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THIRD DEPARTMENT, MARCH TERM, 1897. [Vol. 15. Severyn B. Sharpe and J. Newton Fiero, for the appellant.
P. & C. F. Cantine, William Lounsbery, Charles F. Cantine and Howard Chipp, for the respondents.
The defendant Ostrander, on July 16, 1867, was elected treasurer of the Ulster County Savings Institution for the ensuing year, and with the defendant Bruyn, on that day, executed the bond on which this action was brought, which contains the recitals set out in the opinion of MERWIN, J. At the annual meeting of the trustees of the Ulster County Savings Institution, held July 21, 1868, the defendant Ostrander was re-elected for the year, and on July 20, 1869, he was again re-elected for the ensuing year.
It is a well-settled principle that “the liability of a surety is limited to the express terms of the contract; his obligation, so far as warranted by the terms employed, should be construed strictly and favorably to him.” (Ward v. Stahl et al., 81 N. Y. 406.)
I think, therefore, that the defendant Bruyn was only liable on the bond in question during the year for which Ostrander was elected when the instrument was executed. I am unable to see why the principle established in Kingston Mutual Ins. Co. v. Clark (33 Barb. 196); Overacre v. Garrett (5 Lans. 156); Hassell v. Long and Another (2 Maule & S. 363); United States v. Kirkpatrick (9 Wheat. 720); Liverpool Water Works v. Atkinson (6 East, 507); Leadley et al. v. Evans (2 Bing. 32); Lord Arlington v. Merricke (2 Saund. 411), and many other cases that might be referred to, does not apply.
The liability of the defendant as a surety is not in any manner affected by the existence of a by-law of the Ulster County Savings Institution that the treasurer shall hold office during the pleasure of the board of trustees. In this case the pleasure of the board as to the term of office of the treasurer was signified when he was elected. He was elected for the ensuing year, and at the end of that period he was re-elected. The effect of the action of the trustees who made the by-law in question in electing the treasurer for one year prevented such by-law from affecting his term of office.
App. Div.) THIRD DEPARTMENT, MARCH TERM, 1897.
I think the case was properly disposed of below, and that the judgment should be affirmed.
PARKER, P. J., and Landon, J., concurred; Merwin and HerRICK, JJ., dissented. MERWIN, J. (dissenting):
This action is upon a bond, dated July 16, 1867, executed and delivered by the defendants James E. Ostrander and Augustus H. Bruyn and one Jansen Hasbrouck, now deceased, to the plaintiff, in the penal sum of $25,000. After the formal part, the recital and condition are as follows:
“Whereas, the above bounden James E. Ostrander has been chosen and appointed treasurer of the Ulster County Savings Institution, by reason whereof divers sums of money, goods and chattels and other things, the property of the said institution, will come into his hands :
* Now, therefore, the consideration of the above obligation is such that if the said James E. Ostrander, his executors or administrators, at the expiration of his said office, upon request to him or them made, shall make or give unto the said institution, or their agent or attorney, a just and true account of all such sum or sums of money, goods and chattels and other things as have come into his hands, charge or possession, as treasurer aforesaid, and shall and do pay and deliver over to his successor in office or any other person duly authorized to receive the same, all such balances or sums of money, goods and chattels and other things which shall appear to be in his hands and due by him to the said institution, and if the said James E. Ostrander shall well and truly; honestly and faithfully in all things serve the said institution in the capacity of treasurer as aforesaid, during his continuance in office, then the above obligation to be void, else to remain in full force and virtue."
The plaintiff was incorporated in 1852. By the charter it was provided that the business of the corporation should be managed by the board of trustees who should elect from their number a president, a vice-president and such other officers as they may see fit; that the board of trustees should have power from time to time to make such by-laws, rules and regulations as they should judge proper for the election of their officers, for prescribing their funcTHIRD DEPARTMENT, MARCH TERM, 1897. [Vol. 15. tions and the mode of discharging the same and generally for transacting, managing and directing the affairs of the corporation; that the board of trustees might appoint such subordinate officers and agents as they might deem necessary who should respectively give such security for their fidelity and good conduct as the board might from time to time require, and should fix the salaries of such officers and agents.
By-laws were adopted in 1858 which were in force in and after 1867. By article 2 it was provided that the election of officers specified in the charter should take place annually at the regular meeting in July. Article 5 is as follows: “The trustees shall elect one of their number as secretary, and shall also elect a treasurer, and such other officers and assistants as they may deem necessary to be employed in the institution, which appointments shall be held at the pleasure of the board. They shall also annually appoint a standing committee of three, to be called an executive committee, and a standing committee of three, to be called a finance committee, and, serni-annually, a committee of three, to be called an examining committee." By article 10 it was provided that “The treasurer shall execute a bond, with good and sufficient sureties, to be approved by the president and one of the vice-presidents, in the penal sum of twenty-five thousand dollars, conditioned for the faithful performance of his trust, and shall renew the same from time to time whenever required by them so to do."
By article 13 it was made the duty of the executive committee to attend to the general inanagement of the office and superintend the treasurer in the performance of his duties. By article 28 it was provided that the trustees might at any time make alterations in the by-laws, provided the alteration be submitted to the board at least one meeting before the same is passed upon.
Prior to April, 1867, E. W. Budington had been treasurer of the institution. He resigned and, at a meeting of the board of trustees April 16, 1867, the following occurred, as shown by the book of minutes of the institution :
“Resignation of E. W. Budington accepted.
“On motion, Resolved, That the salary of the treasurer be $1,500. The board then proceeded to ballot for treasurer and James E. Ostrander was declared elected.
App. Div.] Third DEPARTMENT, MArch TERM, 1897.
“On motion, Resolved, That the treasurer give bonds in the sum of $25,000.”
The proceedings of the board of trustees on July 16, 1867, were as follows:
“Regular annual meeting of the trustees held July 16, 1867. On motion the following were elected officers for the ensuing year:
“ President, Archibald Russell ; vice-president, A. H. Bruyn ; secretary, Caleb S. Clay; treasurer, James E. Ostrander ; assistant treasurer, M. T. Trumpbour.”
At the annual meeting of the board on July 21, 1868, the following occurred :
“ Minutes read and approved. On motion, the following were elected officers for the year: President, Archibald Russell; vicepresident, A. H. Bruyn; secretary, C. S. Clay ; treasurer, James E. Ostrander; assistant treasurer, M. T. Trumpbour.”
On July 20, 1869, the same officers were elected “ for the ensuing year.” After 1869 there was no election of treasurer at the annual meetings up to and including 1891. Ostrander continued to perform the duties of the office until 1891, when a large defalcation npon his part was discovered, no part of which occurred prior to 1871. The claim of the plaintiff is that this occurred at divers times between 1873 and 1887.
In April, 1867, the defendant Bruyn was a trustee of the plaintiff and vice-president of the board and so continued until 1877, when he became president, and so continued to 1891. He was also one of the executive committee from 1867 to 1869. He did not at any time demand from Ostrander any other bond than that which was given in the first instance and did not ask him to renew it. It was conceded on the argument that no other bond was ever given. Hasbrouck, the other surety, was a trustee in 1867 and was president from 1870 to 1877.
The defendants claimed, among other things, that the bond was good only for a year from its date, and that, as there was no defalcation within that period, the defendants were not liable and the trial court so held. · In the bond, after a recital that Ostrander “has been chosen and appointed treasurer,” it is then conditioned that Ostrander, " at the
APP. Div.-Vol. XV. 23
THIRD DEPARTMENT, MARCH TERM, 1897. (Vol. 15. expiration of his said office,” shall pay and deliver over “ to his successor in office, or any other person duly authorized to receive the same,” all moneys or property due from him, and shall faithfully in all things serve the institution “in the capacity of treasurer as aforesaid during his continuance in office.” The term of office or the time of service is not fixed.
The contention of the defendant is that the election in July, 1867, “ for the ensuing year” limits the term of office or time of employment which was intended to be covered by the bond.
The contention of the plaintiff is that, as by the charter or by-laws, no term is fixed for the office, the phrase in the bond, "during his continuance in office," was intended to cover the entire period he should in fact occupy the position.
It is to be observed that in the election or appointment on April 16, 1867, there is no limit of time. The salary of the officer was also then fixed, and a resolution was adopted that the officer give honds in the sum of $25,000. The matter of salary or bonds does not appear in any of the subsequent proceedings of the board.
“In an action against sureties upon a bond given by an agent for the faithful performance of liis duties, the surrounding circumstances and the situation of the parties, at the time of its execution, may be considered in construing its terms, in case of ambiguity therein." (Western N. Y. Life Ins. Co. v. Clinton, 66 N. Y. 326.) The contract may be interpreted in the light of the surrounding facts as they existed at the time of its execution. (Griffiths v. Hardenbergh, 41 N. Y. 469; Zimmer v. Settle, 124 id. 37, 42.
The question is, what was the intention of the parties? (Brandt on Sur. § 92; Crist v. Burlingame, 62 Barb. 351 ; Nat. Mech. Bkg. Assn. v. Conkling, 90 N. Y. 121.)
The office in this case was not, by statute or by-law, an annual one, and, therefore, the case of Kingston Mut. Ins. Co. v. Clark (33 Barb. 196) is not applicable. In that case the secretary was by the by-laws made to hold his office for one year, and until another was appointed in hiis stead. The bond given by him was in terms for the faithful performance of the duties of the office, “during his continuance in office, by virtue of his appointment.” At the end of the first year, and of each year thereafter for several years, he was elected without any new bond being given or required. It was