178 N.W. 989 | S.D. | 1920
In 1908, the Bank of Willow Lakes had a capital stock of $S,0OO; 30 shares were owned by E. A. Syverson, 10 shares by-Walter G. Syverson, and 10 shares by M. G. Anderson. E. A. Syverson was president of the bank, and the three men named constituted its board of directors. In 1909, through stock dividends, the capitalization was increased to $10,000, doubling the amount of stock held by each of the three stockholders. W. G.
“To make good * * * any loss which the employer may sustain by reason of any act of personal dishonesty, forgery, theft, larceny, embezzlement, wrongful conversion or abstraction, on the part of any employe * * * in any position in the employer’s service.”
It also contains the further provision:
“The employer may, at any time, transfer any and every employe for whom the company is or may become, during the continuance of this bond, surety hereunder, from one position to another, and shift such employes about at pleasure, without notice to the company, and the company shall be liable and remain-liable to the employer for any loss occasioned by such employes as fully and to the same extent as if no transfer had been made.”
In 1911 the defendants W. G. Syverson and John Fredrick Flindt purchased and became owners of 80 shares of the bank stock; W. G. Syverson was elected president of the bank, and Flindt cashier, while Syverson, Flindt, and one Anderson, who owtaed the remaining 20 shares of stock, became the board of directors.
It must be- assumed that the indemnitor, by consenting that the employes whose integrity is guaranteed by its bond might at any time be shifted from one position to another at pleasure, without notice to the company, and that the company should remain liable as fully and to the same extent as if no transfer had been made, either assumed that such change in itself involved no increase of hazard, or that it intended to wfaive any increased hazard which might be supposed to arise from such changes. Under this provision of the policy, the mode in which such changes might be accomplished would seem to have been considered wholly immaterial, for the reason that neither the application nor the policy contains any provision which limits either the conditions upon or the means through which such changes might be effected, one of which was a possible change in stock ownership. It is clear that changes in offices or positions of employes effected by the acts of majority stockholders other than such officers and employes themse-ves would not change or affect the liability of the insurer. Neither the application nor the policy contains any
(A'n examination of the bond in this case discloses numerous and minute provisions and conditions, both present and prospective, intended to safeguard the insurer against increased hazards ; but nowhere do we find, either in the application or policy any conditions attending, or even any reference to, changes in stock ownership. Must we not assume that the company did not consider possible changes of stock ownership as affecting the hazard involved, even though the same men whose integrity was guaranteed, and who constituted a majority of the stockholders, should choose to place themselves in active management and control of the affairs of the bank? May we not assume that the bonding company considered the hazard lessened rather than increased, when persons holding a majority of the stock, and therefore most heavily interested in the success or failure of the business, should themselves choose to assume direct. control and management of the affairs of the bank? Neither the application nor the policy 'in this case contains any warranties, express or implied, nor any representations, from which an inference of increased hazard may be drawn in case the employes whose integrity is guaranteed should become majority stockholders and thereby invested with absolute and plenary management, control, and supervision of the affairs of the bank. The application and policy constitute the entire contract between the bank and the company, and the courts are without power to interpolate into it conditions wholly foreign to its express or implied provisions. Por this reason we are of the view that the case of Farmers’ & Merchants’ Bank v. U. S. Fidelity & Guaranty 'Co. should not be followed. This view renders it unnecessary to consider a number of collateral propositions urged by appellant’s counsel, chief of which is that the defendant company would not have issued the policy, had it been advised that Syverson and Flindt had become the owners of a majority of the stock.
Appellant challenges the probative force and effect of this evidence to sustain the finding of the trial court to the effect that the bank suffered financial loss in the sum of $5,000 by reason of these acts. We are of the view that the evidence is sufficient to sustain the conclusion that W. G. Syverson, in substance and effect, substituted his own worthless checks in lieu of cash in
“And no active officer or employe of any corporation transacting a banking business in this state shall ¡be permitted to borrow any of the funds of the ’bank upon his own note or obligation without having first obtained the approval of a majority of the board of directors of the bank, and the approval, if obtained, shall be properly recorded in the bank’s minute" book. No such loans shall be made without ample collateral or a responsible indorser. lAJny individual * * * who shall violate the provisions of this section shall be deemed guilty of embezzlement of the funds of said bank to the extent of said note or obligation so given.” etc.
Appellant next contends that, even though the notes are worthless and represent a total loss to the bank, yet it does not
After a careful consideration of the entire record, we are of the view that it discloses no prejudicial error. The judgment and order of the trial court are therefore affirmed.
¡(concurring in the result.) Inasmuch as the persons whose acts were insured bore the same relation to the