Summary
Appeal from the Superior Court of Baltimore City.
This was an action brought by the appellee against John Siebrecht, as principal, and August Engler and Adolph Engler as sureties, on a bond given for the faithful performance by John Siebrecht, of the duties of the office of secretary of the appellee. The condition of the bond was, “ that if the above named John Siebrecht shall faithfully perform his duties as secretary of the said Peoples’ Eire Insurance Company of Baltimore, during the time he holds said office, and shall account for all the money which shall come into his hands as such secretary, then this obligation shall be void, otherwise the same shall remain in full force and virtue.”
And the 4th Article of the by-laws of the company, defining the duties of the secretary is as follows:
“Art. 4, It shall be the duty of the secretary to attend daily at the office during the business hours of the company, to keep the accounts and books of the company in proper order, and ready for inspection when called upon' by either standing committee, to countersign all policies of insurance, renewals of policies and certificates of stock, to countersign all conveyances of real estate and releases of mortgages, and all other papers and acts to which the seal of the company is affixed, to attend the meetings of the board of directors, and keep the minutes of their proceedings, to attend the meetings of the standing committees, and keep the minutes of their proceedings, to report at the monthly meeting of the board of directors a statement of the receipts and disbursements of the preceding month, and half yearly, a full and complete statement of all the property and the effects of the company, to wit: real estate, stocks and bonds, loans on real estate, loans on stocks and United States bonds, cash on hand, and all debts and claims due to or by the company, to prepare for publication the annual statement, and, in general, to perform such other duties as may he referred to him by the board of directors or by the standing committees. The secretary shall give satisfactory security for the faithful performance of his duties, in a sum not less than $2000, to be approved by the finance committee. In case of sickness of the secretary, the president shall appoint some person to perform the duties of the secretary, until the board of directors shall be convened."
The appellant appeared to the action, and pleaded general performance on the part of his principal, and upon this plea issue was joined.
Exception. — At the trial, the defendant offered the four following prayers :
1. If the jury shall find from the evidence that John Siebrecht was appointed secretary of the plaintiff at or about March 9th, 1871, and entered upon the duties of the said office, under the charter and by-laws offered in evidence, and that Art. 4 of said by-laws, prescribes the duties and obligations of said secretary, and that the defendant executed the bond to the plaintiff offered in evidence, to secure the faithful discharge of the office of said secretary, that, then the defendant' is only responsible for any breach of duty on the part of said secretary, which is contained in the said article prescribing said duty; and if the jury find that the said secretary was entrusted with the care and custody or safe-keeping of the funds of the plaintiff, that then such duty is not within the provisions of said article, and plaintiff is not entitled to recover.
2. The defendant respectfully moves the Court to instruct the jury, that under the charter and by-laws of the plaintiff, offered in evidence in this case, the duties of the secretary of the plaintiff are prescribed in Article 3 of the same, and could not he enlarged or varied in any manner, unless the same were referred to him by the hoard of directors or by the standing committee; and if the jury find that he was entrusted with the safe-keeping and depositing of the moneys of the plaintiff, without the order and direction of said board or standing committee, as above stated, that then any defalcation of said Siebrecht as secretary, is not embraced within the terms and conditions of the bond of said secretary, and the plaintiff is not entitled to recover.
3. That Article 3 of the charter and by-laws of the plaintiff, makes it the duty of the president of the company to receive all moneys paid to the company or plaintiff, and to deposit the same, as stated in said article; and if the jury find that the said president, instead of receiving such money and making said deposit himself, entrusted the funds of said' plaintiff to this John Siebrecht, secretary of the plaintiff, for that purpose, that then said president under the said article must he considered as relying upon the personal integrity and capacity of the said John Siebrecht, and not upon the official' bond of said Siebrecht, as secretary, given for the faithful performance of his duties as secretary under Article 4 of said charter and by-laws, and the plaintiff is not entitled to recover.
4. If the jury find from the evidence that the defendant made and executed the bond offered in evidence, dated March 9 th, 1871, the duties of John Siebrecht, as the secretary of the plaintiff, it then became the duty of the plaintiff, to notify the defendant of the acceptance and approval of the same; and if the jury should find that the plaintiff did not give the defendant any such notice until some three years after the same had been made, to wit: about the month of March, 1875, when defalcation or breaches of duty had already been committed by Siebrecht as secretary, then the plaintiff is not entitled to recover.
The Court, (Dobbin, J.,) refused all of said prayers; to which ruling the defendant excepted.
The jury rendered a verdict for the plaintiff, and judgment was entered accordingly. The defendant appealed.
The charter and by-laws prescribe the duties and obligations of the secretary, and consequently the bond in question operates only to secure the faithful discharge of his duties as secretary, and the care and custody of the funds of this company are not within the provisions of the article. “A surety can only be charged where the case is brought within the very terms of his contract, and the Court will not go into an inquiry whether the surety has been injured by a departure from those terms.” Smith’s Merc. Law, 582; Berkhead vs. Brown, 5 Hill, 634, 640; Edmondston vs. Drake, 5 Pet., 624, 629 ; Dobbin vs. Bradley, 17 Wend., 422 ; Walwrath vs. Thompson, 4 Hill, 200; Smith vs. Dann, 5 Hill, 543.
The duties of the secretary being prescribed as stated, these duties could not be enlarged in any manner, or raised without the action of board of directors, and the bond of the secretary would not be responsible, because any departure from the express terms of the obligation would discharge the surety.
“If the surety’s engagement relates to a particular office, it extends only to such things as were included, in the office when the engagement was entered into.” Chitty on Contracts, 523, (7th Am. Ed.;) Leigh vs. Taylor, 7 B. & C., 491; Russell vs. Perkins, 1 Mason, 340; Barker vs. Barker, 1 T. R., 287 ; Dance vs. Girdler, 1 New R., 34; 8 Clarke & Fin., 470.
It was the plain duty of the president, under the charter and by-laws, to receive the funds paid in and to deposit them; and if instead of discharging that duty so required of him, he entrusted them to the secretary, then the president must he considered to have relied upon the personal integrity and capacity of Siebrecht. The defendant’s bond could not he made responsible for any action of the principal on the bond, not embraced strictly within th provisions of the bond itself.
“ A surety is entitled to a strict and literal performance by the creditor of the contract, in reference to which the guarantee was given.” Chitty on Contracts, 529; Miller vs. Steuart, 9 Wheat., 680; Wright vs. John, 8 Wend., 512 ; Bank of Wash. vs. Barrington, 2 Penna., 29 ; Ware vs. Calvert, 2 N. & P., 126; Sasscer vs. Young, 6 Gill & Johns., 243.
The appellant was entitled to notice of the approval and acceptance of the bond before his responsibility can he said to have actually arisen or became effectual.
“When the guaranty is prospective, and to attach upon future transactions and the guarantor is uninformed as to whether his guaranty has been accepted and acted upon or not, it is the settled doctrine in the Courts of the United States that notice of the, acceptance must he given within a reasonable time.” Smith’s Merc. Law, 511; Lee vs. Dick, 10 Peters, 482 ; Edmondston vs. Drake, 5 Peters, 624; Russel vs. Clark, 7 Cranch, 91; Train vs. Jones, 11 Vermont, 444.
There is nothing whatever inconsistent with the express terms of by-law No. 4, with the reception by the secretary of money or other valuables belonging to the company. In addition to the duties specifically set forth therein, he was, ‘in general, to perform such other duties as may he referred to him by the hoard of directors or by the standing committees.”
The objection, therefore, to the appellant’s first prayer is, that it instructs the jury that the reception by the secretary of money intrusted to him was not a part of his duty under Art. 4 of the by-laws.
This is false in fact, and the most the appellant could ask was, that this question should be left to the jury. He however, sought to take it away from them.
The second prayer is liable to the same objection. It assumes that the secretary was limited to the strict line of duty as laid out in Art. 4 of the by-laws, and that he had no other duties incident to his office, which were covered by his bond than those specifically set forth in said bylaw. It assumes again, that it was necessary, if other duties were referred to the secretary, that the same should be done by formal action and recorded on the minutes of the company.
In addition to his specific duties, he had others, which necessarily arose from his position as secretary, which were the legitimate result of his position and strictly in the line of his duty. The by-laws in general prescribed his duties — but could not specify each act to be done by him. He was an employe as well as a secretary, and his bond covered both capacities.
A bond for fidelity as assistant book-keeper, secures fidelity and honesty as employe as well as good book-keeping. Rochester Bank vs. Elwood, 21 N. Y., 88 and 94; Barrington vs. Bank, 14 S. & R., 405; Strawbridge vs. B. & O. R. R. Co., 14 Md., 360.
By one of the by-laws of a bank; it was provided that every officer of the bank should perform such services as might be required of them by the president or cashier. A book-keeper gave a bond for the faithful performance of the duties of his office, “and of all other duties required of him in said bank.” The book-keeper, while in the discharge of the other duties required of him, took large sums of money. The sureties were held liable. Planters’ Bank vs. Lamkin, R. M. Charlton, 29; Minor vs. Mechanics’ Bank, 1 Peters, 46.
The answer to the second assumption is, that no possible harm has been done to the sureties by the failure of the appellants to have spread on its record, admitting such to he the fact, the duty of receiving money and depositing the same in hank. The condition of the bond contemplated this duty, in addition to the duties specifically set forth, and the sureties had due notice thereof when they signed the bond. The duty was imposed, and even if it were necessary to take final action of the hoard or standing committees in the premises, which the appellee denies, the sureties are in no manner placed in any new position by such failure. If no formal act was neces^ sary to accept the bond, surely no formal act was necessary to impose duties which were strictly within the condition of the bond.
The second clause in the prayer instructs the jury to find the sureties not responsible, if they find that the secretary was entrusted with the safe-keeping and depositing of the moneys of the plaintiff, without the order and direction of the hoard or standing committees.
But if the evidence shows that the defalcation was -not due to the fact that money was entrusted to the safe-keeping of the secretary, the jury must still find for the appellant.
. The third prayer is based on the theory that the president had no authority to entrust money to the secretary, or to give the same to him to deposit in hank. The secretary was a bonded officer. It was strictly in the line of the duty of a secretary of an insurance company to receive money, and to deposit the same in hank, and unless this ordinary duty is restrained in the by-laws of this appellee in express terms, and the appellant acted in accordance therewith in signing the bond, the appellant can have no case. This seems- to he the point most relied on by him to evade his act of suretyship.
The appellee contends that there is no such restraint in the by-laws, and that it was part of the ordinary duty of the secretary to receive and handle the money of the company. Unless it can be shown that the president of the company was a mere clerk in the office of the company and a runner to the bank, the duty of receiving money must have devolved on the secretary.
The law of the fourth prayer has long since been settled against the view of the appellant. A bond with sureties given by an officer of a corporation for the faithful performance of his duties, and found in the possession of the corporation, the officer having acted in his office, might, as in the case of natural persons, be presumed to be accepted by the corporation, although no vote of acceptance by the directors could be found on the record of the corporation. Bank of the U. S. vs. Dandridge, 12 Wheat., 64 ; Union Bank of Maryland vs. Ridgely, 1 H. & G., 324; Angell & Ames on Corporations, sec. 252; R. R. Co. vs. Elwell, 8 Allen, 371.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
