Baird v. National Surety Co. of New York, a corporation

• Decision Date: 01 May 1926
• Docket Number: 4916,4917
• Citation: Baird v. National Surety Co. of New York, a corporation, 209 N.W. 204, 54 N.D. 91 (N.D. 1926)
• Court: North Dakota Supreme Court

209 N.W. 204

54 N.D. 91

L. R. BAIRD (Substituted for C. W. Reimers) Receiver of the Security State Bank of Brantford, a Corporation, Plaintiff and Respondent, v. NATIONAL SURETY COMPANY OF NEW YORK, a Corporation, and Nels E. Ostrem, Defendants and Appellants.

L. R. BAIRD (Substituted for C. W. Reimers) Receiver of the Security State Bank of Brantford, a Corporation, Plaintiff and Respondent, v. NATIONAL SURETY COMPANY OF NEW YORK, a Corporation, and Dewey Bernard Miller, Defendants and Appellants

Nos. 4916, 4917

Supreme Court of North Dakota

May 1, 1926

Appeal from judgments of the District Court of Foster County Coffey, J.

Affirmed.

Lawrence Murphy & Nilles, for appellants.

"Proofs to be effectual, must correspond substantially with the allegations; hence, if there is a variance between the nature and elements of plaintiff's cause of action as alleged and as proved, it is fatal." 31 Cyc. pages 700 and 701.

"Variance means material difference; and it arises when there is a substantial departure from the issues in the evidence adduced, and must be in some matter which in point of law is essential to the charge or claim." 21 R. C. L. pp. 608, 609.

"Plaintiff cannot allege one set of facts and recover upon proof of another set of facts." (Cal. App. 1909) Seebach v. Kuhn, 9 Cal.App. 485, 99 P. 723; (Colo. 1915) Denver Horse Importing Co. v. Schafer, 58 Colo. 376, 147 P. 367; (Ill. 1908) Lovington Tp. v. Adkins, 232 Ill. 510, 83 N.E. 1043; (App. 1910) Zacuchny v. Chicago Lighterage Co. 157 Ill.App. 136; (Iowa 1913) Helm v. Ressel, 162 Iowa 75, 143 N.W. 823.

A plaintiff must recover, if at all, on the cause of action pleaded in the petition. (Ind. 1910) Terre Haute Electric Co. v. Roberts, 91 N.E. 941, 174 Ind. 351; reversing judgment (Ind. App.) 90 N.E. 335.

A plaintiff can recover only on the cause of action alleged and proved. (Ill. App. 1906) Latrobe Steel & Coupler Co. v. Shlones, 129 Ill.App. 215; (Mo. 1907) Henry County v. Citizens Bank of Windsor, 208 Mo. 209, 14 L.R.A. (N.S.) 1052, 106 S.W. 622; Henry County v. Farmers Bank, 208 Mo. 238, 106 S.W. 630.

C. B. Craven (E. P. Kelly of counsel), for respondent.

The books and records of the bank are presumed to be correct. Reimers v. Larson (N.D.) 202 N.W. 653.

It will be presumed that corporate accounts and proceedings are regular; that corporate business is lawfully conducted. 22 C. J. 107, cases cited notes 70-72.

The books and records of a corporation are competent evidence to prove its existence, and preliminary proceedings showing its organization under its charter or general law, and the corporate accounts and proceedings generally. 22 C. J. 896, § 1095, cases cited, notes 85, 86; 2 Enc. Ev. 677.

Books of account kept by an agent, or under his direction, and in pursuance of his duty as such agent, and pertaining to the business of his principal, are competent evidence against a surety. 2 Enc. Ev. 676, cases cited note 90; 32 Cyc. 137 cases cited notes 36, 37; Brillion Lumber Co. v. Barnard (Wis.) 111 N.W. 483; Williamsburg City F. Ins. Co. v. Frothingham, 122 Mass. 391; Agricultural Ins. Co. v. Keeler, 44 Conn. 161; Bricker v. Stone, 44 Mo.App. 530.

Admissions by the principal, connected with the act or transaction to which the contract of surety relates and within the scope of the duties connected with the joint liability, are admissible. 32 Cyc. 137, note 35; Greatwest Life Assur. Co. v. Shumway (N.D.) 141 N.W. 479; Farmers Co-op. Exch. v. United States Fidelity & G. Co. (Minn.) 184 N.W. 792.

"It is true that generally in actions in the nature of trover for the conversion of bills, notes, bonds or other security, the measure of damages is prima facie the amount due on the security with interest from the time of conversion, but this is not a case when such a rule is applicable; the rule itself is based upon the fact of the prevailing party being divested of his property which was valuable to him as property." Winona v. Construction Co. 29 Minn. 68.

"The measure of damages for the conversion of promissory notes, bonds, and other evidence of indebtedness is their actual not their face value. But in the absence of the proof of actual value they will be deemed to be worth their face value or such sum as plaintiff might have recovered upon them." 38 Cyc. 2097 note 71.

"Having the evidence before the jury without objection, the court, if necessary, should have directed the amendment of the pleading so as to conform with the defense made." Bowers v. Thomas (Wis.) 22 N.W. 710.

BURKE, J. CHRISTIANSON, Ch. J., and BIRDZELL, JOHNSON, and NUESSLE, JJ., concur.

OPINION

BURKE, J.

This is an action on a surety bond executed and delivered to the Security State Bank of Brantford, North Dakota, 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 Nat'l Surety Co. of New York and Dewey Bernard Miller; and one by L. R. Baird, receiver of Security State Bank of Brantford v. The Nat'l Surety Co. 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, North Dakota; that it was found by the banking board of the state or 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 thirty 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 1st, 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 attached to 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 Four 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...