
    The Union Pacific Tea Co., Respondent, v. The Union Surety & Guaranty Co., Appellant.
    (Supreme Court, Appellate Term,
    February, 1904.)
    Surety bond indemnifying an employer against loss from the fraud of employees — Construction — Doubtful provisions how construed.
    Under a surety bond guaranteeing an employer against any loss from the fraud or dishonesty of any of its employees, requiring the employer, if requested by the surety, at its expense, to use all diligence in prosecuting any employee to conviction for any fraud or dishonesty committed by him for which a claim is made, and making “ such action ”, when requested, by the employer a condition precedent to a recovery on the bond, it is enough that the employer, when requested, used all diligence in prosecuting the employee and the employer need not show that the prosecution resulted in a conviction.
    Doubtful provisions in an instrument drawn by a party must be interpreted favorably to the other party thereto.
    Appeal from a judgment of the Municipal Court of the city of New York, second district, borough of Manhattan, in favor of the plaintiff, for $380.03 damages, and $35.38 costs, making in all $415.41, entered upon the verdict of a jury.
    Van Schaick & Norton (Wilson B. Brice, of counsel), for appellant.
    Benner & Willcox, for respondent.
   Gildebsleeve, J.

This action was brought upon a general guarantee bond given by the defendant to the plaintiff, guaranteeing plaintiff against loss sustained by reason of the ■fraud or dishonesty of any of its employees.

The plaintiff claimed for the alleged defalcation of four of its employees, but upon the trial reduced its claim to the alleged defalcation of but two, viz.: W. T. French, amounting to the sum of $322.19, and F. M. Taylor, amounting to $39.99, and there is also a claim made by the plaintiff for the sum of $17.86 for expenses in a criminal proceeding against French. The jury found for the plaintiff, and judgment was entered for $380.03 damages, and $35.38 costs.

Four points are urged by the appellant as grounds for reversal. First. That plaintiff failed to use due diligence in prosecuting Taylor to conviction.” Second. There is no proof of delivery of goods to_ Taylor, or their value. Third. There is no proof of delivery of goods to French, or their value. Fourth. Plaintiff failed to use due diligence in prosecuting French to conviction.”

The bond sued on contained the provision that The employer shall if, and when, requested by the company, at the expense of the company, use all diligence in prosecuting any employee to conviction for any fraud or dishonesty, as aforesaid, which he shall have committed, and in consequence of which a claim shall have been made under the bond, and such action, when requested, by the employer shall be a condition precedent to recovery under this bond.”

The defendant claims that the foregoing provision requires the plaintiff to show that both its employees were prosecuted to conviction. As to the employee Taylor, it was sufficiently made to appear that the defendant made no request for his prosecution by the plaintiff. As to the employee French, it appears that upon the request of the defendant the plaintiff made a complaint against French. He was arrested and held for appearance before the grand jury. Plaintiff’s agent thereafter went before the grand jury and presented proof of the fraud, and the grand jury, for some unknown reason, failed to find an indictment against French, and he was discharged.

The court helow held that all that was required of the plaintiff, when requested to prosecute the employee charged with fraud, was “ to use ” all diligence in endeavoring to secure a conviction. With this we agree. The language of the bond is that “ such action ” by the employer, not “ such conviction,” shall he a condition precedent to a recovery; that is, that the employer shall use all due diligence in prosecuting the dishonest employee. The plaintiff could not control the criminal prosecution, but could only aid the district attorney to its utmost capacity in procuring a conviction. This seems to be the view originally adopted by the defendant itself of the contract, if we may judge by the language of its letter to the plaintiff, admitted in evidence, in which it asks the plaintiff to have French arrested and brought to trial, but says nothing to indicate that plaintiff must procure a conviction. Plaintiff was without power to bring French to trial, but could only lay its proofs before the grand' jury, which plaintiff’s agent swears was done. As the contract was drawn by the attorney or agent of the defendant, it must be interpreted as to doubtful provisions-in favor of the plaintiff.

The bond provides for reimbursement to the plaintiff for such pecuniary loss as it may sustain by reason of “ fraud or dishonesty” on the part of an employee. An employee might be guilty of a fraud in connection with his employment resulting in loss to his employer, but which would not constitute a crime for which he could be indicted or convicted; and it cannot be said that, before the defendant is liable, there must be a conviction.

There was sufficient testimony from which the jury were justified in finding that French had defaulted in the sum of $322.18. It was shown by the manager of plaintiff’s store at Hornersville, Penn., that between January 11 and May 9, 1902, a period covered by defendant’s bond, goods had been delivered to French under a written contract .(in evidence) by the terms of which French was to return the goods or the money for them within a certain time named therein, and that he failed to account for such goods to the amount and value of $322.18. When plaintiff notified the defendant of the shortage of French it also sent a statement, admitted in evidence, of the items of goods sold French, and their value; and no attempt was made by defendant to impeach the correctness of this statement, nor was the testimony of plaintiff’s manager disputed. Defendant made no motion for the dismissal of the complaint as to French upon the ground that plaintiff had failed to prove the value of the goods sold him, nor did he request the judge to charge the jury that no proof of the value of such goods had been given.

As to the shortage of the employee Taylor, no competent evidence was given, except his admission contained in a letter from him to plaintiff, admitted in evidence, in which he acknowledged an indebtedness of thirteen dollars and fifty-one cents, and which sum defendant admits Taylor converted. As the jury allowed the full amount of thirty-nine- dollars and ninety-nine cents claimed by plaintiff, the judgment should be reduced by the sum of twenty-six dollars and forty-eight cents.

Judgment is reversed and a new trial granted, with costs to appellant to abide the event, unless respondent consents to deduct the sum of twenty-six dollars and forty-eight cents from the amount of the judgment, in which ease the judgment. is modified by reducing the amount thereof to three hundred and eighty-eight dollars and ninety-three cents, and, as so modified, is affirmed, without costs of appeal to either party.

Fbeedmah", P. J., and Gbeeebaum, J., concur.

Judgment reversed and new trial granted, with costs to appellant to abide event, unless respondent consents to deduct twenty-six dollars and forty-eight cents from judgment, in which case judgment is modified by reducing amount thereof to three hundred and eighty-eight dollars and ninety-three cents, and as so modified, affirmed, without costs of appeal to either party.  