Court Opinion

ID: 3817777
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:53:47.245541+00
Date Added: 2024-06-11T14:13:38.777650
License: Public Domain

The bond involved in question contains two provisions which were before this court for construction; the construction given these two provisions by the majority opinion destroys the effect of them.
The bond was renewed by payments of premiums by the terms of its provisions until December 1, 1922. The provisions of the bonds presenting these propositions are as follows:
"Now, therefore, this bond witnesseth: That for the consideration of the premises the company shall, during the term above mentioned, or any subsequent renewal of such term, and subject to the conditions and provisions herein contained, at the expiration of three months next, after proof satisfactory to the company, as hereinafter mentioned, make good and reimburse to the said employer, such pecuniary loss as may be sustained by the employer by reason of the fraud or dishonesty of the said employee in connection with the duties of his office or position, amounting to embezzlement or larceny, and which shall have been committed during the continuance of said term, or of any renewal thereof, and discovered during said continuance or of any renewal thereof, or within six months thereafter or within six months from the death or dismissal or retirement of said employee from the service of the employer within the period of this bond, which ever of these events shall first happen; the company's total liability on account of said employee under this bond or any renewal thereof, not to exceed the sum of $5,000.
"This bond is issued upon the following express conditions:
"First: That on the discovery of any act capable of giving rise to a claim hereunder, the employer shall, at the earliest practical moment, give notice thereof to the company, and any claim made under this bond shall be in writing addressed to the company at its head office in the city of Baltimore; and shall within three months after the discovery thereof, at the employer's expense, furnish to the company reasonable particulars and proofs of the correctness of said claim, and such particulars, if required, shall be verified by affidavit.
"Tenth: This bond will become void as to any claim for which the company would otherwise be liable, if the employer shall fail to notify the company of the occurrence of the act or omission out of which said claim shall arise immediately after it shall come to the knowledge of the employer.
"Thirteenth: That no one of the above conditions, or of the provisions contained in this bond, shall be deemed to have been waived by or on behalf of the company, unless the waiver be clearly expressed in writing over the signature of its president and its secretary, and its seal thereto affixed."
It is agreed that the bank was declared insolvent by the State Bank Commissioner on the 14th day of August, 1922; in fact, the opening statement of attorney for the plaintiff stated that the bank closed its doors on August 12, 1922, and did not open on August 14, 1922, and has been closed ever since that date; that the bank was hopelessly insolvent, was taken, over by the State Bank Commissioner, that J.R. Potts and I.A. Tull were appointed liquidating agents, *Page 31 
qualified and are still liquidation agents of the bank.
In the case of State ex rel. v. Wells, 98 Okla. 169,223 P. 694, in the opinion it is said:
"Under the decisions of this court, unquestionably the Bank Commissioner occupies a position, 'in taking charge and collecting the assets of a failed bank, quite analogous to that of a receiver, and therefore is subject to the laws governing receivers, to some extent. * * *"
In Mothersead v. Wiley, 114 Okla. 105, 243 P. 718, it was held:
"The State Bank Commissioner in charge of the assets of a failed bank acts in the capacity of a receiver and holds the property of the failed bank coming into his hands by the same right and title as the bank for whose property he is such receiver. * * *"
In Van Meter v. State ex rel., 132 Okla. 230, 270 P. 41, it was held:
"The assets, moneys, notes, and bills receivable of a state bank, upon insolvency, vest in the state with the State Bank Commissioner as trustee for the use and benefit of the depositors and creditors of the bank and with the administration thereof under the general superintending control of the district court of the county in which the insolvent bank is located."
Undoubtedly, under the holdings above quoted, after the State Bank Commissioner declared the bank insolvent, took over its assets as State Bank Commissioner, said assets vested in the state with the State Bank Commissioner, as trustee for the benefit of depositors and creditors, D.L. Martin, as president of the Yale State Bank, thereafter did not and could not perform any services for the Yale State Bank as a corporation, his authority was superseded by the State Bank Commissioner, and he thereafter could not and did not perform any services as president of said bank.
A provision of the bond in question is, that any loss must be discovered during the continuance of said term of the bond or of any renewal thereof and discovered during the continuance of the renewal thereof or within six months thereafter or within six months from the death or dismissal or retirement of said employee from the services of the employer within the period of this bond.
D.L. Martin retired from the service of the employer, Yale State Bank, on August 14, 1922, and to make the bonding companies liable for his default on this bond, the loss must be discovered within six months from that date, and a petition that did not allege said facts did not state a cause of action, and plaintiff's supplemental petition alleged the loss was discovered on or about the 15th of April, 1923. The six months expired after D.L. Martin's retirement from the service of the bank, February 14, 1923, and it was more than eight months, according to the allegations of plaintiff's amended petition, before the loss was discovered, after the retirement of Martin from the service of the Yale State Bank.
The Supreme Court of the United States, in the case of American Surety Company of New York v. Frederick N. Pauly, as receiver of the California National Bank of San Diego, Cal.,170 U.S. 160, 42 L.Ed. 987, passed squarely on this question. In the fifth headnote it is said:
"The mere suspension of a national bank, followed by an investigation of its affairs by a bank examiner, does not have the effect to retire its president from his position, but he remains in its service until the receiver takes possession."
This case clearly holds that the president of the bank was suspended when the receiver took charge of its affairs, and he was therefore retired from the services of his employer, the Yale State Bank.
The trial court found that said D.L. Martin stayed around said bank, assisting those in charge. If he did, he was there under the direction and control of the State Bank Commissioner, who was in charge, and not as president of the Yale State Bank, nor in the employ or services of the Yale State Bank.
Under the holding in the majority opinion, in the case of an insolvent state bank taken over by the Bank Commissioner, that all officers and employees of said bank, unless discharged by the board of directors, would still be in the services of said bank, would entitle said officers and employees to all salaries and compensation provided by contract with said bank as pay for their services.
I do not believe that this court should go that far, and I am of the opinion that D.L. Martin retired from the services of the Yale State Bank on the 14th day of August, 1922, and the loss not being discovered within six months thereafter, the plaintiff in error is not liable under terms and conditions of the bond. *Page 32 
A further condition of the bond was not complied with, which is as follows:
"That on the discovery of any act capable of giving rise to the claim hereunder, the employer shall at the earliest practical moment give notice thereof to the company, that any claim made under this bond shall be in writing, addressed to the company, at its head office in the city of Baltimore."
The failure on the part of defendants in error, plaintiffs below, to give notice within a reasonable time to the bonding company, plaintiff in error, precludes the recovery. The record discloses that the first notice given was on June 9, 1923, about 60 days after it is alleged the loss was discovered, more than six months after the bond had expired and more than nine months after the president, D.L. Martin, had retired from the service of the bank.
For the reasons stated, I am of the opinion that this cause should be reversed and remanded to the trial court, with directions to dismiss.
Note. — See under (2) 21 R. C. L. 534; R. C. L. Perm. Supp. p. 5070.