co. v. Kinneman.
    
      Suretyship — Notice to surety of default — Petition may be amended to plead waiver thereof, when — Section 11363, General Code — Evidence—Transactions occurring before and after period covered by bond, admissible, when — Conversations between employer and employe admissible as res gestae — Material declarations of employe admissible, when — Refusal to direct verdict for defendant not error— Property entrusted to business manager for term — Relation of trust based on contract created, when.
    
    1. In action to recover on a fidelity bond, permitting plaintiff to amend petition, and plead waiver of condition requiring notice of default, is not prejudicial error, in view of Section 11363, General Code, where letter of defendant, admitted in evidence without objection, amounted to waiver of the condition.
    2. In action on fidelity bond evidence of what transpired during the eight-year period of contract of employment is admissible on question whether there were fraudulent or dishonest acts of conversion during the one-year period of the bond.
    3. In an action on fidelity bond securing plaintiff against fraudulent conversion by business manager, evidence of conversations between employer and employe during period of the bond and at the time of her departure for Florida explaining why she had a ticket and Went alone is admissible as a part of the res gestae.
    
    4. In an action on a fidelity bond securing plaintiff against loss from fraudulent conversion by her business manager, evidence of conversations which took place when employe was in possession of employer’s property, in furtherance of his scheme to fraudulently convert it to his own use and while in performance of his duty as manager, is admissible.
    5. In suit on employe’s fidelity bond, his state of mind, sentiment, or disposition during period of bond being subject of inquiry, his material declarations made at the time of the transaction and not relating to past transactions are admissible.
    6. In action on fidelity bond for fraudulent conversion of assured’s property by her business manager, refusal to direct verdict for defendant held not error.
    7. As respects indemnity insurance, where property was intrusted to a business manager, who was to account therefor and return property in his possession at end of the term, less interest and increment, his relation to his employer was one of trust based on contract.
    (Decided October 30, 1925.)
    Error: Court of Appeals for Williams county.
    
      Messrs. Taber, Chittenden, Northup & Daniells, for plaintiff in error.
    
      Mr. A. L. Gebhard, for defendant in error.
   Williams, J.

This action was brought in the court of common pleas of this county to recover upon a fidelity bond in the principal sum of $5,000, given to Emma L. Kinneman by the United States Fidelity & Guaranty Company, as surety, to secure her against loss from fraudulent or dishonest acts of conversion committed by her business manager, Levant Gould. In the bond in question Levant Gould is called the employe and Emma L. Kinneman the employer. The bond contains the following provision:

“Now, therefore, in consideration of a premium paid for the period from January 8, 1915, to January 8, 1916, at 12 o’clock noon, it is hereby agreed that, subject to the conditions set forth in this bond, the United States Fidelity & Guaranty Company, a body corporate, hereinafter called the ‘surety,’ shall, within three months next after proof of loss as hereinafter set forth, reimburse the employer of money, securities or other personal property in the possession of the employe, or for the possession of which he is responsible, by any act or acts of fraud or dishonesty committed by the employe in the performance of the duties of the office or position in the service of said employer as aforementioned, and occurring during the continuance of this bond and discovered and notified to the surety within six (6) months after the expiration or cancellation of this bond, or within six (6) months after the death, resignation or removal of the employe, prior to the expiration or cancellation of this bond.”

After the execution and delivery of this bond the evidence shows that Levant Gould had in his possession, during the one-year period, property of Emma L. Kinneman amounting to about $10,000. The plaintiff, Emma L. Kinneman, claimed that Levant Gould had dishonestly and fraudulently converted to his own use, during the one-year period, all of the property in his possession covered by the bond. The defendant, the United States Fidelity & Guaranty Company, denied the claim of the plaintiff, and especially ' maintained that, if any fraudulent or dishonest acts of conversion were committed, they were committed after the bond had expired.

Upon the trial of the case in the court below a verdict was returned in favor of the plaintiff against the defendant in the sum of $7,463.33, and judgment was entered on the verdict. This action is prosecuted by the United States Fidelity & Guaranty Company, plaintiff in error, against Emma L. Kinneman, defendant in error, to reverse that judgment.

The first claim which plaintiff in error makes is that the court erred in permitting the plaintiff to amend her petition, and plead a waiver of condition 2 of the bond, which required the employer, within 90 days after the date of a notice of default in the terms of the bond, to file with the surety an itemized claim duly sworn to. It appears that the plaintiff in error wrote a letter to the attorney for the defendant in error, under date of November 1, 1916, which amounted to a waiver of the terms of condition 2, but plaintiff in error contends that as the petition itself did not plead a waiver the letter was inadmissible. An examination of this record discloses that the letter was admitted in evidence without objection, and it was therefore proper, under the provisions of Section 11363, General Code, to permit an amendment to the petition at any time before or after judgment, in the furtherance of justice, to conform to the proof. The action of the court in permitting such amendment was free from error. Putnam v. Bd. of Com’rs of Paulding Co., 102 Ohio St., 45, 130 N. E., 165, has been cited to us, and was cited by the trial judge as conclusive of the question. However, in the view we take of the matter, it is not necessary to base our decision upon the principle announced in that ease.

In the second place the plaintiff in error claims that the court erred in permitting the jury to consider what transpired during the eight-year period of the contract, as bearing on the question of the time at which Gould converted the property in question to his own use. While, under the terms of the policy, the plaintiff in error was not liable for any fraudulent and dishonest acts of conversion not committed within the one-year period covered by the policy, it was proper for the trial court to allow in evidence material transactions, occurring both before and after that period, which tended to shed light upon the question of whether or not there were fraudulent or dishonest acts of conversion during the one-year period covered by the bond. The charge is free from prejudicial error.

In the third place the plaintiff in error claims that the trial court erred in admitting in evidence certain declarations of Levant Gould to Emma L. Kinneman during the one-year period. Emma L. Kinneman testified that she went to Florida December 8, 1915; that a short time before that Levant Gould came to Kunkle, Ohio, and had a talk with her about going to Florida; that he said, in substance, that she had better go down there and see the country and have a good time and get out and around; that perhaps she would never have a chance to go again; that she told him she did not want to go; that as a result of this talk she went to Toledo on the date last named; that Gould indicated that he would go with her to Florida, but when she got there he told her that he could not; that she told him she didn’t want to go alone; that she was not going to be shoved off like that, with nobody to look after her, and commenced to cry; and that, thereupon, Gould bought a one-way ticket for her to Florida, placed it in the hands of the conductor, and she went to Florida, where she was compelled to remain until July 4, 1916, because she had no money to get back.

It is apparent that the reason why she had a ticket and went alone to Florida is only explained by the conversation which took place at the time of her departure. Clearly the conversation that took place at that time was a part of the res gestae. As to prior conversations the question is more difficult.

We are of the opinion that the rule applicable to the question at hand is laid down in 1 Greenleaf on Evidence (16th Ed.), Section 187. It reads as follows:

“We are next to consider the admissions of a principal, as evidence in an action against the surety, upon his collateral undertaking. In the cases on this subject the main inquiry has been whether the declarations of the principal were made during the transaction of the business for which the surety was bound, so as to become part of the res gestae. If so, they have been admissible; otherwise, not. The surety is considered as bound only for the actual conduct of the party, and not for -whatever he might say he had done, and therefore is entitled to proof of his conduct by original evidence, where it can be had; excluding all declarations of the principal, made subsequent to the act to which they relate, and out of the course of his official duty.”

At the time the conversion took place Levant Gould was in possession of and managing all the money and property in question. He was at that very time engaged in the transaction of the business for which the surety was bound. It is a reasonable inference that his utterances were made in furtherance of his scheme to fraudulently and dishonestly convert to his own use and make his own the money and property of Emma L. Kinneman. The declarations did not relate to past transactions, but are truly verbal acts which tend to prove the wrongful and dishonest intention of Gould. He was clearly in the performance of his official duty as her manager, and in the purchase of the ticket, at least, turned over a small part of the money which it was his duty to pay over to her under the guaranty of interest, as shown by the written contract made between him and her and offered in evidence. This was a case in which one of the issues was the state of mind of Levant Gould. If his acts, within the one-year period, were free from fraud and dishonesty, the plaintiff in error was not liable. On the other hand, if he committed acts of conversion during that period, which were dishonest and fraudulent, the plaintiff below could recover. What better indication of his state of mind and his intent could be found than the conversations referred to while he was engaged in part execution of Ms purpose to send her to Florida ? It has been held that where the state of mind, sentiment, or disposition of a person at a particular period is the subject of inquiry, his material declarations bearing upon such point, made at the time of the transaction, and not relating to past transactions, are admissible. We quote from 1 Greenleaf on Evidence (16th Ed.), Section 108, as follows:

“So, also, where a person enters into land in order to take advantage of a forfeiture, to foreclose a mortgage, to defeat a disseisin, or the like; or changes his actual residence, or domicile, * * * or is upon a journey, or leaves his home, or returns thither, or remains abroad, or secretes himself * * *; or, in fine, does any other act, material to be' understood, * * * his declarations, made at the time of the transaction, and expressive of its character, motive, or object, are regarded as ‘verbal acts, indicating a present purpose and intention,’ and are therefore admitted in proof like any other material facts.”

So, upon an inquiry as to the state of mind, sentiments, or disposition of a person at any particular period, his declarations and conversations made within the rule quoted are admissible. They are parts of the res gestae.

For the reasons indicated we think there was no error in admitting the declarations and conversations of Levant Gould.

In the fourth place it is claimed that the court below erred in failing to direct a verdict for the defendant below, and that the verdict is manifestly against the weight of the evidence.

It is not seriously contended that the evidence did not tend to show fraudulent and dishonest acts of conversion on the part of Levant Gould, as he took all the property when he disappeared, and he has not made any report or undertaken to account in any way, although the time for doing so under his contract with Emma L. Kinneman has long since transpired. It is contended, however, that the evidence fails to show fraudulent and dishonest acts of conversion during the one-year period named in the bond.

After getting all of the property of the defendant in error into his possession, Levant Gould sent her away to the state of Florida under the circumstances above mentioned. Apparently he then discovered that to convert the remaining property into money it was necessary for him to have her assign to him a stock certificate, thereby enabling him to transfer it upon the books of the corporation, so that he could sell it and receive the money therefor. So he went to Florida and had her transfer the certificate. After that she never saw him again. That final consummation of his transactions with her occurred on January 5, 1916, three days before the one-year period of the bond expired. He gave her no money on that last visit. Moreover, the jury may well have found that he did not pay what he had guaranteed to pay her, either then or out of the proceeds of the sale of the stock. He left her there with no way to provide for herself and no way to return. Obviously his intention was that she should not renew the bond. He apparently, then, without very much delay, made his escape, and his whereabouts are unknown. Is not the inference on the part of the jury probable that he converted this woman’s property to his own use during the one-year period? The jurors might well have inferred that his actions during that period were not those of an honest man, and they may also have inferred that he had gotten the property into his own possession during that period with the intention of keeping it permanently as his own.

It is claimed, further, that the evidence is wholly insufficient, by reason of the fact that the relation between Gould and the defendant in error was that of debtor and creditor and that no trust relation subsisted. "We have examined Milwaukee Theater Co. v. Fidelity & Casualty Co., 92 Wis., 412, 66 N. W., 360, and Kribs v. People, 82 Ill., 425, cited by counsel for plaintiff in error, and we are of the opinion that they may be distinguished from the case at bar, in that although Gould was to be compensated by the excess of interest over and above 2 per cent, semiannually, after the payment of debts, and by any increment in the property, yet the property was hers, and he was obliged to account for it. He was not to repay to her a certain sum, but was to return the property in his possession at the end of the term, less interest and increment. If there had not been any increment he would have been obliged to return to her all the property, whatever the amount thereof. His position toward her was a relation of trust based on contract.

While there might be a question as to the sufficiency of the evidence in this case were the conversations discussed under the third claimed ground of error inadmissible, we believe that, considering them with all the other evidence in the case, the verdict was not so manifestly and clearly against the weight of the evidence that this court ought to disturb it. Of course, under such circumstances, the trial court was right in not directing a verdict.

We believe that substantial justice has been done by the verdict.

Judgment affirmed.

Richards and Young, JJ., concur.