Court Opinion

ID: 8190300
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:13:12.328197+00
Date Added: 2024-06-11T16:40:24.486259
License: Public Domain

KeRWIU', J.
(dissenting). TRe majority opinion holds that there was evidence to warrant the court below in direct*583ing a verdict for the plaintiff.. Th'é correctness of this conclusion depends upon whether certain admissions of the agent, Greene, made after his resignation and when not in the employ of the plaintiff, were admissible against the defendant. On the lTth day of April, 1908,. Greene ag principal and the defendant as surety executed to the plaintiff a bond in the sum of $5,000, conditioned that said Greene would, in the position of state agent in the plaintiff’s service, make good to the plaintiff within sixty days any loss sustained by plaintiff “by larceny or embezzlement committed by the employee [Greene] during a term commencing on the first day of February, 1908, at 12 o’clock noon, and ending upon the first day of February, 1909, at 12 o’clock noon.” Greene remained in the employ of plaintiff until November 1, 1908, at which date he resigned and abandoned the employment.
The first question presented is, how far, if at all, the admissions. wrere competent as against the defendant surety. Without this evidence plaintiff was not entitled to a directed verdict. The general rule is well established that admissions of a principal are not binding upon the surety unless made in the course of the employment covered by the undertaking of the surety. But it is held by the majority opinion that since the principal was bound to account even after his resignation and withdrawal from the employment covered by the bond, his admissions as to prior misappropriation of money were admissible. True, the duty under a contract to perform always remains and can only be satisfied by performance. And it may be admitted that the duty of Greene to account and pay over what under the contract should be found due on such accounting continued after his resignation. But the amount of shortage, if any, or state of account could not be proved by the statements of Greene, made without the sanction of an oath, detailing past transactions after the term of his employment had ceased, such statements not being part of the res gedw. The evidence relied upon in support of the majority opinion is an admission made by Greene in December, 1908, to the. *584effect that be bad prior to tbat time collected and used $2,800 of tbe money of plaintiff; also admissions made May 17, 1910, to tbe effect tbat a statement of account compiled and presented to bim by tbe agent of plaintiff showing a balance in favor of plaintiff was correct; and further tbat be bad collected and retained such balance. If these admissions be incompetent it is clear tbat tbe plaintiff made no case, and tbe judgment below should have been reversed. I think tbat tbe overwhelming weight of authority establishes the incompe.tency of these admissions. They were made after Greene’s term of employment bad ceased, and were merely statements of past transactions or defalcations in the course of Greene’s employment before he had resigned, and whether be was still under obligation to account or not would not make his admissions relating to such past transactions, without the sanction of an oath, competent against the defendant. The rule is well stated in 1 Greenleaf on Evidence (16th ed.) § 187, as follows :
“We are next to consider tbe admissions of a principal, as evidence in an action against the surety, upon his collateral undertaking. In tbe cases on this subject tbe main inquiry has been, whether tbe declarations of the principal were made during tbe transaction of tbe business for which the surety was bound, so as to become part of the res gestee. If so, they have been held admissible; otherwise not. The surety is considered as bound only for tbe actual conduct of tbe party, and not for whatever be might say be had done; and therefore is entitled to proof of bis conduct by original evidence, where it can be bad; excluding all declarations of tbe principal, made subsequent to tbe act to which they relate, and out of tbe course of bis official duty. Thus, where one guaranteed tbe payment for such goods as the plaintiffs should send to another, in tbe way of their trade, it was held, that the admissions of tbe principal debtor, tbat be had received goods, made after the time of their supposed delivery, were not receivable in evidence against the surety. • So, if one becomes surety in a bond, conditioned for tbe faithful conduct of another as clerk, or collector, it is held, tbat, in an action on tbe bond *585against tbe surety, confessions of embezzlement made by the principal after bis dismissal, are not admissible in evidence; though, with regard to entries made in the course of his duty, it is otherwise.”
To the same effect is 1 Taylor, Ev. §§ 785, 786, and cases cited; 1 Phillips, Ev. (5th Am. ed.) 436 (*526).
The rule laid down in Greenleaf' and other text-books is supported by the authorities generally, English and American. The theory of the authorities seems to be that all evidence as to what the principal said he had done in the past should be excluded, and the only testimony admitted under this head what the principal in fact did in the course of his employment and such statements as were made in connection with the acts done in the course of his business and constituting part of the res gestee; therefore the surety cannot be bound by the mere statements of the principal made subsequently to the acts done and as a narrative of them. The reason of the rule seems obvious when we consider the-well settled doctrine that hearsay evidence is not competent generally, and admissions by principal not supported by the sanction of an oath rarely admissible against the surety. 1 Taylor, Ev. § 786 and cases cited. A brief review of some of the leading cases quite analogous to the case at bar will illustrate the principle applicable to the instant case.
Smith v. Whittingham, 6 Carr. & P. 78, was an action on bond to charge surety for failure to account by principal. After his discharge admissions as to correctness of account were held incompetent against surety. The court said (page 80): “This is not an account current, it is only an admission made by Eisherwick after his discharge of what he had embezzled; and though it would have been evidence against Eisherwick, it is not so against the defendant.” This is a leading case and cited with approval generally in this country.
Hatch v. Elkins, 65 N. Y. 489, was ah action on a bond of *586indemnity. The accounts were offered in evidence and objected to, and the question was as to tbeir competency. In other words, whether, since the relation of surety and principal existed, the admissions of the principal were competent against the surety. It was held that the declarations of the-principal were admissible only when part of the res gestee, and admissions made, not during the transaction of business but subsequently, were not competent. Referring to cases, cited the court said (page 499) : “These cases all hold that the declarations of the principal bind the surety only when they are part of the res gestae in reference to which the surety has covenanted, but that his subsequent admissions, not part of the res gestee, do not bind and are not competent evidence-against the surety.”
The following cases quoted from are quite similar in their-facts to the instant case:
In Lee v. Brown, 21 Kan. 458, at page 461 the court said: “This admission and settlement were after the default óf Lee. These matters referred to past occurrences; they had no connection with the acts to which they related, except as a narrative or admission of what Lee had done at dates prior thereto, and ought not to have been received as evidence so as to bind his sureties; for it was the acts of Lee, and not his admissions: or declarations, for which his sureties were bound.”
In Knott v. Peterson, 125 Iowa, 404, at page 407 it is said: “The bond was not to be responsible for any declaration or-admissions of the principal, but for his conduct only. Hence it is only his conduct in carrying on the business, or declarations accompanying his acts while so engaged,.that are admissible in evidence against his surety.”
Wieder v. Union S. & G. Co. 42 Misc. 499, 86 N. Y. Supp. 105: “The rule seems to be well settled that a party holding an-indemnity cannot prove the loss sustained by him, for which he seeks to hold the surety liable, by the mere admissions or statements of the principal. 'The declarations of the principal made during the transaction of the business for which the-*587surety is bound, so as to become part of tbe res gestae, are competent evidence against tbe surety; but bis declarations subsequently made are not competent.’ ”
Trousdale v. Philips, 2 Swan (Tenn.) 384: “In order to make tbe declarations and statements of tbe principal good against tbe s.urety, in these kind of bonds, they must be made-when tbe business is transacted, and in connection with it, so as to become a part of tbe res gestae. They can be admitted, on no other principle. Tbe surety is bound for the'acts and conduct of bis principal, and not for what be may say be bad done.”
Shelby v. Governor, 2 Blackf. 289, at page 290: “On the-trial, tbe plaintiff introduced a witness to prove that Weathers, told him that be bad collected tbe money in controversy. . . . If Weathers, while officially acting in relation to tbe receipt, of this money, stated that be bad received it, such statement would form a part of tbe res gestee, and would be evidence to-pr.ove tbe act of receiving; and would therefore be admissible against bis sureties. But declarations made by him at any subsequent period, would have no connection with tbe act, and could not be introduced as evidence of tbe act, so as to. bind bis sureties; for it is bis acts, and not bis admissions or-declarations, for which bis sureties are bound.”
Union Sav. Asso. v. Edwards, 41 Mo. 445, at page 449: “Had tbe suit been against tbe sureties alone, tbe evidence-would have been clearly inadmissible. It is not within tbe power of tbe principal, after a transaction is past and gone,, to make admissions to the detriment of his sureties.”
To tbe same effect are Blair v. Perpetual Ins. Co. 10 Mo. 559; Eichhold v. Tiffany, 20 Misc. 680, 46 N. Y. Supp. 534; Ayer v. Getty, 46 Hun, 287; Wheeler v. State, 9 Heisk. 393; Dobbs v. Justices, 17 Ga. 624; Bocard v. State ex rel. Stevens, 79 Ind. 270; Lewis v. Lee Co. 73 Ala. 148; Chelmsford Co. v. Demarest, 7 Gray (73 Mass.) 1; Tenth Nat. Bank v. Darragh, 3 T. & C. 138, 1 Hun, 111.
The majority opinion endeavors to distinguish the instant *588■case from-t¡b.e authorities cited -apon the ground that the agent was obliged to account, and therefore his admissions as to correctness of the account presented to him by the agent of plaintiff, and his further admissions that he converted funds, were •competent.
It may well be that the reports and accounts made by the agent, Greene, before resignation and in the course of his employment were competent, and that if such reports and accounts had shown a misappropriation of funds a prima facie •case would have been made against the defendant. But I think it clear under the authorities that the admissions supplementing the account, made after the reports and accounts had been made, were no part of the res gestee, hence not competent evidence against the defendant surety. Had the admissions as to correctness of account and conversion by the agent been made at or about the time the reports and accounts were made and while the agent was in the discharge of such employment, doubtless such admissions would have been competent against the defendant as part of the res gestee.
The admissions must be contemporaneous with the act in ■order to constitute part of the res gestes. 3 Wigmore, Ev. §§ 1757, 1772, 1773, 1774, 1776, and cases cited; Stetson v. City Bank, 2 Ohio St. 167, and cases cited; 1 Greenl. Ev. §§ 108, 110; Shelby v. Governor, 2 Blackf. 289; Hotchkiss v. Lyon, 2 Blackf. 222; Ward v. Suffield, 5 Bing. N. C. 381; Evans v. Beattie, 5 Esp. 26; Longenecker v. Hyde, 6 Bin. 1; Kamp v. Coxe Bros. & Co. 122 Wis. 206, 99 N. W. 366.
With all the diligence of the distinguished counsel for respondent and the court, but one case, Father Matthew Y. M. T. A. & B. Soc. v. Fitzwilliam, 12 Mo. App. 445, is cited which appears to support the majority opinion. I am not •clear that that case is authority for the majority opinion here. It is true the report or statement was made after the removal from office of Fitzwilliam, but the statement included no time not covered by the bond, and the bond provided that such a statement should be made at the expiration of the term. *589Besides, it does not appear clearly -whether the statement was-made from records properly kept. Bnt if the case is authority for the majority opinion in the instant case, in my opinion it is unsupported by reason or authority and should not be followed.
The other authorities cited in. the majority opinion (Townsend v. Everett, 4 Ala. 607, approved in Lewis v. Lee Co. 73 Ala. 148; Jenness v. Blackhawk, 2 Colo. 578; Wyche v. Myrick, 14 Ga. 584; Douglass v. Howland, 24 Wend. 35; and 2 Wigmore, Ev. § 1077) do not appear to add strength to the opinion of the court. The point in Townsend v. Everett, supra, pertinent is that the annual statement of the county treasurer, which by law he was bound to make, was evidence against his surety. On page 611 (4 Ala.) the court says:
“We do not consider it necessary, in this case, to go into the-inquiry how far the surety is bound by the declarations of the principal, made in reference to his conduct as treasurer,, whilst in office; as he certainly is bound by those acts which, as treasurer of the county, his principal was bound to perform, and for the performance of which he was surety. The-statute requires the treasurer to account with the commissioners court annually, and upon his resignation or removal from office, to state the account, and deliver the money and other effects of the county to- his successor, and these acts when done are as obligatory on the surety as on the principal.”
Lewis v. Lee Co. 73 Ala. 148, referred to in the majority opinion as approving Townsend v. Everett, 4 Ala. 607, is a strong case in support of this dissent, as I understand it.
Jenness v. Blackhawk, supra, involved the question of declarations of a principal in an official bond as evidence ag-ainst the sureties when made in the performance of some official act or duty and in reference thereto. The court at page 585 (2 Colo.), referring to a case of declarations of the principal in an official bond, lays down the doctrine that the better rule limits the operation of such declarations against sureties to' the case in which they ai'e made in the performance of some official act or duty, and in reference thereto, and that they *590•must be part of tbe res gestee. The court further says (page 586) : “The sureties obligate themselves to be answer■able for what the principal does in his office; his official acts may, therefore, be shown to charge them; every declaration, ■accompanying and explanatory of the act, is part of it.”
Wyche v. Myrick and Douglass v. Howland, supra, contain nothing contrary to the general rule stated in this dissent.
2 Wigmore, Ev. § 1077, treats, among other subjects, of principal and surety, but I find nothing in it contrary to the rule laid down in the cases heretofore cited.
Conceding that the statement of account was competent because the reports from which it was made up were made by the agent, Greene, during the discharge of his duties, such statement is clearly insufficient to charge Greene with larceny ■or embezzlement, because the evidence is undisputed that it is merely a report of the business done by the agent, Greene, ■and not of premiums collected. Under the conditions of the bond the surety was only liable for larceny or embezzlement ■of the agent and not for loss otherwise occurring, therefore the amount of premiums appearing upon the account stated was not sufficient to charge Greene with larceny or embezzlement. Travellers’ Ins. Co. v. McConkey, 127 U. S. 661, 8 Sup. Ct. 1360; Germania F. Ins. Co. v. Deckard, 3 Ind. App. 361; Lycoming F. Ins. Co. v. Schwenk, 95 Pa. St. 89; Gauch v. St. Louis Mut. L. Ins. Co. 88 Ill. 251; Dupin v. Mutual Ins. Co. 5 La. Ann. 482; Weidner v. Standard L. & A. Ins. Co. 130 Wis. 10, 110 N. W. 246. Therefore, as conceded in the majority opinion, the admissions of Greené after his resignation charging himself with conversion were necessary to make a ■case, and, these admissions being incompetent, no case was made. I think, therefore, the judgment should be reversed.
I am authorized to say that Mr. Justice Timlin concurs in the foregoing dissent.
A motion for a rehearing was denied October 3, 1911.