Bank of Peachland v. Fairley

CoNNon, J. The defendants, Fairley Brothers, did not appeal to this Court from the judgment rendered against them in the Superior Court. In their answer to the complaint, they denied the allegations therein that they induced the plaintiff by false and fraudulent representations to credit their account with the amount of their draft, dated 1 December, 1927, for $3,792.11, or to pay their checks drawn on plaintiff before their said draft was collected by the plaintiff. They admit that the draft was dishonored by nonpayment upon its presentation to the drawee, and that by reason, of such dishonor, they were liable as drawers of the draft to the plaintiff for its amount. They did not resist the demand of the plaintiff for judgment against them in this action for the balance due on the draft. We fail to find in the record any evidence tending to sustain the allegations of the complaint involved in the first issue. The answer in the affirmative to this issue supports the order in the judgment for the issuance of an execution against the persons of these defendants. It does not, however, affect the right of the plaintiff to recover of the defendant, United States Fidelity and Guaranty Company, in this action. There was no judgment at the trial of this action in the Superior Court against the defendant, Charles Raymond Storey. No issue involving his liability to plaintiff for any specific sum of money was submitted to the jury. For this reason, this defendant did not appeal to this Court. We fail to find in the record any evidence tending to sustain the allegations in the complaint involved in the second and third issues. We cannot, however, disturb the affirmative answers to these issues insofar as they affect the defendant, Charles Raymond Storey. They do not, however, affect the right of the plaintiff to recover of the defendant, United States Fidelity and Guaranty Company in this action. In the absence of any evidence at the trial of this action, tending to show that the plaintiff has sustained a loss of its money or other personal property, through an act of fraud, dishonesty, larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction or mis [143] application or other dishonest or criminal act or omission committed by its cashier, Charles Eaymond Storey, during the period covered by its bond, the defendant, the United States Fidelity and Guaranty Company, is not liable to plaintiff in this action as surety for said cashier. The bond executed by the defendant as surety for the cashier of the plaintiff does not cover a loss sustained by it solely by reason of an overdraft permitted by its cashier, although without authority of its board of directors. The cashier is civilly but not criminally liable for such loss. N. C. Code of 1931, sec. 221(1). In First National Bank of Edgewater v. National Surety Company, 243 N. Y., 34, 152 N. E., 456, 46 A. L. R., 967, it was held that the act of a bank cashier in permitting an overdraft by a customer through an honest mistake of judgment, or to help the bank, or in the ordinary course of the bank’s business, without any dishonest intent or purpose, is not within a fidelity policy insuring against loss through the fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, misapplication or misappropriation, or other dishonest or criminal act or omission of the cashier. ¥e think the cit.ed case was well decided. There was error in the refusal of the trial court to allow defendant’s motion for judgment as of nonsuit at the close of the evidence. For this reason, the judgment against the appealing defendant is Eeversed. Stacy, C. J., not sitting.