Case Name: CHARLES M. INGRAM v. BANK OF WARSAW et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1928-03-28
Citations: 195 N.C. 357
Docket Number: 
Parties: CHARLES M. INGRAM v. BANK OF WARSAW et al.
Judges: 
Reporter: North Carolina Reports
Volume: 195
Pages: 357–360

Head Matter:
CHARLES M. INGRAM v. BANK OF WARSAW et al.
(Filed 28 March, 1928.)
1. Principal and Surety — Nature and Extent of Liability of Surety in General.
The liability of sureties on a bond given by a bank as principal, to indemnify a depositor against loss for moneys deposited in the bank at the time of its execution, will not be construed by implication to extend beyond securing the deposit therein stated, and bonds of this character are to be strictly construed as to their expressed terms.
2. Banks and Banking — Directors—Liability as Individual Endorser of Note Not Affected by Office.
Where it appears that sureties on a bond given by a bank to secure a depositor are directors of the bank, but that they signed in their individual capacity, their measure of liability is not increased by reason of their being directors of the principal obligor.
Appeal by defendants from Granmer, J., at August Term, 1921, of DupliN.
Reversed.
Action to recover on bond executed by tbe Bank of Warsaw as principal, and its codefendants, as sureties, to indemnify plaintiff from loss on account of certain funds deposited by bim with tbe Bank of Warsaw.
Tbe Bank of Warsaw was adjudged insolvent prior to tbe commencement of tbis action. No answer was filed to tbe complaint by its receiver. Judgment by default final was rendered against said receiver. There was no appeal from tbis judgment.
Answers were filed by tbe other defendants, admitting tbe execution of tbe bond by them as sureties, but denying liability in tbis action upon said bond.
Tbe issue submitted to tbe jury was answered as follows: “In what sum, if any, are tbe defendants, sureties, indebted to tbe plaintiff? Answer: $7,188.12.”
From judgment in accordance with tbe verdict, defendants, sureties on tbe bond, appealed to tbe Supreme Court.
A. McL. Graham, George B. Ward and Gavin & Boney for plaintiff.
W. T). Williams, B. D. Johnson and L. A. Beasley for defendants.

Opinion:
CoNNOE, J.
On 17 February, 1925, plaintiff, an ex-sheriff of Duplin County, whose term of office bad expired in December, 1924, bad on deposit with tbe Bank of Warsaw, Kenansville Branch, tbe sum of $30,988.48. Tbe said sum was credited, partly to tbe account of "C. M. Ingram, Sheriff," and partly to tbe account of "O. .M. Ingram, Sheriff, 1923 Tax."
In compliance witb bis request, the Bank of Warsaw on said day caused a bond to be executed and delivered to plaintiff in words as follows:
"North Carolina — Duplin County.
Know all men by these presents that we, the Bank of Warsaw'and Kenansville, N. C., a corporation, and the undersigned sureties, are held and firmly bound unto Charles M. Ingram in the sum of thirty thousand dollars, for which payment well and truly to be made,, we bind ourselves, our heirs, executors and administrators, jointly and severally, firmly by these presents, in the amount set opposite our names.
Signed and sealed this the 17th day of February, 1925.
The condition of the above obligation is such that whereas Charles M. Ingram has certain funds deposited in the Bank of Warsaw, a corporation, and if the said Bank of Warsaw shall turn said funds over to said Charles M. Ingram, when demanded, then this bond to be null and void; otherwise in full force and effect.
BaNk op Waesaw, a Corporation. (Seal)
By H. L. Stevens, Pres. (Seal)
Attest:
J. K. Powell, (Seal)
Secretary.
J. K. Powell. (Seal) $2,500
II. L. SteveNS. (Seal) 5,000
R. L. Best. (Seal) 5,000
John Feedeeich. (Seal) 5,000 J. A. Powell. (Seal) 2,500
J. W. Quinn. (Seal) 10,000
Jas. J. Bowden. (Seal) 2,500."
After the execution of said bond plaintiff made deposits from time to time with the Bank of Warsaw, which were credited, in accordance with his request, some to the account carried on the books of the bank, under the name of "C. M. Ingram, Sheriff," and some to the account carried under the name of "O. M. Ingram, Sheriff, 1923 Tax." Checks drawn by plaintiff on these accounts were paid by the bank, and duly charged to the saidi accounts, respectively. On 1 August, 1925, and subsequent to said day, plaintiff made deposits with the said bank, which at his request were credited to the account of "O. M. Ingram, Back Tax Account." Checks drawn by plaintiff on this account were duly paid and charged to said account.
On 7 November, 1925, plaintiff withdrew from the Bank of Warsaw the entire balance to his credit on the two accounts, which were carried on tbe boobs of tbe bank prior to and on 17 February, 1925. On- 21 April, 1926, tbe Bank of Warsaw was declared insolvent, and a receiver was thereafter duly appointed for said bank. On said day tbe balance to tbe credit of tbe account carried on tbe books of tbe bank, under- tbe name of "0. M. Ingram, Sheriff, Back Tax Account," was $7,188.72. All deposits to tbe credit of said account were made by plaintiff after tbe date of tbe bond, upon which plaintiff seeks to recover in this action.
Upon tbe evidence tending to show tbe facts to be as above stated, there was error in tbe refusal of tbe court to allow defendants' motion, at tbe close of tbe evidence, for judgment dismissing tbe action as upon nonsuit.
By tbe express terms of tbe bond, if tbe Bank of Warsaw turned over to plaintiff certain funds deposited with tbe said bank, upon bis demand, tbe bond became null and void, and defendants, 'sureties thereon, were discharged of liability. Tbe bond cannot be construed as indemnifying plaintiff from loss on account of funds deposited with tbe bank after its date, certainly when said funds are credited, at bis request, to another account. All tbe evidence shows that tbe bank has paid tbe funds on deposit with it, at tbe date of tbe bond, to plaintiff, upon bis demand. Tbe amount now due to tbe plaintiff- by tbe bank was deposited after tbe execution of tbe bond, and is not included in tbe sum for which defendants are liable, as sureties on tbe bond.
Plaintiff alleges in bis complaint "that it was tbe purpose and intent of said bond and of tbe parties thereto that tbe same should secure tbe plaintiff up to $30,000, against any loss of tax moneys which tbe plaintiff might on tbe date of said bonds or thereafter have on deposit in said Bank of Warsaw." This allegation is denied by defendants in their answers. Tbe language of tbe bond does not support this allegation. Defendants' liability is restricted to tbe funds on deposit at tbe date of tbe bond; they cannot be held liable for funds thereafter deposited.
The principle stated in Edgerton v. Taylor, 184 N. C., 571, is applicable upon the facts of the instant case. It is said in the opinion in that case: "Sureties are favored by the law. Their obligations are ordinarily assumed without pecuniary compensation, and are not to be extended by implication or construction. They have a right, as we have said, to stand on the terms of their contract, and having consented to be bound to a certain extent only, their liability must be found within tbe terms of that consent, strictly construed, and it has been said to be insufficient that the surety may sustain no injury by a change in the contract, or that it may even be for his benefit."
This principle is applicable, notwithstanding the fact, shown by the evidence, that defendants at the time they signed the bond, were directors of the Bank of Warsaw. Trust Co. v. Rose, 192 N. C., 673. They were liable to plaintiff, not as directors of tbe bank, but as sureties on the bond. This liability having been discharged, plaintiff cannot recover of them in this action. The judgment in favor of plaintiff and against defendants, sureties on the bond, is
Reversed.