American Surety Co. v. Peoples Bank

ON MOTION EOR REHEARING.

MacIntyre, J.

This case being here on account of the overruling of demurrers (on demurrers the allegations are considered as true), the language used in the opinion, “when he took the funds from his individual account, he thereby kept the bank from deriving any benefit from his former act,” was used in the sense that if, as alleged in the petition, he took the funds from the individual account, he would thereby have kept the bank from deriving any benefit from his former account. Having arrived at the conclusion as between Easterling, the cashier, and the bank, that under the alleged scheme adopted by Easterling of taking the funds from the account of the estate of Mrs. Waters, of which estate he was the administrator, and placing them in his overdrawn individual account, both accounts being in the bank of which he was cashier, and then taking them from his individual account, the petition did not allege a valid payment to the bank of a pre-existing debt, we do not think that it appeared from the allegations of the petition that there was a violation of the provisions of the bond “that the surety shall not be liable hereunder for any default the proceeds of which shall have been applied to the payment to the employer of a pre-existing debt.” Bearing in mind that the moment the general deposit is made, the credit of the banker is substituted for the money and that the title to the money passes to the bank, we are of the opinion that if the allegations be true “that the funds were taken by the said R. D. Easterling from his account in the plaintiff’s bank as administrator of the estate of Mrs. J. B. Waters and placed in his individual account, and then taken by him from said individual account, and that the plaintiff derived no benefit therefrom,” then the facts alleged would authorize a conclusion or finding that the bank sustained a pecuniary loss “by the act of larceny or embezzlement” on the part of Easterling, and under the provisions of the bond the surety company which indemnified the bank for such pecuniary loss as the bank “shall have sustained of money or of other personal property (including- that for which the employer is responsible) by any act or acts of larceny or embezzlement on the part of the employee,” the bank could recover on the bond for such loss. We can not agree with the plaintiff in error that it appears from the plaintiff’s petition that the estate was defrauded, and not the bank; nor do we think that it appears from the petition that the proceeding is nothing more or less than an effort to force the surety company to pay an overdraft of Easterling. ’If Easterling’s alleged acts amounted to nothing more than overdrafts, why the necessity of taking money from another account in the bank and placing it in his individual account to conceal a shortage? The facts alleged in the petition would authorize a finding that the scheme of Easterling was that of “larceny or embezzlement” from the bank. Rehearing denied.