104 Ky. 819 | Ky. Ct. App. | 1898
delivered the opinion oe the court.
One C. W. Stone was elected clerk of the Deposit Bank of Midway some time in the year 1872, and executed bond, for the faithful performance of his duties, with one Wiggins as his surety. The surety died, and in 1883 Stone-executed another bond of like character, with the appellee, Hearne, as his surety. No other election or appointment of Stone seems ever to have been made or other bond executed. In 1891 he fled the country, it having been discovered that he and the cashier of the bank had used its money, and for years had been fraudulently concealing-their transactions by false entries. This suit was then-, instituted by the assignee of the bank against Hearne on the bond of 1883, but the court, holding that under the-charter of the bank the term of office of the clerk was one year, dismissed the action.
The charter provided that the subscribers for stock in the proposed institution should meet, and elect five directors, who should be stockholders, and who should serve-until the January following the election; and that annua? meetings of stockholders should be held, and oftener if re—
The first paragraph of Hearne’s answer consists of a denial of the defalcation and failure of duty, and, of course, presents an issue. The second presents the defense that the office of clerk was an annual one, and, upon failure to renew the bond annually, the surety was discharged. The court below supposed this defense good, and, as it was fatal to the plaintiff’s suit, the petition was dismissed. Our conclusion being otherwise, it becomes necessary to consider the remaining defenses.
The third paragraph is to the effect that, before the execution of the bond sued on, Stone, as clerk had already embezzled large sums as clerk, which fact was known to the directors, or might have been known; and, so known, they still held out and represented to the surety, Hearne, and to the public, that Stone was trustworty, etc. These averments seem to bring the case within the principle of law announced in Graves v. Lebanon Natl. Bank, 10 Bush, 33, and, if true, the surety is discharged.
The fourth paragraph presents a defense similar to the ■ last. The petition and exhibits discover a defalcation of some $10,000 occurring after the execution of the bond, in 1883; but, as the covenant was in the penal sum of $5,000, a recovery for that amount only was sought, and the amount was alleged to have been embezzled within the statutory period of limitation, or within seven years be-
The fifth paragraph is a plea of limitation, in the usual form, and may be considered in connection with the sixth and last paragraph, which pleads the statute and avers in substance that after the execution of the bond, and before the 2d day of May, 1889, the clerk had embezzled more than $5,000, the penal sum of the bond, and, as the cause of action therefor had accrued more than seven years before the suit, it was barred as to the surety, and .the bank’s cause of action was exha usted .more than seven years before the suit was instituted. It seems to us, however, that the covenant of the bond ran with the service of the employe, and the bank might sue for each and every breach of duty, or might abandon any it desired, and prosecute other breaches. The case of Davis v. Brown, 17 Ky. Law Rep., 1428 [32 S. W., 614], does not apply. There it was held that, upon a verbal contract not to engage in a similar business, recovery from the party so agreeing might be had in one suit to include all damages, past and future, so that, in a suit for the breach, the first breach, the whole penalty or damage might be recovered; and hence, if the first breach is barredythe whole of the action is barbed. We think the bond