American Surety Co. of New York v. Austin

SHORT, P. J.

This case was submitted as a companion case to that of Southern Surety Company v. Chas. O. Austin, Commissioner, appealed from Travis county, since one of the questions involved in the trial of the two cases is the same. Judge Leddy has written an opinion in the Southern Surety Company Case disposing of this question, and we refer to that opinion as expressing our views on the question involved. 17 S.W.(2d) 774.

• The plaintiff in error, as surety, and Walter H. Harris, as principal (in form), executed a fidelity insurance bond in the sum of $2,000, payable to the People’s State Bank of Pear-sall, Tex., the bond being conditioned as follows: “That whereas, the said officer is in' the service of the bank in the city of Pearsall, County of Frio County, Texas, holding the position of bookkeeper, now if the above bounden officer and surety shall hold the bank harmless against and pay to it such pecuniary loss as it may sustain of money or other valuable securities embezzled, wrongfully abstracted, or wilfully misapplied by said officer in the course of his employment, as such officer, and in the course of his employment in any other position in the said bank to which he may be appointed, reappointed, elected, reelected, or temporarily assigned, -then this obligation is -void, otherwise to be and remain in full force and effect.”

Harris was not made a party, and an abatement of the suit was sought on that ground by the plaintiff in error. This plea was overruled. A trial was had to a jury, upon special issues.

It appears from the testimoriy thaij Harris, tie so-called principal in the bond, as bookkeeper, bad kept tbe books in sucb manner as to enable its cashier, one Hudson, to successfully abstract or misapply funds, and that same was done knowingly by Harris and with intent to assist Hudson, wbicb conduct consisted of wrongful abstraction or willful misapplication of funds, witbin tbe meaning of tbe bond. Tbe jury found every issue submitted in favor of the defendant in error to tbe effect, as -follows: (1) That Hudson, cashier of tbe People’s State Bank, willfully misapplied to bis own use $3,000 wbicb was 'charged to the account of Mrs. C. M. Slaughter ; (2) Harris made a charge entry of $3,000 on tbe individual ledger sheet of Mrs. O. M. Slaughter January 16, 1924; (3) that, at the time be made tbe entry, be knew tbe $3,000 of the bank’s funds represented by the charge on tbe individual ledger sheet were being misapplied by Hudson to bis own use and benefit; (4) that Harris, at the time be made tbe entry, intended to aid and assist Hudson in tbe willful misapplication of tbe $3,000 from the bank ; (5) that by bis acts be -affirmatively aided and assisted Hudson in misapplying the $3,000 in sucb manner as to materially contribute to tbe success of tbe misapplication by Hudson; (6) that Hudson misapplied the funds of tbe bank by means of overdraft fraudulently allowed -to Ferguson Bros.; (7) that the sum so willfully misapplied by Hudson to tbe use and benefit of Ferguson Bros., by means of overdraft, was a minimum of $12,000; (8) that, at tbe time Harris posted tbe statement sheets and ledger sheets of Ferguson Bros., be knew tbe funds were being willfully misapplied by Hudson to tbe use and benefit of Ferguson Bros, by means of overdraft ; (9) that Harris, at tbe time be posted tbe statement sheets and individual ledger sheets, intended to aid and assist Hudson in tbe willful misapplication of tbe funds of the bank to tbe use and benefit of Ferguson Bros.; (10) that tbe acts of Harris did affirmatively aid in tbe misapplication of tbe funds of tbe bank to tbe use and benefit of Ferguson Bros, in sucb a manner as to materially contribute to tbe success of sucb misapplication; and (11) that, during and at the time Harris kept tbe statement ledger and individual ledger, reflecting tbe $3,000 discrepancy between tbe .two in tbe account of Mrs. O. M. Slaughter, he intended to affirmatively aid and assist Hudson in tbe willful misapplication of tbe bank’s funds.

‘ Tbe court construed tbe bond sued on as a contract of insurance, and, upon tbe basis of tbe answers of tbe jury to tbe questions submitted, entered judgment in favor of tbe defendant'in error for tbe sum of $2,000, with interest, from which action of tbe court tbe Southern Surety Company appealed to tbe Court of Civil Appeals at El Baso where tbe judgment of tbe trial court was affirmed. 5 S.W.(2d) 626.

In granting tbe application for tbe writ of error in this case, tbe Supreme Court expressed tbe opinion that it was inclined ‡0 tbe view that the opinion of tbe Court of Civil Appeals is correct, but granted tbe writ on account of tbe confused state of tbe authorities on tbe subject involved.

Judge Leddy, in tbe opinion of tbe Southern Surety Company Case, supra, has discussed tbe question whether bonds of tbe kind here sued upon are construed as contracts of insurance and subject to tbe rules applicable to such contracts, or whether sucb bonds come under tbe rules applicable to ordinary accommodation surety contracts, and reaches tbe conclusion that bonds of this kind are construed as contracts of insurance, and not contracts of surety, bolding that tbe statutory provisions, articles 6244, 6245, 6251, R. S. 1925, wbicb relate to the rights of sureties, have no application to suits against sureties upon bonds of tbe nature here sued on, and cites tbe authorities in support of tbe conclusion reached. We adopt tbe opinion of Judge Leddy in tbe Southern Surety Company Case on this point; tbe conditions of tbe bonds being substantially tbe same.

Tbe remaining assignments of error, with the possible exception of one, challenge tbe sufficiency of tbe testimony to raise issues of fact, such as were submitted to tbe jury. To require tbe Supreme Court to sustain these assignments, or any of them, it is necessary that tbe conclusion be reached by tbe Supreme Court, from consideration of all tbe testimony, that no evidence of a substantial nature was presented by tbe defendant in error to sustain tbe various answers to tbe questions propounded to tbe jury. To determine this matter, it has become necessary for us to read the statement of facts, wbicb is voluminous. This we have done, and have reached the con-cldsion that the Court of Civil Appeals was correct in its bolding that there was substantial evidence introduced by the defendant in error in support of each one of tbe facts found by tbe jury. We think tbe facts in this case are of tbe same general nature as those in tbe ease of Austin, Commissioner, v. Neiman (Tex. Com. App.) 14 S.W.(2d) 794, in wbicb it was held that, in determining whether there is any evidence to sustain a finding, tbe reviewing court must confine itself “witbin tbe field of evidence to tbe utmost bounds of reason wbicb rational men of common sense might know, without passing beyond tbe line between tbe field of probability and tbe field of conjecture.” 23 C. J. p. 52, par. 1795. It was held by this section of tbe Commission in that case that the character of testimony upon wbicb tbe defendant in error relied in support of its allegations, charging liability upon tbe plaintiff in error, was pertinent to tbe issues presented by tbe pleadings, and was sufficient to sustain a judgment against tbe company, upon its bond. Tbe testimony in this case is, while different in detail, substantially the same in nature, and equally convincing as that in the Neiman Case. All of the assignments are overruled.

We recommend that the judgment of the Court of Civil Appeals affirming that of the district court he affirmed.

CURETON, C. J. Judgments of the district court and Court of Civil Appeals both affirmed, as recommended by the Commission of Appeals.