Federal Sur. Co. v. State
| Decision Date | 12 January 1926 |
| Docket Number | 15740. |
| Citation | 243 P. 936,116 Okla. 186,46 A.L.R. 973,1926 OK 11 |
| Parties | FEDERAL SURETY CO. v. STATE ex rel. WALCOTT, Bank Commissioner, et al. |
| Court | Oklahoma Supreme Court |
Rehearing Denied Feb. 23, 1926.
Syllabus by the Court.
When J B. draws an order on the bank of P. directing the bank to pay to a third person a sum of money out of the funds of the bank, and the cashier of the bank of P. cashes such order and pays out the sum of the face of the order, or cancels notes of such third person, held by the bank of P and thereby releases such third person from his obligation to the bank, and, at the time of paying out or cashing such order, J. B. has not on deposit with such bank a sum equal to such order, the surety on the official bond of such cashier is liable for the sum or sums so paid out, under section 4143, C. O. S. 1921.
When the terms of a cashier's bond recite that the surety indemnifies a bank against the "willful misapplication" of the funds of the bank by its cashier such surety on the cashier's official bond is liable, where the cashier pays out money of the bank upon worthless orders, checks, or drafts, knowing, as it is his duty to know, that the drawer of such orders, checks, or drafts has not on deposit with such bank a sum equal to the sum of the order, checks, or drafts; such acts constituting a willful misapplication of the funds of such bank.
Commissioners' Opinion, Division No. 3.
Appeal from District Court, Mayes County; A. C. Brewster, Judge.
Action by the State, on the relation of Walcott, Bank Commissioner, and another, against the Federal Surety Company, surety on the bond of S.W. Brown, cashier of the First State Bank of Pensacola, to recover for an alleged misapplication of funds of the bank by such cashier. Judgment for the plaintiffs, and defendant appeals. Affirmed.
Ross & Thurman, of Oklahoma City, for plaintiff in error.
J. T. McIntosh, of Durant, for bank commissioner.
Carey Caldwell, of Vinita, for defendants in error.
This action was brought by the defendants in error to recover from the plaintiffs in error a sum of money, being the money of the First State Bank of Pensacola, Okl., and alleged to have been misapplied by one Sherman William Brown, cashier of the last said bank. It appears S.W. Brown was cashier of the First State Bank of Pensacola, and the Federal Surety Company was surety on his bond. The condition of the bond was as follows:
"We * * * bind ourselves to pay to First State Bank of Pensacola, Oklahoma, * * * such pecuniary loss * * * as the employer shall have sustained * * * by any act or acts of fraud, dishonesty, forgery, theft, larceny, embezzlement, wrongful abstraction, or willful misapplication."
The foregoing is the only portion of the bond set forth or referred to in the record or the briefs.
After S.W. Brown became cashier of the Pensacola bank, his brother, J. J. Brown, opened up a grain elevator in Pensacola and would purchase grain from the farmers in that vicinity and give what is called a "bill of exchange," but in reality a check, on the First State Bank of Pensacola, for the purchase price of the grain, and these checks would be presented at the bank and cashed by S.W. Brown, notwithstanding J. J. Brown did not have a deposit in the bank sufficient to pay these checks and in fact was "in the red" the major portion of the time during these transactions. There were some 40 of these "bills of exchange" or checks of J. J. Brown, cashed by S.W. Brown, identical in form, and it will be necessary to set out but one as follows:
Gross .. 20,470 lbs. Kind of grain
Tare ...... 918 lbs. Oats.
Net .... 11,285 lbs.
A. R. Jones.
To John J. Brown, Pensacola, Oklahoma.
Some 40 of these worthless checks were cashed by S.W. Brown, cashier, out of the funds of the First State Bank of Pensacola, notwithstanding J. J. Brown had no money in the bank and during the greater portion of the time J. J. Brown's account was actually overdrawn.
The bank became insolvent and was closed by the bank examiner, who, under order of the court, turned over the assets of the defunct bank to the First State Bank of Vinita under an agreement, which it is not necessary to discuss in this opinion.
The plaintiff in error contends that these acts on the part of S.W. Brown do not constitute breaches of duty on the part of S.W. Brown, or breaches of the conditions of the bond executed by Federal Surety Company, as surety, and further contend that even if the transactions complained of were in fact breaches of duty on the part of S.W. Brown, and breaches of the conditions of the bond, there can be no recovery on account thereof, because the proof failed to show that the First State Bank of Pensacola or the plaintiffs, or either of them, were damaged thereby.
With this we cannot agree. The evidence discloses S.W. Brown did pay out some cash on these checks, and it further...
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