Engler v. People's Fire Ins. Co.

• Decision Date: 07 March 1877
• Citation: 46 Md. 322
• Parties: ADOLPH ENGLER v. PEOPLE'S FIRE INSURANCE COMPANY OF BALTIMORE.
• Court: Maryland Court of Appeals

46 Md. 322

ADOLPH ENGLER v. PEOPLE'S FIRE INSURANCE COMPANY OF BALTIMORE.

Court of Appeals of Maryland

March 7, 1877

APPEAL from the Superior Court of Baltimore City.

This was an action brought by the appellee against John Siebrecht as principal, and August Engler and Adolph Engler as sureties, on a bond given for the faithful performance by John Siebrecht, of the duties of the office of secretary of the appellee. The condition of the bond was, "that if the above named John Siebrecht shall faithfully perform his duties as secretary of the said Peoples' Fire Insurance Company of Baltimore, during the time he holds said office and shall account for all the money which shall come into his hands as such secretary, then this obligation shall be void otherwise the same shall remain in full force and virtue."

And the 4th Article of the by-laws of the company, defining the duties of the secretary is as follows:

"Art 4. It shall be the duty of the secretary to attend daily at the office during the business hours of the company, to keep the accounts and books of the company in proper order, and ready for inspection when called upon by either standing committee, to countersign all policies of insurance, renewals of policies and certificates of stock, to countersign all conveyances of real estate and releases of mortgages, and all other papers and acts to which the seal of the company is affixed, to attend the meetings of the board of directors, and keep the minutes of their proceedings, to attend the meetings of the standing committees, and keep the minutes of their proceedings, to report at the monthly meeting of the board of directors a statement of the receipts and disbursements of the preceding month, and half yearly, a full and complete statement of all the property and the effects of the company, to wit: real estate, stocks and bonds, loans on real estate, loans on stocks and United States' bonds, cash on hand, and all debts and claims due to or by the company, to prepare for publication the annual statement, and, in general, to perform such other duties as may be referred to him by the board of directors or by the standing committees. The secretary shall give satisfactory security for the faithful performance of his duties, in a sum not less than $2000, to be approved by the finance committee. In case of sickness of the secretary, the president shall appoint some person to perform the duties of the secretary, until the board of directors shall be convened."

The appellant appeared to the action, and pleaded general performance on the part of his principal, and upon this plea issue was joined.

Exception.--At the trial, the defendant offered the four following prayers:

1. If the jury shall find from the evidence that John Siebrecht was appointed secretary of the plaintiff at or about March 9th, 1871, and entered upon the duties of the said office, under the charter and by-laws offered in evidence, and that Art. 4 of said by-laws, prescribes the duties and obligations of said secretary, and that the defendant executed the bond to the plaintiff offered in evidence, to secure the faithful discharge of the office of said secretary, that then the defendant is only responsiblc for any breach of duty on the part of said secretary, which is contained in the said article prescribing said duty; and if the jury find that the said secretary was entrusted with the care and custody or safe-keeping of the funds of the plaintiff, that then such duty is not within the provisions of said article, and plaintiff is not entitled to recover.

2. The defendant respectfully moves the Court to instruct the jury, that under the charter and by-laws of the plaintiff, offered in evidence in this case, the duties of the secretary of the plaintiff are prescribed in Article 3 of the same, and could not be enlarged or varied in any manner, unless the same were referred to him by the board of directors or by the standing committee; and if the jury find that he was entrusted with the safe-keeping and depositing of the moneys of the plaintiff, without the order and direction of said board or standing committee, as above stated, that then any defalcation of said Siebrecht as secretary, is not embraced within the terms and conditions of the bond of said secretary, and the plaintiff is not entitled to recover.

3. That Article 3 of the charter and by-laws of the plaintiff, makes it the duty of the president of the company to receive all moneys paid to the company or plaintiff, and to deposit the same, as stated in said article; and if the jury find that the said president, instead of receiving such money and making said deposit himself, entrusted the funds of said plaintiff to this John Siebrecht, secretary of the plaintiff, for that purpose, that then said president under the said article must be considered as relying upon the personal integrity and capacity of the said John Siebrecht, and not upon the official bond of said Siebrecht, as secretary, given for the faithful performance of his duties as secretary under Article 4 of said charter and by-laws, and the plaintiff is not entitled to recover.

4. If the jury find from the evidence that the defendant made and executed the bond offered in evidence, dated March 9th, 1871, the duties of John Siebrecht, as the secretary of the plaintiff, it then became the duty of the plaintiff to notify the defendant of the acceptance and approval of the same; and if the jury should find that the plaintiff did not give the defendant any such notice until some three years after the same had been made, to wit: about the month of March, 1875, when defalcation or breaches of duty had already been committed by Siebrecht as secretary, then the plaintiff is not entitled to recover.

The Court, (DOBBIN, J.,) refused all of said prayers; to which ruling the defendant excepted.

The jury rendered a verdict for the plaintiff, and judgment was entered accordingly. The defendant appealed.

The cause was argued before BARTOL, C.J., STEWART, BRENT, GRASON, MILLER and ROBINSON, J.

John C. King, for the appellant.

The charter and by-laws prescribe the duties and obligations of the secretary, and consequently the bond in question operates only to secure the faithful discharge of his duties as secretary, and the care and custody of the funds of this company are not within the provisions of the article. "A surety can only be charged where the case is brought within the very terms of his contract, and the Court will not go into an inquiry whether the surety has been injured by a departure from those terms." Smith's Merc. Law, 582; Berkhead vs. Brown, 5 Hill, 634, 640; Edmondston vs. Drake, 5 Pet., 624, 629; Dobbin vs. Bradley, 17 Wend., 422; Walwrath vs. Thompson, 4 Hill, 200; Smith vs. Dann, 5 Hill, 543.

The duties of the secretary being prescribed as stated, these duties could not be enlarged in any manner, or raised without the action of board of directors, and the bond of the secretary would not be responsible, because any departure from the express terms of the obligation would discharge the surety.

"If the surety's engagement relates to a particular office, it extends only to such things as were included in the office when the engagement was entered into." Chitty on Contracts, 523, (7 th Am. Ed.;) Leigh vs. Taylor, 7 B. & C., 491; Russell vs. Perkins, 1 Mason, 340; Barker vs. Barker, 1 T. R., 287; Dance vs. Girdler, 1 New R., 34; 8 Clarke & Fin., 470.

It was the plain duty of the president, under the charter and by-laws, to receive the funds paid in and to deposit them; and if instead of discharging that duty so required of him, he entrusted them to the secretary, then the president must be considered to have relied upon the personal integrity and capacity of Siebrecht. The defendant's bond could not be made responsible for any action of the principal on the bond, not embraced strictly within the provisions of the bond itself.

"A surety is entitled to a strict and literal performance by the creditor of the contract, in reference to which the guarantee was given." Chitty on Contracts, 529; Miller vs. Steuart, 9 Wheat., 680; Wright vs. John, 8 Wend., 512; Bank of Wash. vs. Barrington, 2 Penna., 29; Ware vs. Calvert, 2 N. & P., 126; Sasscer vs. Young, 6 Gill & Johns., 243.

The appellant was entitled to notice of the approval and acceptance of the bond before his responsibility can be said to have actually arisen or became effectual.

"When the guaranty is prospective, and to attach upon future transactions and the guarantor is uninformed as to whether his guaranty has been accepted and acted upon or not, it is the settled doctrine in the Courts of the United States that notice of the acceptance must be given within a reasonable time." Smith's Merc. Law, 571; Lee vs. Dick, 10 Peters, 482; Edmondston vs. Drake, 5 Peters, 624; Russel vs. Clark, 7 Cranch, 91; Train vs. Jones, 11 Vermont, 444.

Fielder C. Slingluff and Frederick W. Brune, for the appellees.

There is nothing whatever inconsistent with the express terms of by-law No. 4, with the reception by...