Illinois Surety Co. v. Donaldson , 202 Ala. 183 ( 1918 )

The conclusion that reversible error affected the judgment was based upon the authority afforded by Ala., etc., R. R. Co. v. Nabors, 37 Ala. 489. The soundness of the doctrine of this decision has not been before brought into question. The cases of Farrall v. State, 32 Ala. 557, 559, Givens v. Tidmore,8 Ala. 745, 750, 751, and Freeman v. Blount, 172 Ala. 655, 661,662, 52 So. 293, in the particular to which they are referred to in the brief in support of the application for rehearing, do not at all relate to the pertinent doctrine of the Nabors Case, supra. Those decisions considered arule of evidence, namely, the obligation of a party to make proof of a negative averment; whereas, the Nabors Case, supra, pronounced upon the obligation of the plaintiff, who would recover in virtue of contract rights, to affirmatively prove every essential to entitle him to recover. It is not conceivable that in such actions any essential element of the contractual obligation, upon which the plaintiff must rely for a recovery, could be peculiarly within the knowledge of the defendant; rather than, as the very act of contracting (where no fraud is practiced) necessarily imports, that both of the parties to a contract, not only know the terms of the contract, but agree upon them. It may be remarked, by the way, that so far as the ability of a party to avail of appropriate evidence in actions at law to meet the burden of proof upon him is concerned, the statutes, requiring the production of certain books and writings under the adversary's control (Code, §§ 4058, 4059), and those permitting the examination of one party to the cause by another party thereto (Code, § 4049 et seq.), make adequate provision. In the present case the plaintiff filed interrogatories to the defendant under the authority of Code, § 4049, cited just above. The fact that evidence which the plaintiff requires to establish the obligations of the contract declared on is in the possession of the defendant does not excuse the plaintiff in the premises or shift the burden to the defendant. In Ala., etc., R. R. Co. v. Nabors, at pages 493, 494, of 37 Ala., the court advisedly pronounced:

"It will not do to say that it devolved upon the defendant, in whose possession they were, to produce the resolutions. It was for the plaintiffs to make out their case; and this they could not do without showing that the day of payment had arrived, and that the defendant was in default, and whether or not this was so depended entirely upon the terms and conditions of the loan."

The circumstance that the plaintiffs (Nabors and Gregory) also employed the common counts did not avert further application to these counts of the court's stated conclusion; for it was held that "the evidence showed the existence, but not the stipulations of the contract," a pronouncement that was accepted as authoritative in the comparatively recent decision in Lamar v. King, 168 Ala. 285, 291, 53 So. 279.

It is insisted in the brief in support of the application for rehearing that a mistaken interpretation or construction of the contract sued on prevailed in the original opinion. Though a reiteration, it is not amiss to state, in the terms of the bond, that the indemnity given was against "such pecuniary loss as the employer shall have sustained by any act of larceny or embezzlement upon the part of the employé in the performance of the duties of the office or position in the service of the employer hereinbefore referred to, as such duties have been, ormay hereafter be stated in writing by the employer to thecompany [i. e., the indemnitor]. * * *" (Italics supplied.) In Benjamin v. McConnel, 4 Gilman (Ill.) 536, 544, 46 Am. Dec. 474, 478, a decision approvingly cited to the like effect in Sanford v. Howard, 29 Ala. 684, 693, 68 Am. Dec. 101, it was said:

"In the construction of a contract, where the language is ambiguous, courts uniformly endeavor to ascertain the intention of the parties, and to give effect to that intention. But where the language is unequivocal, although the parties may have failed to express their real intentions, there is no room for construction, and the legal effect of the agreement must be enforced."

To the same effect is Lee v. Cochran, 157 Ala. 311, 313,47 So. 581; 9 Cyc. pp. 577, 578, and note 95. This elementary rule of law is grounded in the nonambiguity of the terms of the contract. There is a familiar rule of construction, to be presently quoted from a high source, that is founded in the important, controlling circumstance that the contract carries ambiguous terms, and is therefore of equivocal effect. In American Surety Co. v. Pauly, 170 U.S. 133, 144,18 Sup. Ct. 552, 556, 42 L.Ed. 977, 981, a pronouncement that was noted and applied in Ala. Fid. Co. v. Ala. Penny Savings Bank, 200 Ala. 337,76 So. 103, 107, 108, this rule of construction was thus stated:

"If, looking at all its provisions, the bond is fairly and reasonably susceptible of two constructions, one favorable to the bank and the other favorable to the surety company, the former, if consistent with the objects for which the bond was given, must be adopted, and this for the reason that the instrument which the court is invited to interpret was drawn by the attorneys, officers, or agents of the surety company."

If the terms of the contract are unequivocal, are unambiguous, the latterly quoted rule of construction cannot be resorted to. The terms of the bond of indemnity here sued on do not present, in the feature with which we are now concerned, a case of ambiguity, an instance where the contract, to quote the statement of the Pauly Case, "is fairly and reasonably susceptible of two constructions"; and hence that rule of construction is inapplicable. The indemnity intended was with respect to a "general agent," so named in the bond. From the terms of the bond specifically defining the obligation assumed thereby, it appears that the indemnitor did not intend to unrestrictedly indemnify the employer against pecuniary loss that might result to the employer from any act of larceny or embezzlement of its "general agent"; but, to a limited effect and that specifically stipulated, the indemnitor engaged to indemnify the employer against pecuniary loss in the performance of the duties of the general agency as those duties had been stated in writing by the employer to the indemnitor, or as they may thereafter have been stated in writing by the employer to the indemnitor. The bond affirmed expressly that the duties of the "general agent" had been, when the bond became a binding obligation, defined, in writing, by the employer to the indemnitor. Recognizing the possibility that the duties of the "general agent" might be changed, the further provision was incorporated looking to the written statement of such changed duties by the employer to the indemnitor. The courts cannot ignore or eliminate plain provisions of an unequivocal contract that is not offensive to law or public policy. These parties had the unquestioned right to engage as they did. The indemnity bond considered in Ala. Fid. Co. v. Ala. Penny Savings Bank, 76 So. 103,⁴ being materially different from the bond now under consideration, of course a different construction was taken. There the indemnity was against loss through the infidelity of a "receiving and paying teller" in a bank, a banking position or office of distinctly recognized character and functions. 1 Morse on Banking (5th Ed.) § 174; 1 Words Phr. p. 694. There the feature of the bond which the indemnitor asserted disclosed the failure of the employer (plaintiff) to present the entire contract, within the doctrine of the Nabors Case, supra, were "statements" which should or did note the duties, etc., of the employé. As appears from the report of that appeal, the reference in the bond to the "statements" of the character described was in the preamble of the instrument and through the recital (in the body of the bond, but not in definition of the obligations assumed by the indemnitor as was done in the bond here sued on) that the obligations assumed by the indemnitor were accepted "upon the faith of the said statements as aforesaid by the employer." Under that bond as thus framed and phrased, the court entertained the opinion that the contract was ambiguous in this particular, and that the rule of construction satisfactorily stated in the Pauly Case, supra, could be properly invoked and applied. If the bond there declared on had defined the indemnitor's obligations by reference to the "statements" mentioned in the preamble of that bond, manifestly a very different case would have been presented. Consequent upon the construction there given the bond, the court held it to be complete, indemnifying the employer against pecuniary loss as a result of the infidelity of its "paying and receiving teller." Having so concluded, it was further decided as upon satisfactory reason and authority that the indemnitor's assurance was not restricted to infidelity on the part of the teller in the discharge of the particular, limited duties of the office of "paying and receiving teller." The bond here sued on admits of no such liberty of interpretation or construction, because in express terms this bond restricted the obligation to acts of infidelity in the performance of duties stated in writing by the employer to the indemnitor. It cannot, of course, be assumed or presumed that the duties of the agent were not stated as the terms of the bond required. If, when the indemnitor delivered the bond, the agent's duties were not, in fact, stated as the instrument contemplated and provided, that fact may be appropriately presented, and the obligation of the bond determined as upon the contractual status made by the practical elimination of the restrictive feature of the definition of the indemnitor's obligation to the employer.

The application for rehearing is denied. All the Justices concur.

⁴ 200 Ala. 337.