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either the assured or her husband had made by the evidence. Whether Mr. Brooks made any statements or representations to the agent any representations to the agent concerning the in reference thereto. The defendant offered in number of rooms in the house was to be de evidence a document signed by Mr. Brooks termined upon a direct conflict of evidence; which is claimed to be the application. This aúd, if the jury believed that he did not, his document is indorsed: “Daily Report of Pol- signing the application with the ambiguous icy Issued for the Home Mutual Insurance phrase, “Less than fifteen rooms," without Company. Instructions to Agents.” The knowing that it was there or the purpose'for face of the policy is headed, "Questions,” which it had been inserted, cannot be conwith the following direction, evidently in strued as a written representation by him that tended for the agent of the defendant, viz.: the building contained less than fifieen rooms. "By baving the following questions so fully The rule ihat one who sigus an instrument answered that the company can get a clear which contains terms of obligation upon bimidea of the risk, and can verify rates, the agent self is not absolved from such obligation by will avoid much unnecessary correspondence.” showing that he signed the instrument without Under this are various printed questions, num- reading it, has no application like the present, bered consecutively to twenty-five, and be where the instrument signed contains no words neath these printed questions there was written, of obligation, and the clause invoked against upon a blank line on this printed page: “(26) the signer does not purport to be a statement by Less than fifteen rooms. The agent of the him, or in answer to a question put to him. defendant testified that, before he presented The policy sued on does not refer to this applithis document to Mr. Brooks for signature, he cation, or in any way incorporate its contents had written these words in the application into the conditions upon which the contract of from information wbich he had obtained from insurance is made: but the appellant sought by Dungan, and he did not testify that he made extrinsic evidence to connect the two instruany inquiry of Mr. Brooks concerning the ments, and make the one dependent upon the number of rooms in the house. Mr. Brooks contents of the other. In such a case ibe evi. testified that, when the application was pre- dence should be very clear that the statements sented to bim for bis signature, he signed it in the application relied on to defeat the action without reading it, and that, when he signed were made by the applicant, and that, at the it, he had no knowledge that these words were time of making them, the applicant knew that there. It does not clearly appear whether the they were to form the basis of the policy to be matter referred to in these words was the sub- issued to him. Dunbar v. Phenix Ins. Co. 72 ject of a question which was intended to be Wis. 492; Schwarzbach v. Ohio Valley Protecput to Mr. Brooks, and to which no answer tive Union, 25 W. Va. 663; Combs v. Hannibal was written in the application, or whether the Sav. & Ins. Co. 43 Mo. 148, 97 Am. Dec. 383; words constitute a statement written by the Rowley v. Empire Ins. Co. 36 N. Y. 550: May, agent of the defendant for the information of Ins. S: 144 et seq. his principal. It is quite as consistent with the Certain rulings of the court at the trial were evidence on this point that the jury should excepted to by the appellant, but we are of the have found that these words were written by opinion that no error was committed in these the agent for the information of the company, rulings. The question asked of Freeman, “In as that they were an answer to any question whose bandwriting was the statement, 'Less put to Mr. Brooks by the agent. In the line than fifteen rooms?'” was subsequently stated numbered 24, the questions, "Have you per. by him to be in his own handwriting. The sonally examined the risk?” and “Do you rec- question whether Brooks stated to bim that ommend it?" are evidently questions which were there were less than fifteep rooms in the buildto be answered by the agent, and he testified ing was clearly leading, and was properly exthat the answer to the next question, "Has the cluded upon that objection. Whether Brooks risk been recently rejected ?" to which the an- made such a statement was a material point of swer No” is written, was not discussed by inquiry, and it would have been competent for him with Mr. Brooks,

the defendant to ask of Freeman whether any The court instructed the jury, in substance, statement was made by him on that subject, that if Mr. Brooks, in applying for the policy, and, if so, what it was; but the defendant made a written representation that the build- omitted to make such inquiry. Equally proper ing contained less than fifteen rooms, they was it for the plaintiff to show by Brooks that should find for the defendant; but, if they he did not make such statement, and that, at should find that the facts contained in the ap- the time he signed the application, he was not plication respecting the number of rooms were aware that the statement was there. The only obtained by the defendant from Dungan, and objection to these questions was that tbey from the diagram or plans furnished by him, were irrelevant and immaterial, and this ob and that Brooks made no representation per-jection was properly overruled. sonally in the matter, but signed the applica- The judgment and order are affirmed. tion without knowing wbat it contained as to the number of rooms, it did not constitute a We concur: Garoutte, J.; Van Fleet, J. defense. This instruction properly directed the jury in their deliberations upon their ver- Rebearing in banc denied, Beatty, Ch. J., dict, and their verdict thereunder is justified | dissenting. 34 L, R. A.

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NORTH DAKOTA SUPREME COURT. . STANDARD OIL COMPANY, Appt., brings them squarely within the terms of the

bond, as partners. Mike ARNESTAD et al., Respts.

· Palmer v. Bagg, 64 Barb. 641; Bates, Partn.

$ 655, p. 688, and cases therein cited. (...6...N. D. 255

Mr. F. W. Ames, for respondents:

The principals in the bond are Mike Arne*Sureties who sign a bond for the fidel. stad and Ole Eggerud, copartners as Arnestad

ity of a firm as agents for the obligee are not & Eggerud, and it is their fidelity, and that of liable for funds misappropriated by one of the their employees, and those to whom they may members of such firm after the dissolution of the intrust the business of the appellants, that are partnership and the retirement of the other part- expressly undertaken by the respondent surener from the business of such agency. And this ties; the expression, “ör either of them," as is the rule notwithstanding the fact that the ob- shown by the tenor of the whole bond imports ligee knew nothing of such dissolution.

nothing more than an intention to be respon(November 20, 1896.)

sible for the acts of either during the existence

of the partnership. APPEALis bicPlaiuriti fromes judgment for

2 Brandt, Suretyship & Guaranty, 2d ed. the District Court for Cass County in fa- $ 118; Simson v. Cooke, 8 .!. B. Moore, 588; vor of defendants in a proceeding brought to Hawkins v. New Orleans Printing & P. Co. enforce a bond which had been given by de 29 La. Ann. 134. fendants for the fidelity of a firm which had

A surety cannot be held beyond the express been appointed to act as agents for the sale of terms of his contract. plaintiff's goods. Affirmed.

Rev. Code, 4651; Miller v. Stewart, 22 U. The facis are stated in the opinion.

S. 9 Wheat. 680, 6 L. ed. 189. Mr. Melvin A. Hildreth, for appellant:

A surety who guarantees that a firm comThe defense of a dissolution of partnership posed of particular individuals will do certain is an affirmative defense, and must be proved acts or discharge certain duties, cannot be beld by a preponderance of the evidence.

liable where there is a change in tbe firm, alThe statements and declarations of partners though the firm name is not changed. as to their status or dissolution, or any

Dupee v. Blake, 148 Ill. 453; Barnett v. change in their relationship, should be closely Smith, 17 N. 565; 1 Brandt, Suretyship & scrutinized when others may be injuriously Guaranty, 2d ed. $ 118, etc.; Crane Co. v. affected by the establishment of any fact which Specht, 39 Neb. 123: Theobald, Principal & such declarations or statements may tend to Surety, 72; Simson v. Cooke, supra; Kipling prove. They are interested witnesses. v. Turner, 5 Barn. & Ald. 261; Penoyer v.

Clinton Lumber Co. v. Mitchell, 61 Iowa, Watson, 16 Jobos. 100; Shaw v. Vandusen, 5 132.

U. C. Q. B. 353; White Sering Mach. Co. y. In this state the common-law rule that the Hines, 61 Mich. 423, and cases cited; 2 Kent, contract of suretyship shall be strictly con

('om. 124; Backhouse v. Hall, 6 Best & S. 507; strued does not apply.

Manhattan Gaslight Co. v. Ely, 39 Barb. 174. Rev. Code, S 4652.

The fact that plaintiffs were not notified of The principle that the dissolution of a part

the change is immaterial. nership releases the sureties upon a bond cov.

Birch v. De Rivera, 24 N. Y. S. R. 770; 2 ering the acts of the partners, applies only

Parsons, Cont. 505. where the bond covers the acts of the partners partners only, and in those

Corliss, J., delivered the opinion of the cases knowledge of the dissolution was gen

court: erally brought home to the plaintiff. The

The object of this suit is to hold the defendcase at bar is distinguishable, first, in apts, as sureties upon a bond, liable for the that the bond herein is a joint and sev- embezzlement of one of the principals in such eral bond and extends to the individual acts obligation. The Standard Oil Company, the of Arnestad and Eggerud, or either of them or plaintiff herein, having selected as its agents at their employees, or the employees of either of Mayville, in this state, the firm of Arnestad & them, or anyone to whom they or either of Eggerud, required of them a bond with sureties tbem, may intrust the business of the com

as a condition of shipping them its goods, to pany while acting as the agents of the plain be handled by them as such agents at that titf; and second, the plaintiff had no knowl. point. In response to this demand the bond in edge of

the alleged change in this partnership suit was executed by the firm, and by defendSee Palmer v. Bagg, 36 N. Y. 523; Hayden ants Hanson and Gullicks as sureties. The sole v. Hill, 52 Vt. 259.

question before us relates to the liability of the The act itself of intrusting plaintiff's goods sureties.. Their only defense is that the bond to Arnestad & Lindstorm by the firm of secured the bonesty of only the firm, and that Arnestad & Eggerud without notifying plaid- before the embezzlement in question took place tiff and without plaintif's consent, was an act Eggerud bad withdrawn from the firm, and of misappropriation of plaintiff's goods which that at the time the money sued for was misap

propriated the business of such agency was *Headnote by CORLISS, J.

being carried on by Arnestad and Lindstrom.

as

NOTE-The opinion of the court and the briefs in of a bond for the fidelity of a partnership, so that the above case seem to present very fully the au- no attempt will be made to annotate the case. thorities on the point in question as to the effect

As the construction of the bond is involved, | & Eggerud, or anyone to whom they may inwe deem it necessary toʻquote it in full: trust the business of the company.” Again, the

“Know all men by these presents: That we, bond provides that, “if the said Arnestad & Mike Arnestad and Ole Eggerud, copartners Eggerud shall faithfully and accurately peras Arnestad & Eggerud, principals, and John form the duties as agents for the said Standard P. Hanson and C. Gullicks, sureties, are held Oil Cocopany, and shall correctly account for and firmly bound unto the Standard Oil Com- all' stock or funds belonging to the said company in the sum of five hundred dollars ($500), pany which shall be intrusted to bim or his lawful money, to be paid to the Standard Oil employees acting in his stead, whose acts he Company, its executors, administrators, and herein directly assumes, then the above obliga. assigns, for which payment well and truly to tion to be void,” etc. It is evident that the be made we bind ourselves, our heirs, execu- words, "to bim or his employees acting in his tors, and administrators, severally and collect- stead, whose acts be herein directly assumes," ively, firmly by these presents. The coudition were intended to express the plural instead of of the above obligation is such that if, through the singular. In preparing the bond, a blank the neglect, carelessness, or inattention to the was probably used which had been so worded business of the said company by the said Arne as to apply to a single agent. Looking at the stad & Eggerud, or either of them, or any of whole instrument, and interpreting it in tbe their employees to whom they may intrust the light of surrounding circumstances, we are unbusiness of the said company, the company able to find in it any purpose on the part of the shall sustain any loss or damage, then the said obligors to give, or on the part of the obligee to Arnestad & Eggerud, and parties hereto sub. exact, security for the act of either partner after scribed as sureties, shall indemnify the said the partnership as such had ceased to act for the company to the amount of this bond; and the plaintiff. Had this been the object of the parsubscribing parties also firmly bind themselves ties, an explicit provision to that effect could, to sustain and pay the Standard Oil Company, and certainly would, have been incorporated in pot to exceed the amount of this bond, any loss the bond. We are therefore forced to fall back resulting to the said company through the upon the inquiry whether the law will imply theft or fraud on the part of the said Arnestad any promise on the part of the sureties to be & Eggerud, or anyone to whom they may responsible for Arnestad's honesty after he intrust the business of the company. The di had ceased to be associated with Eggerud in rect purpose of this bond is to secure and the business. On this point we bave no doubt. indemnify the said company against any loss A surety who engages to be responsible for from shortage on account of stock not being the honesty of a firm may be entirely inilu properly accounted for, and loss on account of enced by the consideration that one of the funds belonging to the said company being partners is a man of integrity, and of such misappropriated by the said Arnestad & Egge strength of character, and such shrewdness and rud, or either of them, or anyone to whom they watchfulpess in business affairs, that the risk shall intrust the business of ibe said company. of dishovesty from the action of the other If the said Arnestad & Eggerud shall faithfully partner, in whom the surety may place do and accurately perform the duties as agents for irust, is reduced to the ininimum. The sure. the Standard Oil Company, and shall correctly ties in this case may bave been willing to be account for all stocks or funds belonging to the come bounden for the fidelity of Arnestad & said company which shall be intrusted to him Eggerud wbile acting as a firm, and yet at the or bis employees acting in his stead, whose acts same time not willing to incur the hazard of be herein directly assumes, then the above obligating themselves as sureties of the partobligation to be void; otherwise to remain in ner Arnestad alone. Based upon such considfull force and virtue."

erations as these, the rule of law has long been It is urged that by the use of the words or established that the surety, standing upon the either of them” the parties intended to cover the very letter of his contract, may insist that be individual defalcation of either member of the cannot be held for aught that is done after the firm as well after the dissolution of the firm as dissolution of the firm, for which alone be bebefore. But we are unable to discover any came responsible. Backhouse v. Hall, 6 Best justification for such a construction of the in. & S. 507; Dupee v. Blake, 148 Ill. 453: 2 Bates, strument. We think tbat these words were Partn. SS 648-655; Birch v. De Rivera, 24 Y. employed (unnecessarily employed, it is true) to Y. S. R. 770. See also Penoyer v. Watson, 16 express what the law would bave implied had Jobps. 100; Crane Co. v. Specht, 39 Neb. 123; they been omitted; i. e., that both partners need Manhattan Gaslight Co. v. Ely, 39 Barb. 174; not join in the wrongful act to render all parties White Sewing Mach. Co. v. Hines, 61 Mich. to the obligation liable. The bond was given to 423; Barnett v. Smith, 17 II). 565; 24 Am. & secure the plaintiff from loss growing out of the Eng. Enc. Law, pp. 764, 765. The case of agency beld byšthe copartnership, and there is Dupee v. Blake, 148 Ill. 453, so far as the prinnothing in its language to indicate that the ciple of law is concerned, presents the same parties were contracting with reference to a features as the case at bar. The court there possible dissolution of the partnership, and the said: “The rule is that, if a surety engages continuance of the agency by one of the firm. for an individual, the engagement is underOther provisions of the bond indicate the exact stood to extend to the acts of that individual reverse. The instrument declares that “tbe alone, and will not continue if he takes in a subscribing parties also firmly bind themselves partner. In other words, the surety for a sinto sustain and pay to the Standard Oil Com-gle individual is not liable for a partnership of papy, not to exceed the amount of this bond, which such individual is a member. A surety any loss resulting to the said company through who guarantees that a firm composed of parthe theft or fraud on the part of said Arnestad | iicular individuals will do certain acts or dis. charge certain duties cannot be held liable for Mitchell on the bond, could not be liable to where there is a change in the firm, although respond for the laches of the firm, for it would the firm name is not changed. As the surety's be the default of a different party from that for liability is strictissimi juris and cannot be ex. which they were bound. Mitchell was at libtended by construction, his guaranty to a part. erty to employ such agency as he chose to assist nership is extinguished if any partner is taken him. He could pay assistants a stipulated into or retires from the partnership, upless it salary, or compensate them with a portion of appears from the terms of the instrument the profits of the business. It was a matter of that the parties intended the guaranty to be a indifference to the plaintiff, so long as Mitchell continuing one without reference to the com fultilled all the stipulations of his agreement. position of the firm. A party may be induced If he employed unfit agencies, and thereby the to become surety for the individuals who com property, was squandered aud lost, it was, so pose a firm because of his confidence in their far as this plaintiff is concerned, the default of integrity, prudence, accuracy, and ability as Mitchell alone, and he and his sureties must bnsiness men, but be cannot be presumed to respond. If the fact that defendant took in a have intended to become responsible for the partner in conducting the business of the possession of such qualities by some third per-agency did enhance the risk of these defendson, who may be afterwards taken into the firm ants, as the sureties of Mitchell, it was not inwithout bis knowledge or consent. It is often duced or recognized by the plaintiff, and in the power of one partner, by want of dis was a matter over wbich the defendants had cretion or integrity, to ruin another.”

quite as much control as the plaintiff. We Our attention has been called to certain de- think that the referee was right, under the cisions which it is urged with great earnestness circumstances of the case, in findivg that are opposed to the authorities already cited, Mitchell was 'responsible for the acts of Clapp,' and we are requested to follow them as enun- as for any other agent or assistant that be em. ciating the sounder doctrine. These decisions ployed, in conducting the business of the are Palmer v. Bagg, 56 N. Y. 523, 64 Barb. 641; agency; and that money that came to the Hayden v. Hill, 52 V1. 259. But, in our judg- bands of Clapp in the conduct of this business ment, these cases are plainly distinguishable by legal intendment came to the hands of from the case before us for final settlement. Mitchell. Palmer V. Bagg, 64 Barb. 641." Their facts were different from the facts of And in Palmer v. Bagy (56 N. Y. 525), the this controversy in vital particulars. The court said: "We do not think this sufficient to sureties there bad become responsible for the change the relations between Fanning and the honesty of an individual agent. As the court plaintiffs. The latter did no act creating or recvery properly held, such sureties took the ognizing any change. The agencies or means risk, not only of their principal's honesty, but which Fanning employed to dispose of the also of the dishonesty of those whom he might machines after receiving them did not necesemploy in any capacity to assist him in the sarily interfere with ihe relations between prosecution of the business of the agency. him and tbe plaintiffs. He might emShould he hire a subagent as an assistant, the ploy other persons to aid in the selling and pay sureties would still be bound. And so they ihem wages or a percentage, or a sbare of would remain liable if he should see fit to give profits as partners. So long as the plaintiffs such assistant an interest in the property of confined their dealings with him under the the business of the agency, provided the obli- power of attorney, they would not be affected gee did not deal with the new firm as agents, by any arrangements he should make.” In and thus extinguish the original agency. The neither of these cases did it appear that the sureties in those cases undertook to guarantee obligee bad dealt with the firm. Had this apthe fidelity of the agent to his trust, and tbere peared, a different question would have been fore necessarily agreed to be responsible for presented, for then the sureties could have whatever he should do himself or through his claimed that their bond did not cover a partagents and employees. They agreed to as- persbip agency, but only an individual agency. sume the risk of his integrity and his business And it is apparent from the language of the judgment in employing assistants in any ca- courts in these cases that this fact would bave pacity. It is upon this ground that all ihese constrained them to hold that the sureties were decisions relied on by counsel for plaintiff pro not liable. ceed. In Hayden v. Hill, 52 V t. 259, the court Finally, it is said that it does not appear said on this point: “(1) The report shows that that the plaintiff knew of the withdrawal of Mitchell took in one Clapp as a partner, and Eggerud from the firin, and that hence it foltbat said agency was managed, and funds lows that the old firm, as a firm, was still liatherefor received, during a portion of the time, ble to the plaintiff for the funds misappropriby the partnership; and it is claimed that a ated, no matter by whom they were embezzled. portion of the funds from sales and leases of Upon this foundation plainiiff builds up the the property were received by Clapp, and never argument that, inasmuch as the principals in actually came into the hands of Mitchell. But the bond are liable, so are the surcties. But the report further states that the plaintiff never this reasoning entirely misapprehends the narecognized such partnership, and dealt solely ture of the obligation of the sureties in this with Mitchell. He refused even to receive a case. By sigping the bond, they did not, in pote indorsed by the partnership name. If effect, assert to the plaintiff that they would the plaintiff had seen fit to have consigned the be bound whenever the principals in the bond property to the partnership, and dealt with it were liable in any way to the plaintiff, whether in such manner that the firm of Mitchell & because of their having embezzled the propClapp would have been the responsible parties erty, or by reason of the doctrine of estoppel in the accounting, these defendants, as sureties which would seal their lips against a denial of

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liability. They merely agreed to become re-ever, is not responsible for the state of facts sponsible for the fidelity of the firm so long which might justify a recovery against the as each of the members offthe firm should re- original members. There is no evidence here main in the business. They contracted to be that he was aware of the change. He seems bound for the acts of Arnestad so long as they to have been as much without notice as the could have the protection resulting from the plaintiffs themselves. But were it otherwise, association of Eggerud with him in the same we may say, in the language of Lord Black business. But they did not guarantee the in- burn, Nothing is stated to show either that the tegrity of Arnestad alone, unwatched and in defendant was under any obligation to inform fiuenced by Eggerud, who may bave been the the banking house of that fact or that he took only person in whom they reposed any trust. any steps to conceal it.' At all events, his conIf ihe plaintiff was ignorant of the change in tract is to guarantee a copartnership firm comthe firm, so were the sureties; and, if the sure posed of certain persons, and that contract canties have a right to stand upon the terms of not be altered or extended without his consent." their contract, then it behooved the plaintiff See also Backhouse v. Hall, 6 Best & S. 507. 'to ascertain at its peril whether all the persons We are unable to agree with counsel for for whom the sureties had become responsible plaintiff that there is not sufficient evidence of still remained at the helm of the business of the dissolution of the firm of Arnestad & Eg. the agency. On this point the decision of the gerud. The evidence on the point is very satcourt in Birch v. De Rivera, 24 N. Y.S. R. 770, isfactory. Nor do we find anything in the is decisive. The court there said: “The fact case to rebut it. The deficit sued for having that the plaintiffs were not notified of the resulted from misappropriation of funds by change is immaterial. They may have an ac- Arnestad after Eggerud had retired from the tion against the firm as it existed before the business, the district court was right in renchange because of failure to notify them of dering judgment for the sureties on the bond. such change, or to publish the dissolution. It follows that such judgment must be affirmed, That proceeds upon another principle, namely, and it is so ordered. the presumption attached to continuous firm dealings without notice. The guarantor, how- All concur. 34 L. R. A.

END OF CASES IN BOOK 34.

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