Opinion
No. 29600.
January 4, 1932.
1. EQUITY. Fiscal agent and treasurer of insurance company, entering into secret partnership, were jointly and severally liable for each act of wrongful conversion and fraud, and surety was liable on respective fidelity bonds, and bill by receiver against treasurer, fiscal agent, and surety on fidelity bonds was not multifarious.
Each of the fidelity bonds was conditioned against loss by acts of fraud, dishonesty, forgery, theft, wrongful abstracts, misapplication, misappropriation, or any other dishonest or criminal act of commission, and evidence disclosed, among other things, that fiscal agent, although required to collect cash, took notes for first payments on stock and sent them through bookkeeper to treasurer, cashier of a bank, which for number of years had been insolvent, and that notes were discounted by treasurer purporting to act as cashier of bank, that fiscal agent's commission was credited to him on books of bank, and that treasurer received part of moneys fraudulently paid out to fiscal agent under their arrangement.
2. INSURANCE.
Chancellor was not required to allocate amount to be recovered from each fidelity bond sued on where same surety made all bonds.
3. INSURANCE.
Receiver could collect on fidelity bonds for parties in interest and pay out funds under court's direction.
4. EVIDENCE.
Presumption was that funds recovered by receiver on fidelity bonds would be paid out under court's direction to proper parties.
5. JUDGMENT.
Surety on fidelity bonds, on paying judgment rendered in receiver's suit against it, is acquitted of any further responsibility.
APPEAL from chancery court of Hinds county. HON. V.J. STRICKER, Chancellor.
Robertson Campbell, of Jackson, for appellant.
It is clear that in this case the bill of complaint was multifarious, contained a misjoinder, and showed no facts giving equity jurisdiction.
Nelms v. Brooks, 61 So. 985, 105 Miss. 74.
That separate insurance policies covering the same property all contained concurrent insurance clause did not entitle the insurers to join in a bill to cancel the policies and to restrain the maintenance of separate actions thereon.
Scottish Union National Insurance Company v. Warren Gee Lumber Company, 60 So. 1010, 108 Miss. 816; Judgment modified in 61 So. 310 and 61 So. 430.
Where a bill combines separable subjects, demands different modes of relief against defendants not having a community of interest in all or any of the subjects, and against whom the complainant does not assert a common right, it is multifarious and a demurrer thereto should be sustained.
George D. Barnard Co. v. Sykes, 18 So. 45; Carter v. Kimbrough, 84 So. 251, 122 Miss. 543.
Bill of complaint is multifarious when recovery is sought in two or more causes of action flowing from separate and distinct sources, and some of defendants liable on one cause have no connection with and are not liable on other.
Clark v. Miller, 105 So. 502, 142 Miss. 123; Griffith's Chancery Practice, secs. 204, 205.
A complainant cannot demand by the same bill several distinct matters against several defendants. They must have an interest in the same object in relation to which redress is sought. A bill is multifarious if it demand several matters of wholly separate and distinct natures either in behalf of unconnected complainants or against unconnected defendants.
Griffith's Chancery Practice, secs. 204, 205; Roberts v. Stark, 47 Miss. 263; Carter v. Kimbrough, 122 Miss. 543, 84 So. 251; Guess v. Straham, 106 Miss. 1, 63 So. 313; Thoms v. Thoms, 45 Miss. 263; McNeill v. Burton, 2 Miss. 510; Carmichael v. Browder, 4 Miss. 258.
Distinct causes of action against different defendants cannot be joined, although in favor of the same plaintiff; nor can a cause of action upon which defendants are jointly liable be joined with one upon which one of the defendants alone is liable. So joint action will not lie against two for their several debts upon separate obligations, or for breach of distinct covenants or generally where their liability is several and not joint. Nor can a joint action be maintained against a principal debtor and a guarantor, or against principals and sureties where they are liable in different amounts.
1 C.J., page 1072, sec. 223; McKee v. Kent, 24 Miss. 131; State v. Powers, 52 Miss. 198.
There is no question as to Cadenhead being indebted to the Mississippi Life Casualty Insurance Company for the full amount of commissions credited him on sales where these notes were taken for the initial cash payment, but his bonds with appellant do not guarantee any indebtednesses from Cadenhead to the insurance company. It only guaranteed against losses on account of fraud, dishonesty, misappropriation, or other dishonest or criminal act or omission.
The acts of Cadenhead whereby he collected commissions on sales of stock where notes were taken for the initial cash payment were done in a manner which was known to and acquiesced in by the directors and officers of the Mississippi Life Casualty Insurance Company and the National Casualty Company is therefore not liable on its bond for this loss caused by such acts.
The acts of A.J. Oubre in connection with the transaction whereby the L.C. Cadenhead Fiscal Agency account was credited with five thousand dollars commissions on the sale of stock of forty thousand dollars to L.C. Cadenhead, Trustee, were not acts of fraud, dishonesty, forgery, theft, wrongful abstraction, misappropriation, misapplication, or other dishonest or criminal acts or omissions and are not covered by his bond with appellant National Casualty Company.
The acts of appellant A.J. Oubre, in connection with the transaction whereby the L.C. Cadenhead Fiscal Agency account were acts performed by the said Oubre as cashier of the bank of Kemper and not as treasurer of the Mississippi Life Casualty Insurance Company and his bond with appellant National Casualty Company, therefore, does not cover such acts.
None of the bonds here sued on are joint bonds of Oubre and Cadenhead. None of the bonds guaranteed the insurance company against losses caused by dishonest criminal or other acts of L.C. Cadenhead, fiscal agency, composed of L.C. Cadenhead and A.J. Oubre. Neither the surety or the obligee knew that Cadenhead and Oubre were co-partners in the fiscal agency.
If a surety engages for an individual, the engagement is understood to extend to the acts of that individual alone, and will not continue if he takes in a partner; in other words, the surety for single individual is not liable for a partnership of which such individual is a member.
Spokane Union Stockyards Co. v. Maryland Casualty Co., 127 P. 797, 63 Or. 586, 43 L.R.A. (N.S.) 65.
So a surety who guarantees that a firm composed of particular individuals will do certain acts or discharge certain duties cannot be held liable where there is a change in the firm, although the firm name is not changed, and although the obligee is not aware of the change. As the surety's liability is strictissimi juris, and cannot be extended by construction, his guaranty to a partnership is extinguished if any partner is taken into or retires from the partnership, unless it appears from the terms of the instrument that the parties intended the guaranty to be a continuing one without reference to the composition of the firm.
21 R.C.L. 1061, sec. 104; School District No. 6 v. Wallawaw County, 127 P. 797, 63 Or. 586, 43 L.R.A. (N.S.) 65; Gazette Publishing Company v. Cole, 164 Ark. 542, 262 S.W. 985; Waterman v. Alden, 143 U.S. 196; sec. 435, 36 L.Ed. 123; Blair v. Perpetual Insurance Company, 10 Mo. 559, 47 A.D. 129.
No recovery can be had in a court for money or property received by an employee, or agent, acting in pursuance of a contract of employment involving a violation of law where recovery would have to be based on the illegal contract.
2 A.L.R. 906; Wooten v. Miller, 7 Smedes and M. 380; Dixie Rubber Company v. Cato, 145 Miss. 342, 110 So. 670.
It has been said that it is well settled law that the insurer is not liable for any acts of fraud or dishonesty committed by the employee after the employer becomes aware of any act which might be made the basis of a claim; and certainly if the bond is conditioned that if the employer, without consent of the company shall entrust his employee with money after having discovered any act of dishonesty, the bond shall be null and void, the act of the employer in retaining his employee in a position of trust after discovery of his dishonesty is at his own risk, and he cannot hold the guaranty company liable for defalcations occurring after the discovery and before notice to the guaranty company.
25 C.J., page 1098, sec. 10; Los Angeles Athletic Club v. U.S. Fidelity Guaranty Co., 183 P. 174; Remington v. Maryland Fidelity, etc. Co., 27 Wn. 429, 67 P. 789; Oil Refining Co. v. Smoot, 242 Ill. App. 438.
The decree rendered in this cause is void and unenforceable because it renders judgment for the lump sum of nine thousand two hundred fifty dollars and eighty-six cents, against all of the appellants jointly without allocating items and amounts of liability against each defendant and without allocating items and amounts of liability against each or any of the three bonds sued upon.
Franklin, Easterling Rosenthal, of Jackson, for appellee.
A finding of fact will not be disturbed unless manifestly erroneous.
Bradbury v. McLendon, 119 Miss. 210, 80 So. 633; Bacot v. Holloway, 140 Miss. 120, 104 So. 696; Rawlings v. Anderson, 149 Miss. 632, 115 So. 714; McClanahan et al. v. O'Donnell et al., 114 So. 336.
The question of jurisdiction is settled by the Constitution (section 147 of the Constitution of 1890), and whether or not this is an action of assumpsit, and, therefore, an action at law, cannot now constitute grounds for reversal.
Carter v. Wetherspoon, 126 So. 388; Engleburg v. Tonkel, 140 Miss. 513, 106 So. 447.
The uniting in one bill of several distinct and unconnected matters of equity against the same defendant, shall not be an objection to the bill.
The several issues covered by the bill arose out of the same transactions which it is charged formed a connected series of acts, all intended to defraud the complainant.
A bill is not necessarily rendered multifarious by reason of the fact that there may be united in it several causes of action. If all the different causes of action united in the bill grow out of the same transaction, and if all of the defendants are interested in the same rights, and the relief against each is of the same general character, the bill may be maintained. No bill is multifarious that presents a common point of litigation, the decision of which will affect the whole subject-matter, and will settle the rights of all the parties to the suit; and it is not indispensable that all the parties should have an interest in all the matters contained in the suit, but it is sufficient if each party has an interest in some material matters in volved in the suit, and they are connected with the others.
Ogden v. Amite County Bank, 135 Miss. 875, 104 So. 290; Dukate v. Adams, 101 Miss. 433, 58 So. 475; N.O. N.E.R. Co. v. N.O.G.N.R. Co., 107 Miss. 453, 65 So. 508.
Oubre and Cadenhead were joint participants in each and every act of fraud and dishonesty for which recovery is sought. Each is liable for the acts of the other, and each is liable for the whole. The mere fact that the appellant executed separate bonds for these men could afford it no greater or higher right. It is the same surety on each bond and its liability arises out of the joint acts of fraud and dishonestly under the express terms of each bond, for the liability arises from the acts of fraud and dishonesty "on the part of the employe directly or through connivance with others."
The chancellor found that Cadenhead and Oubre were liable for four thousand two hundred fifty dollars and eighty-six cents for illegal commissions collected on subscriptions on which no cash payment was made and also the chancellor found Cadenhead and Oubre liable for the five thousand dollars commission collected on the fake sale of sixteen hundred shares made to L.C. Cadenhead, trustee. These two items formed the aggregate amount of the decree and clearly show that the chancellor did make an accounting, and made such an accounting that the defendant was able to tell upon what basis the decree was made.
The chancellor did not have to make a report to himself nor was it necessary to set forth the details of the account in the decree.
Where all the facts are before the court, the accounting may be had and rendered by the court without appointing a master.
Ransom v. Harronn, 113 So. 206.
In order to establish liability on the bond, it was not necessary to show that principal had appropriated the money to his own use.
United States Fidelity Guaranty Co. v. Citizen's State Bank, 116 So. 605; 20 C.J. 427, sec. 16.
The partnership of Cadenhead and Oubre was a conspiracy and the purpose of the bonds was to cover conspiracy and the bonds expressly provide that they shall cover any act of the employee directly or through connivance with others while in any position or at any location. The bonds were individual bonds, covering individuals, and any fraudulent act or acts of the said individual are covered by said bonds.
On February 27, 1930, L.C. Hallam, receiver for Mississippi Life Casualty Insurance Company, exhibited an original bill of complaint in the chancery court of Hinds county, Mississippi, against L.C. Cadenhead and the National Casualty Company, surety on his fidelity bond written by the National Casualty Company in favor of the Mississippi Life Casualty Insurance Company guaranteeing the fidelity of Cadenhead as the fiscal agent of the company to sell stock of the said insurance company to prospective buyers, and also on another bond in the sum of one thousand dollars in the same company, commonly known as a "Blue Sky" bond, and also against A.J. Oubre, as principal, and the National Casualty Company, as surety, on a fidelity bond in the sum of twenty-five thousand dollars, guaranteeing the fidelity of Oubre as treasurer of the insurance company.
The bill alleged that the Mississippi Life Casualty Insurance Company, which had been placed in the hands of a receiver for liquidation, had been organized under the law of the state of Mississippi, and that Cadenhead had been employed as its fiscal agent under written contract; that the defendant Oubre had been elected treasurer of the said insurance company and was at the same time cashier of the Bank of Kemper at Scooba, Mississippi, which bank was designated as one of the depositories of the said insurance company. It was further alleged that the fiscal agency contract was executed between the said insurance company and L.C. Cadenhead, and that by a secret arrangement between Cadenhead and Oubre, the treasurer of the company, a partnership was entered into between Oubre and Cadenhead without the knowledge of the officers or directors of the Mississippi Life Casualty Insurance Company. The fidelity bond in each case was conditioned against loss by acts of fraud, dishonesty, forgery, theft, wrongful abstractions, misapplication, misappropriation, or any other dishonest or criminal act of commission. The bill alleged that Cadenhead, contrary to his contract, and in violation of the permit granted by the insurance commissioner requiring twenty per cent of the subscription to be paid in cash, had sold forty-three thousand five hundred dollars worth of stock to various parties and had accepted promissory notes for the first payment instead of having said payments made in cash, and had collected commissions on the said sales to the amount of five thousand four hundred thirty-seven dollars and fifty cents. The bill further alleged that the defendant Oubre connived and colluded with Cadenhead in the collection of said commissions, and that the same constituted a breach of both the bonds of Cadenhead and of Oubre. It was further alleged that in July, 1929, Cadenhead, as fiscal agent, fraudulently, dishonestly, and wrongfully pretended to sell to L.C. Cadenhead, trustee, sixteen hundred shares of stock in the said insurance company for forty thousand dollars, and that he gave his check for six thousand dollars as a payment on this subscription at a time when he had no funds in the bank on which the check was drawn to cover the same, but that defendant Oubre, who was the cashier of the bank on which the check was drawn, which was a depository of the insurance company, held it for thirty days and credited the account of the insurance company on the books of the bank with a deposit of six thousand dollars. It was further alleged that twenty per cent cash required to be collected on said subscription would amount to eight thousand dollars, and that Cadenhead and Oubre wrongfully, dishonestly, and fraudulently abstracted from the funds of said insurance company on deposit with said bank the sum of five thousand dollars as commission on said sale. That the said Oubre had full knowledge of the transaction and should have refused to permit Cadenhead to withdraw the said five thousand dollars commission, which Oubre had authority, by virtue of his office as treasurer, to do, and that the same constituted a fraud on the insurance company and a breach of both bonds.
It was further alleged that later Oubre debited the account of the insurance company with the bank of Kemper with this six thousand dollars, but did not demand a return of the five thousand dollars commission, and that the same has never been returned to the insurance company. That both Cadenhead and Oubre knew that they had no authority to cancel a subscription, and that the delivery of the six thousand dollars and the taking of the five thousand dollars commission was a fraudulent misappropriation and misapplication of said funds and a breach of the bonds.
It appears that the arrangement between Cadenhead and the insurance company, under his contract as fiscal agent, was that Cadenhead was to receive twelve and one-half per cent of the amount of the subscription at the time the subscription was taken; that he was to have a total of fifteen per cent, but that two and one-half per cent of the first premium was to be paid into the treasury of the company and there remain until the full amount of the subscription had been paid.
An exhibit to the bill, showing various parties to whom stock was sold and notes taken for the initial premium payment required to be in cash, but in fact taken by note, is set out. This list is marked Exhibit 7, and the total shares of stock sold in this method was one thousand seven hundred forty, the amount of the subscription forty-three thousand five hundred dollars, the amount to be paid in cash as initial payment, but which in fact was paid by note, was eight thousand eight hundred dollars, and the amount actually collected as commissions from this amount, instead of being twelve and one-half per cent of the amount of the initial payment, amounted to a total of five thousand four hundred thirty-seven dollars and fifty cents. Generally, these payments were the commission on the entire subscription due Cadenhead under the twelve and one-half per cent arrangement, and not twelve and one-half per cent of the initial payment.
It appears that Oubre was cashier of the bank of Kemper and was under bond to that bank in the amount of twenty thousand dollars with the United States Fidelity Guaranty Company, as surety, and the amount of this bond at the time suit was filed had been collected and paid to the state banking department, that bank at the time being in liquidation as an insolvent institution. It further appears that Oubre had been cashier of the bank of Kemper for many years, and the bank had been insolvent for a number of years, and that Oubre had converted or abstracted or made way with the funds of said bank in large sums exceeding the capital and surplus of the bank. It appears in the proof that Cadenhead took notes and sent them through his bookkeeper to Oubre, and that they were discounted by Oubre, purporting to act for the bank, and Cadenhead's commission credited to him on the books of the bank, and the balance was credited to the insurance company's account on the books; that Oubre did not in fact issue a check as treasurer of the insurance company to Cadenhead, but, acting as cashier of the bank, issued or made out deposit certificates. At the time the bank was taken over for liquidation by the banking department the insurance company had on the books of the bank an account amounting to more than eleven thousand dollars. After the bank had been in liquidation, a fifty per cent dividend was paid to the depositors and one-half of the account mentioned was paid and was credited on the bank guaranty certificate held by the receiver of the insurance company. The receiver had instituted suit against the superintendent of banks for the balance of the deposit to the credit of the insurance company, as shown by the books of the bank, and that suit was pending at the time the judgment was rendered.
The chancellor rendered judgment against Oubre, Cadenhead, and the National Casualty Company, jointly, in the sum of nine thousand two hundred fifty dollars and eighty cents, with six per cent interest from the date of the filing of the bill and all costs. From this judgment the National Casualty Company appeals, but the defendants, Cadenhead and Oubre, do not appeal.
It is insisted by the appellant that the chancery court did not have jurisdiction to render the judgment which it rendered in this case, and that the bill filed was multifarious. A demurrer on general and special grounds was filed to the bill and overruled by the chancellor, after which answers were made by the respective defendants. It will appear from what has been stated that the demand all grew out of a common source, and that Oubre and Cadenhead had entered into a partnership arrangement, and through their connivance and collusion and fraud moneys properly belonging to the insurance company were diverted from that company to Cadenhead and Oubre. The bonds were all made by the same surety, and the acts of Oubre and Cadenhead were made under a secret contract between them amounting to a secret partnership in the funds so unlawfully diverted from the insurance company to the said Cadenhead and Oubre. Oubre deposited moneys belonging to the insurance company in a bank which he knew was insolvent and paid out to Cadenhead moneys fraudulently, of which he received a part, under their arrangement.
We think that Oubre and Cadenhead were jointly and severally liable for each act of wrongful conversion and fraud, and that the surety bond was liable under its terms for the acts of each on each of the said respective bonds. It is immaterial that the chancellor did not allocate the amount to be recovered from each bond, because the same surety made all of the bonds, and the judgment rendered by the chancellor subrogated the surety to the rights of the Mississippi Life Casualty Insurance Company against both Oubre and Cadenhead, and also subrogated the insurance company to the rights of the receiver in the suit filed against the superintendent of banks, having the bank of Kemper in liquidation. As we see it, the National Casualty Company was liable on each of the bonds to the receiver of the Mississippi Life Casualty Insurance Company, which receiver had a right to collect on all of the bonds for all of the parties in interest, and who will pay out the funds under the direction of the chancery court, and that the appellant, on paying the judgment rendered against it, is acquitted of any further responsibility as it has no particular interest in the disbursement of these funds. It must be presumed that the funds will be paid out under the direction of the court to the parties properly entitled thereto.
We find no grounds warranting a reversal of the judgment, and the judgment of the court below is affirmed.
Affirmed.