Karsh v. Fidelity Union Casualty Co.

BISHOP, J.,

pro tem.

The defendant corporation appeals from a judgment entered against it on a bond executed on its behalf by a Mr. Frederic, its attorney-in-fact. The judgment is attacked on several grounds, which may be summed up in these. The bond by its terms is not a binding obligation; its execution by Frederic does not bind the appellant. With neither of these propositions did the trial court agree, and neither do we.

Much of the situation, out of which the transaction in question grew, is given us in a sketchy fashion, yet sufficiently in full for the purposes of this appeal. Certain contractors were engaged in building a house, the cost of construction being financed in part, at least, by the proceeds of a first mortgage loan, deposited in a bank in the name of appellant, and subject to the joint control of Frederic and the contractors. J. A. Waldorf was a subcontractor, desirous of some money in advance of its due date. An order for $2,000 payable to Waldorf, addressed to “Frederic, attorney-in-fact, Fidelity Union Casualty Company”, and signed jointly by the owner of the building under construction and the contractors was presented to the respondent for discount. He agreed to take it, giving two checks, one for $1740 and one for $40, drawn in favor of Waldorf and appellant. As a part of the transaction a written document was given to the respondent, dated November 5th, the recitals of which, somewhat condensed, were substantially these: The Fidelity Union Casualty Company is held and firmly bound to Charles Karsh in the sum of $2,000, for the payment of which sum on or before sixty days from date, it binds itself; that the condition of the obligation is such that, whereas an order was executed in favor of Waldorf, as a part of the contract price due or to become due him, and Charles Karsh, in consideration of the execution of this instrument, agreed to and has bought the order. Now, therefore, the condition of this obligation is such that if the said sum of $2,000 shall be paid under said order on or before sixty days, this obligation shall

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be void, “otherwise said surety herein named, does hereby expressly promise and agree that it will promptly on or before three days after said sixty days due date herein mentioned” pay the sum of $2,000. This instrument had affixed to it the name of appellant by Frederic, attorney-in-fact, and bore appellant’s corporate seal. A short time after its execution Frederic informed the respondent that Waldorf objected to so great a discount, in view of the certainty that the order would be honored in much less than sixty days, and the respondent gave Frederic two checks in exchange for the two first given, the new checks being for $1840 and $40, respectively. These checks were payable to the appellant alone, and were deposited by Frederic in its account. Subsequently, the sum of $1880 was withdrawn from appellant’s account by Frederic, Waldorf getting none of it, nor did appellant see it again. Frederic (to complete the picture, we note it), also gave respondent a check for $100, to be cashed if the order was not paid at as early a date as was represented. The order was not paid, either early or within the sixty days, nor was the $100 check cashed when presented.