Lionberger v. Krieger

• Decision Date: 31 October 1885
• Citation: 88 Mo. 160
• Parties: LIONBERGER, Assignee, v. KRIEGER et al., Appellants
• Court: Missouri Supreme Court

88 Mo. 160

LIONBERGER, Assignee,

v.KRIEGER et al., Appellants

Supreme Court of Missouri.

October Term, 1885.

Appeal from St. Louis Court of Appeals.

AFFIRMED.

E. T. Farish and F. K. Ryan for appellant.

(1) The plaintiff in this case has the same rights, and no other, as the Broadway Savings Bank. Harris v. Babitt, 4 Dill. 185. The fact that Krieger was not a director and had not been appointed to the office of cashier, was well known to the president and directors of said bank, when the bond was executed by defendants as sureties. (2) The defendants are not estopped to deny the recital in the bond that Krieger had been appointed cashier by the board of directors. Brandt on Suretyship, 42; Hudson v. Inhabitants, etc., 35 N. J. 437; Thomas v. Burrows, 23 Miss. 588. The doctrine in respect to de facto cashiers or officers, can only be invoked where the public is concerned. Currie v. Mut. Ass'n, 4 Her. & Munf. 346. (3) The bond is inoperative because when Krieger was retained in office after the first year, it was by resolution and not by ballot, and it was when he was ineligible to the position because not a director. Thompson on Offices, 515; 1 Allen, 339; 1 Peters, 46; Mayor, etc., v. Crowell, 40 N. J. (L.) 212. (4) The increase of the stock released the sureties on the bond. Thompson on Offices, 531; Brandt on Suretyship, 461; Grocery Bank v. Kringman, 16 Gray, 475. Blair v. Perpetual Ins. Co., 10 Mo. 566; Home Savings Bank v. Traube, 6 Mo. App. 221; State to use of Carroll v. Roberts, 68 Mo. 234; Miller v. Stewart, 9 Wheat. 702. (5) When the law of 1877 (R. S. 1879, sec. 919), went into effect, it superseded any by-law of the bank, and required a new bond in conformity with its provisions. (6) The action of the board of directors in accepting from Krieger the old bond, after the death of Fortune, operated to release the securities remaining thereon.

Hough, Overall & Judson also for appellants.

(1) The rule is inflexible, both at law and in equity, that the surety is not to be held liable beyond the precise terms of his contract, and is never to be implicated beyond his specific engagement. Prior v. Kiso, 81 Mo. 249; Nofsinger v. Hartnett, 84 Mo. 549; Ludlow v. Simonds, 2 Carne's Cases, 57; Brandt on Suretyship, secs. 79, 80; State ex rel., etc., v. Boone, 44 Mo. 262; Miller v. Stewart, 9 Wheat. 680; State v. Meday, 17 Ohio, 565. (2) The increase of the capital stock of the bank changed the contract and discharged the sureties. Grocer's Bk. v. Kingham, 1 Gray, 474.

John D. Davis and G. A. Madill for respondent.

(1) The section of the statute governing savings banks (G. S. 1865, chap. 68, sec. 3), which directs the cashier to be selected from among the directors, does not vitiate this bond, though the cashier was not a director. It is a ground of complaint which the state alone can make. State v. Cooper, 53 Miss. 615. This provision contains (as to selection of cashier), no prohibitory or negative words, and announces no penalty or other consequences, if it is not complied with; it is, therefore, simply directory and not mandatory. Bank of Brighton v. Smith, 5 Allen, 413-417; State ex rel. Att'y Gen'l. v. Mead, 71 Mo. 266-269; West v. Ross, 53 Mo. 350-354; City of Cape Girardeau v. Riley, 52 Mo. 424; City of St. Louis v. Foster, 52 Mo. 513; Jump v. McClurg, 35 Mo. 193-196; Hicks v. Chouteau's Adm'r, 12 Mo. 341. (2) The defendants are estopped by the recitals of the bond from claiming exemption from its obligations by reason of the fact that the principal was not eligible to the position of cashier, or that he was not duly elected. Barada v. Carondelet, 8 Mo. 644--649; Western Boatmen's Benevolent Ass'n v. Kribben, 48 Mo. 37-43; Hundley v. Filbert, 73 Mo. 34; Commonwealth v. Teal, 14 B. Monroe, 29; Williamson v. Woolf, 37 Ala. 298; Sprowl v. Lawrence, 33 Ala. 674-688; Green v. Wardwell, 17 Ill. 278; Jones v. Scanland, 6 Humph. 195; United States v. Maurice, 2 Brock. 97, 113; Crawford v. Howard, 9 Geo. 314; Stephens v. Crawford, 1 Kelley, 574; S. C., 3 Kelley, 499; Iredell v. Barbee, 9 Iredell, 250; Aulanier v. Governor, 1 Texas, 653; Mayor of Homer v. Merritt, 27 La. Ann. 568. (3) The sureties upon the bond of a de facto officer, as well as the officer himself, are estopped to deny the validity of his appointment, when sued for money received by him in his official capacity. Taylor v. State, 51 Miss. 79; State v. Cooper, 53 Miss. 615; Boone Co. v. Jones, 54 Ia. 699; State v. Rhoades, 6 Nev. 352; Monteith v. Commonwealth, 15 Gratt. 172; People v. Jenkins, 17 Cal. 500; Town of Lyndon v. Miller, 36 Vt. 329; State v. Bales,36 Vt. 387; Shroyer v. Richmond, 16 Ohio St. 455; Marshall v. Hamilton, 41 Miss. 229; Jones v. Scanland, 6 Humph. 195. (4) The act of 1877, concerning savings banks (1 R. S. 1879, sec. 917), providing that cashiers shall be required to give bond conditioned as therein directed, did not vitiate the bond in suit, because not in exact conformity therewith. This statute is also merely directory and not mandatory. Bank of Brighton v. Smith, 5 Allen, 417, and cases cited, under point (2). (5) Though bond were not good as a statutory bond, yet, if it contravenes no rule of law or of public policy, it is good as a common law bond. Henoch v. Chaney, 61 Mo. 131; Graves v. McHugh, 58 Mo. 499; Barnes v. Webster, 16 Mo. 258-265; Bank of Brighton v. Smith, 5 Allen, 413-415; Grocer's Bk. v. Kingman, 16 Gray, 474; United States v. Bradley, 10 Pet. 343. The bond sued on is in substantial compliance with the provisions of section 917, Revised Statutes, 1879. (6) The bond in suit continued obligatory during the entire time Krieger, Jr., acted as cashier. (7) A bond given to secure the faithful performance of an officer's duties during his continuance in office, whether under present appointment, or any re-appointment, is obligatory after expiration of first appointment. DeColyar on Guarantees, 262; Augero v. Keene, 1 M. & W. 390; Long v. Seay, 72 Mo. 648; Savings Bk. v. Hunt, 72 Mo. 597. (8) The death of James Fortune, one of the securities on said bond in 1874, did not avoid the bond or release the sureties from further liability. (9) The fact that the capital stock of the Broadway Savings Bank was increased after the execution of the bond sued on, and that part of such increased capital was paid in, does not release the sureties. Morse on Banks and Banking (2 Ed.) 241; Bank of Wilmington & Brandywine v. Wollaston, 3 Harrington, 90, 96; Thompson on Liability of Officers, 532; Morris Canal, etc., Co. v. Van Vorst's Adm'x, 21 N. J. L. 100; RailwayCo. v. Goodwin, 3 Wels., Hurl. & Geo. 320; Gaussen v. U.S., 97 U. S. 584; Brandt on Suretyship and Guaranty, secs. 343, 344; Strawbridge v. B. & O. Ry., 14 Md. 360; Exster Bk. v. Rogers, 7 N. H. 21, 27, 31; U. S. v. Woodman, 1 Utah, 265; Commonwealth v. Holmes, 25 Gratt. 771; Howe Sewing Mach. Co. v. Layman, 88 Ill. 39.

BLACK, J.

This is a suit upon the bond of the cashier of the banking corporation of which the plaintiff is the assignee, under the laws of this state relating to voluntary assignments. The bond is dated February 13, 1869, and is in the penal sum of twenty thousand dollars. It is conditioned as follows:

“Now, if the said J. Philip Krieger, Jr., shall well and truly and faithfully perform the duties of cashier of said bank, for and during all the time he shall hold such office of cashier of said bank, and for and during all the time he may continue or act as such cashier of said bank, whether under the present appointment, or under future re-appointments, and shall well, truly and faithfully account for, and render over to said bank all such money,” etc., “and shall, while he continues in such service, either under the present appointment, or any future re-appointment, faithfully, and to the best of his ability, perform all trusts reposed in him, and all duties devolved on him by the law of the land, or by any by-law, rule, order or resolution of said board, now existing or hereafter made, enacted or adopted, not inconsistent with the laws of the land, then,” etc.

Krieger entered upon his duties and continued to act as cashier until and during the year 1878, under annual re-appointments, made by resolution of the board of directors at the annual election of officers. In 1878, and while acting as such cashier, he made breach of the conditions of the bond to many times the amount of the penalty, the circumstances of which need not be stated.

1. The bank was organized in February, 1869, under the general laws of this state, with a capital stock of two hundred and fifty thousand dollars, which was increased in April of that year to three hundred thousand dollars; twenty per cent. of the stock, and no more, was paid in. The sureties contend that because of this increase during the first year they are released from all liability on the bond. A surety has an undoubted right to rely upon the letter and strict terms of the bond. “It is not sufficient that he may sustain no injury by a change in the contract, or that it may be even for his benefit. He has a right to stand upon the very terms of his contract, and if he does not assent to any variation of it, and a variation is made, it is fatal.” The rule thus stated in Miller v. Stewart, 9 Wheat. 702, has been again and again asserted here and elsewhere by one form of expression and another. But this does not mean that the fair import of the obligation is to be disregarded. Another rule equally binding upon the courts is that in the construction of the contract of a surety, as well as of every other contract, the question is: what was the intention of the parties as disclosed by the instrument read in the light of the surrounding circumstances? Brandt on Suretyship, sec. 80. In the application of these rules of law appellants place much reliance upon the case of Grocer's Bank v. Kingman et al., 16 Gray, 476. There the stock was increased from $300,000, first, to $500,000, and then to $750,000, because of which the...