128 Tenn. 70 | Tenn. | 1913
delivered the opinion of the „ Court.
Twio records were filed in this court under the same style; one embracing the proceedings brought against the defendant named in the caption and the American Bonding Company, and the other against him and'the Title Guaranty & Surety Company. These bills were brought against defendant Nelson on two- bonds, executed by the respective surety companies. These bonds are substantially the same, though differently
“ . . . shall . . . make good and reimburse the employer [insurance company], to the extent of the sum of five thousand dollars ... of any pecuniary loss sustained by the employer [insurance company] of moneys, securities or other personal property belonging to the employer [insurance company] in the possession or custody of the employee [Nelson], or for the possession of which he is responsible, directly occasioned by larceny or embezzlement on the part of the employee, in connection with the duties of the office or position in the service of the employer [insurance company], hereinbefore referred to [general agent]. . . .
“ . . . this bond being intended .only to cover such dishonest acts of the employee [Nelson] in connection with the position in. the service of the employer [insurance company], hereinbefore referred to [general agent] as amount to larceny or embezzlement.
“ . . . it being the true intent and meaning of this bond that the company shall be responsible only as aforesaid for moneys diverted from the employer [insurance company] ' through larceny or embezzlement on the part of the employee [Nelson]. . . , ”
Premiums .$3,973 73
Reinsurance canceled. 180 59
$4,154 32
Less returned premiums.$1,062 59
Less reinsurance effected. 639 05 1,701 64
Net premiums ...$2,452 68
Commissions on net premiums. 735 80
Balance due Company.$1,716 88
Under the course of business the general agents were permitted to deposit all funds collected by them on premiums in their own private accounts in banks of Memphis, and they paid the companies in their private checks. There was no specific agreement that this should be done, but it was the invariable practice.
About May, 1909, when the subject of the consolidation .of the two companies — that is, the Dixie and the North State — was being agitated, objection thereto was raised by Nelson, who was a stockholder in the North State. The consolidation was effected, and he subsequently sold his stock. About June, 1909, the companies became dissatisfied with Nelson, on the ground that the agency was not profitable, and some discussion of the matter arose in the insurance papers, indicating
Many questions have been suggested and discussed in the very able briefs filed by counsel. We deem it necessary, however, to consider only one of these ques
Our statute reads:
“Any officer, agent, or clerk of any incorporated company, or any clerk or agent of a copartnership or private person, except apprentices and other persons under the age of eighteen years, who embezzles or fraudulently converts to his own use any money or property of any other, which has come to his possession, or is under his care by virtue of such employment, shall, on conviction, he punished by confinement in the State penitentiary not less than five nor more than twenty years. ” Shan. Code, sec. 6576.
To make a case of embezzlement the person charged must occupy one of the relations indicated, “officer, agent, or clerk,” and he must “fraudulently convert to his own use” the money or property of another person which has come into his possession, or is under his care by virtue of such employment. It is clear that, if a merely debtor and creditor relation existed at the time of the act or acts complained of, there could be no conviction under a charge of embezzlement. It may be conceded that such moneys as Nelson collected from his agents in the several States came into his hands by virtue of his agencies. We also think that the fact that he was granted sixty days in which to collect from his agents, and make remittance to the company, would not change the relation from that of agency to one of debtor and creditor.
In this connection we are referred by counsel for complainants to the authorities upon the subject of sales of goods under a del credere agency. We do not think they apply. The peculiar body of law existing upon that subject has been-in the main long established, and its principles are in general well settled; but it would only confuse the issue before us to attempt to apply these principles to the present controversy. It is said that State of Washington v. Covert, supra, does not apply, because the local agents in the several States were also agents of the insurance companies. In a sense they were; but their dealings were only with the general agent, and théir accounts on the books in the home office were kept with him,, and not with them. It is true, as already stated, that the general agent made daily reports, showing every policy issued as reports on this subject came to him from his local agents. But this was required, not that any charges might be made against these local agents, but only that accurate information might always be at hand showing the run of the general agent’s business, and to enable the companies thereby to keep an eye on him. This is apparent from the correspondence between complainants and the bonding companies at the time the bonds were under way and before execution.
Nor is this a view based merely upon technical reasoning. It goes to the heart of the controversy. We do not gainsay the proposition that, if it he made to appear that an agent has appropriated the money of his principal to his own use, nothing else being shown, a case of fraudulent conversion is made out, under which a charge of embezzlement can he sustained.' But if the principal habitually permits his agent to convert his money, by depositing it in bank in his own name, and accepts the agent’s individual checks in payment from time to time, as occasion for payment arises, he must thereby be held to understand that the money is subjected to the perils of the agent’s individual business, and when it is lost in that business it is then, too late for the principal to bring a charge,.of embezzlement. That is just what happened in the present case. Nelson was agent, not only for the two companies suing here, but for several other companies. He kept the funds of all of the companies in his individual account in the banks, and checked on them all to meet the needs of his business. He lost heavily in the business of some of the other companies; there were also losses in the business which he was conducting for the two complainant companies. He drew on the general fund composing his deposit account for the conduct of his business as a general agent for all of the companies. He eould not be justly charged with conscious wrongdoing when his principal's, by their silent acquiescence in this
This point is referred to in the case of Williams v. United States Fidelity Co., 106 Md., 490, 66 Atl., 495, although it is not there given the emphasis which is here given it. See, also, Mononyahela Coal Co. v. Fidelity Co., 94 Fed., 732, 36 C. C. A., 444.
In opposition to this view we are referred to the following excerpt from Com. v. Smith, 129 Mass., 104-110, viz.: “If an agent, authorized to receive payment for goods sold by him on account of his employment, receives a check payable to his own order, the property in the check does not vest in him, and if he fraudulently converts the check or its proceeds he may be found guilty of embezzlement, although by the course of business between him and his employer he was in the habit of depositing such checks to his credit in a bank and sending his own checks in lieu thereof. ” But the court further said in that case (page 110): “But the jury found that the defendant had no authority to mingle the money of his employers with his own money, and so become thereby debtor for the amount belonging to them. ’ ’ This seems to take the point out of that case, so far as it applies to the present controversy.
We cannot doubt in the present case, from the full knowledge which the insurance companies had and the course of business referred to, the failure at any time to object to the method in which the deposits were
Under these facts there could be no .embezzlement. Of course, there is nothing to indicate larceny. Under the terms of the bond, therefore, there cóuld be no recovery.
The decree of the chancellor against the bonding companies is therefore reversed, and as to them the bills are dismissed, with costs.