Lawrence Lewis.

American and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] online

. (page 32 of 73)
Online LibraryLawrence LewisAmerican and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] → online text (page 32 of 73)
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were payable by a fixed and stated compensation from the
operation of the section. It will also be observed that in the
structure of the clause referred to, the words first used, and
presumably those to which the most importance was attached
are those of " fees and percentages," and then follows the word
"allowances," which seems to have been employed by way of
repetition, and as a possible cover for some form of compensa-
tion of a similar character not included in its previous lan-
guage. The rule embraced in the maxim of noscitur a sociis
seems to be peculiarly applicable to the question presented,
and requires a definition of the word ** allowance" similar
to that of the language to which it is so closely allied.

The natural interpretation of these provisions is that they
were intended to include only those irregular,
indefinite and uncertain modes of compensat- ^;s^^» ^'
ing public servants which were^ indicated by
words of like character and meaning, as those of "fees,"
"percentages," etc. The case of McGaffin v. City of
Ci)hoes, 74 N, Y. 389, is illustrative of the rule referred
to. There the words "contract, obligation or liability"
were held, by force of the maxim in question, to exclude liabil-
ity for torts ; the late Chief Judge Church saying that " words
are often used redundantly or repetitiously, without strict re-
gard to the meaning of each, but for greater caution to express



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300 MANGAM V. CITY OF BROOKLYN.

the full meaning of the principal subject In such cases, the
maxim noscitur a sociis is applied." In the case of Corning
V, McCuUough, I N. Y. 47, it was held that a clause in a
statute prescribing three years limitation ** for any forfeiture,
or cause, the benefit and suit whereof is limited to the party
aggrieved," should be construed as meaning actions for a
forfeiture, or cause of action of like nature only, and not to
apply to cases of contract liability. See, also, Aikin v. Was-
son, 24 N. Y. 484 ; Coffin v, Reynolds, 37 Id. 644.

It seems to us that we cannot, without doing violence to the
meaning and intent of the authors of the Constitution, ascribe-
to them, by the use of such a word, in such a relation, an
intention to reach and affect so important a subject as that
embraced in regulating the compensation of those numerous
^jxowAHOBg, public servants whose services are compensated by
fixed salaries. Whether we consider the ordinary and popular
signification of the word, or the more accurate and technical
meaning attached to it by lexicographers, it is entirely inap-
propriate to express the idea of a fixed compensation adopted
for the payment of services rendered by one person to another.
The word " allowance" imports the voluntary act of one party
in doing something which is in his discretion to perform or
withhold at pleasure. To allow implies the right to determine,
and is the act of a superior toward a dependant granting a
privilege which he has authority to confer or deny. It does
not express the relations existing between co-contractors,
vendor and vendee, or employer and employee where there is
a right secured by contract on one side, and no power of
voluntary action on the other.

Allowances are made by husband to wife, parents to chil-
dren, the head of a family to its members, superannuated de-
pendants and servants, from the benevolent to the poor, and
in cases where the act is discretionary with the donor, as a re-
ward for benefits conferred, or services voluntarily rendered
by one to another.

Referring to some of the uses of the words in question
adopted by the legislature in statutes, we find by section 3,
chapter 521, Laws of 1880: "No officer or person who is
paid a salary from the city treasury shall receive to or for
his own use any fees, costs, allowances, perquisites of dSiO^^
commissions," etc., and the comptroller is empowered io



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MANGAM V. CITY OF BROOKLYN. 3OI

examine any such officer under oath touching '* the amount
of any fees, costs, allowances, perquisites," etc. Allowances
have been authorized to be made by the court to parties in
actions in certain cases, and extra allowances in actions to
foreclose mortgages, for partition of real property, and to
obtain construction of wills, etc. (Code of Pro. §§ 303-309 ;
and Code of Civ. Pro. §§ 3252, 3253); also for expenses of
poor witnesses (§ i, chap. 155, Laws of 1869), and so, too, in
cases of divorce, infancy, lunacy and wards of court, salvage,
and all discretionary awards. They are also made to sheriflFs
on attachment proceedings when no fixed charges are provid-
ed. Code of Civ. Pro. § 656. They were formerly authorized
in some special cases to be made to canal contractors for work
and labor (§ 2, chap, 273, Laws of 1841 ; i R.*S. 632, § 37 ;
653, §^ 1^^ 77 \ 655, § 2), and to compensate appraisers ap-
pointed by loan commissioners. 3 Stat, at Large, 87, § 35.
Per diem allowances were made to the justices of the Supreme
Court in addition to their salaries, and it was provided that
the compensation of those residing in New York City should
not thereby be deemed to be reduced. (Chap. 308, § 9, Laws
of 1870.) The health officer receives an allowance by way
of commission on collections from coasters. Chap. 302,
Laws of 1829. The clerks of the senate and assembly received
an allowance for stationery (§ i, chap, i, Laws of 1859), ^^^
were to receive a salary and no extra allowance by section 3,
chapter 379, Laws of 1879. Commissioner of public accounts
receives z,per diem compensation and additional allowance for
mileage. Chap. 223, Laws of 1862. Pilots have an allow-
ance for extra service (§ 8, chap. 69, Laws of 1847), ^ do also
receivers of insolvent financial and life-insurance companies*
§1, chap. 141, Laws of 1821 ; §2, chap. 3, Laws of 1841 ; chap.
442» Laws of 187 1 ; chap. 902, Laws of 1869.

To the uses of the words shown by these citations, others
of the same character could be made indefinitely, and we have
yet to discover any employment of the word " allowance" by
law-makers or others which is the exact equivalent of either of
the words "salary" or "compensation." Reference to the works
of the lexicographers shows Webster's definition to be, i^ The
act of allowing, g^ranting or admitting." " Permission or
license." " That which is allowed ; a portion appointed ; a
limited quantity of meat and drink when provisions fall short."



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30^ MANGAM V. CITY OF BROOKLYN,

** A customary deduction from the gross weight of goods.*'
The substance of the definitions in Crabbe's English Syn-
onyms is that an allowance is gratuitous ; it ceases at the
pleasure of the donor. Stipends and salaries arc the requital
of some supposed service, and are paid yearly or at even
portions of a year, and are the subject of contract between
the parties.

Worcester gives a definition similar to that of Crabbe, but
refers to the word " salary" as one of the synonyms of " allow-
ance/' distinguishing them, however, by stating that the latter
is gratuitous and the former a stated compensation, payable
under a contract Richardson's English Dictionary gives,
*' to permit, to concede, to suffer, to assent, to yield." Other
lexicographers ^ive definitions similar to those of Worcester
and Crabbe, and seem to exclude the idea tliat the terms are
analogous, except, perhaps, in a very loose and imperfect
sense.

tt would seem from the foregoing illustrations that the
word ^'allowance" has a plain, definite and precise meaning
attached to it by authors and law-makers, and the duty of
the court to enforce it as it reads, is clear and unmistakable.
We have no power, and it is not our office, to stretch the
meaning of words used, for the purpose of covering an ob-
ject which we have no other means of determining to have
been within the contemplation of the authors of the Constitn-
tion, than that of the language employed by them. It there-
fore seems to us not only a reasonable but a neccessary
inference from the invariable use by the authors of the Con-
stitution of the words "salaiy" and "compensation" when
referring to that kind of payment made to public officers by
way of salary, and their deliberate exclusion from the clause
in question, that they did not intend to include salaried offi*
cers within its meaning.

This view is greatly strengthened by the express provisions
made in that instrument with reference to the immutability
of the compensation of a large number of such officers, and
the inference which may be drawn therefrom that they did
not intend to enact general provisions to accomplish a similar
object

In opposition to our views it is urged that such a construc-
tion would leave no subject of importance for the provisions



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MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY. 303

in question to operate upon, but we do not think this is so.
While it is obvious that it does, to a certain extent, narrow its
application, yet a large body of public officers whose com-
pensation consists solely of fees,' percentages and allowances,
such as sheriff's, county clerks, registers of deeds, coroners,
port-wardens, harbor-masters, pilots, commissioners, health-
officers, justices, constables, and others who might be named,
are still left to be affected by those provisions of the Consti-
tution.

We are quite aware of the great importance of the question
presented, and of the divers views existing with reference
to it by judges and members of the legal profession ; but no
sufficient, reason has been suggested, as we think, which
authorizes the importations into the Constitution of a mean-
ing which does not flow naturally and obviously from the
language employed in it.

Other minor questions raised by the learned counsel for the
appellant have been examined by us, but we find none of
sufficient plausibilty to raise serious doubt as to the correct-
ness of the judgment appealed from. The judgment should
therefore be affirmed.

All concur.



Mayor, Aldermen and Commonalty of the City of New

York

V.

Kelly, Administratrix, etc., Impleaded, etc.

(98 N€W York Reports, 467.)

The sureties to a bond, given by one appointed to a position in a publie
office, for the faithful dischat^e of his duties, are not dischai^ed by the
imposition of new duties, which are distinct and separable from those
protected by the bond, unless they render impossible, or materially hinder
or impede, the proper and just performance of the duties so guaranteed ;
ud this, although the new duties so imposed expose the principal to
temptation, and give broader opportunity for dishonesty.

^pon the appointment of B. as book-keeper in the department of docks,
in the city of New York, he gave a bond with two sureties in the penal sum
ot tsooo, conditioned that he would " truly and faithfully perform the



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304 MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY.

duties that may be legally required of him . . . during his continuance
in the office." B. was required to assist the treasurer in receiving and
■ depositing, to the credit of the treasurer, the funds of the department.
He embezzled, at various times, moneys of the department, amounting in
all to over $40,000, and to conceaf this, made false entries of deposits in
the books, or omitted to make any entries of receipts. In an action upon
the bond it was not claimed that the additional duties in any manner im-
peded or hindered the faithful performance of the duties of book-keeper.
The complaint was dismissed on trial. Held, error ; that conceding B.
could not be held liable, as book-keeper, for the whole amount embezzled
(as to which qucere), as there was a clear breach of the condition of the
bond, the amount of damages resulting therefrom was a question of faa
for the jury, and might reasonably have been found to have at least equalled
the penalty.

Appeal from judgment of the General Term of the Court
of Common Pleas, in and for the city and county of New
York, entered upon an order made November 5, 1884, which
affirmed a judgment in favor of defendant Kelly, entered
upon an order dismissing the complaint on trial.

This action was a bond given by William W. Bumham upon
his appointment as book-keeper in the department of docks in
the city of New York.

The facts, so far as material, are stated in the opinion*

D. J. Dean for appellant.

Wallace Macfarlane for respondent

Finch, J. — The sureties who defend, resist the action
brought upon their bond, with proof which they claim estab-
DBFHicB STATED Ushcs that thclr principal, in addition to the duties of
book-keeper, was required to perform, and did continuously
perform, the duties of treasurer of the department of docks;
so that, besides keeping the accounts, which was his specific
duty, he was intrusted with the public money, and exposed
to risks and temptations not contemplated by his bondsmen.
The defence founded upon this fact assumed two forms, ex-
pressed in the separate grounds upon which a motion for the
dismissal of the complaint was based. It was claimed, first,
that the added employment was an extension of the risk and
liability of the sureties which discharged them at once and
entirely; and, second, that if not so discharged, and remain-
ing liable for Bumham's false book-keeping, the breach
created by his fraudulent entries was merely technical, and



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MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY. 305

the injury flowed from an embezzlement not protected by the
bond.

The sureties are never discharged by the imposition of new
duties which are distinct and separable from those protected
by the guaranty, unless such new employment renders im-
possible, or materially hinders or impedes, the i,o,o6inoH of
proper and just performance of the duties guaran- ^ ko?'^
teed. Where the new employment is separate SStT'ncSS
and distinct, and in no respect essentially in- ^^^^
terferes with the duty covered by the bond, the imposition
of such added duty is wholly a matter between the employer
and servant with which the sureties have no concern. For
misconduct as to the new employment, the bondsmen are in
no manner responsible, and have no right to complain so long
as the added and separable duties do not prevent or tend to
prevent the proper and just performance of those which are
guaranteed. In such a case, if misconduct occurs, the sole
question is whether it was a violation of the duties guaranteed,
or of those outside of the bond and its protection. Ordinarily,
that proves to be the only inquiry ; and in all the cases cited
by the respondent Was the substantial point of investigation.
Thus in Nat. Mech. B'k'g Ass'n v. Conkling, 90 N. Y. 116,
to which our attention is especially called, the book-keeper
had been promoted to the office of teller. When we held
that the guaranty related wholly to the duties of book-keeper,
and such others as might be temporarily added while he re-
mained such, it followed that his promotion to a new office
terminated his duties as book-keeper, and so ended his respon-
sibilities in that character, and of course the liability of his
sureties, while as to his new and separate duties, the sureties
had made no contract. If in that case he had remained book-
keeper, the liability of the sureties as to that office would have
continued, although the duties of a teller had been added to
it (Rochester City Bank v. Elwood, 21 N. Y. 88), unless it
further appeared that his failure to keep correct accounts was
naturally and necessarily occasioned by the pressure or inter-
ference of his new duties. That the latter exposed him to
temptation, or gave broader opportunity for dishonesty, is
immaterial. For it is the very substance of the contract of
the sureties, that as book-keeper he will be honest and faith-
9 Cor^ €88.-20



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306 MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY.

£ul whatever temptation may approach. By their bond they
vouch for his integrity, and invite the employer to repose
trust and confidence. They know that the book-keeper is to
be introduced into the office and the business ; that the whole
range of the employer's transactions must come under the
servant's observation, and be intrusted to his silent fidelity ;
and that out of the situation will necessarily arise unforeseen
opportunities and temptations. It is of no consequence how '
many or what, so long as they in no respect become part of,
or hinder or prevent, his gfuaranteed duty, or the preserva-
tion of his guaranteed integrity in rendering the services
covered by the contract If that were not so, proof that the
money«drawer in the book-keeper's room was left unlocked
and often unwatched, or the combination of the safe was dis-
closed to him, might serve as a defence against dishonestly
kept accounts. In People v. Pennock, 60 N. Y. 426, the sole
question considered was whether the sureties upon a super-
visor's bond were liable for his default as to moneys which he
was not authorized to receive in his official capacity. The
board of supervisors had directed certain moneys to be paid
to him, and which were so paid without legal authority, and
this court held that as to such sums, his default was not within
the condition of the bond. The decision went wholly upon
that ground, without even a hint that the imposition of the
new duty discharged the real and existing liability of his sure-
ties for his official acts. In Ward v. Stahl, 81 N. Y. 406, the
question again was upon the construction of the bond, and
whether it covered anything more than the collection of village
taxes. In People v. Vilas, 36 N. Y. 460, the rule as to private
parties and the ground upon which it rests is thus stated:
" Any alteration in the obligation or contract in respect of
which a person has become surety without- consent of the
latter, extinguishes his obligation. The reason upon which
the rule is founded is, that the surety has never made the con-
tract upon which it is sought to charge him." In all these
cases, the question hinged upon the construction of the bond.
If the employer has not materially altered the employment
guaranteed ; if that remains as contemplated by the contract;
it is no defence of faithlessness in that, to say that employer
and servant have contracted in addition for new services with
which the sureties had no concern, and which did not in their



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MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY. 307

nature interfere with or injuriously a£Fect the services guar-
anteed.

It is not here pretended that the additional duties imposed
upon Bumham of receiving and depositing the funds of the
department were of a nature to prevent or in any manner im-
pede or hinder his faithful performance of the duties of book-
keeper. It may correctly be said that it furnished him greater
opportunity for embezzlement and so put temptation in his
way. But precisely that suggestion was overruled in Roches-
ter City Bank v. Elwood, supra. There the bond was given
for the faithful discharge by the principal of the trust reposed
in bim as assistant book-keeper of the bank. In consequence
of the absence of the cashier and the duties of the teller hav-
ing become more onerous, the assistant book-keeper was re-
quired to assist the teller in keeping the credit journal. Avail-
ing himself of that opportunity. Gold credited a deposit of
$1625 as $625, and embezzled $1000 of it. The court con-
ceded that by this added duty imposed upon the book-keeper
the latter was " better able" to cover up an embezzlement and
conceal it from detection. There was thus opportunity and
temptation resulting from the new duty ; but it was held that
the true interpretation of the bond extended to Gold's honesty
in his position, the court saying that " the contract did not de-
fine the trust reposed, but indicated the department of duty
to be assigned and guaranteed that the appointee was a trust-
worthy person to be introduced into the bank to discharge
that duty."

The sureties were held liable. The new opportunity for
wrongdoing furnished by the new action of the employer was
not permitted to operate as a defence. If the rule were other-
wise it would compel the employer to put no confidence in
the honesty of the book-keeper, and sedulously guard his
money and valuables against any opportunity for embezzle-
ment. The true question thus is, was the loss inflicted upon
the employer within the condition of the bond, and the con-
tract of the sureties, or in other words, was the contract
essentially altered or modified? The bond recited that Burn-
ham had been appointed to the office of book-keeper of the
department of docks, and was conditioned that he should '' in
all things well, truly and faithfully perform the duties that
may be legally required of him to perform and do during his



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308 MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY.

continuance in the said oflBce of book-keeper of the depart-
ment of docks." If this condition, which is very broad in its
terms, is narrowed by the recital, and limited to the duties of
book-keeper simply, the facts show that those duties were
not faithfully performed. Burnham not only emblezzled the
money of the department, but made false entries of deposits in
the books, and omitted to make entries of receipts which
should have been made, and all this purposely and with a
view to conceal his wrong.

There was thus a breach of his bond. His duties as book-
keeper were never terminated by promotion or change to a
new or diflFerent office, nor were they in any respect altered
or modified by the imposition of the entirely distinct and
separate duties as to which the sureties were not bound.
The respondent argues that while Burnham was not promoted
to the office of treasurer he was in fact made treasurer by
the act of the department. Even so much cannot justly be
said. It was the duty and authority of the treasurer to re-
ceive and disburse the funds. No authority was given to
Burnham to disburse a dollar. The money paid went to the
credit of the treasurer and remained within his control.
None of it could go to the credit of Burnham except as he
stole and concealed it. His duties were merely clerical in
the receipt and deposit of moneys and as an assistant to the
treasurer, and his services were temporary in the sense that
they could be dispensed with at any moment and were wholly
within the control of the treasurer. So that his duty as
book-keeper remained and was not terminated, nor was it at
any time essentially or necessarily altered or modified.

That duty, it is conceded, was wilfully and fraudulently
violated ; but it is said, as the second ground of defence, that
ALLEOBD TECH. ^^ breach was purely technical ; that the loss
?F^BoiS^iS? resulted wholly from the embezzlement against
^^^^^ which the sureties had not contrfcted; and so

that only nominal damages could be recovered. Precisely
the same contention was urged in the Elwood Case,
supruy and overruled. The court there said that, "where
a person is introduced into and employed by a bank to assist
in keeping its books, and avails himself of his situation to
defraud his employers, the surety who has vouched for his
honesty should answer for any loss accruing from his fraud-



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MAYOR, ETC., OF THE CITY OF NEW YORK V. KELLY. 309

ulent or criminal conduct. Irrespective, therefore, of false
entries, the abstraction of the noioney by Gold would render
the surety liable for the loss. But more especially would he
be liable if the false entries were concurrent and simultaneous,
and each a part of the res gesta of guilt." That doctrine thus
declared would make Bumham liable as book-keeper for the
embezzlement. But the present case does not require that
-we should go so far, or follow the doctrine stated to its full
extent, for here the amount of damages resulting from the
conceded breach was a question for the jury, and might
reasonably have been found by them upon the facts to have
at least equalled the penalty of the bond. That penalty was
$5000. The total defalcation of Burnham exceeded $40,000.
The embezzlements were between 1875 and 1878, or through
a period of about three years. During the last eleven months
of the time the books were not written up at all, and in that
period Bumham's thefts reached $11,000. The largest single
item virhich the evidence shows to have been stolen is less
than $2400. So that it is quite apparent that a jury might



Online LibraryLawrence LewisAmerican and English corporation cases : a collection of all corporation cases, both private and municipal (excepting railway cases), decided in the courts of last resort in the United States, England, and Canada [1883-1894] → online text (page 32 of 73)