Case ID: nys_3/html/0797-01.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J. Brady, J., (dissenting.)", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Union Dime Sav. Inst. v. Neppert et al.
    
    
      (Supreme Court, General Term, First Department.
    
    January 28,1889.)
    Principal and Surety—Release of Surety—Official Bonds.
    A bond recited that “if the above bounden, [principal,] who has been appointed clerk of said Union Dime Savings Bank, * * * shall faithfully and honestly discharge his duties as such clerk, or in whatever capacity he may serve said bank, and shall faithfully apply and account for all such moneys, funds, valuables, and property which may come into his hands, or under his control as such clerk, then this obligation to be void, ” etc. Held, that the sureties were liable for defalcations of the principal in his capacity as teller, to which position he was subsequently appointed. Brady, J., dissenting.
    Appeal from special term, New York county.
    Action by the Union Dime Savings Institution of New York City against Francis Neppert and Otto Baumann, to enforce the liability of the defendant first named on a bond conditioned for the faithful conduct of defendant Bauman as “clerk, or in whatever other capacity he may serve” plaintiff. Trial to the court, and judgment dismissing the complaint. Plaintiff appeals.
    Argued before Van Brunt, P. J., and Brady and Macomber, JJ.
    
      Arnoux, Bitch dS Woodford, (Wm. H. Arnoux, of counsel,) for appellant. De Witt, Bookman & De Witt, (Theo. De Witt, of counsel.) for respondent.
   Van Brunt, P. J.

It is assumed by the learned counsel for the respondent that the decision in the case of Association v. Conkling, 90 N. Y. 116, disposes of this appeal. A very brief examination, however, of the case cited, will show'that it has no application whatever to the case afcbar, except so far as it may declare the general principles which are to govern the construction of contracts. It is laid down in the case cited as a rule of construction that a surety is never to be held liable beyond his specific engagement, and his liability is always strictissimi juris, and must not be extended by construction. This contract must be construed by the same rules which are used in the construction of other contracts. The extent of his obligation must be determined by the language used, read in the light of the circumstances surrounding the transaction. But when the intention of the parties has thus been ascertained, then the court will carefully guard the rights of the surety, and protect him against liability not strictly within the precise terms of his contract. The action was brought, as was the one at bar, against a surety who had executed a bond to the plaintiff at the time it employed the .defendant Conkling as a book-keeper in its bank. The recitals and condition .of the bond were that “whereas, the above-named [plaintiff] has appointed the above-named Conkling [defendant] to the office of book-keeper, and Conk-ling having accepted the same, and consented to perform the duties thereof, •now, the condition of this obligation is such that if the above-named Conk-ling shall faithfully fulfill and discharge the duties committed to and the trust reposed in him as book-keeper, and shall also faithfully fulfill and discharge .the duties of any other office, trust, or employment relating to the business of said-which may be assigned to him, or which he shall undertake to perform, etc., then the obligation to be void; otherwise to remain in full force .and virtue. ” Conkling continued to act as such book-keeper until 1870. In that year he was appointed the receiving teller of the bank at an increased salary, and continued to act as such until he resigned. After his resignation it was discovered that he had embezzled some of the funds of the bank, and the action was brought against the obligors upon the bond to recover the .amount thus embezzled, and it was held in that case that the sureties undertook for the fidelity of the principal only while he was book-keeper, but, if ■while book-keeper the duties of any other office were assigned to him, their .obligation would also extend to the discharge of those duties. But it was held that, the parties not having in contemplation at the time of the execution of this bond the appointment of the principal to a new office, they were not bound for defalcations committed in the new office to vyhich he had been appointed.

In the case at bar the condition of the bond was as follows: “That if the .above bounden Otto Baumann, who has been appointed clerk of said Union Dime Savings Bank by its board of directors, shall faithfully and honestly .discharge his duties as such clerk, or in whatever capacity he may serve said bank, and shall faithfully apply and account for all such moneys, funds, valuables, and property which may come into his hands or under his control as such .clerk, and deliver the same on proper demand to the order of the board of directors of the said Union Dime SavingS'Bank, or to the person or persons authorized to receive them, without any fraud or other delay, then this obligation to be void; otherwise to remain in full force and virtue.” It is to be observed .that the position in the bank which*the appointee was to occupy is in no way referred to in the condition of this bond. He is simply described as a clerk, .or, in other words, as a servant and employe of the bank; and therefore, as long as he remained a clerk or servant or employe of the bank, he comes within the condition.of the bond. There was no particular position in the .bank, such as that of book-keeper, referred to in the condition of this bond, .as there was in the Case of Conkling. In his case it is expressly stated that he has been appointed as book-keeper, and the condition of the bond is that he shall faithfully fulfill the duties of such book-keeper, and shall also faithfully fulfill and discharge the duties of any other office, trust, or employment, .etc. In that case the minds of the parties were upon the office of bookkeeper, and: it was during his occupancy of that office that the condition of the bond applied, and when that office was vacated there was no condition to be broken. In the case at bar, however, the condition of the bond is for the fidelity of the principal as clerk, or in whatever capacity he might serve the bank,—not “and in whatever capacity he may serve the bank,” but “or;” thereby intending that the obligation should cover, not only the position as .clerk, but any other position in which he might serve the bank. In the Case of Conkling the additional duties were to be added to the original office; in the case at bar the new duties might be entirely distinct from the original .employment, as the .condition is in the disjunctive, and not in the conjunctive. Therefore even if, when the principal was appointed as teller, he was not to be still considered as a clerk in the bank, it would be within the condition of .the bond, and th.e intention of the obligors. This view is borne out by the ■effect of the terms used in the remaining part of the condition of the bond. It is said in the evidence that as book-keeper he had no charge of the moneys, funds, valuables, or property of the bank, and that these words could have no application to the duties of that position. But we find in the condition of the bond the words, “and shall faithfully apply and account for all such moneys, funds, valuables, and property which may come into his hands or under his cdntrol as such clerk.” If it had not been intended by the use of the word “clerk” to apply to all the positions which employes of the bank occupied, and of which the teller is one, why should these words in reference to the moneys, funds, valuables, and property of the bank have been added? It would seem, therefore, that it was the intention of the parties that the obligors should be bound for the faithful discharge of the duties of the principal in whatever capacity he might be employed in such bank, and that all the subordinate positions of the bank were classed together under the generic name of “clerk.” Indeed there seems to be no distinction, as far as to whether he is a clerk or not, between the positions of book-keeper and of teller. Our attention is called to some definitions from lexicographers. It is true that a teller is there called an “officer of the bank,” but in law he occupies no such position. His duties are entirely clerical, as much so as th.ose of any other employes of the bank. It would appear, therefore, that the condition of the bond in question was broken, and that there was a right to recover upon the part of the appellants. The judgment should be reversed, and a new trial ordered, with costs to appellant to abide event.

Macomber, J., concurs.

Brady, J., (dissenting.)

The plaintiffs sought to recover the penalty of a bond dated March 17,1873, executed by the defendant Baumann as principal, and by the defendant Neppert as surety. The condition was for the faithful performance by Baumann, who had been appointed a clerk of the plaintiffs, of “his duties as such clerk, or in whatever capacity he may serve said bank, and shall faithfully apply and account for all such moneys, funds, valuables, ■and property which may come into his hands, or under his control, as such ■clerk, and deliver the same, on proper demand, to the order of the board of directors of the said Union Dime Savings Bank, or to the person or persons authorized to receive them, without any fraud or other delay, then this obligation to be void; otherwise to remain in full force and virtue.” At the time of the execution of the bond Baumann occupied the position of book-keeper. His duties consisted of keeping books and accounts, and until a longtime afterwards he had no connection with the cash in the bank. His position was advanced, however, from time to time, and his salary increased. In 1878 he commenced to handle the cash of the bank in the absence of the other clerks. In September, 1879, he was detailed to act as teller of the bank by Mr. Sprague, the secretary, and in 1881 he was regularly appointed teller by the board of directors. His duties in that capacity consisted of receiving the cash deposits of customers, entering the same on the pass-books, and making initial records of such deposits. Prior to his appointment as teller, and in 1879, he kept as book-keeper about twenty deposit ledgers, containing the individual accounts of plaintiff’s customers. Hi's duties as book-keeper were gradually taken away from him, however, and at the time of his appointment as teller he kept one deposit ledger only, and it appears that it was usual in the plaintiff’s bank to require tellers to do a small amount of book-keeping, whictrwas considered a part of their duties as such; the paying teller also keeping a deposit ledger. In July, 1885, and after all the changes in the position and duties of Baumann had been made, he commenced to misappropriate the plaintiff’s funds, and it was during the period commencing July 1 in that year, and ending September 6,1886, that all the moneys abstracted by him were reoeived by him as teller. Moreover, it distinctly appears by the testimony of the secretary of the plaintiff that, if Baumann had been kept in his original position of book-keeper, he would not have been able to have stolen tire money. A question relative to that subject drew forth this answer: “Certainly not;. I don’t see any way in which he could without an accomplice. There is nO' evidence that he had an accomplice. I don’t think he had. All this money was stolen after Baumann was appointed a teller. He used his office as teller to enable him to steal money.” The learned justice in the court below regarded the case of Association v. Conkling, 90 N. Y. 120, as decisive of this action, and therefore gave judgment for the defendant. It must be said that his conclusion in this regard was correct, for that case seems to fully justify the judgment rendered herein. We had occasion to consider the result of that case in Bank v. Spinney, 47 Hun, 293. There the question was in many respects the same as in this case, and it was held that a direction to the jury that if a principal entered into the employment of the bank as book-keeper, even if other duties were superadded to that employment, the defendants were liable; but if he had been virtually removed from the position of book-keeper, and put into another position, which enhanced the liability of the defendants-on their bond, then they were entitled to a verdict. The statement of facts-shows conclusively that the principal herein was advanced to the position of teller, the duties of which he discharged, and the performance of which relieved him from those of a book-keeper eo nomine, enlarging Iris responsibilities, and placing him in a position by which he was enabled to make the misappropriations complained of. It will be observed that the condition of the bond in regard to the faithful application of and accounting for all moneys, etc., which might come into the hands of Baumann, relates to those received by him as such clerk. The language is: “Property which may come into his hands or under his control as such clerk.” In Webster’s Dictionary, (Ed. 1828,) the words “clerk” and “teller” áre defined as follows: “Clerk. A writer; one who is employed in the use of the pen in an office, public or private, for keeping record's and accounts; as the clerk of a court.” “Teller. An officer of a bank, who receives and pays money on checks.” And Worcester, Stormouth, Bouvier, and Jacobs give substantially the same definition, and it appears to have been adopted by the court of appeals in People v. Commissioners, 73 N. Y. 437.

The phraseology of the condition of the bond in this case seems to express clearly the intention of the surety that his responsibility should be limited to such misconduct as his principal might commit while discharging his duties as a elerl$ eo nomine; but, if it be not confined to this restricted effect, it certainly calls for the application of the rule established in Association v. Conkling and Bank v. Spinney, supra. An examination of the requests to find submitted on behalf of the appellant has not created an impression that any wrong was done, by refusing them, and the exceptions to the evidence are subject to the same criticism. All the facts are before the court necessary, on the evidence submitted, to determine the liability of the defendants, applying to them the well-established rules governing such relations as are created by the bond in question. The facts found rest chiefly upon the testimony given on behalf of the plaintiff. It may be said with great propriety that an abstract question of law only is presented, and that is whether the appointment of the principal as teller, and the consequent suspension of his duties as book-keeper, was one which relieved the defendant from the obligationso he assumed when he executed the bond. As we have seen, such a change in the position and duties of the principal relieved him from any obligation. The judgment should therefore be affirmed, with costs.