First National Bank v. Ætna Casualty & Surety Co.

Supreme Court of Pennsylvania May 26, 1920

First National Bank v. Ætna Casualty & Surety Co., 267 Pa. 519 (Pa. 1920)

110 A. 165; 1920 Pa. LEXIS 904

Brown, Frazer, Moschzisker, Simpson, Stewart, Walling

Opinion of the Court

Per Curiam,

William P. Horn, while serving as note clerk for the First National Bank of Easton, embezzled $39,081.73 of its funds. His embezzlements were committed in 1912, 1913, 1914, 1915 and 1916, when he was under bond in the sum of $5,000, with the appellee as his surety. After his last embezzlement he was elected cashier of the bank and his bond was increased to $20,-000, with the same surety. As cashier he embezzled no *521moneys and caused no loss to the bank by “dishonesty” or “bad faith,” but in this action it seeks to hold the surety liable on the increased bond, covering only his cashiership, for the losses it sustained by his embezzlement as note teller. This it cannot do, and the correct conclusions of the learned court below were: “First. Under the provisions of the bond in suit and the renewals of the same, the defendant company is not liable for more than $5,000 and interest. Second. The dishonesty of William P. Horn, for which the defendant is liable, occurred during his employment as ‘note clerk,’ and the fact that during his employment as ‘cashier,’ he concealed his embezzlement by forging notes and placing them with the genuine notes of the bank, will not make the defendant liable for the amount for which it had bonded him as cashier.”

Judgment affirmed.

Reference

Full Case Name: First National Bank of Easton v. Ætna Casualty & Surety Co.
Status: Published
Syllabus: Principal and surety — Bond of employee — Change of employment — Bank—Note clerk — Cashier. 1. Where a surety company insures a bank against any loss ts the amount of $3,000 resulting from the “dishonesty” or “bad faith” of a note clerk, and this contract continues for five years, when the note clerk is promoted to be the cashier of the bank, and the bond is increased to $20,000, the bank cannot hold the surety company liable on the increased bond for a loss resulting from the employee’s dishonesty while he was note clerk. 2. In such case, the fact that the employee during his employment as “cashier” concealed his embezzlement as “note clerk,” by forging notes and placing them with the genuine notes of the bank, will not make tbe surety company liable for tbe amount for which it bonded him as cashier.