146 Wis. 573 | Wis. | 1911
Lead Opinion
The following opinion was filed June 1, 1911:
The bond sued on obligated the surety to-“make good to the employer, within sixty days, any loss sustained by the employer by larceny or embezzlement committed by the employee during a term” of one year from February 1,. 1908. The appellant contends that no competent proof was offered to show that the agent, Greene, had collected or at any time had in his hands any money belonging to- the plaintiff which had not been paid to it, and that the court erred in directing a verdict for the plaintiff and in refusing to direct one for the defendant. The plaintiff insists that the required proof was presented.
The agent of the plaintiff admitted to its secretary on December 22, 1908, that he had collected and used $2,800 of money belonging to the plaintiff. The total amount due or to become due the plaintiff for collected and uncollected premiums at this time, according to statements rendered by the agent, was $3,604.80. Of this amount $700 was paid after December 22d. A statement of account was compiled by the plaintiff from the daily reports and monthly accounts rendered by the agent, which was submitted to the latter on May 17, 1910, and showed a balance of $2,904.80. This
It is conceded by both parties.that any admission by the agent of the amount of money in his.hands belonging to his principal, made prior to his resignation, would be competent evidence against the surety. Goldman v. Fidelity & D. Co. 125 Wis. 390, 396, 104 N. W. 80, and cases cited. It is contended by the defendant, however, that such admissions were made after the agency was terminated and were therefore incompetent. There are many eases holding generally that declarations or admissions made by an agent when his employment has ceased are not competent in an action by the principal against the surety. Lee v. Brown, 21 Kan. 458; Knott v. Peterson, 125 Iowa, 404, 407, 101 N. W. 173; Wieder v. Union S. & G. Co. 42 Misc. 499, 86 N. Y. Supp. 105; Chelmsford Co. v. Demarest; 7 Gray (73 Mass.) 1, 7; Lewis v. Lee Co. 73 Ala. 148; Trousdale v. Philips, 2 Swan (Tenn.) 384; Bocard v. State ex rel. Stevens, 79 Ind. 270; Shelby v. Governor, 2 Blackf. 289; Dobbs v. Justices, 17 Ga. 624, 630; Wheeler v. State, 9 Heisk. 393, 397; Union Sav. Asso. v. Edwards, 47 Mo. 445; Ayer v. Getty, 46 Hun, 287; Eichhold v. Tiffany, 20 Misc. 680, 46 N. Y. Supp. 534; Blair v. Perpetual Ins. Co. 10 Mo. 559; Hodnet’s Adm'x v. Pace’s Adm’r, 84 Va. 873, 6 S. E. 217; Hatch v. Elkins, 65 N. Y. 489; Stetson v. City Bank, 2 Ohio St. 167. The cases in this court bearing on the question ar.e Stone v. Northwestern S. Co. 70 Wis. 585, 587, 36 N. W. 248; Coxe Bros. & Co. v. Mil
It was the duty of the agent under the written contract to remit for the business written in October not later than December 31st, and for that written in Rovember not later than the 31st of January following. The time for making remittances for business written under the oral contract does not ajipear. The agent tendered his resignation about December 1st, and after that time wrote no new business. It was still the duty of the agent after his resignation to make remittances during the months of December and January, according to the terms of his' contract, and to collect any outstanding premiums that were unpaid and to account for and remit such premiums to the plaintiff, less his commission and expenses. This much satisfactorily appears from the whole record. . Even if the record were silent, the duty of an agent to account for moneys coming into his hands is well settled. See collection of cases found in 31 Oye. 1470, note 90, and 2 Am. & Eng. Ency. of Law & Pr. (2d ed.) 1070 and 1057. Even after his resignation it was contemplated that Greene would continue to perform his former duties of collecting premiums due to the company and of remitting the same to it. The agent did not make up Exhibit 29, but it was compiled from statements which he had rendered, and the only thing in reference thereto which it was necessary for the plaintiff to be advised upon was whether or not the business reported as having been written had been paid for by the policy-holders to the agent. When he stated that all of the moneys had been collected he was not making a mere casual remark, but was discharging a duty that devolved upon him under his old contract.
The question we have before us, therefore, is, Where an aeent renders an account or O E?s an account submitted to
We perceive no very good reason why, where an agent does, an act which, it is his duty under his contract to perform, evidence of that act after his principal duty as agent has ceased should not he admissible as well as if made during the time he was actively performing his duties, and we think it would be the better rule to hold such testimony competent. We conclude, therefore, that a prima facie case of embezzlement .was. made, there being no evidence offered by the defendant upon the question.
In the application of the plaintiff for a surety bond it was. stated (1) that the agent would remit on the 10th of each month; (2) that he would not be permitted to retain balances; (3) that his accounts and books would be inspected, audited, and verified at least once a month; and (4) that his outstanding accounts would be verified at least once a month. It was further stated that it was agreed that the answers of the applicant should be warranties and form part of and be conditions precedent to the issuance, continuance, or renewal of the bond. The bond itself contained a statement that all “the representations made by the employer ... to the surety are warranted to be true.” This probably refers to the representations contained in the application for the bond.
The appellant claims that it was incumbent on the plaintiff to prove the truth of the representations made as a condition precedent to the right of recovery. The respondent contends that the representations were mere warranties or conditions subsequent which should be pleaded and proven as a defense.
The question whether the representations were conditions precedent or warranties is not very material, however, inasmuch as these conditions and the breach thereof were pleaded as a defense, and the proof showed that the agent did not remit on the 10th of each month; that he was permitted to re
Tbe question arising on tbe application, therefore, is not whether we. are confronted with conditions precedent or warranties, but whether the representations made affect the plaintiff's right of recovery in any aspect of the case.
The bond provided that the employer should observe “all due and customary supervision over said employee for the prevention of default, and that there shall be a careful inspection of the accounts and books of said employee at least once in every twelve months from the date of this bond,” etc. We think this provision of the bond determined what was required in the way of inspection and supervision and superseded what was stated in the application and waived any other or further requirement in reference thereto. The applicant was required to do certain specific things in the way of inspection and to exercise due and customary supervision over the agent, by the terms of the^ond. The surety substituted its own requirements for the things which the applicant said it would do.
The bond provided that the employer should immediately notify the surety of any default on the part of the agent. The evidence does not disclose whether this notice was given or not. Ueither is there any evidence on the question of whether the plaintiff exercised “due and customary supervision” over its agent. If it was incumbent on the plaintiff to show that notice of the default was given or that it exercised due and customary supervision over, its employee, as a condition precedent to its right of recovery, then a verdict should
We deem it unnecessary to discuss the other point raised by appellant’s counsel.
By the Court. — Judgment affirmed.
TRe following opinion was filed June 21, 1911:
Dissenting Opinion
(dissenting). TRe majority opinion holds that there was evidence to warrant the court below in direct
The first question presented is, how far, if at all, the admissions. wrere competent as against the defendant surety. Without this evidence plaintiff was not entitled to a directed verdict. The general rule is well established that admissions of a principal are not binding upon the surety unless made in the course of the employment covered by the undertaking of the surety. But it is held by the majority opinion that since the principal was bound to account even after his resignation and withdrawal from the employment covered by the bond, his admissions as to prior misappropriation of money were admissible. True, the duty under a contract to perform always remains and can only be satisfied by performance. And it may be admitted that the duty of Greene to account and pay over what under the contract should be found due on such accounting continued after his resignation. But the amount of shortage, if any, or state of account could not be proved by the statements of Greene, made without the sanction of an oath, detailing past transactions after the term of his employment had ceased, such statements not being part of the res gedw. The evidence relied upon in support of the majority opinion is an admission made by Greene in December, 1908, to the.
“We are next to consider tbe admissions of a principal, as evidence in an action against the surety, upon his collateral undertaking. In tbe cases on this subject tbe main inquiry has been, whether tbe declarations of the principal were made during tbe transaction of tbe business for which the surety was bound, so as to become part of the res gestee. If so, they have been held admissible; otherwise not. The surety is considered as bound only for tbe actual conduct of tbe party, and not for whatever be might say be had done; and therefore is entitled to proof of bis conduct by original evidence, where it can be bad; excluding all declarations of tbe principal, made subsequent to tbe act to which they relate, and out of tbe course of bis official duty. Thus, where one guaranteed tbe payment for such goods as the plaintiffs should send to another, in tbe way of their trade, it was held, that the admissions of tbe principal debtor, tbat be had received goods, made after the time of their supposed delivery, were not receivable in evidence against the surety. • So, if one becomes surety in a bond, conditioned for tbe faithful conduct of another as clerk, or collector, it is held, tbat, in an action on tbe bond*585 against tbe surety, confessions of embezzlement made by the principal after bis dismissal, are not admissible in evidence; though, with regard to entries made in the course of his duty, it is otherwise.”
To the same effect is 1 Taylor, Ev. §§ 785, 786, and cases cited; 1 Phillips, Ev. (5th Am. ed.) 436 (*526).
The rule laid down in Greenleaf' and other text-books is supported by the authorities generally, English and American. The theory of the authorities seems to be that all evidence as to what the principal said he had done in the past should be excluded, and the only testimony admitted under this head what the principal in fact did in the course of his employment and such statements as were made in connection with the acts done in the course of his business and constituting part of the res gestee; therefore the surety cannot be bound by the mere statements of the principal made subsequently to the acts done and as a narrative of them. The reason of the rule seems obvious when we consider the-well settled doctrine that hearsay evidence is not competent generally, and admissions by principal not supported by the sanction of an oath rarely admissible against the surety. 1 Taylor, Ev. § 786 and cases cited. A brief review of some of the leading cases quite analogous to the case at bar will illustrate the principle applicable to the instant case.
Smith v. Whittingham, 6 Carr. & P. 78, was an action on bond to charge surety for failure to account by principal. After his discharge admissions as to correctness of account were held incompetent against surety. The court said (page 80): “This is not an account current, it is only an admission made by Eisherwick after his discharge of what he had embezzled; and though it would have been evidence against Eisherwick, it is not so against the defendant.” This is a leading case and cited with approval generally in this country.
Hatch v. Elkins, 65 N. Y. 489, was ah action on a bond of
The following cases quoted from are quite similar in their-facts to the instant case:
In Lee v. Brown, 21 Kan. 458, at page 461 the court said: “This admission and settlement were after the default óf Lee. These matters referred to past occurrences; they had no connection with the acts to which they related, except as a narrative or admission of what Lee had done at dates prior thereto, and ought not to have been received as evidence so as to bind his sureties; for it was the acts of Lee, and not his admissions: or declarations, for which his sureties were bound.”
In Knott v. Peterson, 125 Iowa, 404, at page 407 it is said: “The bond was not to be responsible for any declaration or-admissions of the principal, but for his conduct only. Hence it is only his conduct in carrying on the business, or declarations accompanying his acts while so engaged,.that are admissible in evidence against his surety.”
Wieder v. Union S. & G. Co. 42 Misc. 499, 86 N. Y. Supp. 105: “The rule seems to be well settled that a party holding an-indemnity cannot prove the loss sustained by him, for which he seeks to hold the surety liable, by the mere admissions or statements of the principal. 'The declarations of the principal made during the transaction of the business for which the-
Trousdale v. Philips, 2 Swan (Tenn.) 384: “In order to make tbe declarations and statements of tbe principal good against tbe s.urety, in these kind of bonds, they must be made-when tbe business is transacted, and in connection with it, so as to become a part of tbe res gestae. They can be admitted, on no other principle. Tbe surety is bound for the'acts and conduct of bis principal, and not for what be may say be bad done.”
Shelby v. Governor, 2 Blackf. 289, at page 290: “On the-trial, tbe plaintiff introduced a witness to prove that Weathers, told him that be bad collected tbe money in controversy. . . . If Weathers, while officially acting in relation to tbe receipt, of this money, stated that be bad received it, such statement would form a part of tbe res gestee, and would be evidence to-pr.ove tbe act of receiving; and would therefore be admissible against bis sureties. But declarations made by him at any subsequent period, would have no connection with tbe act, and could not be introduced as evidence of tbe act, so as to. bind bis sureties; for it is bis acts, and not bis admissions or-declarations, for which bis sureties are bound.”
Union Sav. Asso. v. Edwards, 41 Mo. 445, at page 449: “Had tbe suit been against tbe sureties alone, tbe evidence-would have been clearly inadmissible. It is not within tbe power of tbe principal, after a transaction is past and gone,, to make admissions to the detriment of his sureties.”
To tbe same effect are Blair v. Perpetual Ins. Co. 10 Mo. 559; Eichhold v. Tiffany, 20 Misc. 680, 46 N. Y. Supp. 534; Ayer v. Getty, 46 Hun, 287; Wheeler v. State, 9 Heisk. 393; Dobbs v. Justices, 17 Ga. 624; Bocard v. State ex rel. Stevens, 79 Ind. 270; Lewis v. Lee Co. 73 Ala. 148; Chelmsford Co. v. Demarest, 7 Gray (73 Mass.) 1; Tenth Nat. Bank v. Darragh, 3 T. & C. 138, 1 Hun, 111.
The majority opinion endeavors to distinguish the instant
It may well be that the reports and accounts made by the agent, Greene, before resignation and in the course of his employment were competent, and that if such reports and accounts had shown a misappropriation of funds a prima facie •case would have been made against the defendant. But I think it clear under the authorities that the admissions supplementing the account, made after the reports and accounts had been made, were no part of the res gestee, hence not competent evidence against the defendant surety. Had the admissions as to correctness of account and conversion by the agent been made at or about the time the reports and accounts were made and while the agent was in the discharge of such employment, doubtless such admissions would have been competent against the defendant as part of the res gestee.
The admissions must be contemporaneous with the act in ■order to constitute part of the res gestes. 3 Wigmore, Ev. §§ 1757, 1772, 1773, 1774, 1776, and cases cited; Stetson v. City Bank, 2 Ohio St. 167, and cases cited; 1 Greenl. Ev. §§ 108, 110; Shelby v. Governor, 2 Blackf. 289; Hotchkiss v. Lyon, 2 Blackf. 222; Ward v. Suffield, 5 Bing. N. C. 381; Evans v. Beattie, 5 Esp. 26; Longenecker v. Hyde, 6 Bin. 1; Kamp v. Coxe Bros. & Co. 122 Wis. 206, 99 N. W. 366.
With all the diligence of the distinguished counsel for respondent and the court, but one case, Father Matthew Y. M. T. A. & B. Soc. v. Fitzwilliam, 12 Mo. App. 445, is cited which appears to support the majority opinion. I am not •clear that that case is authority for the majority opinion here. It is true the report or statement was made after the removal from office of Fitzwilliam, but the statement included no time not covered by the bond, and the bond provided that such a statement should be made at the expiration of the term.
The other authorities cited in. the majority opinion (Townsend v. Everett, 4 Ala. 607, approved in Lewis v. Lee Co. 73 Ala. 148; Jenness v. Blackhawk, 2 Colo. 578; Wyche v. Myrick, 14 Ga. 584; Douglass v. Howland, 24 Wend. 35; and 2 Wigmore, Ev. § 1077) do not appear to add strength to the opinion of the court. The point in Townsend v. Everett, supra, pertinent is that the annual statement of the county treasurer, which by law he was bound to make, was evidence against his surety. On page 611 (4 Ala.) the court says:
“We do not consider it necessary, in this case, to go into the-inquiry how far the surety is bound by the declarations of the principal, made in reference to his conduct as treasurer,, whilst in office; as he certainly is bound by those acts which, as treasurer of the county, his principal was bound to perform, and for the performance of which he was surety. The-statute requires the treasurer to account with the commissioners court annually, and upon his resignation or removal from office, to state the account, and deliver the money and other effects of the county to- his successor, and these acts when done are as obligatory on the surety as on the principal.”
Lewis v. Lee Co. 73 Ala. 148, referred to in the majority opinion as approving Townsend v. Everett, 4 Ala. 607, is a strong case in support of this dissent, as I understand it.
Jenness v. Blackhawk, supra, involved the question of declarations of a principal in an official bond as evidence ag-ainst the sureties when made in the performance of some official act or duty and in reference thereto. The court at page 585 (2 Colo.), referring to a case of declarations of the principal in an official bond, lays down the doctrine that the better rule limits the operation of such declarations against sureties to' the case in which they ai'e made in the performance of some official act or duty, and in reference thereto, and that they
Wyche v. Myrick and Douglass v. Howland, supra, contain nothing contrary to the general rule stated in this dissent.
2 Wigmore, Ev. § 1077, treats, among other subjects, of principal and surety, but I find nothing in it contrary to the rule laid down in the cases heretofore cited.
Conceding that the statement of account was competent because the reports from which it was made up were made by the agent, Greene, during the discharge of his duties, such statement is clearly insufficient to charge Greene with larceny ■or embezzlement, because the evidence is undisputed that it is merely a report of the business done by the agent, Greene, ■and not of premiums collected. Under the conditions of the bond the surety was only liable for larceny or embezzlement ■of the agent and not for loss otherwise occurring, therefore the amount of premiums appearing upon the account stated was not sufficient to charge Greene with larceny or embezzlement. Travellers’ Ins. Co. v. McConkey, 127 U. S. 661, 8 Sup. Ct. 1360; Germania F. Ins. Co. v. Deckard, 3 Ind. App. 361; Lycoming F. Ins. Co. v. Schwenk, 95 Pa. St. 89; Gauch v. St. Louis Mut. L. Ins. Co. 88 Ill. 251; Dupin v. Mutual Ins. Co. 5 La. Ann. 482; Weidner v. Standard L. & A. Ins. Co. 130 Wis. 10, 110 N. W. 246. Therefore, as conceded in the majority opinion, the admissions of Greené after his resignation charging himself with conversion were necessary to make a ■case, and, these admissions being incompetent, no case was made. I think, therefore, the judgment should be reversed.
I am authorized to say that Mr. Justice Timlin concurs in the foregoing dissent.
A motion for a rehearing was denied October 3, 1911.