Home Ins. Co. of New York v. Holway

• Decision Date: 06 April 1881
• Citation: 8 N.W. 457,55 Iowa 571
• Parties: HOME INS. CO. OF NEW YORK v. HOLWAY AND OTHERS.
• Court: Iowa Supreme Court

55 Iowa 571

8 N.W. 457

HOME INS. CO. OF NEW YORK

v.HOLWAY AND OTHERS.

Supreme Court of Iowa.

Filed April 6, 1881.

Appeal from Howard district court.

This is an action upon a bond executed by the defendants for the faithful discharge of the duties of the defendant E. W. Holway, as the agent of plaintiff at Cresco, to solicit risks for fire insurance, deliver policies, and collect premiums. The cause was tried upon the issues joined between the plaintiff and the defendant Upton. The trial resulted in a verdict and judgment for the defendant. The plaintiff appeals. The facts are stated in the opinion.H. T. Reed, for appellant.

Barker Bros. and R. Noble, for appellee.

DAY, J.

The facts of this case are very fairly and clearly set forth in the argument of appellant's attorney, substantially as follows: Sometime in 1871 the defendant Holway was appointed by the plaintiff its agent at Cresco, Iowa, to solicit risks for fire insurance, deliver to the patrons of plaintiff its policies of insurance, receive the premiums thereon, and account to the plaintiff for the same, and pay over to plaintiff the moneys received by him, after deducting his expenses and commissions for compensation, which was a percentage of the premiums paid on the policies, and to perform other duties as are usually done by a local solicitor or insurance agent. Holway continued to act in this capacity for plaintiff till about March, 1876, when he resigned this position in favor of his brother G. N. Holway, and his agency then terminated. At the time this agency terminated, in March, 1876, the defendant Holway was in arrears in his payments to plaintiff for the premiums received during the last two months of his business, and was then indebted to plaintiff on this account in the sum of about $150. He resigned because he was unable to pay this amount to the plaintiff when it was demanded, and turned the business over to his brother, a surety on his bond, in order to have him settle up the delinquency. A part of this amount then due the plaintiff was for premiums due from the patrons of the company, and which Holway had not collected at the time his agency closed, but what proportion the evidence does not establish. Subsequently to March, 1876, and prior to October 25, 1876, the full amount of the indebtedness due from Holway to the plaintiff had been paid.

About October 25, 1876, Holway again desired to act as plaintiff's agent or solicitor at Cresco, and, in order to secure the position, was requested to furnish a bond with sureties, and a blank bond was then left with him to be signed by himself and sureties before he was authorized to act. Holway afterwards signed this bond, and procured the defendants Upton and Marshall to sign with him as sureties, and he then forwarded the bond to the plaintiff's agent, Page, at Des Moines. This is the bond sued on in this case. At the time this bond was left with Holway to be signed, neither the plaintiff nor its agent, Page, knew or had means of knowing whom Holway would get to sign the bond, and they did not know who signed it until the bond was received by Page, at Des Moines, signed by the defendants. The plaintiff or its agent, Page, who acted in the matter, never in any manner made any statements, or representations of any kind whatever, to Upton in order to induce him to sign the bond, and had no communication with him whatever relative thereto, nor did Upton in any way apply to plaintiff or its agent, Page, for any information in regard to Holway's prior dealing or conduct while acting for plaintiff, but he signed the bond solely at the request of defendant Holway, and relying upon his promises that he would send him a statement every month of the business he was doing, so that he could see for himself what his liability would be on the bond. Under this last appointment, Holway continued to act for plaintiff till December 29, 1878, and during the last months of his agency he did not pay over to plaintiff promptly the moneys due from him, and when the account was closed, on December 29, 1878, he was indebted to plaintiff for the business of October, November, and December, 1878, amounting to $309.05, to recover which this action is brought on the bond. A part of the amount due from Holway was for premiums uncollected and due from the patrons of the company when the agency closed. Plaintiff did not inform Upton of the manner of Holway's dealing under the prior appointment, but did inform him as early as September 20, 1878, and Upton at this date knew that Holway was then running behind in his payments to plaintiff, and was not paying promptly the moneys due to plaintiff received by him under the bond in suit. No time was stipulated in which Holway should make payments. Holway, under both this and the former appointment, was to have for his services a part of the moneys received by him for plaintiff. When Upton signed the bond the name of Marshall was not to it, but Marshall signed it afterwards, at Holway's request, and before it was delivered to the plaintiff.

1. The plaintiff requested the court, amongst others, to give the jury the following instructions: “(2) The plaintiff was under no obligations to inform Upton, before he signed the bond, that Holway had been in arrears to plaintiff in his payments under the former agency, unless he (Upton) inquired of them for information as to his prior dealings with the company; and if you find that Upton did not so inquire of plaintiff, and plaintiff, or its agent, Page, made no representations or statements to Upton, in any way, to induce him to sign the bond, then plaintiff is entitled to recover the full amount thereof. (3) If the plaintiff, or its agent, Page, made no statements to Upton, or did no act to prevent Upton from finding out that Holway had been in arrears to plaintiff under the former agency, then the plaintiff is entitled to recover the full amount proved.” The court refused these instructions, and upon this branch of the case gave the following instruction: “(10) If you find from the evidence that, before the execution of the bond, the said E. W. Holway had been in the employ of the plaintiff as its agent, and he had, as such agent, become a defaulter to the plaintiff, and that such fact was known to the plaintiff at the time of its acceptance of the bond, and that defendant executed it ignorant of such fact, and that plaintiff retained the bond without disclosing the fact to defendant, then the plaintiff is not entitled to recover, and your verdict should be for defendant.” This action of the court the plaintiff assigns as error.

The cases upon this subject are not all, perhaps, susceptible of complete reconciliation. It seems to us, however, that the decided weight of authority sustains the view of the law presented in the instructions asked by plaintiff. The case of the Ætna Life Ins. Co. v. Mabbett, 18 Wis. 667, is directly in point. In that case an action was brought by the plaintiff, an insurance company, against the sureties on the bond of its agent, conditioned for his duly accounting for and paying over to the company, on demand, moneys received for it. The answer alleged that the plaintiff took and received the bond in pursuance of a uniform custom by which all its agents were required to give bonds, and that it fraudulently concealed from the sureties the fact that the principal, who then was and for sometime had been its agent, was at that time a defaulter in the transaction of its business. It was held that the answer did not set up a defence, there being no allegation that the bond was executed at the solicitation of the plaintiff, or any of its officers or agents, nor that there was any intercourse between them and the sureties, nor that the sureties had appealed to them for information as to the course of dealing or state of accounts between the plaintiff and the agent. The facts alleged in this answer are really much stronger in favor of the sureties than the facts shown to exist in the present case, as the agent was in the employment of the principal, and an actual defaulter when the bond was executed; whereas, when the bond was executed in the case at bar, Holway was not in the employment of the plaintiff, and was not a defaulter.

The case of Roper v. Trustees of Sangamon Lodge, 91 Ill. 518, is also directly in point, and much stronger in its facts in favor of the sureties than the case at bar. The point determined is correctly stated in the syllabus as follows: “Where a party becomes surety upon the bond of a treasurer of a secret society for the faithful application of moneys in his hands, payable to the society, the fact that the officers and members of the society knew of his previous misappropriation of the funds entrusted to him during the prior year, and with such knowledge re-elected him, and failed to communicate such fact to his sureties, no inquiry being made of them by the sureties, and they doing no act to put the sureties off their guard or prevent them from ascertaining the facts, no fraud can be imputed to the society which can be set up in avoidance of the sureties' liability on the bond.” See, also, Ham v. Greve, 34 Ind. 18;Atlantic & Pacific Telegraph Co. v. Barnes, 64 N. Y. 385;Cowley v. The People, Reporter, Nov. 10, 1880, p. 592; The Remington Sewing Machine Co. v. Kezertee, 5 N. W. REP. 809, 2 Wis. 527;Atlas Bank v. Brownell, 11 Am. Rep. 231, 9 R. I. 168.

The cases relied upon by the appellee are nearly all distinguishable in principle from the case at bar. In Sooy's Adm'rs v. State, 39 N. J. L. 135, it was held that “a person taking a bond for the future good conduct of an agent already in his employment must communicate to a surety his knowledge of the past criminal misconduct of such agent in the course of such past employment, in order to make such bond binding.” No fact appeared in the present case from which criminal misconduct on the part of Holway can be inferred. He...