Case Name: FARMERS ELEVATOR COMPANY OF WAVERLY, Respondent, v. SWANSON et al., Appellants
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1914-03-21
Citations: 33 S.D. 377
Docket Number: 
Parties: FARMERS ELEVATOR COMPANY OF WAVERLY, Respondent, v. SWANSON et al., Appellants.
Judges: 
Reporter: South Dakota Reports
Volume: 33
Pages: 377–380

Head Matter:
FARMERS ELEVATOR COMPANY OF WAVERLY, Respondent, v. SWANSON et al., Appellants.
(146 N. W. 586.)
1. Contract — Elevator Company Manager’s Bond — Violation—Dealing in Options — Sufficiency of Evidence.
In a suit by an elevator company on tbe bond of its manager land grain buyer, to recover money lost by the latter in dealing in options, held, that the evidence, being materially conflicting, was sufficient to sustain verdict for plaintiff.
2. Appeal — Review—Evidence, Oonclnsiveness of — Option Deals by Elevator Manager.
On appeal from a judgment for plaintiff for recovery of money lost by an elevator company’s manager in dealing in options, it appearing, by the testimony of plaintiff corporation’s •directors and clerk, that defendant, long prior to his engaging in such deals, was notified immediately after the adoption of a proper resolution of the directors, concerning defendant’s duties, to the effect that “dealings in options is prohibited,” that such resolution, which amended a former resolution prohibiting such dealings where “prejudicial to the business” of the company, had been adopted, held, that for purposes of the appeal, this testimony must he taken as true.
3. Agency — Liability of Elevator Company’s Manager’s Sureties— Option Dealing.
The sureties of the manager and grain buyer of an elevator company, on a bond conditioned upon the faithful discharge of his duties and the accounting for all grain and money received by him under his agency, are liable for losses sustained through his dealings in options in violation of a resolution of the company’s directors, and of which the manager had been notified before making sucb deals.
(Opinion filed March 21, 1914.)
Appeal from Circuit Court, Codington County. Hon. Carr G. Shrrwood, Judge.
Action by the Farmers’ Elevator Company of Waverly against E. M. Swanson and others, to recover upon a surety bond given by defendant and his sureties, under his agency as plaintiff’s manager and grain buyer. From a judgment for plaintiff, and from an order denying a new trial, defendants appeal.
Affmmed.
Wilbur S. Glass, for Appellants.
The evidence is insufficient to justify the verdict, because, First. The evidence fails to show that F. M. Swanson has not well and faithfully discharged his duties as such manager and grain buyer.
Second. The evidence fails to show that F. M. Swanson has not accounted for all grain which came into his possession in said elevator, weighed in and weighed out, less reasonable shrinkage.
Third. The evidence fails to show that F. M. Swanson has not accounted for all moneys which came into his hands and belonging to said elevator company.
Loucks, Mather & Stover, for Respondent.
The bond in this case being conditioned on the faithful performance of his duties as manager, and also> to account for all shortage of grain, it covers the position of the respondent in two ways. In other words the dealing in options being prohibited toy the company, or even in the absence of such a prohibition of the company without its authority would toe a breach of 'his duty under the clause requiring his bondsmen to guarantee the faithful performance of his duty. Secondly, it resulted in a .shortage on his grain account by reason of the fact -that the money used for option purposes came out of the grain and left a shortage in the grain account.

Opinion:
McCOY, J.
It appears from the record that about the month of May, 1909, appellant F. M. Swanson was employed by respondent as manager and grain 'buyer at its elevator at Waverly, and that as a part of the contract of employment the said F. M. Swanson was required to and did give and enter into1 a bond, with appellants Frank A. Swanson, Neilson, and Meyers as sureties, conditioned, -among other things, that if said Swanson well and faithfully discharged his duties as such manager and grain buyer, and should account for all grain which might come into his possession' in such elevator, weighed in.and weighed out, less reasonable shrinkage, and account for all moneys which might come into his hands belonging to said elevator company, then such obligation should become null and void; otherwise, to remain in full force and virtue. It is conceded by the parties hereto that said Swanson, as such manager and grain buyer, dealt in what is designated "options" with certain commission firms, and that' such "option" transactions resulted in a net loss to said elevator company of $980. Plaintiff, who' is respondent here, instituted this action against Swanson and his said sureties to recover such loss, basing its claim to recover upon a breach of the conditions of said bond There was a verdict and judgment for plaintiff, and defendants appeal.
'The vital question for consideration is whether or not said dealings in "options" by said Swanson were in violation of his duties as such manager and grain buyer. Appellants contend that Swanson was authorized by plaintiff to deal in such "options" as a part of his duties; and this is denied by plaintiff, who contends that Swanson was expressly prohibited from engaging in such transactions. This was one of the disputed questions of fact at issue, and on which question there was material conflict in the testimony. We are of the opinion that there was ample evidence submitted by plaintiff to support the verdict of the jury.
The contract of employment was oral, and ¡the duties of such manager and grain buyer were such as might be prescribed or required by the board of directors of respondent. At the time Swanson was employed, a resolution was passed relating to his duties, which, among other things, provided that "dealings in options detrimental .to the business of the elevator company would not be permitted;" but the board of directors at a subsequent meeting amended this part of the 3 esolution, so as to read "dealings in options is prohibited." The members of the board of directors, and the clerk thereof, tejtified that Swanson was immediately notified of this amendment, and long prior to his engaging in any of said option deals. For the purposes of this appeal, this testimony of the board of directors, and the clerk thereof, must be taken as true.
Under these circumstances, we are of the view that Swanson was not authorized to engage in option dealings for and on behalf of the elevator company, and that his doing so was a violation of, and a failure to well and faithfully discharge, his duties as such manager and grain, buyer, and that the taking of the moneys and grain of respondent to' settle the losses occasioned by such option dealings was -a misappropriation of said moneys and grain, and in violation of the terms of said bon'd), and a 'breach thereof, for which Swanson and his said sureties became liable. He could not thus account for - the grain and moneys of respondent.
Many assignments of error are presented relating to the reception or rejection of evidence, instructions of the court, motions to strike testimony, or motions for directions of verdict; but they are all based upon the crucial question of whether or not Swanson was authorized to engage in such option dealings. All these assignments have been considered, and we are of the view that no prejudicial error exists -therein.
The judgment and order appealed from are affirmed.