ON SUGGESTION OF ERROR. The decree of the court below herein was reversed on a former day, and the cause remanded. It appeared then that the appellee was probably entitled to a final judgment on some of the items sued for, but we were unable to arrive at any satisfactory conclusion relative thereto without the further assistance of counsel, the case not having been argued with the view to a judgment here for the appellee in event the court should hold that it was entitled to recover less than the amount awarded in the court below. That assistance has now been given. *Page 772
In this connection we desire to suggest that where counsel for either party desire a final judgment in this court, in event the judgment or decree appealed from is reversed, they should specifically state in their briefs filed on the hearing what this judgment should be, and the reasons therefor.
The correctness of our former decision is challenged, but after mature consideration we have determined to adhere thereto.
The three bank officers whose fidelity was here insured are W.J. Lindinger, its president, L.A. Watts, its cashier, and T.W. Hudson, its assistant cashier. The defalcations by Watts and Hudson, on which recovery can be had under our former decision, are not now in dispute, and a decree will be entered here therefor. These defalcations on the part of Watts amount to one thousand six hundred seventy-five dollars, and on the part of Hudson to four hundred dollars.
As to Lindinger, and dealing now with the appellant's liability under the schedule employees' fidelity bond executed by it on December 28, 1928, Watts, the cashier, knew of each of Lindinger's defalcations when committed, and the first question to be here decided is whether this knowledge of Watts should be held to be constructive notice to the bank. It is true that ordinarily the knowledge of a bank's cashier is imputed to it, but that rules does not apply in favor of the surety on a bank employee's fidelity bond. This exception to the rule is supported by numerous authorities giving the reasons therefor, and is exemplified by the line of cases in which appear Fidelity Casualty Co. v. Gate City National Bank, 97 Ga. 634, 25 S.E. 392, 33 L.R.A. 821, 54 Am. St. Rep. 440, and Fidelity Deposit Co. of Maryland v. Courtney, 186 U.S. 342, 22 S. Ct. 833, 46 L. Ed. 1193.
The bank's board of directors, as stated in the former opinion, obtained notice of the transactions by Lindinger, *Page 773 alleged to constitute breaches of his bond, on June 6, 1929, at its quarterly meeting then held, whereat it approved all of these transactions. These were:
May 15, 1929 — Loan to himself not previously authorized ........................................ $3,600.00 May 31, 1929 — Loan to himself not previously authorized ........................................ 980.50 June 4, 1929 — Loan to himself not previously authorized ........................................ 2,640.00 March 27, 1929 — Loan to Canty Gautier ........... 2,600.00 April 11, 1929 — Henry LaForce note, discounted .... 208.07 April 29, 1929 — Loan to Canty Gautier ........... 600.00 May 13, 1929 — Loan to Scranton Fish Company ....... 2,000.00 May 15, 1929 — Bennie Charlton note, discounted .... 900.00
The schedule employees' fidelity bond insured the bank against "such pecuniary loss as the employer shall sustain of money or other personal property through the fraud, dishonesty . . . of or by any of the employees listed in the schedule forming part of this bond directly or in connivance with others," etc. The loans made by Lindinger to himself in violation of section 3812, Code 1930, were held, in our former opinion, to be dishonest acts for which the bond was liable.
Canty, Gautier, and Lindinger were partners owning a boat engaged in the fishing business. The money loaned Canty and Gautier by Lindinger was for the use of the partnership, Lindinger guaranteeing to them the payment of his pro rata thereof. The reason why Lindinger's name was not included in the notes as one of the makers thereof was that he preferred it not to be so, because he was an officer of the bank. While these loans were not made on Lindinger's "own note or obligation" (section 3812, Code 1930), he was indirectly obligated to the payment thereof, and whether expressly so intended or not was but a scheme to defeat the prohibition of the statute and within its intendment. To hold otherwise would render the statute a nullity because of the easy manner by *Page 774 which officers and employees of a bank could do indirectly that which it expressly forbids. These loans, therefore, come within the same category as the loans by Lindinger to himself alone.
The Scranton Fish Company was a corporation, of which Lindinger, Canty, and Gautier each owned a third of the stock. Lindinger was not an officer of the corporation, but in borrowing the money loaned it by Lindinger for the bank he and the other two stockholders determined whether the loan should be applied for, and Lindinger himself determined whether the bank should lend it. This loan is not within the provisions of the statute. It is not necessary for us to determine whether it is of such a fraudulent or dishonest character as to come within the terms of the bond. No crime was committed by Lindinger in making it, and the bank had the right to approve and adopt it; this it did through its board of directors, therefore, there is not liability on the bond therefor. The Bennie Charlton and Henry LaForce notes were owned by the Scranton Fish Company and discounted to the bank, Lindinger represented the bank in discounting the notes and participated with the other two stockholders of the fish company in determining whether the notes should be sold to the bank. What has just herein been said with reference to the loan to the Scranton Fish Company applies here.
This brings us to the appellant's liability for Lindinger's alleged defalcations under the second, or banker's blanket, bond. These are:
*Page 775February 25, 1931 — Loan to himself (Hibernia Bank item) ........................................... $325.77 March 21, 1931 — Loan to Fairyland Golf Course ........ 50.00 April 2, 1931 — Loan to himself ....................... 200.00 April 28, 1931 — Loan to Fairyland Golf Course ........ 52.36 April 28, 1931 — Loan to himself (Cincinnati Boat item) ................................................ 703.64
This bond became effective at noon on the 25th day of February, 1931. The evidence is silent as to what hour of February 25, 1931, the Hibernia Bank transaction took place, and the burden was on the appellee to prove that it took place subsequent to noon of that day. There can be no recovery for this item. The Fairyland Golf Course was a partnership composed of Lindinger's wife and others, but in which he had no interest. The loans to this partnership were not within the statute and are in the same category as the Scranton Fish Company, LaForce, and Charlton notes; no recovery can be had therefor.
The loan of two hundred dollars by Lindinger to himself comes within our former opinion. This leaves only the Cincinnati boat item of seven hundred three dollars and sixty-four cents undisposed of. Counsel are in hopeless conflict as to what the amount of this item should be, and we are wholly unable ourselves to determine it on the present record. It seems that the appellant is probably liable for something thereon, so that all we can do with reference thereto is to remand the cause to the lower court for the determination thereof.
A final decree will be rendered here for the appellee for the items hereinbefore said to constitute liabilities on the bonds, and the cause will be remanded for trial only as to the appellant's liability on the Cincinnati boat item.
Sustained in part and overruled in part. *Page 776