Westervelt v. Mohrenstecher

• Decision Date: 31 August 1896
• Docket Number: 757.
• Citation: 76 F. 118
• Parties: WESTERVELT v. MOHRENSTECHER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

76 F. 118

WESTERVELT v. MOHRENSTECHER et al.

No. 757.

United States Court of Appeals, Eighth Circuit.

August 31, 1896

O. A Abbott and John W. Blee (Ralph W. Breckinridge was with them on the brief), for plaintiff in error.

C. C Flansburg, S. L. Geisthardt, and W. H. Thompson, for defendants in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

This was an action upon the bond of the cashier of the Citizens' National Bank of Grand Island, Neb., brought by Edgar M. Westervelt, the receiver of that bank. The defendant in error George A. Mohrenstecher was the cashier, and the principal, and Mary Mohrenstecher, Otto A. Mohrenstecher, and William Stull were the sureties, on the bond. Judgment was rendered against the plaintiff below upon the pleadings, on the ground that the office of cashier of this bank was an annual office, and that the delinquencies charged in the petition occurred after the expiration of the year during which the bondsmen were liable. The facts material to the questions presented to this court, which were disclosed by the pleadings, are: The Citizens' National Bank of Grand Island, Neb., was a national banking association engaged in the business of banking from some time anterior to January 1889, until on December 4, 1893, it suspended payment, and went into the hands of the plaintiff in error, who was appointed its receiver by the comptroller of the currency. The national bank act provides that such a banking association shall be a body corporate and shall have power:

'Fifth. To elect or appoint directors, and by its board of directors to appoint a president, vice-president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places. Sixth. To prescribe, by its board of directors, by-laws not inconsistent with law, regulating the manner in which its stock shall be transferred, its directors elected or appointed, its officers appointed, its property transferred its general business conducted, and the privileges granted to it by law exercised and enjoyed.' 13 Stat.c. 106, p. 101, Sec. 8; Rev. St. U.S. Sec. 5136, p. 993.

The articles of association of this bank provided:

'The board of directors shall have power * * * to elect or appoint a cashier and such other officers and clerks as may be required to transact the business of the association; to fix the salaries to be paid to them, and continue them in office or dismiss them, as in the opinion of a majority of the board the interests of the association may demand.'

The by-laws of the association provided that the cashier of the bank should be elected at the first meeting of the board of directors in January of each year; that he should give a bond in the sum of $10,000, and should hold his office one year, and until his successor should be elected and qualified. One D. H. Vieths was appointed cashier of this bank at the annual meeting of its board of directors in January, 1889, and resigned in May of that year. Thereupon the board of directors passed this resolution, 'Resolved, that George A. Mohrenstecher be appointed cashier of this bank;' and Mohrenstecher entered upon the discharge of his duties as cashier, and continued to discharge them until the bank suspended on December 4, 1893. On August 13, 1889, the defendants in error delivered their bond in the sum of $10,000 to the bank, and the latter accepted it, and never thereafter took any other bond to secure the faithful discharge of the duties of this cashier. This bond contained no recital of the time or term for which Mohrenstecher was appointed, and no reference of any kind to his appointment, or to the time during which the obligors bound themselves to be responsible for his acts, except that which is contained in the following condition of the bond, viz.:

'The condition of the above obligation is such that whereas the above-bound Geo. A. Mohrenstecher has been appointed cashier of the Citizens' Nat'l Bank of Grand Island, Nebr., by reason whereof he will receive into his hands and have under his care and charge money, goods and chattels, and other things the property of said bank. Now if the said Geo. A. Mohrenstecher for and during all the time he shall hold the said office of cashier of the said bank shall execute the duties thereof with integrity and fidelity and will faithfully perform and fulfill the trust thereby in him reposed, and well and truly, at all times when thereunto required, account for and render over to said bank all moneys, goods, chattels, and other things the property of said bank that may come into his hands, possession, or control, so that no default, fraud, or failure shall happen or be occasioned by any neglect or failure on his part to perform his duties as such cashier, then this obligation shall be void, otherwise it shall remain in full force and virtue.'

On January 14, 1890, and at the first meeting of the board of directors in each January thereafter, that board passed a resolution in substantially this form:

'Resolved, that George A. Mohrenstecher be appointed cashier of this bank.'

Subsequent to January 14, 1890, Mohrenstecher appropriated to his own use large amounts of money of the bank, under the pretense of loaning it to himself and others, whose promissory notes he took, payable to the bank, and placed among its assets. He also loaned money of the bank, in excess of the amounts permitted by the national bank act, to several persons, upon their promissory notes. By these unlawful acts of its cashier the bank lost $17,321.82. The bank or its receiver obtained judgments upon the various notes so taken in its name, but has been unable to collect the judgments. The defendant in error Mary Mohrenstecher was a married woman when she signed the bond.

Were the obligors on this bond liable for the defaults of the principal in it after January 14, 1890, under this state of facts? The contention of their counsel is that the office of cashier of this bank was an annual office, and that their liability was limited to the unexpired term of Vieths, for which Mohrenstecher was appointed in May, 1889. It is familiar law that, in cases where the term of office to which the principal is elected or appointed is fixed by law, the liability of his bondsmen will be limited to the current term, unless they expressly agree to continue liable after its expiration. Harris v. Babbitt, Fed. Cas. No 6,114; U.S. v. Irving, 1 How. 250, 259; U.S. v. Kirkpatrick, 9 Wheat. 720; Bank v. Hunt, 72 Mo. 597; County of Wapello v. Bigham, 10 Iowa, 39; Wardens of St. Saviour's v. Bostock, 2 Bos.& P. (N.R.) 175; Dover v. Twombly, 42 N.H. 59; Welch v. Seymour, 28 Conn. 387; County of Scott v. Ring, 29 Minn. 398, 13 N.W. 181; Enterprise Co. v. Allen, 67 Cal. 505, 8 P. 59; Bigelow v. Bridge, 8 Mass. 274; Chelmsford Co. v. Demarest, 7 Gray, 1; Hassell v. Long, 2 Maule & S. 363; Peppin v. Cooper, 2 Barn.& Ald. 431; Leadley v. Evans, 2 Bing. 32; State Treasurer v. Mann, 34 Vt. 371; Insurance Co. v. Clark, 33 Barb. 196. It is equally well settled that, where the bond recites the length of the term for which the officer is elected or appointed, the liability of the bondsmen is presumed to be limited to that term, in the absence of an express agreement to be responsible for a longer time. Arlington v. Merricke, 2 Saund. 411; Waterworks Co. v. Atkinson, 6 East, 507; Association v. Lemke, 40 Kan. 661, 664, 20 P. 512. But a bond for the fidelity of one who holds his office during the pleasure of the appointing power covers all delinquencies until he resigns or is removed. Bank v. Rogers, 7 N.H. 21, 23. No one denies that the law favors sureties, that doubts of the extent of their liability are to be resolved in their favor, and that the burden of proof is upon the obligee to establish their liability upon their bond. But, after all is said, a bond is nothing but a contract. It is the written evidence of the meeting of the minds of the parties to it, and, subject to the rules favoring sureties to which we have referred, it must be construed by the established canons for the interpretation of contracts. The rule for the construction of contracts which prevails over all others is that the court may put itself in the place of the contracting parties; may consider, in view of all the facts and circumstances surrounding them at the time of the execution of the instrument, what they intended by the terms of their contract, and when their intention is manifest it must control in the interpretation of the instrument, regardless of inapt expressions, or more technical rules of construction. Accumulator Co. v. Dubuque St. Ry. Co., 27 U.S.App. 364, 372, 12 C.C.A. 37, 41, 42, and 64 F. 70, 74. Let us apply this salutary rule to the bond in this case. The act of congress under which this bank was organized provided that its board of directors might appoint a cashier, require bonds of him, and fix the penalty thereof, and dismiss him at pleasure, and appoint another to fill his place. Its articles of association provided that the board might appoint a cashier, fix his salary, and continue him in office, or dismiss him, as in the opinion of a majority of the board the interests of the association might require. It is plain that, in the absence of any other regulations, a cashier once appointed under this act of congress and these articles of association would hold his office until he resigned, or until the board of...