209 N.W. 204 | N.D. | 1926
This is an action on a surety bond executed and delivered to tbe Security State Bank of Brantford, North Dakota, by tbe National Surety Company of New York, a corporation, and Dewey Bernard Miller, and by tbe National Surety Company of New York, a corporation, and Neis E. Ostrem. There are two actions: One by L. B. Baird as receiver of tbe Security State Bank of Brantford v. Tbe Nat’l Surety Co. of New York and Dewey Bernard Miller; and one by L. B. Baird, receiver of Security State Bank of Brantford v. Tbe Nat’l Surety Co. of New York and Neis E. Ostrem. Tbe two actions were tried, briefed and argued as one. Tbe court appointed C. W. Burnham as referee to take tbe testimony and to make findings of fact. Tbe testimony was taken down and transcribed, and upon tbe same tbe referee made bis findings of fact in wbicb be found that tbe Security State Bank of Brantford was a banking corporation existing under tbe law of tbe state of North Dakota, with its principal place of business in the town of Brantford, North Dakota; that it was found by tbe banking board of tbe state or North Dakota on or about the 21st day of July, 1921, to be insolvent and was on tbe same day closed for business and taken in charge by tbe bank examiner; that the defendant Dewey Bernard Miller was served with summons in said action more than thirty days previous to tbe commencement of tbe trial and was, at tbe time of tbe trial of said action, in default; that said defendant Dewey Bernard Miller was, between April 1st, 1920, and tbe 18th day of July, 1921, both inclusive, acting cashier of tbe said Security State Bank
On the 15th day of September, 1924, the plaintiff moved to confirm the report of the referee, and for judgment, which motion was duly granted and judgment was entered against the defendants and in favor of the plaintiff for the sum of $9,669.54, on the 9th day of October, 1924. The same facts were found by the referee in the case against the National Surety Company and Neis E. Ostrem and judgment was duly entered in said action for the same amount. The Dewey Bernard Miller case was tried first and it was stipulated by counsel that inasmuch as the evidence in the Neis E. Ostrem case would be exactly the same that it would be a waste of time and expense to cover it again and-it was agreed that the court might decide both cases using as the evidence transcript in the Dewey Miller case together with all exhibits, subject, of course, to all objections made, etc. From the judgment in each case the defendant National Surety Company appeals to this court and demands a trial de novo upon the theory that this is an .action for accounting and, as such action of accounting, the same was referred- to
“In any other civil action or proceeding where a jury has been waived, or where tbe action or proceeding is triable to tbe court or judge, when a note of issue has been filed and notice of trial served, or where one of tbe parties is in default in appearance or answer, on motion duly noticed made by either party, or in open court without notice when the action or proceeding is on tbe peremptory call calendar, when in the discretion of the court it is deemed necessary to expedite the administration of justice.”
The Wisconsin court, in the case of Brillion Lumber Co. v. Barnard, 131 Wis. 284, 111 N. W. 483, construes a similar statute and says:
“We do not understand that in order to justify a reference the action must be strictly based on the account or for an accounting. The language of the statute clearly indicates the contrary. If ‘the trial of an issue of fact shall require the examination of a long account on either side,’ then according to the express language of the statute, the reference may be directed either as to the whole issue or any specific question of fact involved. . . . True, mere items of damage do not constitute an account, and likewise true there must be an account in the proper sense and it must be something more than a. mere incidental matter. It must be a matter forming substantially the basis of the plaintiff’s claim, though the action need not be on the account nor for an accounting. References have been sustained in actions of this nature because of the necessity to examine the principal obligee’s account to ascertain the amount of his defalcation and determine the extent of the liability of the surety upon the bond. Such cases are referable because the account is a matter directly involved in the main issue. Dane County v. Dunning, 20 Wis. 210; Cairns v. O’Bleness, 40 Wis. 469; Andrus v. Home Ins. Co. 73 Wis. 642, 3 L.R.A. 271, 41 N. W. 956.”
It is stipujated that the reference be made under subdivision 4 of §
Before the talcing of any testimony the defendant objected to the introduction of any testimony for the reason “that the bill of particulars which has been furnished is incomplete, incompetent, and is not in fact any true bill of particulars; that the same is indefinite, uncertain and unintelligible and furnishes no basis upon which the defendant may anticipate or determine the plaintiff’s claims.” The overruling of this objection is assigned as error.
Section 7457 of the Compiled Laws of 1913 requires a party to an action to deliver to the adverse party, within ten days after demand, a bill of particulars, and the court or a judge thereof may order a further account when the one delivered is defective, and the court may in all cases order a bill of particulars of the claims of either party "to be furnished. There is no law under which the defendant’s objection could be sustained and no error in overruling his objection.
The defendant has specified and has assigned 174 errors, practically all of which relate to the admission of testimony during the trial, the testimony of witnesses, and the exhibits, consisting of the books of the bank, letters in the files of the bank, and the report of an auditor who made an audit of the affairs of the bank as taken from the books; and further, that the evidence is insufficient to justify the findings of the referee and the judgment of the court. It is the contention of the defendant that the books of the bank were not properly identified by officers of the bank in whose handwriting the books were kept or by any officer who had the custody of the books and under whose supervision the books were kept as provided by § 7909, Comp. Laws 1913. On the other hand the plaintiff contends that the two defendants, Dewey Bernard Miller and Neis E. Ostrem, were the active officers of the bank and in control of its management and of its books, Ostrem as president and Miller as cashier. And it was their duty to keep the books. There is no conflict in the testimony on the question as to who was in control of the bank. It is all in support of the plaintiff’s contention that Ostrem as president and Miller as cashier were in the bank, in control
The books and records on their face purport to be the books, records and files of the bank. They were found in the possession of the president and the cashier of the bank when Mr. McAneny, deputy state bank examiner, examined the bank and were by him turned over to deputy bank examiner Thomas, by him to deputy bank examiner Dok-ken and by him to auditor ITammerud who made the audit, and during all of the time that the witnesses were testifying about the books, records and files, the defendant Miller sat with the auditor Rodgers and the attorney for the defendant as advisers.
On July 25th, 1921, Mr. Rodgers wrote to director E. M. Trove a letter being plaintiffs exhibit 66, advising Mr. Trove and signed the same as “Consulting Auditor.”
■ Deputy bank examiner McAneny testifies that when he examined the bank on the 24th of July, 1921, that the defendants Miller and Ostrem, president and cashier of the bank, admitted to him that they had placed copies of notes which had been paid in their note pouch for the purpose of covering up a shortage of something around $5,000. He is asked, “Now, when you refer to the officers of the bank, who do you refer to ?” and he answers, “Mr. Miller and Mr. Ostrem.” These books and records are the records of the stewardship of the defendants Miller and Ostrem. The identification of the books and records is sufficient as to them and they were properly received in evidence as admissions made against the defendants’ interests.
In the case of Merchants’ Bank v. Rawls, 7 Ga. 191, 50 Am. Dec. 394, the court said:
*101 “These books belonged to a particular custody — -to the officers óf £he bank, in this case — and when they are'proven to come from thé proper repository, they are received as evidence without further proof.”
In the case of Reimers v. Larson, 52 N. D. 297, 40 A.L.R. 1177, 202 N. W. 656, this court quotes with approval from the instructions of the trial court, as follows:
“The court charged the jury that the books were presumed to be correct and the fact that the defendants were officers made the presumption against them stronger. He charged that the law presumed that every man in his private and official character did his duty until the contrary was proved, and that having set up matters in defense which, were contrary to the records as kept in the corporate books the burden was upon the defendants to establish their defense by a fair preponderance of the evidence. We are of the opinion that these instructions were as favorable to the defendants as they could well be. . . . The instruction in the instant case was altogether favorable to the defendants.”
In the case of Dickinson v. White, 25 N. D. 523, 49 L.R.A.(N.S.) 362, 143 N. W. 754, this court said, in reference to the records:
“As before stated, in the absence of proof to the contrary, this constituted prima facie evidence of the existence of shortages and the amount thereof; and if such shortage had been subsequently made up or adjusted, such fact could have been shown by the defendant.”
The books are admissible as admissions against the interests of defendants.
“Entries in a party’s books of account are admissible against him as admissions against interest. Banning v. Marleau, 121 Cal. 240, 53 Pac. 692; Plummer v. Struby-Estabrooke Mercantile Co. 23 Colo. 190, 47 Pac. 294; Agricultural Ins. Co. v. Keeler, 44 Conn. 161; Kent v. Richardson, 8 Idaho, 750, 71 Pac. 117; Second Borrowers & Invest. Bldg. Asso. v. Cochrane, 103 Ill. App. 29; Milhollen v. McDonald & M. Mfg. Co. 137 Iowa, 114, 112 N. W. 812; Beyle v. Reid, 31 Kan. 113, 1 Pac. 264; Spears v. Spears, 27 La. Ann. 537; Moise’s Succession, 107 La. 717, 31 So. 990; Ward v. Leitch, 30 Md. 326; Richardson v. Anderson, 109 Md. 641, 25 L.R.A.(N.S.) 393, 130 Am. St. Rep. 543, 72 Atl. 485; Bell v. Smith, 99 Mass. 617; Nolan v. Garrison, 151 Mich. 138, 115 N. W. 58; Hanson v. Jones, 20 Mo. App. 595;
“In 16 Cyc. page 1218, it is said: Declarations against interest are not only received as evidence of the fact directly asserted, but of incidental facts fairly embraced within the scope of the declaration.’ ”
In the case of Hall v. Henderson, 126 Ala. 492, 61 L.R.A. 639, 85 Am. St. Rep. 53, 28 So. 534, the court says:
“The most potent probative evidence tending to establish a sale by Henderson to the corporation, and a knowledge by him that he was being paid out of its assets, is to be found in the books of the corporation, — entries upon the cash book of the company. We repeat, the most potent probative evidence tending to establish these facts is to be found in these books, for the reason that, if the facts disclosed by them stood alone, in connection with the admitted fact that Henderson was a director and treasurer of the corporation at the time the entries were made, the facts as disclosed by those entries would have made at least a prima facie sale by him to the corporation of the stock, and of course, notice to him that he was receiving assets of the company, his vendee, in payment for it. . . . Henderson says to all this that he did not keep this book, and had no knowledge of its contents. It was presumptively his duty as treasurer to have kept this book, or to have had some one to do so for him. He cannot, under the facts of this case, avoid, as against creditors of the corporation, the probative effect of these entries by invoking his own dereliction of duty.”
The books, files and records of the bank are in the nature of admissions against the defendants Miller and Ostrem and “the rule is that books kept by a principal obligor as part of his duties are evidence against the surety. Williamsburg City F. Ins. Co. v. Frothingham, 122
“Upon an issue between fbe sureties on an agent’s bond and the agent’s principal, books of account kept by the agent or by his direction, and in pursuance of his duty as such agent, and pertaining to the business of Ms principal, are competent evidence against the sureties to show the state of the agent’s accounts.” 2 Enc. Ev. 676. State Bank v. Johnson, 8 S. C. L. (1 Mill, Const.) 404, 12 Am. Dec. 645; Whitmash v. Genge, 8 Barn. & C. 556, 108 Eng. Reprint, 1149; Williamsburg City F. Ins. Co. v. Frothingham, 122 Mass. 391; Bricker v. Stone, 47 Mo. App. 530.
“In American Surety Co. v. Pauly, 18 C. C. A. 644, 39 U. S. App. 254, 72 Fed. 470, affirmed in 170 U. S. 159, 42 L. ed. 987, 18 Sup. Ct. Rep. 552, an action by the receiver of a bank against a surety company to recover on its bond for loss resulting from the dishonesty of the bank’s cashier, it was held that a book kept by the teller, who died before the trial, was competent evidence in connection with the course of business, upon an issue as to whether or not money had been paid in upon a certain date, to show that upon the page where such payment should have been entered they did not appear.” First Nat. Bank v. Tisdale, 84 N. Y. 655; Olney v. Chadsey, 7 R. I. 224.
The appellant insists that the court erred in'admitting in evidence the audit of the books of the hank for the reason that the same was incompetent, hearsay, and not the best evidence. Mr. Hammerud, who made the audit, testified as to his qualifications as an auditor and expert bookkeeper, from which it appears that he was thoroughly competent to make an audit of the books. He states, in reference .to the audit report, plaintiff’s exhibit 69, “It is a statement of the condition of the affairs of the bank after the examination had been made; a true statement of the condition of the bank and it is backed up by various schedules throughout the report.” Respondent contends that it is a summary of what the books and records of the bank show, and admissible to aid the court for that purpose. As such it is admissible.
“The court may in its discretion permit a competent witness who has examined the books with reference to the points sought to be established to testify to the result of his examination or to present schedules
In reference to prepared statements, the court says:
“They were simply tabulated statements, made by competent persons, taken from voluminous and numerous claims and records which were already in evidence, made for the purpose of assisting the jury in arriving at their verdict. As such, they were competent. State v. Cadwell, 79 Iowa, 432, 44 N. W. 700; 1 Rice, Ev. 237; Von Sachs v. Kretz, 72 N. Y. 548; Bradner, Ev. 309, 310; Casey v. Ballou Bkg. Co. 98 Iowa, 707, 67 N. W. 98; 2 Rice, Ev. 745, 746 and cases cited;” State v. Brady, 100 Iowa, 191, 36 L.R.A. 693, 62 Am. St. Rep. 560, 69 N. W. 290.
‘ See also Jordan v. Warner, 107 Wis. 539, 83 N. W. 946; Northern P. R. Co. v. Keyes (C. C.) 91 Fed. 47; San Pedro Lumber Co. v. Reynolds, 121 Cal. 74, 53 Pac. 410.
The appellant claims that the examination of the affairs of the bank did not extend back of the 21st day of July, 1920, and there may have been some defalcation prior to that time. The record shows that on the 21st day of July, 1920, the deputy state bank examiner McAneny made an examination of the bank and found from such examination that the books and records of the bank were correct and that the assets of the bank were all accounted for and shown to be intact. This, according to authorities heretofore cited, made a prima facie case that the loss occurred between the 21st day of July, 1920, and the 18th day of July, 1921, and there being no evidence to the contrary, the shortage occurred between said dates.
The appellant also contends that the terms of the bond were not complied with on the part of the bank and that the directors of the bank' did not notify the appellant within five days from the time that they discovered the thefts, etc., of the defendants Miller and Ostrem. The evidence shows however, that just as soon as there was any suspicion director Reiniger went to Minneapolis and consulted the attorney for the defendant Surety Company and under his advice a Mr. Rodgers was employed as auditor who spent 11 days at the bank and later was the adviser and consulting auditor of the appellant. The record shows
Appellant contends tbat the finding tbat Miller and Ostrem connived together and were together responsible for tbe shortage is error on account of there being no allegation of connivance alleged in tbe complaint. We think that under all of tbe evidence in tbe case tbat tbe contention of tbe respondent tbat Miller and Ostrem were each liable for tbe entire shortage is correct. They were in sole charge of tbe bank; they admitted to tbe bank examiner that they bad placed dummy notes, or copies of notes which bad been paid, in tbe note pouch where they appeared as bills receivable for tbe purpose of covering up a shortage of some $5,000. According to tbe testimony of bank examiner McAneney, they were both present at an examination of tbe bank and further admitted tbat they bad increased tbe cash $1,000, by a fictitious entry. They stated tbat tbe reserve was very low and they thought it would help matters to make it look better, “if it was increased, so they increased it $1,000.” They stated tbat there was a shortage in bills receivable and tbe sum of $540, an item of interest, was credited to bills receivable instead of interest received.
Tbe complaint in each case is exactly alike. In tbe case against Ostrem and the surety company, it is charged tbat Ostrem did unlawfully, fraudulently, dishonestly and without tbe knowledge or consent of tbe directors of the Security State Bank of Brantford, steal, embezzle, wrongfully abstract from tbe possession of the said Security State Bank of Brantford, and convert to bis own use and benefit, certain moneys, negotiable papers, books, records, and personal property in tbe sum and value of $10,000, and to tbe loss and damage of tbe said Security State Bank in tbe said sum of $10,000. There is a like allegation in tbe case against Miller. If the evidence which proves this charge shows tbat Miller and Ostrem acted together, such showing does not make tbe evidence incompetent. If Miller and Ostrem bad each
It is also the contention of the appellant that a quarter section of land in the county of Sheridan was deeded to the bank by the defendant Ostrem which should be included in the assets of the bank. An examination of the record shows that the deed to this land was introduced in evidence by the defendants. The plaintiff knew nothing about any such deed. There was no record in the bank or in the books of the bank showing any such deed. It turns up at the trial in the.hands of the defendant surety company. The only evidence in relation to this deed is given, under objections, by the witness Anderson on cross-examination, which is found on pages 55, 56 and 51 of the transcript. On page 55, 3VIr. Anderson is asked: “Do you know anything about this property out in the western part of the state?” Objected to — “not proper cross-examination; no proper foundation laid; incompetent, irrelevant and immaterial.” Objection overruled. “A. Tes, I do.” I knew when that was deeded to the bank; I do not know the date. “Q. Was it after the bank was closed or before?” “A. Yes, sir.” “Q. Who deeded it to the bank if you remember ?” “A. That I couldn’t say. I wasn’t there when the deed was made.” I suppose it was Ost-rem’s land, “as I had it in mind it was collateral to his notes, that the bank held against Ostrem; as sort of a security for the payment'of these notes. That was my understanding of it.” I dont know who he made the deal with; I dont know anything about that part of it at all. I couldn’t tell you when. This evidence was brought out by the defendant, surety company. It is the only evidence that there is concerning the deed which was introduced in evidence by the defendant and which shows on its face that there is a thousand dollar mortgage on the land. It does not increase the assets of the bank, for, under the testimony as brought out by the defendant’s counsel, it is only collateral to Ostrem’s notes, amounting to $4,695, which notes are listed as assets of the bank.
The defendant, surety company, also claims that there are a large
It is the settled law in this state that if a law action tried by the court is brought to this court for review it comes like a legal conclusion, with all the presumptions in favor of its correctness, and that the
Tbe judgment of tbe lower court in both cases is affirmed.
