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Magee v. Manhattan Life Insurance Company, 92 U.S. 93 (1875)

Magee v. Manhattan Life Insurance Company

92 U.S. 93


In a suit by a company organized under the laws of the State of New York against citizens of the State of Alabama on a bond conditioned for the faithful performance of duty and the payment of money received for it, executed by the agent of the company who transacted business as such in the City of Mobile, where he resided, and by them as his sureties, the latter pleaded that the company, as a condition upon which it would retain in its employment the agent then largely indebted to it, required such bond and also his agreement to apply all his commissions thereafter earned to his former indebtedness to it; that the agreement was made, and the commissions were so applied; that the company knew that the agent had no property, and depended upon his future acquisitions for the support of himself and family; that the defendants were ignorant of such indebtedness and agreement; that had they been informed thereof, they would not have executed the bond; that the agreement as to the commissions and its performance were a fraud on them, and that the bond as to them was thereby avoided. Held that the plea was bad, as it set forth neither the circumstances attending the delivery of the bond nor averred misrepresentations,

Page 92 U. S. 94

fraudulent concealment, opportunities to make disclosure on the part of the company, inquiries by the sureties before the bond was delivered, or knowledge by the company that the sureties were ignorant of the facts complained of. Held further that this agreement had no such connection with the undertaking of the sureties as to give them a right to be informed thereof except in answer to inquiries. As none was made, the company was under no obligation to volunteer the disclosure.

This is a suit by The Manhattan Life Insurance Company of the City of New York against the plaintiffs in error, sureties on the bond of one Henry V. H. Voorhees, who was the agent of the company at Mobile, Ala.

The bond sued on is as follows:

"Know all men by these presents that we, Henry V. H. Voorhees, as principal, and Jacob Magee and Henry Hall, as securities, of the Town of Mobile, and State of Alabama, are held and firmly bound unto the Manhattan Life Insurance Company of the City of New York in the sum of $5,000, for which payment well and truly to be made we bind ourselves, our heirs, executors, and administrators, jointly and severally, firmly by these presents."

"The condition of this obligation is such that if the above-bounden Henry V. H. Voorhees, who has been appointed an agent of the said The Manhattan Life Insurance Company, shall faithfully conform to all instructions and directions which he, as such agent, may at any time receive from the said The Manhattan Life Insurance Company, and shall on the first day of each month remit to the office of said company all moneys received by him (not previously remitted) as such agent, less his commissions, together with his account of the same, then the above obligation to be void; otherwise to remain in full force and virtue."

The breach assigned was the agent's withholding from the company moneys received by him subsequently to the date of the bond, as well as other moneys remaining in his hands at the time it was executed.

The defendants pleaded three pleas. Upon the first and second issue was joined.

The third plea was as follows:

"For a further plea, the defendants say that before the execution and delivery of said bond, said Henry Voorhees was largely

Page 92 U. S. 95

indebted to said plaintiffs for moneys before that time received by him belonging to plaintiffs in conducting their business as agent in Mobile, of which these defendants had no notice, and the plaintiffs required of him the bond described in the complaint as a condition on which only they would retain him in their employment as agent in Mobile in conducting their business, and, besides the bond, the plaintiffs required of said Voorhees a promise or agreement that all his future commissions and interest he might acquire and earn in conducting their business afterwards, he, the said Voorhees, should pay to the plaintiffs, to be applied to his then past indebtedness, for which said plaintiffs had no security."

"The plaintiffs then well knowing, for so the fact was, that said Voorhees had no property or means of his own by or out of which his said past indebtedness could be paid. They also well knew, and so the fact was, that he could not support himself and family but by means of his future acquisitions by his labor, and therefore the appropriation of his commissions and interest in all his future acquisitions in conducting plaintiffs' business would compel him, said Voorhees, to appropriate a similar amount to his support out of moneys received by him belonging to plaintiffs."

"And they further aver that said Voorhees did promise and agree with said plaintiffs, before said bond was executed, that he would pay said plaintiffs all his commissions on the moneys that he might afterwards receive in conducting their business, to be applied to the then past indebtedness of said Voorhees to said plaintiffs. And these defendants further aver that at the time they executed said bond, which was as the securities of said Voorhees, they had no notice or knowledge of said agreement between said Voorhees and said plaintiffs nor any notice or knowledge that he, said Voorhees, had fallen behindhand or had become indebted to plaintiffs, and if they had been informed of said agreement or of said indebtedness, they would not have executed said bond."

"And these defendants further allege that in pursuance of said agreement, the said Voorhees did pay said plaintiffs all his commissions afterwards earned and acquired in the business of the plaintiffs, which was carried to the credit of his past indebtedness to them in pursuance of said agreement, but retained a corresponding amount from the moneys of the plaintiffs he afterwards received as he was compelled from necessity to do. And they further aver that said agreement and its execution as set forth in this plea was a fraud on these defendants, and therefore they are not bound by said writing obligatory, but the same, as to them, is void; and of this they are ready to verify. "

Page 92 U. S. 96

To which plea the plaintiff demurred. The court sustained the demurrer.

The jury found for the plaintiffs below and judgment was rendered accordingly, whereupon the defendants brought the case here and assigned for error the judgment of the court in sustaining the demurrer

Page 92 U. S. 97

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