Willoughby v. Fidelity & Deposit Co. of Md.

• Decision Date: 15 February 1906
• Citation: 85 P. 713,16 Okla. 546,1906 OK 30
• Parties: WILLOUGHBY v. FIDELITY & DEPOSIT CO. OF MARYLAND.
• Court: Oklahoma Supreme Court

85 P. 713

16 Okla. 546, 1906 OK 30

WILLOUGHBY v. FIDELITY & DEPOSIT CO. OF MARYLAND.

Supreme Court of Oklahoma

February 15, 1906

Syllabus by the Court.

In an action upon contract, the party seeking to recover cannot claim the benefits thereunder, and at the same time repudiate the burden. So in an action against a surety company to recover on the bond of a defaulting bank president, the bond must be construed as a whole, and the plaintiff's right to recover must depend upon such a construction; and where such bond is issued by the surety company and accepted by the bank, upon the faith of certain statements and representations in writing, made the assistant cashier of the bank, relative to the conduct, duties, employment, and accounts of the defaulting bank president, and such statements so made by the said assistant cashier are, by the terms of said bond, made a part of the bond itself, the bond and statements together form the contract, and they must be construed together, and upon their joint construction, or upon their construction as a whole, must depend the rights and liabilities of the parties thereto; and where the bond is issued by the surety company and accepted by the bank upon the faith of the statements and representations so made by the assistant cashier, the receiver of the bank, later appointed, in an action on the bond, cannot be heard to repudiate of question the authority of the assistant cashier to bind the bank by his statements and representations concerning the conduct, duties, employment, and accounts of the defaulting bank president, and at the same time be allowed to recover on the bond procured on the strength of the statements and representations so made by the said assistant cashier.

Error from District Court, Logan County; before Justice J. L Pancoast.

Action by J. A. Willoughby, receiver of the Capitol National Bank against the Fidelity & Deposit Company of Maryland. Judgment for defendant, and plaintiff brings error. Affirmed.

Flynn & Ames, for plaintiff in error.

Lawrence & Huston and Dale & Bierer, for defendant in error.

GILLETTE J.

In this case, the plaintiff, J. A. Willoughby, as receiver of the Capitol National Bank of Guthrie, sues the Fidelity & Deposit Company of Maryland upon the bond of the defendant company guarantying the faithful discharge of the duties of Chas. E Billingsley, as president of the Capitol National Bank. A copy of the bond with all its indorsements is attached to and made a part of the plaintiff's petition. The bond provides, among other things: "Amount, $10,000.00. Annual premium, $40.00. Baltimore, Md. Whereas Chas. E. Billingsley, Guthrie, Ok., hereafter called the 'employee' has been appointed to the position of president, in the service of the Capitol National Bank, Guthrie, Oklahoma, hereafter called the 'employer' and whereas, the employer has delivered to the Fidelity Deposit Company of Md., a corporation of the state of Maryland, hereafter called the 'Company,' certain statements in writing relative to the employee, his conduct, duties, employment and accounts, the manner of conducting the business of the employer, and other things connected with the issuance of this bond, which, together with any other statements in writing, hereafter made by the employer to the company relating to any such matters, do and shall constitute the basis and form part of this contract, or any continuation thereof, and shall be warranted; and it is hereby agreed, that any such statement, made in writing by the president, cashier, or any officer or director of the employer, shall be considered the statements of the employer within the meaning hereof. Now, therefore, in consideration of the sum of $40.00 paid as premium for the period from January 1, 1904, to January 1, 1905, at 12 o'clock noon, and upon the faith of said warranties of said employer as aforesaid, it is hereby agreed that, subject to the obligations imposed by this bond, on the employer the performance of which shall be condition precedent to the right on the part of the employer to recover under this bond, the company shall, at the expiration of three months next after proof of a pecuniary loss as hereinafter mentioned, has been given to the company, reimbursed the employer to the extent of the sum $10,000.00, and no further for such pecuniary loss of money, securities, or other personal property, as the employer shall have sustained by any dishonest act or acts committed by the employee in the performance of the duties of the office or position in the service of the employer hereinbefore referred to, or of such other office or position as employee may be subsequently appointed to or called upon to fill by the employer, as such duties have been or may hereafter be stated in writing by the employer to the company, and occurring during the continuance of this bond, and discovered at any time within six months after the expiration or cancellation of this bond, or in case of the death, resignation, or removal of the employee, prior to the expiration or cancellation of the bond, within six months after such death, resignation, or removal."

Then follows conditions of the bond that are not material in the consideration of this case. The defendant surety company answered admitting the giving of the bond, but denying liability, because as it claimed, the bond was procured by false and fraudulent representations made by the Capitol National Bank to the defendant surety company, concerning the said Chas. E. Billingsley, his conduct, duties, employment, and accounts. A copy of the letter of the defendant surety company, to the Capitol National Bank, asking for information, together with such of the questions, answers, and statements made by R. S. Briggs, the assistant cashier, as are necessary for the consideration of this case, are as follows:

"Baltimore, December 5th, 1903. To the Capitol National Bank, Guthrie, O. T.: An application has been made to this company to issue to you a Fidelity Bond for Mr. C. E. Billingsley, as president in your service at Guthrie, O. T., to the amount of $__________. Before passing on the said application the company must have answers to the following questions: Very respectfully yours, Edwin Warfield, President."

"5. (a) Is he now (C. E. Billingsley) or has been from any cause indebted to the bank or its officers? A. No. (b) If so, give particulars, stating amount, how incurred, and how payment is secured. Not answered. It is agreed that the above answers shall be warranties, and shall constitute the basis and form part of the bond, or any continuation or continuations of the same that may be issued by the Fidelity & Deposit Company of Maryland, to the undersigned upon the person above named, and it is agreed that the duties, powers and remunerations of the employee and obligations of the employer as stated in the above warranty shall remain unchanged during the currency of this bond or any continuation or continuations thereof. Dated at Guthrie this 22d day of December, 1903. Capitol National Bank, by R. S. Briggs, Ass't Cashier, Official Capacity."

"This must be returned to the home office, Baltimore, Md., before bond will be issued."

The reply is an unverified general denial, and a special denial of the authority of R. S. Briggs, the assistant cashier, to bind the bank by his answers to said questions, and by the agreement he undertook to make on behalf of the bank. Upon the trial of the cause it was shown by the plaintiff, and by the proper cross-examination of plaintiff's witnesses, that notwithstanding the statements of the said R. S. Briggs, the assistant cashier, in answer to question 5a, that Mr. Billingsley was not indebted to the bank, he was at the time the statement was made indebted to the bank on his own note of $5,150, and his own overdraft of $35,693.24. The bond given by the defendant surety company and accepted by the bank expressly provided that the statements in writing relative to C. E. Billingsley, his conduct, duties, employment, and account, and other things connected with the issuance of the bond, should constitute the basis, and form a part of the contract, and should be warranted; and that any statements made in writing by any officer of the bank should be considered the statements of the bank; and in consideration of the sum of $40, and upon the faith of such warranties of the said bank the $10,000 bond sued on herein was given by the surety company, and accepted by the bank. When the plaintiff rested, the defendant surety company demurred to the evidence upon the ground that the plaintiff had failed to prove facts sufficient to constitute a cause of action in favor of the plaintiff and against the defendant. The demurrer to the evidence was sustained, and the case dismissed at the cost of the plaintiff, and he brings it to this court claiming that the trial court erred in sustaining the demurrer.

In this court the plaintiff contends that whatever his rights might have proved to be upon a full and final hearing, the demurrer to the evidence was not well taken, and should not have been sustained, based as it was on the pleadings and plaintiff's evidence alone. Let us examine for a moment the issues and status of the case when plaintiff rested, and the demurrer was interposed by the defendant, and sustained by the court. A copy of the bond sued on was attached to and made a part of the plaintiff's petition, and was admitted by the defendant in its answer, so it was fully before the court. The questions and answers thereto, as made by the cashier, and the statements attached to them, were attached to and made a part of the defendant's answer, and not being denied under oath under section 3986 of our statutes of 1893, were taken as true, and...