Seelbinder v. American Surety Co

• Decision Date: 26 November 1928
• Docket Number: 27314
• Citation: 119 So. 357,155 Miss. 21
• Court: Mississippi Supreme Court
• Parties: SEELBINDER v. AMERICAN SURETY CO

119 So. 357

155 Miss. 21

SEELBINDER v. AMERICAN SURETY CO

No. 27314

Supreme Court of Mississippi

November 26, 1928

Division A

Suggestion of Error Overruled Jan. 14, 1929.

APPEAL from circuit court, Second district, Bolivar county, HON. W A. ALCORN, JR., Judge.

Suit by the American Surety Company against Sol Seelbinder. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Judgment reversed and cause remanded.

Shands, Elmore & Causey, of Cleveland, for appellant.

In an action by a surety to recover of its principal sums paid on an indemnity bond, Hemingway's Code 1927, Sec. 3111, evidence tending to negative dishonesty or corrupt motives should be allowed.

Spears and Kattman v. Netherlands Fire Insurance Co., 72 S.W. 1018; Goodin v. Hays, 88 S.W. 1101.

Where a person charged with crimes, such as theft, larceny, embezzlement, etc., a fraudulent intent in the mind of the person by whom the money has been converted must be shown.

Richburger case, 90 Miss. 806, 44 So. 772; 10 Am. & Eng. Enc. of Law, page 1032; 20 C. J., page 491; Wadley v. Commonwealth, 35 S.E. 452; Eatman v. State, 37 So. 579; State v. Culver (Neb.), 97 N.W. 1015, 10 Am. & Eng. Ency. of Law (2 Ed.) 997; 2 Clark and Marshall, Law of Crimes, 810; Masters v. United States, Ann. Cas. 1916-A 1245; Dunavant v. Commonwealth, 137 S.W. 1051; Frink v. State, 47 So. 515, 517; 15 Cyc. 529; Hampton case, 99 Miss. 176, 54 So. 722; United States v. Northway, 120 U.S. 327; 30 L.Ed. 664; United States v. Harper, 33 F. 471; United States v. Breese, 131 F. 915, 921; United States v. Britton, 107 U.S. 655, 27 L.Ed. 520; Flickinger v. United States, 150. F. 1; United States v. Steinman, 172 F. 913, 915; United, States v. Lee, 12 F. 816, 818; Kansas Flour Co. v. American Surety Co., of New York, 158 P. 1118; May v. State, 76 So. 636; Knowles v. State, 74 S.W. 767; 21 R. C. L. 1098, sec. 135; Geo. Birrell, Inc., v. Casualty Co., 188 N.W. 26; Monongahela Coal Co. v. Fidelity Co., 94 F. 732.

Contracts of suretyship, as between the surety and the obligee are to be strictly construed in favor of the surety.

Lipscomb v. Postell, 38 Miss. 476-488; American Surety Co. of New York v. State, 277 S.W. 790, 797; State v. Evans, 32 Tex. 201; H. & S. Engineering Co. v. Turney, 110 Tex. 153; 216 S.W. 621; 32 Cyc. 73; 22 R. C. L. 199, page 513; Sec. 201, page 514.

Somerville & Somerville, of Cleveland, for appellee.

A fidelity bond should be construed by the same principles of law applicable to contracts of insurance. The language of the bond contract is that selected by the Company issuing it for a consideration. If ambiguous, it must be construed most strongly in favor of the one indemnified.

Green v. United States Fidelity & Guaranty Co., 135 Tenn. 117, 185 S.W. 726; 25 C. J. 1091; case note in 100 Am. St. Rep. 775; American Surety Co. v. Pauly, 170 U.S. 133, 42 L.Ed. 977; 14 R. C. L. 47.

In a suit by a surety to recover sums paid on an indemnity bond it is not necessary to prove that the principal was guilty of the crime of larceny or embezzlement.

Champion Ice Mfg. Co. v. American Bonding Co., 115 Ky. 863, 75 S.W. 197, 103 Am. St. Rep. 356; City Trust, etc., Co. v. Lee, 204 Ill. 69, 68 N.E. 485; Ranking v. U. S. F. & G. Co., 86 Ohio St. 267, 99 N.E. 314; 19 Cyc. 518; 25 C. J. 1094; City Trust Co. v. Lee, 204 Ill. 69, 69 N.E. 485.

Section 3111 of the Code of 1927 enlarges the rights of the surety in this state and automatically subrogates the surety to all of the rights of the obligee in the bond as against the principal.

Louis C. Hallam, of Jackson, for appellee.

Parol evidence cannot be introduced to vary the terms of a written contract.

Colt v. Hinton, 143 Miss. 800, 109 So. 856; Colt v. Odom, 136 Miss. 651, 101 So. 853.

"Embezzle" and "willfully misapply" are not synonymous.

U. S. v. Northway, 120 U.S. 327, 30 L.Ed. 664; Black, Law Dict., 1242; Batchelor v. U.S. 156 U.S. 426, 429, 39 L.Ed. 478; U. S. v. Lee, 12 F. 816, 818; State v. Hussey, 60 Me. 410, 411, 11 Am. Rep. 206; State v. Townsell, 50 Tenn. (3 Heisk.) 6, 7.

OPINION

Cook, J.

The appellee, The American Surety Company, of New York, instituted this suit in the circuit court of the second judicial district of Bolivar county against the appellant, Sol Seelbinder, to recover a sum alleged to have been paid by the appellee to the Jefferson Standard Life Insurance Company, as required under an indemnity bond executed by the appellant in favor of said life insurance company with appellee as surety. At the conclusion of the testimony the court below sustained a motion to exclude the evidence offered by the appellant, and instructed the jury to return a verdict for the appellee for the amount sued for; and from the verdict and judgment entered in pursuance of this peremptory charge, this appeal was prosecuted.

The declaration alleged, in substance, that the appellant was employed by the life insurance company as its agent, to solicit and obtain applications for life insurance in said company, and to attend to matters incident to the writing of such insurance, and to collect and remit to the company premiums for such policies, less certain commissions agreed upon as compensation to the appellant for his services; that the appellant had collected premiums from certain named persons on whose lives he had effected life insurance with said company, and had failed to remit to said company its share of said premiums; that the appellee, as surety, had thereby become liable to pay the sums which the appellant, as principal, had failed to remit; that, in response to the demand of the life insurance company, the appellee had paid such sum, and that, by reason of appellee, as surety, having paid said sum, the appellant, as principal, had become indebted to appellee for the sum so paid, with attorney's fees.

To this declaration, the appellant filed a plea of general issue, and gave notice thereunder that he would offer evidence to show that he made a written contract with said life insurance company in which his territory for soliciting persons to take insurance with said company was in the city of Cleveland, Mississippi, and vicinity; that he was to receive certain commissions out of premiums collected as his compensation; that about ten days after such written contract had been entered into, he had an oral agreement with one Bruce A. Donald, general agent of the life insurance company, changing the written contract so as to protect him against other agents coming into his territory to solicit insurance; that by this subsequent oral agreement it was provided, in substance, that the appellant would have the right to be notified of any and all applications for life insurance written by other agents on the lives of persons residing within the territory embracing the city of Cleveland and vicinity, so that the appellant might agree for such insurance to be written, and that if the appellant received no such notice, or, if the writing of said insurance was not acceptable to him, then he was to receive all of the commissions earned thereon by other agents.

The notice further averred that other agents came into his territory and wrote insurance on the lives of certain named persons residing therein; that the commissions on the premiums on such policies were owing to him by the life insurance company, and were more than the amount which the appellant had collected and retained; that such money, so withheld, was withheld to reimburse him for such sums so owing as commissions on premiums of policies written by other agents; that the appellant notified the appellee, the surety company, not to pay such life insurance company the sum demanded by it, and advised the appellee that he did not owe said sum or sums to the life insurance company, and that he had not violated any of the terms of the bond, and, if appellee had paid said sums to the life insurance company, it did so at its own risk.

The appellee filed a counter notice in which it was averred that the written contract entered into between the life insurance company and the appellant was the only contract covering his employment; that no subsequent oral contract, varying the terms of a written contract, was made; that the alleged subsequent oral contract was without consideration; that the appellant had no right to set off the sum owing to him by the life insurance company against funds which he owed to it; that, under his contract, the appellant had forfeited his rights to commissions; that Bruce A. Donald had no authority to make a subsequent oral agreement changing the provisions of the written contract, and that the written contract gave the appellant notice that said Donald had no such authority.

At the trial, the appellee introduced in evidence the written contract between the appellant and the life insurance company, containing, among others, the following provisions:

"17. The Company may at its option, employ other agents in the territory named herein, and the agent shall have no claims for commission or other remunerations on the business affected by such other agents so employed."

"26. The agent shall keep deposited with the Company a bond for the faithful performance of this contract, and of all duties pertaining to said agency, satisfactory to the Company."

"31. No variation, alteration, or amendment to this contract is binding on the company unless executed in writing and attached hereto by an executive officer of the company.

"32. It is expressly agreed that this contract covers all agreements, verbal and written, between the Company and the Agent, and supersedes...