Kaufman v. Marshall

Hiuu, C. J.j (after stating the facts.) Marshall and Cline brought suit in chancery against Kaufman and others, seeking to cancel a bond which they had executed as sureties for Bridges to Lorch. Kaufman and Lorch sought to sustain the bond, and Kaufman brought a cross-complaint, in which he sued upon notes executed by Bridges to Lorch which had been transferred to 'him by Lorch, and which 'he sought to recover upon against Lorch on his indorsement, against Bridges as maker, and against Bridges, Marshall and Cline as signers of the bond. The chancellor gave Cline and Marshall the relief prayed, and denied Kaufman relief upon his cross-complaint. Kaufman and Lorch have appealed, but Bridges has not. It is immaterial whether the action of the chancellor upon the complaint was correct or not, because the court is convinced that Kaufman and Lorch have no action under the evidence here upon the bond. The chancery court had jurisdiction of the cause by reason of the allegations of the complaint, and Kaufman elected to sue upon his notes in that court upon a cross-complaint; and the issue upon the cross-complaint determines the whole controversy between them as effectually as the issues upon the complaint. In Byington v. Sherman, 64 Ark. 189, the controlling question in this case was settled. That was an action upon a bond executed by an insurance agent for the faithful performance of his agency, and contained a clause obligating the agent to faithfully perform the various matters therein specified, and to pay over all moneys collected and received by 'him as such soliciting and collecting agent, “as also all moneys which he now owes, or may hereafter owe, said general agents, either on account of advances to him or otherwise.” The court, through Mr. Justice Riddick, said: “Now, it seems reasonable, when we consider the object and purpose of the bond, to construe the stipulation that Byington should pay over 'all moneys which he now owes or may hereafter owe said general agents, either on account of advances to him or otherwise,’ as having reference only to sums advanced to him or owed by him in connection with his agency for the performance of the duties of which he executed the bond. In other words, as this bond was executed by Byington for the faithful performance of his duty as agent, and as the evidence shows that it was his duty, as agent, to solicit insurance and make collections for the appellees, and also that appellees, as general agents, were from time to time to make advances of money to Byington, to enable him to carry on the business of .his agency, which advances he was under obligation to repay, we are of the opinion that his sureties are liable for his failure to pay over such collections and advances, and all other sums due in the line of his agency, but not for debts having no connection therewith. This construction, in our opinion, does no violence to the language of the bond, is in accordance with what seems to .have been the intention of the parties, and is sustained by the adjudged cases, which show that general expressions in a bond may within reasonable limits be controlled by its recitals, and by a consideration of the object and purpose of the bond.” And many authorities were cited to sustain this position. The bond at bar, after providing for the faithful discharge of his duties as insurance agent, and the faithful accounting for all moneys due on policies, renewals, etc., provides further: “It is understood that the said sureties shall be liable to said Louis Lorch for all moneys advanced to said agent, and for all indorsements on notes, and for any other indebtedness.” It will be seen therefrom that this clause is no broader than the one in Byington v. Sherman, supra; and it must be held in this case, as it was in that one, that the obligation of the bond is for the principal’s failure to pay over collections an$ advances and all other sums due in the line of his agency, but not for debts having no connection therewith. Issue was made in the pleadings as to whether the advancements to Bridge's were in the line of his agency, but no proof was adduced to sustain the allegations of Lorch’s answer to that effect, and none upon the similar allegation in the cross-complaint. In order for Kaufman to hold Cline and Marshall upon the bond for the notes which he had purchased from Lorch, which had been executed by Bridges to Lorch, it was necessary for him to prove that the money represented by these notes was advanced by Lorch in the line of Bridges’ agency for the purpose of his insurance business. Marshall and 'Cline were not parties to the notes, and they could only be made liable upon them by showing that the notes were based upon liabilities which the bond was executed to secure. This Kaufman wholly failed to do, and therefore he has failed to make out a case against them, and is not entitled to any relief on his cross-complaint against them. He would, of course, be entitled to a judgment against Bridges upon his notes, and against Lorch upon his indorsements. But those are not issues between Kaufman and Marshall and Cline; and this appeal has brought up only the issues • between him and Lorch on the one side and Marshall and Cline on the other as to their liability on the bond for the payment of the notes sued upon. The arguments have been directed principally to attacking on the one side, and sustaining on the other, the original complaint; but, as heretofore indicated, if Kaufman has no remedy against Marshall and Cline upon the notes, it is immaterial whether it was properly sustained or whether it should have been dismissed — the whole controversy is as completely raised on the ■cross-complaint as upon the complaint. If the complaint should have been dismissed, the cross-complaint of Kaufman should likewise have been dismissed. Kaufman is here asking affirmative relief upon his cross-complaint, as well as relief against the granting of the prayer of the complaint,- in which appeal -he is joined by Lorch; and, as 'this decision goes to the core of the controversy, it is unnecessary to go into the incidental and collateral issues that have grown up about it The judgment is affirmed