Appeal
from superior court, Edgecombe county; Bowman, Judge.
DOUGLAS
J.
This is
an action brought upon a penal bond given by the defendant
the Fidelity & Deposit Company to secure the plaintiff
against all loss from any fraudulent acts of its
co-defendant, Mehegan, as cashier of said plaintiff bank.
This bond, which seems to have been modeled after some form
of insurance policy, is extremely complicated, and is based
upon an application containing a large number of questions
and subquestions. There appear to be 23 sections in the bond
and 31 questions in the application. All the answers are made
"conditions precedent." The complaint alleged the
execution of the bond and its renewal, and set out the
several alleged fraudulent acts of the defendant Mehegan upon
which it relied. It further alleged: "(18) That
immediately upon ascertaining the several fraudulent acts of
the said James G. Mehegan, cashier as aforesaid, the
plaintiff bank notified the defendant company thereof, and
permitted the agent of said defendant to examine the books of
said bank, and furnished said defendant with proof of said
loss more than three months before the bringing of this
action." After demurrer overruled, the defendant company
answered in part as follows: "(5) That, in answer to
allegation 5 of the complaint, the defendant admits that
there was a bond of indemnity executed by the defendant and
said Mehegan, the defendant executing the same as the surety
of the said Mehegan, upon the date mentioned and for the
amount named, but the defendant denies that the terms and
conditions
of said bond are properly, correctly, and truly alleged; that
a copy of the contract of the suretyship entered into by the
defendant with the plaintiff, and a copy of the notice of the
expiration, statement by bank, and renewal receipt are hereto
attached, and asked to be taken as a part of this answer. (6)
That allegation 6 of the complaint is admitted; but the
defendant, further answering same, says and alleges that said
contract and agreement was entered into and based upon the
following statement and representations, to wit, those set
out in the attached papers set out in the preceding paragraph
hereof, which said statement, at the time it was made, to
wit, December 15, 1896, was incorrect and untrue, and by
reason of the incorrect and untrue statements contained
therein the defendant was induced to execute and deliver to
the plaintiff the said renewal receipt, and the defendant
submits that it is not liable on account thereof." The
further defense of defendant company alleges: "(2) That
by the terms, conditions, and convenants of said contracts of
suretyship, the plaintiff assumed, obligated, and contracted
to do and perform certain obligations therein named, the
carrying out and performance of which by the said plaintiff
was necessary to make said contract valid and binding upon
the defendant, and to entitle the plaintiff to bring and
maintain this action; that the said plaintiff has neglected
and failed to perform and carry out its obligations as
aforesaid, and therefore is not entitled to recover in this
action. (3) That the plaintiff has failed to set out and
allege that it has in all respects complied with and
performed its part of the contract made with the defendant,
as it was its duty to have so done, and the defendant submits
that the plaintiff is not entitled to maintain and prosecute
this action. (4) That the said plaintiff has failed and
neglected to carry out and perform its part of said contract,
thereby causing and doing a wrong in the premises, and
thereby discharging the defendant from liability on account
of said contract."
The
court below made the following order: "In this cause, it
appearing to the court from an inspection of the pleadings
and the record in the cause that the trial of the pleas in
bar raised by the pleadings and other issues of fact herein
will involve the examination and taking of a long account, it
is ordered that the trial of issues of fact and of law be
referred to C. F. Warren, referee, pursuant to the provisions
of subsection 1 of section 42 of the Code. The defendant
resisted the motion, contending that the cause was not
referable." In this we think there was error. The
answers of the defendants, which were...
