46 N.Y.S. 823 | N.Y. App. Div. | 1897
This action was brought to foreclose a mortgage made by one William H. Buxton, the appellant’s testator, to one Bainbridge Colby, and
The complaint alleges the execution of the' mortgage and agreement, and that, upon an examination and investigation of the accounts and dealings of said defendant William H. Buxton with said plaintiff, Irving Savings Institution, it appeared that said Buxton was indebted to the said institution in the sum of $32,919.57, with interest. The answer of the defendant denies his indebtedness to' the sayings institution in any sum whatever, and the issue raised by this denial is the first question presented upon this appeal.
It appears that the defendant entered into .the employ of the savings institution in the year 1863 as a clerk. That subsequently there were in.the employ of the said institution two clerks, of whom the defendant was one, whose duty it was to receive money from depositors and pay it out to them, He continued to act in that capacity until the year 1890, when he was made secretary, in which' position he continued down to the time of the execution of the mortgage and agreement before referred to. These two-clerks were known as first and second clerks-. The first clerk was generally employed as paying teller, and the second clerk as receiving teller of the bank, although each of the clerks. from time to time performed the duties of the other. One Daniel D. Tompkins was the
. The first and serious question presented upon this testimony is as to the construction to be given to these instruments, whether there . was secured by this mortgage any amount for which Buxton was liable to the bank, which either through his connivance or negligence had been taken by other employees of the bank. Subsequent investigations show that, in addition to the $25,000 which Buxton had repaid to the bank, there was due by him the sum of $4,333.80, which' on May 7, 1894, he repaid to the bank. It also appeared that Tompkins had appropriated $23,702.17; and that Heaten, the other clerk, had appropriated $729.95 ; making a total of principal of $24,432.12. For this sum, with interest, the court . has awarded judgment, upon the ground that Buxton was responsible to the bank for the money thus appropriated by Tompkins and Heaten, the sum having been taken with his connivance or through his culpable negligence, And the question is whether, according to the terms of this mortgage, it covered a liability to the bank occasioned by Buxton’s negligence' or liability for money taken by others.
Was a liability for the amount taken by Tompkins and Heaten an indebtedness of Buxton’s to .the institution? Using it in its strict legal significance, the word “ indebtedness ” applies only to an obligation arising from contracts express or implied; and the defendant strenuously insists that this obligation should be confined to a liability of this character. . The word “indebtedness” is defined by Bouvier’s Law Dictionary as the state of being in «debt without regard to the ability or inability to pay the same.' The word “ debt ” has generally been confined to a contract obligation, and is defined in Blackstone as a sum of money due by certain and, express agreement. In the American and English Encycl
In Heacock & Lockwood v. Sherman, (14 Wend. 58).it was. held, in construing the Word “ debt,” as used in a statute making-stockholders liable for demands or debts of the corporation, that damage arising upon tort is not a debt accrued within any reasonable construction of that term. There is, however, a much broader meaning given to the term than the definitions above given. Thus,, • in the Imperial Dictionary the word “ debt ” is defined as “ that which is due from one person to another,, whether money, goods or services; that which one person is bound to pay to or perform for ■another; that which one is obliged, to do or suffer; ” and there are many cases in which this .broader significance .has. been applied to the term. Thus, Judge Story, in the case of Carver v. Braintree Manfg. Co. (2 Story, 450), says: “It seems clear that in common parlance, as well as in law, the term is, in an enlarged sense, sometimes used to denote any kind of a just demand.” And many other cases might be cited in which similar language is used. In which sense Was the. word used by the parties to this instrument in question ? I think that this is" a case in which the court is justified •in considering the negotiations which led ■ up to the execution of these instruments; the situation at the time the instruments were, executed; the nature of the demand made upon Buxton,- and the object of the parties in executing the instruments, which is apparent-from what was said and. done at the time they were prepared and executed. A defalcation had been discovered from which it. appeared that upwards of $60,000 had been stolen from this institution. It had been discovered that Buxton had appropriated a. large portion of this money, he conceding that he had appropriated. $25,000, which he had made good. He, as the responsible officer of the institution, was charged with the responsibility for the whole-amount, and the reasonable claim was made that he should account, for its disappearance if he was to relieve himself from liability for
There was no evidence before the officers of this banking association that any one else had been concerned in the commission of the wrong to the company, and it is quite reasonable to suppose that if, upon an investigation, it was found that more of the funds were missing, the one who had admitted stealing $25,000 would be the party who would be responsible for the balance. He concedes that he had knowledge of the fact that the other officers of the association had from time to time appropriated money belonging to it. He nowhere claimed that he understood that that money had been repaid. He made no statement to the officers of the institution as to the robbery of the others, but insisted that no more had been taken; and when a demand was made that he should repay this sum, or at least secure the bank against any loss if it was discovered that a further defalcation had taken place, he expressly agreed that he would accept such responsibility and would secure the bank. He stated to the officers that he was willing to make good anything that he was directly or indirectly responsible for, and it was to carry that intention into effect that the instruments were prepared and executed. He was not in a position to make terms. He must be presumed to have had a knowledge, even upon his own statements, of acts of these other employees which would at least justify any one in believing that the defalcations of his co-employees, of which he had knowledge, with his own, were not the only ones which had depleted the funds of this institution; and we agree with the learned judge below, that it is scarcely possible to conceive, considering his relations to this bank and the terms he was on with the other employees and officers,"that he did not know that they had applied the same methods to cover up their stealing as had been applied by him.
It seems to us clear, considering this express intention with which Buxton executed this agreement, and the express object of the officers of the bank in obtaining this mortgage, that he must have understood that this term “ indebtedness ” was used in its ordinary significance, and that the agreement was intended to secure the bank
In the case of Leggett v. The Bank of Sing Sing (24 N. Y. 284) the court had under consideration the words “ debt due,” and the intention with which that phrase was used, and it was there held that those words included the contingent obligation of an indorser of a promissory note held by a bank, although, at the time when the obligation was sought to be. enforced, the note itself was not due and the liability of the indorser was only contingent upon the failure of the maker of the note to pay it, and although there was a strong dissent in that case, both of the learned judges writing the opinions conceded that the words “ debt due ” would include an obligation that existed, although it was not payable until a future time.
It is not necessary to multiply citations to show that where one of two meanings can be given to a word used in an instrument of this character, the court should consider the object for which the instrument -was executed to ascertain which of the- two meanings the parties intended to use, and looking at this case, it is apparent that it was the intention of all the parties that this mortgage should be .given to secure all liabilities of Buxton arising out of his connection with the- defalcation of this sum, and it was not intended to restrict it to the amount to which he could be said to- be indebted to- the bank upon a contract or for money which he himself appropriated and -used.
The other questions presented do not require an extended discussion. Upon the evidence there can be no doubt that Buxton was liable to the bank for the money appropriated by his fellow-employees. They were both his subordinates, to some extent under his control. They followed his example in appropriating the bank’s money, and we think it clear from the evidence that he was negligent in allowing them to steal, and that he connived at their appropriating the money of the bank. The mere fact that he might not have been familiar with the extent of their appropriations would not relieve him from such liability.
We think the amount allowed by the court below as due from the defendant was proved, and that the plaintiff was entitled to recover the interest allowed. The agreement itself provides that, for any indebtedness of the defendant, interest should be allowed, and that could only mean interest from the time that the obligation to the bank accrued.
There are many exceptions to evidence in the record, but none of them are material. The only disputed fact was as to the agreement that the defendant made as to the effect of the security that he should give. The books were in court, and the exceptions to allowing the witness to testify to their contents are not available.
We think, on the whole case, that the judgment appealed from was right, and it is affirmed, with costs.
Van Brunt, P. J., Williams, Patterson and O’Brien, JJ., concurred.
Judgment affirmed, with costs.