National Mechanics' Banking Ass'n v. Conkling

Earl, J. In September, 1863, the plaintiff employed the defendant Joseph C. Conkling as a book-keeper in its bank, at a salary of $400. At the time of his employment, and to secure his fidelity, a bond in the penalty of $10,000 was executed to the plaintiff, which contained the following recitals and conditions : ■ “ Whereas, the above-named, the Mechanics’ Banking Association, have appointed the above-named Joseph C. Conkling to the office of a book-keeper of the said association, and the said Joseph C. Conkling hath accepted the same and consented to perform the duties thereof, now the condition of this obligation is such that if the above-named Joseph C. Conkling shall faithfully fulfill and discharge the duties committed to and the trusts reposed in him as such book-keeper and shall also faithfully fulfill and discharge the duties of any other office, trust or employment relating to the business of the said association which may be assigned to him, or which he shall under». *120 take to perform, and shall also, without neglect or delay, inform the president and cashier of the said association of any embezzlement of the money, property or goods belonging to, and of any fraud whatever committed upon, the said association, of any false entry, error, mistake or difference of accounts in the books thereof which he may discover, or which shall come to his knowledge as such book-keeper as aforesaid, or whilst engaged in any other office, duty or employment relative to the business thereof, and which he may discover, or which shall come to his knowledge, in any matter or thing whatever appertaining thereto; and shall also faithfully keep all the secrets of the said association; then the above obligation to be void, otherwise to remain in full force and virtue.” The salary of Joseph as book-keeper was subsequently increased and he continued to be book-keeper until 1870. In that year he was appointed the receiving teller of the bank at an increased salary, and he continued to be and to act as such teller until October 10, 1879, when he resigned. After his resignation it was discovered that while acting as teller he had embezzled $2,700 of the funds of the bank. This action was brought against all the obligors upon the bond to recover the amount thus embezzled. The respondents are the sureties upon the bond and they alone defended. There was no breach of the condition of the bond while Joseph held the employment of book-keeper, and the question to be determined is whether, according to the conditions of the bond, the sureties are liable for the embezzlement committed by their principal while acting as teller. We have come to the conclusion, not without some hesitation and doubt, that they are not. The recital in the condition of the bond shows that Joseph had been appointed to the office of book-keeper; that he had accepted that office and consented to perform the duties thereof. That was the office brought to the attention of the sureties and which they had in mind when they executed the bond. The recital in such bonds, undertaking to express the precise intent of the parties, controls the condition or obliga *121 tian which follows, and does not allow it any” operation more extensive than the recital which is its key, and so it has been held in many cases. In London Assurance Co. v. Bold (6 Ad. &El. [N. S.] 514), Wighthan, J., said: “In truth the recital _ is the proper key to the meaning, of the condition.” In Hassell v. Long (2 M. & S. 363), Ellenborough, Oh. J., said that the words of the recital of a bond afforded the best ground for gathering the meaning of the parties. In Pearsall v. Summersett (4 Taunt. 593), it was held, as expressed in the headnote, that “ the extent of the condition of an indemnity bond may be restrained by the recitals, though the words of the condition import a larger liability than the recitals contemplate. ” (See, also, Peppin v. Cooper, 2 B. & A, 431; Barker v. Parker, 1 T. R. 287; Liverpool Water-works Co. v. Atkinson, 6 East, 507; The Tradesmen’s Bank v. Woodward, Anthon’s N. P. [2d ed.] 300.) Here the sureties undertook for the fidelity of their principal only while he was book-keeper; but if while book-keeper the duties of any other office, trust or employment relating to the business of the bank were assigned to him, their obligation was also to extend to the discharge of those duties. While book-keeper he might temporarily act as teller or discharge the duties of any other officer during his temporary illness or absence, or he might discharge any other special duty assigned to him, and while he was thus engaged the bank was to have the protection of the bond. There are no words binding the sureties in case of the appointment of their principal to any other office. They might have been willing to be bound for him while he was book-keeper or temporarily assigned to the discharge of other duties, but yet not willing to be bound if he should be appointed teller or cashier, and as such placed in the possession or control of all the funds of the bank. This is a case where the general words subsequently used must be controlled and limited by the recital. A surety is never to be implicated beyond his specific engagement, and his liability is always strictissimi juris and must not be extended by construction. His contract must be construed by the same rules which *122 are used in the construction of other contracts. The extent of his obligation must be determined from the language used, read in the light of the circumstances surrounding the transaction. But when the intention of the parties has thus been ascertained, then the courts carefully guard the rights of the surety and protect him against a liability not strictly within the precise terms of his contract. (Ludlow v. Simond, 2 Caines’ Cases, 1; Crist v. Burlingame, 62 Barb. 351; McCluskey v. Cromwell, 11 N. Y. 593; Gates v. McKee, 13 id. 232; Rochester City Bank v. Elwood, 21 id. 88; Pybus v. Gibb, 38 Eng. L. & Eq. 57.) The order should be affirmed and judgment absolute entered against the plaintiff, with costs. All concur. Order affirmed and judgment accordingly.