Commonwealth v. Fidelity & Deposit Co.

Citations

• 224 Pa. 95
• 73 A. 327
• 1909 Pa. LEXIS 731

Syllabus

<p>Principal and surety — Bond—Trust and trustees — Past misconduct of principal — Judgment against principal.</p> <p>1. Where a trustee is surcharged by the orphans’ court on the ground of gross negligence, and neither the trustee nor his surety takes an appeal from the decree, the surety cannot four years thereafter in a suit on the bond of suretyship allege that the trustee was not grossly negligent.</p> <p>2. As to official bonds, bonds of indemnity and bonds to insure the faithful performance of duty, and to secure a proper accounting by persons in fiduciary relations, the rule is that a judgment against the principal is conclusive against his sureties as to his misconduct, and failure to properly account.</p> <p>3. Application was made to a bonding company to become surety on the additional bond of a trustee. The application stated the amount of the entire trust estate, and that the bond was to secure the same. It also stated that the entire trust estate had come into the hands of the trustee, and that the purposes and nature of the bond were to secure to parties in interest the proper application of the principal and interest of the trust estate. The company made an investigation as to the amount of the trust estate, the character of the securities held by the trustee, and the investments made by him. The bond itself obligated the company to be answerable for the faithful discharge by the trustee of his duties, and that the trustee “shall faithfully apply all the assets, received by him in said trust estate.” Held, that the bonding company was liable for any loss resulting from the misconduct of the trustee, either before or after the date of the execution of the bond.</p>