Jackson Exchange Bank v. Russell

181 Mo. App. 698 | Mo. Ct. App. | 1914

REYNOLDS, P. J.

(after stating the facts). — It is contended by learned counsel for respondents, first, that the rule is well established to the effect that a surety is a favorite of the law and that his liability is not extended or varied beyond the strict terms of his contract; that he is bound to the extent and in the manner and under the circumstances pointed out in his obligation and no further. Second, that any alteration in the contract by the principal thereto, without the consent of the surety, will operate to discharge him therefrom, and that this rule is so strict that the courts will not stop to inquire whether the alteration was injurious or beneficial to the surety. Third, that there is no implied obligation on the part of the sureties. It is further argued that the president of a business corporation is its chief executive officer; that he may, without any special authority from the board of directors, perform all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business, but that it is clear that the sureties could not be held for any defalcation of the principal in this bond as assistant cashier and bookkeeper, and should not be held liable for any false entries made by him in order to conceal such defalcations, as they would be regarded as having been indirectly occasioned by the action of the bank in appointing him assistant cashier and bookkeeper, it being argued that the appointment of English, the principal in the bond as assistant cashier and bookkeeper, increased the hazard of the sureties and discharged them. Finally, it is argued that there is nothing before the court for review as no declarations of law were asked, and that the court properly sustained the exceptions to the report of the referee.

The learned referee has so fully and completely supported • the positions which he took in his several reports in this ease, that it would' be a work of supererogation to attempt to enlarge on it to any very great extent.

Taking up the last suggestion of the learned counsel for respondents, that there is nothing before our court for review as no declarations of law were asked, it is sufficient to say that by very many decisions it is the settled law of our State that in an action in the nature of one in equity, tried as such, no declarations of law need be given. The only effect of the absence of declarations of law when the case is to be reviewed by the appellate court, is that that court should consider the evidence from the standpoint most favorable to the successful party below — here the defendants — and if substantial evidence, supporting the finding, can be found, the judgment should be affirmed. [New York Life Ins. Co. v. McDearmon, 133 Mo. App. 671, l. c. 674, 114 S. W. 57.] In examining the testimony in this case, we have borne this rule in mind. “The report of a referee stands as a special verdict and if there was evidence tending to establish the facts found, the court will not disturb the finding.” [Chew et al. v. Ellingwood, 86 Mo. 260, l. c. 269; State ex rel. Bell v. United States Fidelity & Guaranty Co., 236 Mo. 352, l. c. 375, 139 S. W. 163.] This does not apply, however, when the court does not confirm the report but sustains exceptions to it and makes an independent finding. [State ex rel. Kimbrell v. People’s Ice Co., 246 Mo. 168, 151 S. W. 101.] But in the case at bar there was no finding of fact by the court. The only testimony before it was that taken before the referee, and whether the learned trial judge sustained 'the exceptions to that report because of errors in law or errors in fact, we are not advised. We have therefore no finding before us, save that of the referee, as to the facts in the case. On careful examination of that, we have reached the conclusion that his finding of facts is amply sustained by the testimony. The conclusiveness of the finding of a referee, more correctly, giving it the force of a special verdict, applies solely to his finding as to the facts and does not apply to his conclusions of law. The latter are open to examination by the appellate tribunal as fully in an equitable case as in one at law, and this record before us is open to review both on the facts and the law. This is to be reviewed as a suit in equity. Although it appears that this reference was by consent, consent did not eliminate the fact that it was a case for compulsory reference, as involving the examination of a long account or of the books of the bank, to determine the amount of defalcation, if any. A reference is always proper as involving the examination of a long account. [Third National Bank v. Owen, 101 Mo. 558, l. c. 584, 14 S. W. 632; Vandagrift v. Masonic Home, 242 Mo. 138, l. c. 154; 145 S. W. 448.] In such a case a compulsory reference is proper. [State ex rel. Federal Lead Co. v. Reynolds et al., 245 Mo. 698, l. c. 702, 151 S. W. 85.] When a compulsory reference may be ordered under the statute, the court may exercise the supervisory power of a chancellor' over the proceedings of a referee, and the purpose of such a reference is akin to equitable jurisdiction and in such case the appellate court has the full power to reverse the finding of the referee in the instances mentioned in the statute, and this is so whether the issues were committed to the referee by consent of both parties or by order of the court without the consent of either. [Reed v. Young, 248 Mo. 606, l. c. 612-613, 154 S. W. 766. So we held in Reifschneider v. Beck, 148 Mo. App. 725, 129 S. W. 232.] To repeat, we affirm the finding of the referee on the facts and agree with him on his conclusions of the law.

We can add little to the discussion of the learned referee of the law pertaining to construction of contracts of suretyship.

The position taken by the learned counsel for respondents on this point is hardly accurate; it leaves out of consideration a very important element entering into the construction of like contracts. The rule may be stated to be that while it is elementary law that the liability of sureties cannot be extended by a construction or by doubtful implication — and this is a rule never relaxed in the case of individual' sureties, who are generally such without compensation — it is equally true that a bond should be so construed as not to eliminate but to give effect to all the provisions it contains. [Chew v. Ellingwood, supra, l. c. 270; Lionberger v. Krieger, 88 Mo. 160, l. c. 165; Beers v. Wolfe, 116 Mo. 179, l. c. 184; N. K. Fairbank Co. v. American Bond & Trust Co., 97 Mo. App. 205; l. c. 212, 70 S. W. 1096; Springfield Lighting Co. v. Hobart, 98 Mo. App. 227, l. c. 232, 68 S. W. 942; New York Life Ins. Co. v. McDearmon, supra, l. c. 678.]

We find no evidence of an enlargement or change of the duties of the principal' in the bond for the time covered by the bond. While duties not mentioned in the bond, such as bookkeeper, were cast upon him, the minutes of the bank show that even before the giving of the bond and for all the period covered by it, the-president had been discharging the duties of bookkeeper as well as acting cashier or assistant cashier during part of the time, but we are unable to see how the addition of these duties imposed any more responsibility than rested on the principal in the bond in his office as president. Even if it increased his labor, it did not do so to the extent of releasing the sureties. [Third National Bank v. Owen, supra.]

Nor is there any evidence of any fraudulent concealment of facts known to the bank, with knowledge of which facts the sureties may not have been willing to sign the bond. This point has been covered by the referee in his report and is fully sustained by the decision in Third National Bank v. Owen, supra, l. c. 581-582.

The contention, and that is the chief one, of the counsel for respondents turns on the proposition that the defalcations of the principal in the bond were brought about by the acts of that principal as bookkeeper and not as president. "We cannot accede to this proposition. The evidence is ample to sustain the conclusion that the act of conversion of the funds of the bank was the act of the president, and that his acts as bookkeeper were mere acts which effectually concealed the conversion or misapplication, not to use a harsher word, of the funds of the bank by its president. The bond held him to the faithful discharge of his duties as president and he surely cannot be said to have faithfully discharged those duties when, having converted the funds of the bank, he allowed that conversion to be concealed by the acts of the bookkeeper. For illustration, suppose .another than Mr. H. R. English had been the bookkeeper of this bank, English the president. Knowing that this bookkeeper was making false entries to conceal defalcations or embezzlements of the moneys of the bank, and English, as president, chief officer, with full power of supervision even over the bookkeeper, which was undoubtedly an incident to his office as president, had stood by and condoned these acts of the bookkeeper, or been a party and privy to these false entries, •could it be said that he had not been derelict in the discharge of his duties as president in not stopping these acts of the bookkeeper? Can it be denied that he was not only in privity with the bookkeeper but particeps criminis, an accomplice of, the bookkeeper in his criminal acts, and in a criminal act of this character, all participating in it were principals. Even conceding that as. bookkeeper he effected concealment of the embezzlement, as president, he was a joint principal in that act and in that respect had grossly failed in the faithful discharge of his duties as president. The acts of English as bookkeeper, known to English as president, were surely acts of misfeasance and of failure to faithfully discharge the duties of his office as president, and rendered him and his sureties liable upon the bond. [Home Savings Bank v. Traube, supra; Third National Bank v. Owen, supra, l. c. 580.]

A bond is not usually exacted of the president of a financial institution. The fact that English was required to give a bond is in itself suggestive that he was under more than the mere supervisory duties of president; indicates that he was, as president, to personally handle and .look to the safe-keeping of the moneys of the bank.

Our conclusion is, that the action of the learned trial court in sustaining the exceptions to the referee’s report is without support on the facts in the case, and that the conclusions of nonliability on the part of these defendant sureties is wrong. The judgment of the circuit court in this case is reversed and the cause remanded with directions to the circuit court to overrule the exceptions to the report of the referee and enter up judgment against the respondents in accordance with the finding of the referee for the penalty of the bond, and for interest thereon from the date of the filing of that report by the referee, to-wit, August 21, 1911, as well as for costs, and for execution accordingly.

Nortoni and Allen, JJ., concur.