Plyler v. U.S. Fidelity & Guaranty Co.

• Decision Date: 05 March 1928
• Docket Number: 12390.
• Citation: Plyler v. U.S. Fidelity & Guaranty Co., 142 S.E. 45, 144 S.C. 105 (S.C. 1928)
• Parties: PLYLER v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: South Carolina Supreme Court

142 S.E. 45

144 S.C. 105

PLYLER v. UNITED STATES FIDELITY & GUARANTY CO.

No. 12390.

Supreme Court of South Carolina

March 5, 1928

Appeal from Common Pleas Circuit Court of Greenville County; J. W DeVore, Judge.

Action by John L. Plyler, as receiver of the Industrial Loan & Investment Corporation, against the United States Fidelity & Guaranty Company. Judgment for plaintiff, and defendant appeals. Affirmed.

The charge of the trial court was as follows:

Mr Foreman and gentlemen of the jury, the sum and substance of the plaintiff's cause of action as set forth in this complaint is as follows:

The plaintiff says that on the 1st day of January, 1924 defendant, in order to protect and indemnify Industrial Loan & Investment Corporation against loss or damage by reason of the acts of F. G. Bunker, as secretary and treasurer of said corporation, executed and delivered to said Industrial Loan & Investment Corporation its bond in the penal sum of $5,000 under and by the terms of which defendant bound itself to pay to Industrial Loan & Investment Corporation any pecuniary loss sustained by said corporation not exceeding $5,000 on money, securities, merchandise, or any property including that for which the employer is responsible occasioned by any acts of fraud, dishonesty, or any criminal act by the employee directly or through connivance while occupying the position of secretary and treasurer in the employer's employ during the period commencing January 1, 1924, and continuing until the termination of said bond. A copy of the form of said bond is hereto attached as part of this complaint, marked "Exhibit A." The said bond was issued in consideration of the payment to the defendant of the premium on said bond, and that said bond was renewed upon the same terms for the year 1925, and was of full force and effect at the time of the defaults and acts hereinafter alleged. That the said F. G. Bunker while in the employ of plaintiff, while acting as secretary and treasurer of said corporation, did on January 15, 1925, while the said bond was in full force and effect, willfully, fraudulently, dishonestly, and feloniously appropriate to its own use certain funds of Industrial Loan & Investment Corporation in the sum of $2,762.92 good and lawful money of the United States, being then the property of said corporation, with intent to appropriate the said money to its own use, and to cheat and defraud said Industrial Loan & Investment Corporation of the same. No part of said money has ever been paid to Industrial Loan & Investment Corporation or to plaintiff herein, although demand has been made upon defendant of the payment of same prior to the commencement of this action.

That by reason of the willful, fraudulent, dishonest, and felonious acts of the said F. G. Bunker, as secretary and treasurer of Industrial Loan & Investment Corporation as above alleged, plaintiff has been damaged in the sum of $2,762.92.

That plaintiff and Industrial Loan & Investment Corporation have fully performed all of the conditions of the contract on their part, and by reason of the acts and defaults of the said F. G. Bunker, as secretary and treasurer of Industrial Loan & Investment Corporation, as hereinabove alleged, the conditions of the bond hereinabove set forth have been broken, and plaintiff is entitled to judgment against the defendant for the breach of said bond for the sum of $2,762.92 and the plaintiff asks judgment at your hands in that amount against the defendant.

The answer of the defendant denies the material allegations of the complaint and sets up the following as a defense as the reason why the plaintiff should not recover against the defendant.

Defendant alleges that prior to the executions and delivery of the bond marked "Exhibit A" of the complaint, the president of the Industrial Loan & Investment Corporation, obligee under said bond signed, executed and delivered to defendant a certain instrument in writing designated as an "Employer's Statement." That said statement was the basis of the bond applied for, and the questions and answers therein, by the terms thereof, were taken as conditions precedent to defendant's liability and plaintiff's recovery under said bond. That the said employer's statement and bond constituted the contract between defendant and the Industrial Loan & Investment Corporation, and the plaintiff herein is bound thereby. A copy of said employer's statement being annexed hereto and made a part of this answer, marked "Exhibit A."

Defendant alleges, upon information and belief, that the said Industrial Loan & Investment Corporation, its officers, directors, and agents, obligee under the bond, did carelessly and willfully neglect and fail to perform certain of the conditions precedent as contracted and set forth in the said employer's statement, as follows:

(1) In failing to require that all checks issued by F. G. Bunker, as secretary and treasurer of the Industrial Loan & Investment Corporation, be countersigned by the president of said corporation.

(2) In failing to have the accounts of said F. G. Bunker examined at the intervals provided.

(3) In allowing the said F. G. Bunker to retain custody of larger sums of money than provided in said statement.

(4) In failing to instruct and demand of the banking institutions with which said corporation did business that no checks without the countersignature of the president should be honored.

(5) In failing to demand an accounting from the said F. G. Bunker to the board of directors each month of his handling of funds, stocks, and other securities and assets.

That the said Industrial Loan & Investment Corporation by its careless neglect and willful failure to carry out, as aforesaid, the terms and conditions of the contract entered into by it with this defendant, which conditions were conditions precedent, has breached the conditions of the bond and contract and released this defendant from any and all liability thereunder, and this defendant is not therefore liable to plaintiff herein in any manner or sum whatever.

That is about the sum and substance of the issues raised by the complaint and answer, and to make it plainer and more simple for your consideration, this is a suit to recover 2,700-odd dollars as set forth in this complaint on account of the conduct of Bunker as an employee of this company. And in order to secure any loss on account of Bunker the company entered into a bond, it may be called an indemnity bond, against any fraudulent conduct or dishonesty that Bunker may have been guilty of and against the company, and they allege that he was guilty of such conduct that makes the bond liable for him against the company, an employee of the company as secretary and treasurer.

The defendant says that the company failed to do what they promised to do in the statement that they signed in connection with that bond which became a part of the contract between the parties.

Now, I differ a little with the lawyers on both sides of this case. Suppose the company did fail to do any or all of the acts which they agreed to do under this statement as set forth here in the defendant's defense; suppose they failed to do that. Would it necessarily follow that the plaintiff could not recover? I do not think so. Or suppose the company had done everything that they agreed to do in that statement would it have been possible under those circumstances for them to ascertain the misconduct and fraud practiced by the secretary in the management and conduct of his business towards that company? If the company had done all those things that they promised to do and it would have been impossible for them to have found out any misconduct or fraud or deception practiced by the secretary, Bunker, on this company; suppose they could not have found it out, suppose it would have been impossible for them to have found it out, but whether they could have found it out or not is a question for you to find out from this evidence. To put a plain cause to you: Suppose a man was suing the railroad company for not blowing the whistle and he was where it would have done no good to have blown the whistle, so the blowing of the whistle would not have done any good. Now, suppose these parties, the plaintiff company had done all those things that they promised to do in this statement that is set forth in this defense, suppose they had done all those things, and yet it would have been impossible for them to have found out the shortcomings of the secretary; what good would it have done if they could not have known? Now, whether they could have found it out or not is a question for you to find out from this evidence. If they could have found it out and that caused injury and damage to the defendant, why that would be a good defense to this cause of action. But if they could not have found it out even if they had undertaken to find it out and it would have been impossible to find it out, it would not have done any good to have done it, and that...