
    The Supreme Ruling of the Fraternal Mystic Circle, Respondent, v. National Surety Company, Appellant.
    Fourth Department,
    July 12, 1906.
    Surety — bond indemnifying employer against loss by dishonesty of employees — when surety relieved by failure of principal to give notice — evidence.
    When a bond indemnifying the plaintiff against loss by the dishonesty of its collectors provides that the plaintiff must give notice of any act, fact or information tending to indicate that an employee is or may be dishonest or the obligation is void, a failure of the plaintiff to notify the surety that one of its collectors has failed to turn in collections at the time required by its rules, and neglected to respond to the plaintiff’s letters and personal demands, relieves the surety from all liability for subsequent collections made by said collector but not turned over to the plaintiff.
    It is not error to receive the testimony of the collector to show the amount of his collections.
    Appeal by the defendant, the National Surety Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 30th day of January, 1906, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 31st day of January, 1906, denying the defendant’s motion for a new trial made upon the minutes.
    
      Maulsby Kimball, for the appellant.
    
      Wallace Thayer, for the respondent.
   Nash, J.:

The action is upon a fidelity bond of the defendant, by the terms of which it agreed to indemnify the plaintiff against pecuniary loss by reason of the personal dishonesty of certain of its employees, in connection with the duties pertaining to the office or position to which the employee was appointed, among whom was Thomas Muat, worthy collector of Houston Ruling No. 630, at Houston, Tex., one of the subordinate lodges of the plaintiff, from November, 1901, to his resignation in November, 1902.

Under the by-laws of the plaintiff, worthy collectors were required to remit to the supreme treasurer, on the second business day of each month, the assessments collected of the members during the preceding month, and report to the supreme recorder the amount forwarded. If such remittance was not made by the seventh of the month a penalty was imposed upon the collector of one dollar a day for each day the remittance was delayed. If the collector did not remit by the twentieth of the month he wras subject to removal from office.

The sixth condition of the bond provided that: “ If at any time after the beginning of the term for which this bond is written the employer suspect, or if there come to the notice or knowledge of the employer, any act, fact or information tending to indicate that any employe is, or may be, unreliable, deceitful, dishonest or unworthy of confidence, * * * the employer shall immediately so notify the company in writing at its principal offices in the City of New York, and if the employer fail or neglect so to do, the company shall not be liable for any act of such employe thereafter committed.”

The seventh condition provided: Upon the discovery by the employer that a loss has been sustained, or of facts indicating that a loss has possibly been sustained, the employer shall immediately so notify the company in writing at its principal offices in the City of Hew York, * * * and failure to give such immediate notice * * "x" shall relieve the company from all liability hereunder on account of the employe causing such loss.”

The thirteenth condition provided: “The company may at any time terminate the obligation which it shall have assumed in behalf of any and every employe under this Bond, by giving the employer! written notice of its election so to do, and such termination shall take effect alt the expiration of fifteen days from the receipt of such notice by the employer, and the company shall not be liable for any act of any such employe thereafter committed.”

During the month of August, 1902, Huat collected $277.87. Under, the by-laws this should have been remitted and reported September 2, 1902, but was neither remitted nor reported. The latter part of September the plaintiff telegraphed and wrote Huat calling his attention to the remittance which should have been made September second. He paid no attention to either communication. Early in September the plaintiff sent Dr. Antrey, one of the officers of the local lodge, to see Huat. After being visited by Dr. Autrey Hunt replied to-the letter and the telegram, stating that he would endeavor to get the money and send it as soon as possible. Ho step of any kind was taken by tbe plaintiff to prevent Huat from making any further collections. He collected the September assessment, $271.65 ; in October a special assessment amounting to $232.31, and the regular assessment of $249.84.

Ho notice of Hnat’s default was given by the plaintiff to the defendant until October 7, 1902, when the plaintiff, by mail, gave to the defendant a list of eleven worthy collectors who were in arrears in making their remittances,” and only three of these on more than one assessment. Huat’s name was on the list, but nothing to indicate that he was in default on more than one assessment. The plaintiff, in the letter containing the list of delinquents, requested the defendant to “ write them each to the effect that they must send in their returns on all collections at once, or proceedings will have to be begun against them.”

On October 10, 1902, Huat sent the plaintiff a cheek for $296.56, which went to protest and was not paid. No notice of this fact was given to the defendant at that time.

November 4, 1902, the plaintiff, by mail, reported to the defendant a list of worthy collectors “ delinquent on the first instant; ” among them, “ Thos. Muat, 207 Main St., Houston, Texas, owes three assessments.” The letter concluded: Please send these parties your usual notice.”

Muat finished his collections in November, 1902, and the latter part of that month voluntarily resigned and turned over his books to the plaintiff. Muat made payments to the plaintiff on account of these collections as follows: September 30, 1902, $50; November 19, 1902, $120; November 9, 1903, $25; April 18, 1904, $10q November 14,1904, $75, and had a credit of commissions of $11.61.

The deficiency found at the trial was the sum of $740.06, for which, with interest thereon from November 1, 1902, amounting in all to $876.23, the court directed a verdict for the plaintiff.

The ’ contention of the appellant is, that the plaintiff failed to comply with the conditions of the bond, which required notice to be given to the defendant of any act, fact or information tending to indicate that an employee is or may be unreliable, dishonest or unworthy of confidence; that knowledge' of Miiat’s failure to remit the August, 1902, assessments in the month of September, was information furnished to the plaintiff that Muat might be unreliable, and that when he failed to remit the September, 1902, assessments, due October second, it was evidence of the fact that there was liability of loss on account of Muat’s default; that the defendant was entitled under the conditions of the bond to notice that Muat had failed to remit, so that the defendant might avail itself of the conditions of the bond, and cancel it as to Muat.

We think the appellant’s contention should be sustained. When Muat neglected to answer the plaintiff’s letter and telegram or to respond to the personal demand of Dr. Autrey, the plaintiff was then fully aware of its loss, or its liability- to loss, and should have at once informed the defendant to the end that it might take steps to further prevent loss on account of Muat’s collections. It was the duty of the plaintiff itself to have taken steps to prevent Muat from making the October and November collections.

We think that the appellant’s claim that the verdict should be reduced by the sum of $482.05, being collections during October and November, with interest on that amount to the date of the verdict, amounting in all to $567.86, should be allowed.

We think no error was committed in the reception of the testimony of Muat as to the amount of his collections.

All concurred.

Judgment modified in accordance with the opinion of Nash, J., and as so modified said judgment and the order denying defendant’s motion for a new trial are affirmed, without costs of this appeal to either party.  