*1 authority change making we location, their allowing complaint, have resolved the doubt in favor of just particular question behalf mentioned, as to the damage; special but we of one who has suffered actual only reserving case, the doubt this so resolve definitely question specific a matter decided as be definitely binding precedent be raised until shall parties litigant, argued by which has not been done by them in this case.
Affirmed. v. Co. Merchants’ Deposit Fidelity & Marine Bank & Pascagoula. (Division 4, 1933.) A. Dec.
[151 30884.] No. So. 373.
(Division April 23, 1934.) A.
[154 260. No. 30884.] So.
7'57 *3 Heidelberg, Pascagoula, P. M. Milner, H. P. of New Atlanta, Powell, Arthur G. Orleans, Louisiana, and appellant. Georgia, for *5 appellee. Pascagoula,
Ford, White & Morse, of *10 appellant, Argued orally by Powell, Arthur G. for and appellee. by Ford J. Ford, E. J. I. opinion of the court.
Smith, J.,C. delivered the employees’ appellant appellee on an The sued the employees. defaulting fidelity de- bond and also employees against judgments and also awarded cree appellant, appeal who executed bond. The is appellant, surety, only. presented by The case far is record, so as neces- sary questions understanding for an is, of decided, in substance, follows: day appellant 28th
On the ex- December, 1928, & ecuted and delivered to the Merchants’ Marine Bank Pascagoula, Missississippi, employees’ fidelity a schedule insuring fidelity bond certain officers and em- ployees Lindinger, among of the whom W. J. bank, were president, twenty-five L. thousand dollars, the sum of twenty sum of Watts, dollars, A. in the thousand cashier, and T. W. assistant in the sum ten Hudson, cashier, day February, thousand 25th 1931, dollars. On the appellant bankers’ blanket bond executed indemnify agreed same bank which it the bank the “against loss, while this bond is the direct sustained any provided, hereinafter force discovered as *11 money or in 5 or as defined section here- securities, both, pecuniary or held interest, which insured a in the has of, agent, by collateral, or trustee or bailee, insured the as as (such insured liable herefor and whether or not is the property), being money called and securities hereinafter exceeding fifty dollars thousand in an amount not any (A) Through ($50,000‘), act, dishonest as follows: employees, airy as of defined of the committed, wherever acting or in collusion alone whether hereof, in section provided, this bond A attached to others.” rider with in and should force secure continue substance, that any payment the losses under the of bank’s of the liability employees’ would bond that have been schedule penalty by exceed bond, not to the it on recoverable bond. new of the Pascagoula of Marine Bank & Merchants’ superintendent by of all banks, and liquidated state the super- by sold were the action and choses assets of its appellee, intendent the a new and different bank of the Among acquired by same name. the in action thus dioses appellee right the old bank’s was the to recover on these any employees two defalcation of bonds its covered thereby. The defalcations, recover for which this suit brought by is new bank, the were committed the three officerswhose names are hereinbefore con- forth, set and lending money sist, as to all of them, either themselves belonging obtaining to the bank or loans such without having approval majority “first obtained the of the a board of directors of bank, the or of an executive board or discounting by majority selected committee required by p. board directors,” as 317, section 56, chapter 207,Laws 1916,now section 3812, 1930; and, Code Lindinger, obtaining toas of loans from the bank in permitted by chapter excess amount 54, section 124, Laws now 1914, section 3810, 1930, Code and statute appearing now section 4151, 1930; Code and with- money personal drawal of for his use from the bank’s box, leaving cash therein a written memoranda of the sums withdrawn him. provides
The second sued bond, on, the one here that: practicable “At the earliest and at moment, all events not days, later than ten after the insured shall discover anv give insured shall hereunder, loss the Underwriter by registered telegram, or notice thereof letter addressed to it at office, also, its home shall within three months discovery, after furnish to such the Underwriter at its particulars.” proof home officeaffirmative with full loss given appellant by No notice was bank of employees days defalcations appellant its within ten after they bank, claims were discovered *12 comparatively given until a short time fact, none was, pro- suit. bond not insitution of this does the before give shall failure to the notice the relieve vide that the by liability necessary appellant if, nor does thereon, from provision implication, for notice of the essence the make
769
Consequently,
give
of the contract.
the
failure
bank’s
to
required
by
appellant,
the
notice cannot
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be
of
the
appear
it is
unless
to
to
made
that the failure so
do has
prejudice
rights
resulted in such
under the
to its
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it
thereon,
Employers’ Liability
and such is not the
As
case here.
Corp.
County
surance
v.
Both for their termination on bonds which, happening of first of the events, is, certain one through “upon discovery employee,” of loss that bond, “upon by discovery and under the any the insured second, by employee.” an default under the bond May Lindinger by on 15,1929. The first defalcation was dollars, which owed bank thousand He then the eleven dollars; six hundred he increased to fourteen thousand making himself, new loan he is, obtained, that loan not dollars. This hundred thousand six three required herein- the statute manner authorized the approved board the but was afterwards cited, before meeting quarterly 1929'. 0, on June of directors its at correctly say, appellee did not for as counsel This, illegality is de- indeed, one loan; it of the cure right board directors Had on. sued falcations requirement loan that statute of the to waive the may previously it be authorized, have been should right but made, loan was after to waive it had Savings right. Bank Des German no such it had Bank of Des National Moines Des v. Moines, Iowa, N. 606. The statute W. Iowa, 737, Iowa, Moines, approval requires a loan to be of such expressly ap- made, loan is that, when character such *13 770
proval may part bank. of the a of the records become power question dealing and not of of We are here with a may power be The the manner in which the exercised. by pursued of dis- bank, directors as course here the the disregard by the closed have been to record, the seems to permit entirely of- its to made to statute and to loans be thereto; employees such without ficePs and reference approval. subsequent subject only being loans to their would result a To hold lawful that such conduct is judicial repeal of the statute. injury damage com- to bank was
The as well as the plete Lindinger loan. It unauthorized when received the immediately appellant could him there- have sued 68, 251 U. S. Johnson, National Bank v. for. Corsicana Lindinger 40 S. Ct. L. Ed. had re- 82, course, 141. Olf money, liability appellant’s therefor funded the the discharged. therefore, first bond, would been The have misappropriation Lindinger, this terminated when as bank’s- dollars of of thousand six hundred three money by which the time was occurred at discovered it, appellant’s that it if contention it was committed, vice-presi- active, an ánd was then known the cashier of direc- true; when the board not, dent bank is if Only formally approved shortly loan. thereafter tors brought into bond on first were recoverable liabilities by second. and secured June, 1929, when defalcation occurred
Hudson’s first amount a new loan or increased the he obtained either appellant’s by bond. The a former loan not covered liability defalcation when this to Hudson terminated as knew bank. board directors became known to the The approved thereafter, time loan a short it when it acquired early knowledge may of it was it be Hudson, bank other than officer of the an executive charged. knowledge must be which bank with part only occurred Watts on the The defalcation early also unauthorized June, when he obtained an' money, loan which discovered the bank when approved the board of directors short time thereafter approval, it. The did not said, hereinbefore relieve illegality. of its only
The defalcations under the bond were second Lindinger.' appellant says bond is not an that this *14 employees’ fidelity simply bond, but that it insures the against upon by employees bank inflicted loss its specifically designated unnecessary will character. It be question, only for us to decide this for defalcation the appellant thereunder is admitted the to here made be by Lindinger covered the bond. That defalcation is April personal on withdrew his 2, 1931, when he for use leaving three from box, hundred cash dollars bank’s a cash item which ticket therefor defalcation therein, immediately to to an seems have become known active vice-president and bank. bond, the cashier of This Lindinger, and therefore, then terminated as to that is only item thereon. recoverable in so- reversed, The will decree the court below be appellant, proceedings far as it for further affects the opinion. not inconsistent with this remanded. Keversed and Suggestion op
On Ebro®. opinion suggestion Smith, J.,C. delivered on error. The was on decree the court below reversed herein appeared day, a former and cause remanded. It then appellee probably judg- that the to a final entitled was on ment we were unable for, some the items sued but any satisfactory to arrive at relative thereto conclusion counsel, without the further assistance case not judgment having argued with been the view to a here appellee hold in the court should that it event was to than the amount awarded entitled recover less given. has been court below. That assistance now suggest In this connection we to desire where party judgment counsel for either desire a final in this judgment appealed court, event or from is decree they specifically reversed, should state in their briefs hearing judgment filed on the what should and be, this therefor. reasons challenged, The of our correctness former decision is but after mature we to consideration have determined adhere thereto. fidelity bank officerswhose here three insured Lindinger, president, W. L. its Watts,
are J. its A. cashier, and T. its cashier. The Hudson, W. assistant recovery on which Hudson, defalcations Watts and now Can be not decision, had under our former are dispute, and a will here therefor. These decree be entered part thousand defalcations on of Watts amount one part seventy-five of Hud- six on the dollars, hundred son to four hundred dollars. appellant’s dealing Lindinger, with
As now employees’ fidelity liability bond schedule *15 under the cashier, by the 1928, Watts, on 28, executed it December Lindinger’s when com- of of defalcations knew each question is to be here decided first mitted, and the knowledge be should held to of Watts be whether this ordinarily It true that is notice to the bank. constructive imputed knowledge but it, to of cashier is a bank’s surety apply on a of bank favor in rules does not exception fidelity is employee’s the rule to bond. This giving by the reasons supported authorities numerous by exemplified in of cases which the line is therefor, and City Fidelity Casualty National Gate appear & Co. v. 54 A. Am. St. 821, L. R. E. 33 392, 25 634, 97 S. Ga. Bank, Maryland Deposit Fidelity v. & Co. Rep. 440, L. Ed. 1193. 46 Courtney, 833, 22 Ct. 342, S. U. S. ' in the former stated directors, as board bank’s The by Lindinger, notice transactions opinion, obtained alleged 6, to on June constitute of his bond, breaches ap- 1929, quarterly at its whereat meeting held, then proved all of These these transactions. were: 1929—Loan May previously not 15, to himself n ..............$3,600.00 authorized................ n previously 19291—Loan himself not May 31, to (cid:127)........ 980.50 authorized......................(cid:127) 1929—Loan to not 4, previously June himself authorized.............. n (cid:127)................ 2,640.00 2,600.00 March & .... Canty 1929—Loan to- Gautier 27, 208.07 April note, LaForce discounted 11,1929 Henry— 600.00 April 1929—Loan & 29, to Gautier...... Canty May 2,000.00 1929'—Loan Fish 13, Company to Scranton 900’.00 May note, 19291—-Bennie-Charlton discounted 15, bank fidelity The schedule bond insured the employees’ as shall sus- against “such loss pecuniary employer tain of or money personal property through other . any dishonesty employees ... of or of the fraud, directly part schedule of this bond forming listed or made in connivance etc. The loans others,” with Code 3812, Lindinger himself in violation section dishonest opinion, former to be held, were our 1930, - which the bond was liable. acts partners owning were Gautier, Lindinger Canty, loaned money business. engaged boat fishing was use Lindinger and Gautier for the Canty pay- Lindinger guaranteeing to them the partnership, Lindinger’s why ment of rata The reason pro his thereof. makers *16 expressly and so thereof, whether ment to of statute prohibition scheme the was but a defeat hold would ren- To otherwise and within its intendment. of manner easy a because nullity statute der the employees indirept- which a officers of could do and bank ly expressly that which it forbids. loans, These there- category fore, come within the same as the loans Lindinger to himself alone. Company corporation,
The Scranton Fish a of was Lindinger, Canty, which owned and Gautier each a third Lindinger corpora- stock. an officer of the not. borrowing money by Lindinger but in tion, loaned it -for the bank he and the other two stockholders de- applied termined whether the loan should be for, and Lindinger himself determined whether the bank should provisions lend it. This loan is not within the stat- necessary ute. It is not tous determine whether it is such fraudulent or dishonest character to come within the terms the bond. No crime was committed by Lindinger making right bank had the it, to approve adopt through it; this it did its board liability directors, is therefore, there not on the bond Henry therefor. The Bennie Charlton and LaForce notes Company were owned the Scranton Fish and dis- Lindinger represented to bank, counted the bank in discounting participated the notes and with the other company determining two fish stockholders whether the notes should be sold bank. What to the has just herein said been to loan to with reference Company applies Scranton Fish here. appellant’s brings liability us to
This for Lind- inger alleged ’s defalcations second, under the banker’s or blanket, bond. These are:
February (Hibernia 25, 1931—Loan himself to item) .......... n Bank (cid:127)....................$325.77 Fairyland March 1931—Loan Golf 21, Course 50.00 April 1931—Loan 2, to himself................ 200.00 Fairyland April .. 23,1931 Golf 52.36 Course —Loan April (Cincinnati 28, 1931—Loan to himself Boat .... nn item) 703.64 *17 day of This bond noon on 25th became at effective February, 1931. as to what hour The evidence is silent February Blank transaction the Hibernia 25, 1931, prove appellee place, to took and the on the burden was place subsequent day. noon of There that it took to Fairyland recovery G-olf can no for this item. The be Lindinger’s composed partnership wife Course was to and in which had no interest. loans others, but he partnership and within the statute are this were not category La- Company, Fish as the Scranton the same recovery can had there- notes; be and Charlton no Force, for. Lindinger him- to hundred dollars
The loan two only opinion. leaves This within our former self comes dollars hundred three boat item seven the Cincinnati hope- undisposed sixty-four are in of. Counsel cents be, of this item should amount as what the less conflict to wholly on ourselves to determine unable and we are proba- appellant present is It that the record. seems do something can bly all we thereon, so that for liable lower to the the cause is to remand thereto with reference thereof. for determination court appellee for the here will be rendered A final decree on liabilities constitute said hereinbefore the items only for trial will be remanded the cause bonds, liability boat Cincinnati item. appellant’s on part. part and overruled Sustained was not included in notes one name he it not to because he so, was that be preferred thereof not of the "While loans were an officer bank. these was (section or Lindinger’s obligation” “own note made on indirectly obligated pay- 1930), Code he 3812, not intended or