Court Opinion

ID: 6994379
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:30:39.544094+00
Date Added: 2024-06-11T16:09:43.564652
License: Public Domain

Opinion OP THE CoUBT, ScOEIELD, J. The Donnell Manufacturing Company, appellant, vendor of grocers’ and druggists’ specialties, having its headquarters at St. Louis, Missouri, and doing business in many States, among them the State of Illinois, employed Oliver C. Fitts, in July, 1888, to sell its goods on commission and to collect its accounts in Southern Illinois. Before the contract of employment was made, Fitts was required to give bond for the faithful performance of certain obligations. He wrote the bond in appellant’s office in St. Louis, copying it from a similar bond furnished him by the company’s agent, and then took the instrument to Jefferson County, Illinois, for the purpose of having the same signed and acknowledged by his sureties. Appellee did not read the bond, or require it to be read, but inquired what it was intended to secure, and signed it after having been told that it was only for the purpose of securing the return of the wagon and samples which were to be furnished him by appellant for use in its business. The bond was also signed by M. Fitts, the father of Oliver O. Fitts, and was thereupon taken by the latter to St. Louis and delivered to the company. The condition of the bond as delivered was, that Oliver C. Fitts should take good care of the samples and wagon and any other property furnished by appellant, and deliver up the same in good condition at any time when called upon by the company to do so, and promptly report, deliver and pay over to the company any and all moneys, goods or other property, received by him on account of said company. This action Avas brought against the obligors in the said bond for an alleged breach of the condition thereof. On the trial the suit Avas dismissed as to Mr. Fitts, Avho had died, and also as to Oliver C. Fitts, and A\as prosecuted against the appellee as sole defendant. The defense Avas a denial of liability on the ground of material alterations in the bond, and on the further ground of the illegality of appellant’s business, which was alleged to consist in part, of the unlawful sale of intoxicants in this State. The finding of the jury was for appellee, and from the judgment rendered on that verdict, the appellant has appealed to this court. The evidence tends to show that the bond was signed by James Jones with a lead pencil, and that afterward, and before the delivery of the instrument to appellant, and without the knowledge of Jones, his name was traced with ink over the lead pencil marks. The evidence also tends to show that the. penalty, both in words and figures, and perhaps the names “James Jones,” “Mr. Pitts” and “Jefferson County,” were inserted in the bond after Jones had signed it and before delivery to the company. There were other slight alterations which need not be mentioned. But the most serious question arises from the conflict of the evidence with reference to the alleged alteration of the condition of the bond. Appellee contends that the clause relating to reporting, delivering and paying over moneys, was inserted in the bond after he had executed it. He supports his affirmation by the testimony of Clark and Sweeten. On the other hand, appellant produces evidence which tends to show that if the bond was altered at all after Jones had signed it, this was done while the instrument was in the hands of Oliver O. Pitts, and before the delivery thereof to appellant, and without the latter’s fault or knowledge. In view of the foregoing ■ facts, we think the court erred in some of the instructions given at the request of appellee. These instructions are not numbered, either in the abstract or record, and therefore specific reference to them can not be conveniently made. It is sufficient to state, however, that at least three of the seven instructions given for appellee inform the jury that if the bond sued on was altered in a material point, by O. C. Fitts, after the same had been signed by appellee, and without appellee’s knowledge or consent, then such bond ceased to be binding on appellee unless he afterward ratified the same. These instructions made the jury the judges of what would constitute a material alteration of the bond. The jury might find that the penalty was inserted in the bond after the execution of the instrument, and they might call this a material alteration; or they might hold that the insertion of the name “James Jones” in the bond was a material alteration. This being true, the instructions referred to are erroneous, unless all “of the alterations are material, so that any one of them, if proved, would, of itself, be sufficient for the avoidance of the bond. It is undoubtedly the law that it is no defense to an action on a bond that the names of the sureties and the amount of the penalty were inserted in the appropriate blanks in the bond by the principal obligor after the execution and before the delivery of the instrument without the knowledge or fault of the obligee. In Stoner v. Millikin et al., 85 Ill. 218, it was held that where one, when asked to sign a note as surety, refused unless another should first execute the same, and the principal maker forged the name of such other pei’son, and thereby induced the first to sign the note, and procured money of one who had no notice of the fraud, the fact of the forgery and fraud wmuld not release the surety so executing the note. In Stern et al. v. The People, for use, etc., 102 Ill. 540, the law as above stated, was held to be applicable to sureties on official bonds. In City of Chicago v. Gage et al., 95 Ill. 593, it was held that if the sui’ety of an official bond, relying on the good faith of his principal, will permit him to have possession of the bond signed in blank, the surety will ■ clothe the principal with apparent authority to fill up the blanks in any appropriate manner consistent with the nature of the obligation, so that as against the obligee receiving the bond without notice, or negligence, and in good faith, the surety will be estopped to allege that he executed the instrument with a reservation, or upon a condition with reference to the filling of the blanks, and this, whether the blanks to be filled relate to the penalty, or the names of co-sureties, or other thing. In the Gage case the surety signed the bond on the condition that the penalty should not exceed $250,000, that the co-sureties should be satisfactory, and that he should be permitted to determine whether he would “ stand on the bond ” or not at the time of the acknowledgment. He did not authorize any one to fill the blanks, he did not acknowledge the bond, he did not approve or ratify it afterward. The blank for the penalty was filled out with $1,000,000 without his knowledge, and he was held liable on the bond for damages assessed at more than half a million dollars. The liability of the surety in these Gases is put upon the ground that he makes the principal maker his agent to deliver the bond, and clothes him with authority to fill up blanks, and to do any other acts which are necessary to make the instrument effectual for the purpose intended. A bond without a penalty is valueless; therefore, when a surety signs a bond in this condition, he authorizes the principal intrusted with the delivery of it to insert the penalty in the appropriate blank. If the obligee takes the bond without notice or negligence, the surety is bound. It is difficult to see how this rule of law can be limited in its operation to official bonds. The reason of the rule applies as well to private bonds. The Stoner and Stern cases cited above, show that as to the forgery of signature, the surety, who signs relying on the genuineness of the signature of a co-surety, is bound whether the bond be private or official. If this is the law, the act of filling blanks with the penalty and with the names of co-sureties, should not have a more prejudicial effect in one class of bonds than in the other. In any ease one of two innocent persons must suffer by the fraud and deceit of another, and the loss should fall on him who puts trust and confidence in the deceiver. Stoner v. Millikin et al., supra. In any case the surety can put it beyond the power of the principal maker to perpetrate a wrong by filling the blanks himself, or having it done, before he signs the instrument. City of Chicago v. Gage et al., supra. We are of the opinion, therefore, that the instructions which permitted the jury to determine what alterations ■were material, thereby conferring upon them the power to call that material which is immaterial in law, should not have been, given, and that the giving thereof is reversible error. It is urged, however, that, notwithstanding any errors appearing in the 'record, the judgment should be affirmed on the ground that apjDell.ee has been released from liability on the bond under the law as laid down in Estate of Michael Rapp v. The Phœnix Insurance Company, 113 Ill. 390, in which it was held that where the employer of a clerk or other agent takes from another a bond of indemnity, or an undertaking to become responsible for the honesty and fidelity of such clerk or agent in his service, the employer impliedly stipulates that he will not knowingly retain such clerk or agent in his service after a breach of the guaranty justifying his discharge, and if he retains him after such breach, the surety will not thereafter be- liable. The evidence bearing upon this question shows that Oliver O. Eitts made a satisfactory settlement with appellant in September following his appointment. On December 28th he attempted to make another settlement, but was found to be indebted to the company in the sum of $130 or more, for moneys belonging to the company which had been collected and used by him. He promised to send the money immediately, or to get a note signed by the bondsmen and “ fix that matter up.” Afterward he paid $100, hut the remainder was not paid and is included in the account sued on in this case. Ho notice of the defalcation was in any manner communicated to appellee, but Oliver O. Fitts was permitted to make collections for appellant till April, 1889, at which time he was indebted to appellant in the sum of $121.25 for moneys collected, in addition to certain claim's for damages to the wagon and samples. In view of these facts and others appearing in the record, we would affirm the judgment of the court below on the authority of the Eapp case, were it not for the fact that about $30 of the amount sued for came into the hands of Oliver O. Fitts before the December settlement. Appellant could sue for this, as well as for a larger sum. The release arising under the authority of the Eapp case as applied to the record now before us can not be invoked by appellee for the affirmance of the judgment inasmuch as it does not apply to the whole of ¡Appellant’s claim. We deem it unnecessary to consider the other errors assigned. For the errors indicated the judgment of the Circuit Court is reversed and the cause is remanded.