Ulster Cnty. Sa v. Inst. v. Young

• Decision Date: 21 November 1899
• Citation: 55 N.E. 483,161 N.Y. 23
• Parties: ULSTER COUNTY SAV. INST. v. YOUNG et al.
• Court: New York Court of Appeals Court of Appeals

161 N.Y. 23

55 N.E. 483

ULSTER COUNTY SAV. INST.

v.YOUNG et al.

Court of Appeals of New York.

Nov. 21, 1899.

Appeal from supreme court, appellate division, Third department.

Action by the Ulster County Savings Institution against Horace G. Young, as executor and trustee of Thomas Cornell, deceased, and another. From a judgment of the appellant division (44 N. Y. Supp. 493) affirming a judgment for plaintiff, defendants appeal. Affirmed.

Bartlett, J., dissenting.

A. T. Clearwater, for appellant Young.

B. N. Cardozo and Albert Cardozo, Jr., for appellant Carpenter,

J. Newton Fiero and Severyn B. Sharpe, for respondent.

MARTIN, J.

The plaintiff is a savings bank incorporated by chapter 152, Laws 1851, and acts amendatory thereof, and since its organization has transacted its business at Kingston, N. Y. The statute under which the plaintiff was organized conferred upon its board of trustees the power to make and establish such by-laws, rules, and regulations as they should judge proper for the election of their officers, for prescribing their functions and the mode of discharging the same, and also provided that the board might appoint such subordinate officers and agents of the corporation as they might deem necessary, who should respectively give such security for their fidelity and good conduct as the board of trustees might from time to time require. Laws 1851, c. 152. In pursuance of the authority conferred upon them by statute, the board of trustees established a by-law providing for the election of a secretary, treasurer, and such other officers and assistants as they might deem necessary to be employed in the institution, which appointments should be held at the pleasure of the board. On July 16, 1867, Matthew T. Trumpbour was elected assistant treasurer of the plaintiff for the ensuing year. On the 21st day of July, 1868, he was again elected for a year, and July 20, 1869, he was a second time re-elected for the ensuing year. Although the plaintiff's board of trustees held an annual meeting each year thereafter, he was never again re-elected or reappointed, but continued to act as such assistant treasurer, with the consent of the board, until 1891. After Trumpbour's first election, in compliance with a resolution of the board of trustees requiring it, he gave the bond in suit, which was in the penal sum of $15,000, and the defendant's testator was a surety thereon. After reciting the facts that Trumpbour had been appointed assistant treasurer of the plaintiff, and that by virtue of his office he would handle its money and securities, the bond contained the following condition: ‘If the above-bounden Mattew T. Trumpbour, his executors or administrators, shall at the expiration of his said office, or at any time on request to him or them, make or give unto the said institution, or its agent or its attorney, a just, full, and true account of all such money or securities or other property as may have come in his hands, charge, or possession as such assistant treasurer as aforesaid, and shall and do pay and deliver over to his successor in office, or any other person duly authorized to receive the same, all such sums of money, securities, or other property as may appear to be due and owing by him to said institution, and if the said Matthew T. Trumpbour shall well and truly, honestly and faithfully in all things, serve the said institution in the capacity of assistant treasurer, as aforesaid, during his continuance in office, then the above obligation to be void, otherwise to remain in full force and virtue. It being understood that this bond is to be binding for all the time the said Matthew T. Trumpbour shall hold said office of assistant treasurer, even though he hold under successive appointments; but nothing herein shall prevent the sureties terminating their liability by giving at least tow weeks' written notice of an intention so to do.’

The first and an important question in this case relates to the interpretation of this bond. Its conditions are twofold: (1) That the principal obligor shall account and pay over to his successor in office, or any other person authorized to receive the same, all money or securities due or owing the institution; and (2) that he shall faithfully and honestly serve the plaintiff in the capacity of assistant treasurer. That the principal did not honestly serve in his position as assistant treasurer is admitted by all. His defalcations and wrongful acts were, however, after the expiration of the terms specified in his several appointments, and while he held over, with the consent of the board, under and by virtue of them. Thus, the question presented is whether his sureties are liable for the acts of their principal after the termination of the periods for which he was appointed. This question depends for its solution upon the construction of the provisions of the bond.

The liability of a surety is measured by his agreement, and is not to be extended by construction. His contract, however, is to be interpreted by the same rules which are applicable to the construction of other contracts. The extent of his obligation must be determined from the language employed, when read in the light of the circumstances surrounding the transaction. Hence, where the question is as to the interpretation and meaning of the language by which a party has bound himself, there is no difference between the contract of a surety and that of a principal or other party sustaining a different relation. It is when the intention of the parties has been thus ascertained that the principle of strictissimi juris applies, and then it is that the courts guard the rights of the surety, and protect him against a liability which is not strictly within the terms of his contract. Association v. Conkling, 90 N. Y. 116, 121;Smith v. Molleson, 148 N. Y. 241, 42 N. E. 669. Under this rule of construction, we must examine the bond in suit in the light of the facts and circumstances surrounding the parties, and thus determine their intent, as indicated by a fair and reasonable construction of the language employed.

The condition of the bond, so far as the question under consideration is concerned, is: ‘If the said Mattew T. Trumpbour shall well and truly, honestly and faithfully in all things, serve the said institution in the capacity of assistant treasurer, as aforesaid, during his continuance in office, then the above obligation to be void, otherwise to remain in full force and virtue. It being understood that this bond is to be binding for all the time the said Matthew T. Trumpbour shall hold said office of assistant treasurer, even though he hold under successive appointments; but nothing herein shall prevent the sureties terminating their liability by giving at least two weeks' written notice of an intention so to do.’ The claim of the appellant is that the words ‘as aforesaid,’ contained in the first sentence of this condition, relate to the term of the treasurer's service under the appointment mentioned in the preceding portion of the bond, and consequently the provision that immediately follows is limited to the period for which the appointment was made. On the other hand, the respondent insists that the words ‘as aforesaid’ relate only to, and were intended to describe, the character of the position the treasurer occupied, and should be construed as though this...