Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1898-06-09

D'uilu " ueIHlchtlOn HebWBen tno Hfat
day OF November, 1879, and tho 9Th
day of July. 1885. are stated in tho
evidence to amount to tho sum OF Sill,
600 and between the 9Th day of July.
1855. and the 9th duy of July, 1891. to
have been S27, 750.
Much, in fact most Of the testimony,
both documentary and oral, relates to
the method by which Smith succeeded
10 abstracting such large Huma OF
money and in concsaling 40 SUCCESS
fully their embezzlement, or it discoses
in detail the workings Of the bank
during the period covered by the bonds
10 controversy and prior thereto, tho
system ofibookkoaping employed and Of
the checks used upon the employees and
tho diligence displayed by the president
and directors In preventing or tiiHclos.
ing fraud or dishonesty on the part of
such employees.
Complainant alleges in his bill that
the bank WHOLLY failed and omitted
to use proper care and reasonable dill
gence in the management OF the affairs
of said bank. and hut for such negli-
gence and omission the alleged en-.
be2zlement would not have incurred"
and also that Smith twas required and
suffered to perform the duties of
hookkeeper in said bank. and that tho
duties imposed upon him as bookkeoper
were not appropriate to his employment
as paying teller. nor within the terms
OF said bond, and that bis enbezzle-
ment, il any, of the money and funds
OF said bank were connected with and
in use by reason Of his employment in
said bank as bookkeeper. f"
With regard TO the last allegation 1t
may be stated here that 1t appears from
the evidence TINT the bookkeeping ro-
fprred ia consisted in the fact that it
was made mart of Smiths duty TO
keep the Individual Deposit Ledger,
and also that it was tho custom at that
time OF tho great majority of the
banks in this State to impose this duty
upon the paying teller, and that it vas
considered by those banks to be a
Legitimate part Of the duties OF paying
teller.
| As to the whole question, however,
of negligence on the part of the officers
OF the bank. although ii may be proper
for me to state that cataful examina-
| tion of the evidence aduuced has salts.
he'd ma that ths degree Of care and
diligence displayed by them was such
| uo 10 w w III
| institutions, neither more nor less.
yet shall omit the discussion of the
evidence on that point as being un-
necessary to tina decision of this cauee,
10 view Of the well settled principles
that such negligence doos not discharge
the sureties in auch official bonds as
those which are tho subject matter oil
this suit.
1 IL hs1h 10
ciple reRts were long ago stated with
force and precision by Chief Justice
Shaw in the case OF Amherst Bank vs..
Root and others, ? Metc. page $40, and
| will quots from is language at length.
He Says" Another ground Of argument
foi the defendant was that the sureties
were not Liable by reason OF the cul-
pable negligence of the directors and
Thur agents inasm uch as the by laws
of the bank made it the duty of the
directors to make frequent examina.
tiUna of tho affairs Of the hank, ia
count the money, inspect the books,
and generally 10 watch over its con
Germs; and it ia contended that it does
not appear from an Inspection of the
minutes of thB directors that thia wat
done. Whether their duties were Of
diligently done as they ought to have
been we Jlo not inquire; hecauHe 1t ap
pears to US that the bylaws were
directory, intended TO presctibs the
duties Of the directors; and though
the performance Of them might tend tc
detect aud disclose negligence, or leat
to an early disclosure or detection o
default on the part of an officer, and 81
operate indirectly TO the slfety Of th,
sureties; yet they were not intended 70
that purpose, nor can compliance
with them he deemed condition pre-
cedent to the liability OF the sureties
But further; tho adoption OF such
prinoiplo would lead to this result
that the negligence and fault Of on
agent, or set Of agents, for n corpora
tion, would deprive them Of remed.
against another for their default. A
, we'll might the directors excuse them
, solves for the neglect of their duty, b.
, showing that the cashier had failed +
! lay before them the books or accounts
, the weakly or other statements OF th
, affaira Of the hank, by reason OF whicl
they were unable TO perform their duty
{ 1.-THE idea that the cashier is excuse
, by the act or negligence of tn
I directors, arises from considering th
4 board of directors as the corporation
and then applying a very equitabl
principle, that one ought not to re
/ cover Of surety damages caused b
/ himself. We think the principle doe
not apply. The only case which seam
a to countenaDce it is the People vs.
= Jansen, Johns. page 1872: Gus
!. which has been often questioned AN
which we think ia fully answered b
n the cases of United States We. Kirl
4 patrick. 0 Wheat. page 100, and Mino
q vs.. Mechanics Bank of Alexandria,
q Peters, page 4G. "
d Again in the case OF Amos p. TRple
8 We. Luoretia ID. Martin, l16 Mass. nag
: 275, where defaulting boolSkeeper hn
O been elected cashiar and the Huit arcs
in consequences of his defalcationH a
It cashier, il was alleged that the diret
"a tors had been guilty OF negligence
y not having discovered his defalcatior I
O bookkeeper committed before the bon
"a as cashier was given; Morton, j.. , said
!. "Upon examining the evidence reporte
n in the bill of exceptions, it ia clear thi
% there 10 no evidence which would iu
;, tIfy the jury in tinding that the office
J. Of the bank had actual knowledge
l. Martins frauda while he was bool
}. keeper. We are not, therefore. calls
it upon TO decide whether il they ht
10 such Knowledge and failed to commun
10 cate it to the sureties on Martins boz
n as cashier, the bond would be theret
n avoided aa 10 the sureties. The on
question IL whether their negligence
IN failing to examine the books discharg
"a tine obligations of ths sureties. We CT
! SEQ no principle upon which it could
a. Ia ha