Coyle v. U.S. Fidelity & Guaranty Co.
| Decision Date | 03 March 1914 |
| Citation | 104 N.E. 559,217 Mass. 268 |
| Parties | COYLE v. UNITED STATES FIDELITY & GUARANTY CO. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Otis Emerson
Dunham of Boston, for plaintiff.
H. V Cunningham, of Boston, for defendant.
This is an action on a bond by which the defendant Fidelity and Guaranty Company agreed to make good to the plaintiff any and all loss sustained by him through any act of dishonesty on the part of one Mudge, called in the bond an 'employeé' of the plaintiff.
The defendant rested on the plaintiff's evidence and asked the court to direct a verdict in its favor. This was refused. An exception taken to that ruling is the only exception before us.
We are of opinion that although the evidence showed acts on the part of Mudge which the jury could have found to be dishonest they were not committed in the course of the employment described in the bond, and for that reason the ruling asked for should have been given.
The bond begins with a recital that Mudge, 'hereinafter called the 'employé,' has been appointed to the position of agent and collector in the service of Philip H. Coyle, hereinafter called the 'employer,' and has been required to furnish a bond for his honesty in the performance of his duties in the said position.' Then follows a recital that the 'employer' has delivered to the defendant 'a statement in writing setting forth the nature and character of the office or position to which the employé has been elected or appointed, the nature and character of his duties and responsibilities, * * * which statement is made a part hereof.' The statement in writing thus mude a part of the bond is in the form of answers given by the plaintiff to questions propounded to him by the defendant. In these answers the plaintiff stated that 'the title' of Mudge's 'position' was 'agent or collector,' and that a full explanation of his duties was 'collection of accounts assigned to me for same,' and that he was to receive a 'commission or percentage as collected.' We construe the words 'for same' to mean 'for myself.' It is stated in this statement in writing signed by the plaintiff that: 'It is agreed that the above answers are to be taken as conditions precedent and as the basis of the said bond applied for; or any renewal or continuation of the same.'
The facts put in evidence by the plaintiff which showed the true relation between the plaintiff and Mudge, were in substance as follows: In January, 1906, Mudge was carrying on or was about to carry on the business of a printer on his own account. Being in need of ready money he applied to the plaintiff for assistance. Thereupon the two executed a written agreement by which the plaintiff agreed This agreement was dated January 12, 1906. The written statement referred to above and made part of the bond was dated January 11, 1906, and the bond itself was dated January 15, 1906. The bond ran for a year and was renewed five times. The course of business pursued by the plaintiff and Mudge during the five years the bond was in effect before the renewal period here in question was as follows: On Mudge's assigning to the plaintiff a number of accounts receivable due to him from his customers, he received from the plaintiff the full value of them less some 15 to 18 per cent. The accounts due Mudge thus assigned to the plaintiff were then committed by the plaintiff to Mudge for collection. With a single exception no notice of the assignment of any one of these receivables was ever given by the plaintiff or Mudge to Mudge's customers from whom the accounts were due, and the receivables were collected from the customers by Mudge as if no assignment of them had been made. Later on (presumably when the due dates of the assigned accounts had passed), the plaintiff and Mudge had a settlement. These settlements consisted in Mudge's paying the plaintiff 'interest and expenses' on the sum paid him (Mudge) in cash when the accounts were assigned to him by the plaintiff; the 'interest and expenses' were added to the sum originally paid in cash and that sum was deducted from the amounts collected by Mudge on the assigned accounts. The 'balance' so struck was settled in cash or by an assignment to the plaintiff by Mudge of new accounts receivable on which the plaintiff made a new advance, or partly in cash and partly by a new assignment on which a new advance was made. The plaintiff testified that he 'received as a profit on such transactions on an average about 1 1/2 per cent. a month.' During the five years that the bond was in effect, before the renewal period here in question, Mudge never received a commission or any other compensation for collecting the assigned accounts.
The action now before us was brought to recover reimbursement for Mudge's failure to pay over to the plaintiff $1,297.02, collected by him on accounts assigned to the plaintiff on May 15, 1911. The $1,297.02 was used by Mudge for his own benefit.
We are not able to adopt the defendant's contention that as matter of law the real nature of the transaction between the plaintiff and Mudge was a running account by way of loan secured by the accounts assigned to the plaintiff by Mudge. Doubtless the jury could have found that to be the true relation between the plaintiff and Mudge; put they were not bound as matter of law to do so. For that reason this was not a ground for directing a verdict for the defendant. Neither have we been able to adopt the further contention made by the defendant that as matter of law, on the evidence in the case Mudge had authority to use the money collected by him in his business, in which case, under the doctrine of Commonwealth v. Stearns, 2 Metc. 343, and Commonwealth v. Libby, 11 Metc. 64, 45 Am. Dec. 185 (for a collection of the later cases see Commonwealth v. Moore, 166 Mass. 153, 44 N.E. 612), his failure to account for the sums collected by him would not have amounted to embezzlement and so would not have come within...
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