117 Ky. 127 | Ky. Ct. App. | 1903
Opinion op the court by
Reversing.
On the 17th of November, 1900, C. M. Barnett, requested the United States Fidelity & Guaranty Company, of Baltimore, Md., to go security for his honesty and fidelity as bookkeeper and cashier of the firm of Blackly, Hurst & Co., who were engaged in the tobacco business in Louisville, Ky., from the 1st day of December, 1900, to the 1st day of December, 1901. The- application- was made by Barnett upon one of the printed forms of the
On this state of facts, the court gave the jury the following instructions:
“(1) The court instructs the jury that the application for a bond sued on in this case contained the following statements: ‘He (meaning the defendant, Clarence M. Barnett) hag always to the best of my knowledge and belief given satisfaction in his personal conduct and performance of duties, and kept his accounts faithfully and without default. When last examined or audited, by firm, all accounts of this officer were found in every respect correct up to date. He has not been, nor is he at present, so far as I know or believe, in arrears, default, or without unsettled balance in this or any previous service. I know nothing concerning his habits or antecedents affecting his title to confidence, and I know of no reason why the guaranty hereby applied for should not be granted/ Andl said application was*135 signed by the plaintiffs. Unless the jury shall believe from the evidence that one or more of said statements, when made, were not true, to the best of the knowledge and belief of the plaintiffs, or either of them, the law is for the plaintiffs, and the jury should so find.
“(2.) But if the jury shall Relieve from the evidence that these statements contained in said application, and set forth in instruction No. 1, or any of them, was, when made, untrue, to the best of the knowledge and belief of the plaintiffs, or either of them, the law is for the defendant, and the jury should so find.
“(3.) If the jury shall find for the plaintiff, it should be for the sum of $819, with interest from October 10, 1901.
“(4.) If the jury shall find for the defendant, they shall so say. by their verdict, and no more.”
Under the above instructions, the jury found for the plaintiffs, and the defendant appeals to this court, and insists that the instructions quoted supra, do not define the correct rule for the measurement of appellees’ duties and responsibilities growing out of the execution of the bond sued on. In the recent case of Warren Deposit Bank v. Fidelity & Deposit Company, 116 Ky., 38, 25 R., 289, 74 S. W., 1111, it was decided that section 639 of the Kentucky Statutes, which provides that “all statements or descriptions in any application for a policy of insurance shall be deemed and held representations, and not warranties, nor shall any misrepresentation, unless material or fraudulent, prevent a recovery on the policy,” applied to bonds of the character sued on in this action, but that misrepresentations which were material to the risk in this character of cases, whether fraudulent or not, would invalidate the bond. In Graves v. Lebanon National Bank, 73 Ky.,. 23,*136 19 Am. Rep., 50, the court said: “There is no principle of law better settled than that persons proposing to become sureties to a corporation for the good conduct and fidelity of an officer to whose custody its moneys, notes, bills, or other valuables are intrusted have the right to be treated with perfect good faith. If the directors are aware of secretfacts materially affecting or increasing the obligations of the sureties, the latter are entitled to have these facts disclosed to them, a proper opportunity being presented.
. . . A fraud' may be perpetrated as well by the assertion of facts that do not exist, ignorantly .made by one whom the person acting upon the assertion has the right to suppose used reasonable diligence to inform himself, as by concealing facts known to exist, which in equity and good conscience ought to have been made.” In the case of Deposit Bank of Midway v. Hearne, 104 Ky., 819, 20 R., 1019, 48 S. W., 160, this court decided that whenever the directors of a bank become aware of the embezzlement of a clerk, or may by the exercise of slight care have become so, they owe to the surety to discharge the clerk, and thus terminate the surety’s further risk. In Belleview Bl. & L. Ass’n. v. Jeckel, 104 Ky., 159, 20 R., 460, 46 S. W., 482, it was decided: “If a party taking a guaranty from a surety conceals from him facts which go to increase his risk, and suffers him to enter into the contract under false impressions as to the real- state of facts, such concealments will amount to a fraud, because the party is bound to make the disclosure, and the omission to make it under such circumstances is equivalent to an affirmation that the facts do not exist.” Quoting Story on Equity Jurisprudence, section 215. The law requires of an employer, who makes representations material to the risk for the purpose of inducing another to
For the reasons indicated the judgment is reversed, and cause remanded for proceedings consistent with this opinion.
Petition for rehearing by appellee overruled.