Court Opinion

ID: 8008594
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:55:43.997435+00
Date Added: 2024-06-11T16:35:58.828942
License: Public Domain

Black, J.
This is a suit upon the bond of the cashier of the banking corporation of which the plaintiF is the assignee, under the laws of this state relating to voluntary assignments. The bond is dated February 13, 1869, and is in the penal sum of twenty thousand dollars. It is conditioned as follows :
' “Now, if the said J. Philip Krieger, Jr., shall well and truly and faithfully perform the duties of cashier of said bank, for and during all the time he shall hold such office of cashier of said bank, and for and during all the time he may continue or act as such cashier of said bank, whether under the present appointment, or under future re-appointments, and shall well, truly and faithfully account for, and render over to said bank all such money,” etc., “and shall, while he continues in such service, either under the present appointment, or any future re-appointment, faithfully, and to the best of his ability, perform all trusts reposed in him, and all duties devolved on him by the law of the land, or by any bylaw, mile, order or resolution of said board, now existing or hereafter made, enacted or adopted, not inconsistent with the laws of the land, then,” etc.
Krieger entered upon his duties and continued to act as cashier until and during the year 1878, under annual re-appointments, made by resolution of the board of' directors at the annual election of officers. In 1878, and while acting as such cashier, he made breach of the conditions of the bond to many times the amount of the penalty, the circumstances of which need not be stated.
*1651. The bank was organized in February, 1869, un-, der the general laws of this state, with a capital stock •of two hundred and fifty thousand dollars, which was increased in April of that year to three hundred thou- . .sand dollars ; twenty per cent, of the stock, and no more, ¡ was paid in. The sureties contend that because of this increase during the first year they are released from all liability on the bond. A surety has an undoubted right to rely upon the letter and strict terms of the bond. . “It is not sufficient that he may sustain no injury by a ■change in the contract, or that it may be even for his benefit. He has a right to stand upon the very terms of his contract, and if he does not assent to any variation of it, and a variation is made, it is fatal.” The rule, thus stated in Miller v. Stewart, 9 Wheat. 702, has been again and again asserted here and elsewhere by one form of expression and another. But this does not mean that the, fair import of the obligation is to be disregarded. Another. rule equally binding upon the courts is that in the construction of the contract of a surety, as well as of every other contract, the question is : what was the intention, of the parties as disclosed by the instrument read in the light of the surrounding circumstances ? Brandt on Sure-, tyship, sec. 80. In the application of these rules of law ■appellants place much reliance upon the case of Grocer's Bank v. Kingman et al., 16 Gray, 476. There the stock was increased from $300,000, first, to $500,000, and then to $750,000, because of which the sureties on the cashier’s bond were held tobe discharged. The court observed, “the risk of the sureties was thereby very ■greatly enhanced, especially as they undertook to save, the bank harmless from every loss that might arise from the cashier’s mistakes as well as losses arising from his fraud,” etc. Because cf the liability to answer for mistakes the court distinguished that case from Bank v. Wollaston, 3 Harr. 90. In that case the bond was made in 1833, and the stock was increased in 1837, by *166act of the legislature. The sureties of the cashier contended that they were thereby released. The court said: “The simple answer to the proposition is that there was no enlargement of the duties of the officer. The sphere 'of his duties was the same, although the-subject matter of his charge might be increased,' which is no more than what happens from day to day, from fluctuation in the amount of deposits.” In a recent case decided by .the Supreme Judicial Court of Massachusetts (Railroad v. Loring, 19 Reporter, 436), the bond was conditioned for the faithful performance of the duties of a ticket agent ‘£ which are, or may be, imposed upon himlunder this or any future appointment.” The agent’s salary was increased from one thousand to eighteen hundred dollars per year. The stock of the company was increased from $2,853,400 to $4,667,600. At first he sold tickets over one thousand and forty miles of railroad, and for three steamboat lines; the“ business was increased to twenty-two hundred and fifty miles of railroad and five steamboat lines. Notwithstanding these changes the sureties were held not to be discharged. The reasons assigned are that there was no change in the office, that the nature of the duties remained the same, and that the increase of business was fairly contemplated by the bond, looking at the character of (he position which the agent held. See also Ry. Co. v. Goodwin, 3 Wels., Hurl. and Gor. 320; Morris Canal, etc., v. Van Vorst's adm'r, 21 N. J. L. 100 ; Strawbridge v. Ry., 14 Md. 360.
The stock, it is conceded, was increased in pursuance of section two, chapter sixty-two, General Statutes, and hence, by virtue of a vote of the directors made in compliance with a vote of the stockholders held in conformity with the by-laws. It is not contended that the sureties- would have been released had the whole of the two hundred and fifty thousand dollars been called in, for that, it is conceded, would have been within the *167letter oí the bond, so it might be urged that the stock' could only be increased by some “by-law, rule, or resolution of the board,” based, of course, upon a vote also of the stockholders. But we do not place our result on so narrow a ground. The bond must be understood and read in the light of the then existing law. It must have been in the contemplation of the parties that the bank would enlarge its business by all lawful ways and means, not going beyond a banking business. This it could do, if desired, by increasing its stock. The conditions of the bond are broad, and look to the future and to the making of additional by-laws and rules. That this increase of stock was fairly within the contemplation of the bond, we think, is clear, and the court might well have so declared in its instructions.
2. The statute (Gr. S., sec. 3, p. 365), devolved the management of the business of the corporation upon a board of directors, “from whom there shall be designated by themselves a president, cashier and secretary, who shall hold their offices for one year, and until their successors are duly elected and qualified.” The minutes of the meetings of the board of directors seem to show that Krieger was elected cashier on January 21, 1869 ; but the records also show that at a second meeting of the incorporators, held on the twenty-sixth of that month, directors were elected, and at the same time the stockholders elected Krieger cashier. The directors, however, fixed the amount of the bond on February 10, and approved the same on March 2, so that they at least approved the appointment, even if not made by them. Besides this, the bond recites that he had been by the board of directors appointed cashier, and that is conclusive in this action on the bond. But the further conceded fact is that Krieger was not a director at any time until January, 1878, when he was duly elected one of the board. Though a constable be appointed in a district in which he did not reside, and the law declared *168that no person should be appointed unless a citizen of the district, yet it was held if he gave bond and incurred liabilities as constable, his sureties were liable on the bond. Commonwealth for Harris v. Teal, 14 B. Mon. 29 ; Jones v. Gallatin County, 78 Ky. 491. In a suit upon an officer’s bond, where he is only an officer de facto, neither he nor his sureties can allege that he was not an officer de jure ; they are estopped to deny their liability on the bond. 33 Ala. 688 ; 37 Ala. 304 ; 54 Vt. 401. It is trae these were public officers, but the appointment of Krieger, though he was not a director, was not a prohibited act, and he certainly was cashier for all purposes, and his acts binding as such, We do not see how the fact that he was not a director can make invalid the bond which he gave for his fidelity while in office.
3. At the time the cashier was first appointed the .statute did not in terms require a bond, but the bank had an undoubted right to take a bond, and the sureties are liable on it as a common law bond. The act of 1877 did require the cashier to give a bond before entering' upon the duties of the office, and prescribed the conditions (R. S. 1879, sec. 917), but the statute did not have the effect to make void any common law bond given by the officer, and the present bond, in' plain terms, is made to cover future appointments. It is not contended that any statutory bond was even given at all. Nor did the' death of Fortune, in 1874, release the sureties.
We see no reason why the judgment in this case should be disturbed. It is affirmed.
All concur.