Fidelity Mutual Life Insurance v. Richland , 138 N.Y.S. 763 ( 1912 )

Laughlin, J.:

This is an action against one Harris Richland, as principal, and his sureties, on a bond given to the plaintiff for the due performance of his contract as a solicitor of insurance and the repayment of all moneys of the plaintiff coming into his hands, and of all moneys loaned or advanced to him by it. It was alleged and established on the trial by uncontroverted evidence that the principal became indebted to the plaintiff between the 15th day of July and the 31st day of December, 1910, in the sum of $300, which he failed to pay and which was still due and owing from him to the plaintiff. The contract of employment was in writing. It bears date the 25th day of May, 1910, and recites that it was to take effect on the twenty-fifth day of the preceding month, which was the day the principal entered the employ of the plaintiff. It was conceded on the trial that the principal continued in the employ of the-company pursuant to the provisions of said contract until on or about the first day of June thereafter, when he resigned, and the contract was thereupon canceled by mutual consent. He re-entered the employ of the plaintiff on the fifteenth day of July thereafter in like capacity and so continued until the thirty-first day of December of that year; and in the course of his employment between these dates he became indebted to the plaintiff in the amount for which judgment is demanded. The learned Municipal Court judge granted judgment for the plaintiff against the principal on the bond, but in favor of the sureties.

The appeal presents a question of law only, for all material facts were stipulated on the trial. By the original contract Richland was employed to solicit insurance and to 'collect initial premiums, and was to receive for his services specified commissions. No time of employment was specified in the contract. The bond upon which the. action is brought bears date the 6th day of May, 1910. The record does not show the date of its execution, but it is fairly to be inferred that it was on or after the twenty-fifth day of May, for the reason that it contains an express reference to said contract of employment, which, it recites, was made on the- 25th day of May, 1910. It is recited in the bond that the condition of the obligation is such that if Richland shall promptly pay to his employer all moneys which shall come into his hands and all loans or advances made to him or to any agent, appointed by him on account of future commissions “ or otherwise,” and all moneys due from him to the company, and shall refrain from incurring any indebtedness in the name of the company without the written consent of its president, “ and shall and do in all things well and truly observe, fulfill and keep all' and singular the articles, clauses, provisions, conditions and agreements whatsoever which on the part of the said Harris Richland are or ought to be observed, performed, fulfilled and kept, comprised and mentioned in a certain contract or agreement between the said Harris Richland and the said The Fidelity Mutual Life Insurance Company, made the 25th day of May, 1910, and in any and all amendments and supplements thereto, and under or by reason of any and all modifications thereof, and any and all contracts or agreements thereafter made by and between the said Harris Richland and the said company, or its representative, according to the purport, true intent and meaning of the same, then this obligation to be null and void, otherwise to be and remain in full force and virtue.” It was further therein expressly provided as follows: “ Notice to the sureties or either of them of any modification or amendment of said contract or of any subsequent contract between the said principal and the said Company is hereby expressly waived.” These are the only material facts disclosed by the record upon which the decision of the appeal must be made.

It is contended by the learned counsel for the insurance company that the bond plainly obligated the sureties for any liability to the insurance company of the character therein specified whether incurred under the then existing contract of employment to which express reference was made or under any other subsequent contract of the same or any other nature and whether connected with the original employment or in no manner related thereto. I am of opinion that such is not the proper construction of the bond. It was, of course, entirely competent for the sureties to become responsible to the plaintiff for the due performance not only of the existing contract of employment at the time the bond was executed, but of any contract ever made, either before or after that time, between their principal and the insurance company; but it is not reasonable to infer from the contract which they executed, which presumably was drawn by the insurance company, that they intended to incur such an extreme liability. They doubtless contemplated that the terms of the employment, both with respect to compensation and with respect to the duties to be performed, might be changed; but they contracted, I think, upon the theory that they were to become liable for any default on the part of their principal occurring during a continuous employment from the time he entered the service of the plaintiff. If they had anticipated that his contract of employment was to be canceled within a short time and that he was wholly to sever his employment with the plaintiff and enter upon some other employment, it is not probable that they would have consented to become sureties for- his conduct at some ■ remote time in the future when he might again re-enter the plaintiff’s employ and with' respect to which they would have ■ no knowledge. Under the construction of this bond contended for by the learned counsel for the insurance company the sureties would be liable if plaintiff had discharged their principal for embezzling funds and had re-employed him after he had expiated his crime by a term in State’s prison. When the original contract was canceled by mutual consent and the principal left the employ of the plaintiff, the sureties could not become liable for their principal’s conduct under another contract of employment without a new contract with them, and they, therefore, as sureties, were not interested in the future conduct of their principal.

I am of opinion, therefore, that the learned Municipal Court judge correctly construed the bond.- It follows that the deter-' mination should be affirmed, with costs.

McLaughlin and Miller, JJ., concurred; Ingraham, P. J., and Dowling, J., dissented.