Baird v. Nat'l Sur. Co. of N.Y.

• Decision Date: 01 May 1926
• Docket Number: Nos. 4916,4917.,s. 4916
• Citation: 54 N.D. 91,209 N.W. 204
• Parties: BAIRD v. NATIONAL SURETY CO. OF NEW YORK et al. (two cases).
• Court: North Dakota Supreme Court

54 N.D. 91

209 N.W. 204

BAIRD

v.NATIONAL SURETY CO. OF NEW YORK et al. (two cases).

Nos. 4916, 4917.

Supreme Court of North Dakota.

May 1, 1926.

Syllabus by the Court.

In an action at law to recover on a surety bond, referred by stipulation to a referee to take the testimony, make findings of fact and conclusions of law, and which findings and conclusions were approved by the trial court, it is held that on appeal such action is not triable de novo.

Books and records which on their face, purport to be the books and records of a bank, and which, upon the closing of the bank, were found in the possession of the president and cashier of the bank by a deputy state examiner, who also identified the same as books and records examined by him as a deputy state examiner at different times while the bank was open and transacting business, are, for reasons stated in the opinion, held to be admissible in an action by the receiver of the bank against the president and cashier, upon their bonds as officers of the bank.

Books and records kept by a principal obligor are admissible in evidence as against the surety.

The court may, in its discretion, permit a competent witness, who has examined the books with reference to the points sought to be established, to testify to the result of his examination, or to present schedules verified by his testimony showing the details of the computation he has made, where the facts sought to be proved are of such character and the books are so voluminous that the examination of each item would be very laborious.

In separate actions against the president and cashier of a bank, in which actions the defendants are separately charged with embezzlement of the funds of the bank, the evidence which shows that they acted together in their unlawful conduct of the bank is competent, even though there is no allegation in the complaint charging them with conniving together.

Additional Syllabus by Editorial Staff.

Under Comp. Laws 1913, § 7457, objection to introduction of any testimony because bill of particulars furnished by plaintiff was incomplete and objectionable was properly overruled.

Appeal from District Court, Foster County; J. A. Coffey, Judge.

Action by L. R. Baird (substituted for C. W. Reimers), receiver of the Security State Bank of Brantford, against the National Surety Company of New York and Nels E. Ostren, and action by L. R. Baird (substituted for C. W. Reimers), receiver of the Security State Bank of Brantford, against the National Surety Company of New York and Dewey Bernard Miller, tried, briefed, and argued as one case. Judgments for plaintiff, and defendants appeal in each case. Affirmed in both cases.

Lawrence, Murphy & Nilles, of Fargo, for appellants.

C. B. Craven, of Carrington (Edward P. Kelly, of Minneapolis, Minn., of counsel), for respondent.

BURKE, J.

This is an action on a surety bond executed and delivered to the Security State Bank of Brantford, N. D., by the National Surety Company of New York, a corporation, and Dewey Bernard Miller, and by the National Surety Company of New York, a corporation, and Nels E. Ostrem. There are two actions: One by L. R. Baird, as receiver of the Security State Bank of Brantford, v. The National Surety Company of New York and Dewey Bernard Miller; and one by L. R. Baird, receiver of Security State Bank of Brantford, v. The National Surety Company of New York and Nels E. Ostrem. The two actions were tried, briefed, and argued as one. The court appointed C. W. Burnham as referee to take the testimony and to make findings of fact. The testimony was taken down and transcribed, and upon the same the referee made his findings of fact, in which he found that the Security State Bank of Brantford was a banking corporation existing under the law of the state of North Dakota, with its principal place of business in the town of Brantford, N. D.; that it was found by the banking board of the state of North Dakota on or about the 21st day of July, 1921, to be insolvent, and was on the same day closed for business and taken in charge by the bank examiner; that the defendant Dewey Bernard Miller was served with summons in said action more than 30 days previous to the commencement of the trial, and was, at the time of the trial of said action, in default; that said defendant Dewey Bernard Miller was, between April 1, 1920, and the 18th day of July, 1921, both inclusive, acting cashier of the said Security State Bank of Brantford, and during all of said time Nels E. Ostrem was the acting president of said Security State Bank; that during all of said time between said dates the said Dewey Bernard Miller, as cashier, and Nels E. Ostrem, as president, were in active charge and full control of the business affairs of the bank and in possession of and in full charge and control of the books and the records of the said corporation; that on the 1st day of May, 1919, the defendant National Surety Company entered into a written contract with said bank, and agreed to and with said bank to indemnify the said bank against loss, not exceeding $2,000, of any money or other personal property including money, or other personal property for which the said Security State Bank of Brantford should be responsible through fraud, dishonesty, forgery, theft, embezzlement, or wrongful extractions of the said Dewey B. Miller, directly or in connivance with others, while the said Dewey B. Miller should be engaged in the service of said Security State Bank of Brantford, and while the said contract and agreement should be in force; that on or about the 1st day of March, 1920, by a written agreement, the liability of said National Surety Company was increased to the sum of $10,000, and about the 17th day of March, 1920, by a written agreement duly attachedto said contract, all indemnity, as so increased to the sum of $10,000, was extended, to expire on the 1st day of May, 1921, as subject to all the covenants and conditions of the original contract; that on or about the 11th day of March, 1920, a written agreement, duly attached to said contract of indemnity, so increased to the sum of $10,000, was extended to expire on the 1st day of May, 1922. Between the 21st day of January, 1920, and the 18th day of July, 1921, both inclusive, the defendant Dewey B. Miller, with the knowledge of and in connivance and conspiracy with one Nels E. Ostrem, did, without the knowledge or consent of the directors of the said bank, steal, embezzle, and wrongfully abstract from the possession of the said Security State Bank of Brantford and convert to his own use and benefit certain moneys, negotiable papers, books and records, and personal property in the sum of $16,203.67, the same being the property of and for which the Security State Bank of Brantford was then and there responsible, to the loss and damage of the said bank in the sum of $16,203.67; that the directors of the said bank discovered the theft on the 5th day of August, 1921, and within five days gave written notice to the defendant the National Surety Company, and within three months, to wit, on the 20th day of October, 1921, the directors furnished to said National Surety Company affirmative proof of loss under oath, together with full particulars of the loss so far as they were able so to do, and caused the same to be filed with said defendant company at its home office as provided by condition 4 of the said contract of indemnity, and have from time to time since said 20th day of October, 1921, furnished to said defendant company, and caused to be filed with said defendant company, other and further information and evidence as they have been able to secure concerning said loss and damage; that the plaintiff herein and the said Security State Bank of Brantford, by and through its board of directors, have in all things complied with the terms of said contract; that said bank is the present owner and holder of said accounts and claims alleged and set forth in the complaint; that demand has been made upon the defendants and each of them for the payment, but that payment had been refused and neglected; that there is due and owing from the defendant National Surety Company and from said Dewey Bernard Miller, because of said theft and embezzlement, and from each of the said defendants to the plaintiff, the sum of $8,101.84, with interest thereon at the rate of 6 per cent. per annum from and since the 18th day of July, 1921; that all the allegations of the complaint are true.

On the 15th day of September, 1924, the plaintiff moved to confirm the report of the referee, and for judgment, which motion was duly granted, and judgment was entered against the defendants and in favor of the plaintiff for the sum of $9,669.54 on the 9th day of October, 1924. The same facts were found by the referee in the case against the National Surety Company and Nels E. Ostrem, and judgment was duly entered in said action for the same amount. The Dewey Bernard Miller Case was tried first, and it was stipulated by counsel that, inasmuch as the evidence in the Nels E. Ostrem Case would be exactly the same, it would be a waste of time and expense to cover it again, and it was agreed that the court might decide both cases, using as the evidence transcript in the Dewey Miller Case together with all exhibits, subject, of course, to all objections made, etc.

[1] From the judgment in each case the defendant National Surety Company appeals to this court and demands a trial de novo, upon the theory that this is an action for accounting and, as such action of accounting, the same was referred to a referee to hear the testimony and make his findings of fact. The action was referred by stipulation of the parties, and the stipulation provided that the employment of a referee should be construed to come within the provisions of subdivision 4 of section 7646, C. L. 1913, which is a compulsory statute, and which provides that when the parties do not consent to the...