Exeter Banking Co. v. Taylor

• Decision Date: 03 May 1932
• Parties: EXETER BANKING CO. v. TAYLOR. SAME v. YOUNG.
• Court: New Hampshire Supreme Court

160 A. 733

EXETER BANKING CO.

v. TAYLOR.

SAME

v. YOUNG.

Supreme Court of New Hampshire. Rockingham.

May 3, 1932.

Transferred from Superior Court, Rockingham County; Burque, Judge.

Actions by the Exeter Banking Company against Frank W. Taylor & a and against Wilbur H. Young & a. Verdict in the last mentioned action was directed for plaintiff, subject to exception of some of defendants, and in the first mentioned action plaintiff's motion to set aside a verdict of the jury in favor of defendants and for judgment notwithstanding the verdict was granted subject to defendants' exceptions. Transferred on defendants' exceptions stated and on exception to the denial of defendants' motion for a directed verdict.

New trial.

Two actions, to recover on certain bonds or contracts of fidelity insurance. The declaration in the first action alleges that during the period from January 31, 1924, to November 10, 1924, when "said bonds were in full force and effect," certain thefts occurred in the plaintiff's bank to the knowledge of the defendant Taylor which have been lost to the bank by reason of Taylor's failure to faithfully perform his duties as vice president and treasurer. The declaration in the second action alleges that the defendant Young, while in the employ of the plaintiff as clerk and teller, wrongfully converted to his own use money belonging to the plaintiff. Trial by jury.

At the close of the plaintiff's evidence, the defendant Young and the United States Fidelity & Guaranty Company, his surety, moved that a verdict be directed for the plaintiff against them for $800, the sum which Young had admittedly misappropriated. This motion was granted subject to the exception of the other defendants. The case against Taylor and the Fidelity & Deposit Company of Maryland (hereinafter called the defendants) was submitted to the jury, who returned a verdict in their favor. The plaintiff moved to set the verdict aside and for judgment notwithstanding the verdict. Both motions were granted subject to the defendants' exceptions. The defendants also excepted to the denial of their motions for a directed verdict. The material facts are stated in the opinion.

Transferred by Burque, J.

George R. Scammon, of Exeter, and Hughes & Burns, of Dover (G. T. Hughes, of Dover, orally), for plaintiff.

William H. Sleeper, of Exeter, for defendant Taylor.

Robert W. Upton, of Concord, for the Fidelity & Deposit Company of Maryland.

MARBLE, J.

The plaintiff was incorporated in 1893 to do a general banking business. Laws 1893, c. 195. In 1924 it acquired the assets of the Union Five Cent Savings Bank (P. L. 1926, c. 263), and thereafter maintained both a mercantile and a savings department. The defendant Taylor entered the plaintiff's employ in 1904. In 1910 he became treasurer of the Union Five Cent Savings Bank, and occupied that position until 1921, when he resigned to become the plaintiff's assistant treasurer. The first bond under consideration was issued at that time.

After the consolidation of the two banks, he was elected vice president and treasurer. On April 12, 1924, the defendants executed the second bond, by the terms of which the Fidelity & Deposit Company agreed to pay the plaintiff such loss, not exceeding $50,000. as the plaintiff might sustain by reason of Taylor's failure to faithfully perform the duties of his office as treasurer of the savings department (P. L. 1926, c. 264, § 9), and in the course of his employment in any other position in the bank to which he might be assigned.

The alleged losses occurred in the mercantile department. A summary of each day's transactions in this department was entered on a settlement sheet, and the item entitled "To-day's Cash" included currency, gold, silver, and cash items. Shortages were nowhere specifically designated as such, but were entered under the printed headings "Memo" and "Cash items."

During the first six months of 1924, shortages amounting to over $3,000 were so entered. Although Taylor was the officer in charge of the general business of the bank, he did not report these shortages to the directors, but on June 30, the day of their semiannual audit, transferred $3,000 of this item to inactive accounts. By so doing he prevented the examiners from discovering the discrepancy.

After the examination, he continued to enter the daily shortages under "Memo" and "Cash items" until November 5, when the state bank examiners appeared to make their official audit. He then revealed the true situation to them and to the president of the bank. The president did not notify the directors of the condition thus disclosed, but employed a firm of accountants to investigate the affairs of the bank. The accountants reported to the directors on December 29. On December 31 there was a further shortage of over $1,000, making a total deficit of $10,694.81.

It could be found that if the directors had been seasonably notified of the shortages, they would have taken effective means to prevent loss. A wrongful intent on Taylor's part could be inferred from the circumstances; consequently his motion for a directed verdict was properly denied. State v. Hale, 85 N. H.——, 160 A. 95, and cases cited.

On the other hand, if Taylor's testimony is entitled to credence, his motive in concealing the defalcations was an honest one. He hoped, by avoiding publicity, to catch the thief. And, while there is much Justification for the trial court's conclusion that no reasonable man could have accepted this explanation as true, it is to be...