Shackamaxon Bank v. Yard , 150 Pa. 351 ( 1892 )

Opinion by

Mb. Justice Williams,

This case was here in 1891, and is reported in 143 Pa. 129. The question then presented was whether a formal re-election of the cashier each year was necessary in order to the liability of the surety on his official bond. The learned judge of the court below was of that opinion and accordingly entered judgment in favor of the defendant. The plaintiff appealed assigning the ruling upon this question, as error. We sustained the assignment and directed judgment in favor of the plaintiff on the reserved point. The defendant is now the appellant. He contends that he is discharged from all liability on his bond because the bank had increased the duties of the cashier, without his consent, and before the embezzlement complained of was committed. The general proposition on which he relies is found stated in the defendant’s eighth point as follows : “ 8th. Any permanent material alteration in the cashier’s duty without the consent of the surety discharges him from liability.” The court declined to instruct the jury as requested and this action is the subject of the third assignment of error.

A case might be presented in which the duties of an officer or employee might be so changed as to make it inequitable to hold his sureties for an act occurring after the change had taken place; but that would depend on the character of the change and not on the mere fact that a change had been made.

In this case it appears that Huggard was elected cashier and gave the bond now sued on as security for the faithful performance of the duties of his office. Subsequently he proposed to keep the individual ledger, in addition to doing his work as cashier, for an additional sum of five hundred dollars per annum. To this the directors agreed; and the extra work done by him as a book-keeper under this agreement is the basis of the allegation that a material alteration has been made in his duties as cashier that should relieve his sureties from liability.

The proofs show that as cashier Huggard embezzled and aided others to embezzle a large amount of the bank’s money. It is not denied that he is liable to the bank for his breach of duty. The sureties admit that their principal has broken the condition of the bond and that their liability would be fixed if the circumstances on which they rely to show their discharge from such liability did not exist.

The contention is that the fact that Huggard performed other services for the bank than those involved in, or belonging to, the office of cashier is, per se, a discharge of the sureties from their undertaking for his faithful performance of his official duties. This position is thought to find support in the recent case of the Am. Dist. Tel. Co. v. Lennig, 139 Pa. 594. In that case one had been employed as a book-keeper and had given a bond with sureties to secure his employers against loss by his want of fidelity in the performance of his work. Afterwards he was made cashier pro tempore, and a few days later he was appointed to that office. While acting under the pro tempore appointment he embezzled money belonging to his employers. To conceal the crime so committed he made false entries in the books. An action was brought upon the bond given on his appointment as book-keeper, to recover for his embezzlement as cashier fro tern. The sureties defended on the ground that the money sought to be recovered from them was lost by reason of the embezzlement of the cashier, and not by reason of any act of the book-keeper as such. This court held that if the fact was as the sureties alleged, they were right in their legal position ; but as the embezzlement occurred before their principal was duly appointed cashier, the capacity in which he was acting at the time was a question for the jury on which the sureties had a right to be heard. In the opinion delivered by our late brother. Clark it is said: “Neither the imposition of additional, distinct and consistent duties, nor the appointment of the principal to an additional office would necessarily relieve the surety on his bond, if the new duties or the new office have no such connection with the old as to interfere with or affect the original employment.” The book-keeper as such had no access to the funds of his employer. When he was put in charge of them as cashier he had new duties and responsibilities put upon him which were not in contemplation of his sureties when they entered into their undertaking on his behalf. If his default was in the discharge of his new duties and these were not such as in the temporary absence or removal of a cashier were incidental to his employment, until a new cashier could be secured, then his sureties were not liable. If on the other hand his duties under his pro tempore appointment were such as are incidental to an employment as book-keeper, then their liability on their bond was not relieved against and the plaintiff was entitled to recover.

This does not support the position contended for in this case, Huggard’s appointment was to the office of cashier. The defendants gave their bond to secure his fidelity in the performance of the duties of that office. It was as cashier that he embezzled and misappropriated funds that it was his duty to deal honestly with, so that the breach of the condition of the bond was conceded. The extra work done by him on the books, by virtue of his employment to keep the individual ledger, was the sole reliance of the defendant. But what change did this extra work make in his duties as cashier ? It did not affect his custody of the money of the bank. It did not increase his responsibilities as an officer or his opportunities for embezzlement. The most that is suggested is that it might afford some-help in the temporary concealment of his crime. Under the-rule laid down in the American District Telegraph Company v. Lennig, supra, this is not enough. The duties of the new office must be such as tó interfere with or modify the old. If they are not, the sureties cannot complain. It is not enough that some change in the work of the appointee, the principal, has been made. It must also appear that the change was such as to interfere with or modify the duties for the faithful performance of which the sureties are bound, so as to make it inequitable to enforce their undertaking upon a state of facts not within the contemplation of the parties when it was made. The first, second and third assignments of error are not sustained.

The remaining assignments relate to the effect of the death of the surety upon his liability under the facts of this case. The subject was discussed, on the trial in the court below, and the point was ruled against the defendant. As the defendant did not then appeal the question came only incidentally before us at that time; but the holding that notwithstanding the want of a formal re-election of the cashier the liability of the sureties-continued to the end of his term of service, might be properly regarded as covering the question now raised.

The surety had undertaken for himself, “his heirs, executors and administrators,” to be responsible for Haggard’s honesty in the office of cashier during the entire time of his employment as such whatever that time might be. Under Pleasonton’s Appeal, 75 Pa. 844, the obligation contained no stipulation authorizing the termination of the relation between the principal and the bank by notice. If the bank had refused to retain Huggard, and put some one else in his place, the surety would thereafter have ceased to be liable because his principal had ceased to he cashier; but so long as he remained in the employment of the bank in that office, under whatever election or form of organization, the liability of the surety was by express words to remain. The parties contemplated a permanent relation. The bond provided for it in apt words, and we see no reason why the liability should not be enforced.

The assignments relating to this question are not sustained and the judgment is affirmed.