Bolz v. Stuhl

Opinion by Reeder, J., At the time this bond was given, Joseph Stuhl was treasurer of the plaintiff association and Joseph Hart and George Killian were his sureties upon this, his official bond. The plaintiffs are trustees of a benevolent association in the nature of a saving fund society; Stuhl, as treasurer, was, according to the books of the society, indebted in December, 1892, in the sum of about $2,000 to the society. Part of this money consisted of five shares of the Girard Building Association. It was ascertained upon an examination by the trustees that the stock was not in the building association, and at a meeting between its officers and Stuhl, he agreed to transfer five shares of the stock of the building association, held in the name of his children, to the society in lieu of the five shares which appeared upon the books of the association to be held by the society, but which were not in fact so held, as a reimbursement. He also agreed to give a check for $500, and to give a bond with sureties for $600. The check was given, repeatedly presented for payment and payment refused by the bank upon which it was drawn. At the time of the execution of the bond by the sureties, these facts were concealed from Killian and Hart by the trustees of the plaintiff association. After the bond was signed, the officers of the society ousted Stuhl from his position as treasurer of the society, and this suit is brought to recover the money, the most of which was defalked by Stuhl prior to the execution of the bond. The assignments of error raise but a single question for our consideration, viz: Whether the contract of suretyship is a good contract, in view of the silence of the trustees when the bond was signed as to their inability to collect their money from Stuhl, and that Stuhl had given them a worthless check inpaj*ment of their own money supposed to be in his hands, and had transferred to them the shares of the building association, belonging to his children, in lieu of and to replace the stock he was supposed to hold for them in them name. It might well be held upon the authority of Bennett v. Haley, 142 Pa. 258 and the cases there cited, that this bond did not apply to moneys not in the possession of the treasurer at the time of its execution, but that the contract of suretyship only [58] referred to moneys which might thereafter come into his possession. The condition of this obligation is : That the above bonnden Joseph Stuhl, shall and will from time to time “ and at all times hereafter, for and during the above mentioned term of office, and for and during any one or more subsequent terms for which he may hereafter be elected treasurer of the said society, and until he shall deliver all the property which he may have received as such treasurer to his successor in office, .... well and faithfully perform and discharge all the duties required of him as treasurer, then this bond to be void; otherwise to remain in full force and virtue.” In the case of Bennett v. Haley, supra, the condition of the bond was very much like that in this bond, and yet the court there held, that the sum for which the judgment was confessed (under a warrant of attorney) “ was for debts which were such prior to the date of the bond, and which were not covered by its condition. It thus appears from the face of the record, that the judgment was confessed without any lawful authority.” The contention that this obligation did not relate to moneys which had been defalked or abstracted by the treasurer prior tc the execution of the bond, but only related to moneys which he had in his possession after its execution, we do not propose to consider. Whether it was a contract of suretyship relating to moneys which he had in his possession prior to its execution, or whether it was only a contract to secure the proper appropriation of such moneys as might come into his possession after its execution, it is unnecessary for us to determine. The determination of this question would necessarily lead into the investigation by a jury (if we should decide this contention' in favor of the appellant) of the amount of money which Stuhl had in his possession at the time of the execution of the bond, in order to establish the liability of the sureties. As the consideration and determination of the other assignment of error will finally determine the question without another trial by jury, we prefer to let our decision rest upon that ground alone. That concealment of a material fact will vitiate a contract of suretyship, is unquestionably the law of this state. When a contract of suretyship is entered into, the surety is entitled fco know all the material facts concerning it, and if the person [59] for whose benefit the suretyship is contracted conceals any material fact of importance in the determination of the surety to undertake the contract, such concealment is a fraud upon the surety and will vitiate the contract. The court below, in charging the jury, said that if the trustees knew that the treasurer was in default and did not communicate the fact to the sureties, if they knew that they were getting from them an obligation for a man who had proved to be unworthy, that is, unworthy in the sense of having cheated and defrauded the association, then the liabilities of the defendants would not exist. That this is a correct proposition of law, there can be no doubt. But under the facts in the case, we do not think that the charge of the court went quite far enough. Even if the trustees did not know that Stuhl was a defaulter, yet, if from the undisputed facts in the case they had good reason to suspect that he was a defaulter, they were bound to communicate those facts to the sureties at the time they signed the bond, and an omission to do so will relieve the sureties from liability. It is not necessary to cite decisions in support of so W6ll settled a principle. It is in effect saying to the jury, that it was not sufficient for the trustees to know, and knowing, not to communicate, to the sureties the facts that the treasurer was insolvent, that they had endeavored unsuccessfully to collect the money due from him to the society, that they had in their possession his dishonored check for the amount which he was supposed to hold in his possession as treasurer of the society, that they had made repeated efforts to get payment of the check and that payment of it by the bank had been refused, that stock he was supposed to hold for them in a building association he did not have, but replaced by having transferred to them stock owned by his children, but that it must appear that the trustees were aware of the fact that he was a defaulter. The facts as presented are practically undisputed — his shortage, the dishonor cf his check, that he did not have the funds in his hands to pay the society, that the stock which appeared as part of the invested funds of the society and which was supposed to be in his possession, was not in fact in his possession at all, and that upon a demand for it he had substituted in lieu of it stock held by his children. Even if it were possible under such circumstances, which we believe highly incredible, for any [60] intelligent man not to know of the treasurer’s defalcation, yet, the facts justified such a strong inference of a defalcation, that the withholding of them upon the part of the society from the sureties on this bond, is such a fraud in law as will vitiate the contract. Judgment reversed.