Bank v. Kehnast. tortious conduct, within the scope of their conferred powers, it hardly needs the citation of authority to decide. The courts have been careful to keep national banks within the scope of their powers, and to limit their liability to such scope to the end that stockholders may not be saddled with responsibilities they never contemplated; that the public be protected; and that those dealing with them may neither defraud nor be defrauded; but nowhere has it been decided that the "divinity that doth hedge a king" shall be extended to national banks and the conclusion reached that, like the king, they can do no wrong but redress be obtained only from their ministers. Even conceding that the bank could not be held for the strictly tortious conduct of its officers, though acting within the apparent, though not real, scope of their authority, yet there can be no doubt but that a person who has been deprived of his property by reason of the machinations of the officers of a national bank, acting within the apparent scope of their ordinary duties, but acting fraudulently, whereby the bank obtains an advantage, such person, so defrauded, may sue the bank as for money had and received. The reasoning of the opinion in Salt Lake City V. Hollister, 118 U. S. 256 [6 Sup. Ct. Rep. 1055; 30 L. Ed. 176], to which the court refers counsel, is pertinent and illuminating. As to the question of estoppel, while it is true that it was held in Bank of the United States v. Dunn, 31 U. S. (6 Pet.) 51 [8 L. Ed. 316], that the president and cashier of a national bank had no authority to bind the bank by a representation to an endorser of a note that his liability would be merely nominal, yet in that case the endorser entered into the contract knowingly and impressed upon the paper certain legal characteristics which the court held it would not only involve setting aside the law merchant to release him from, but would also involve an invasion of the rule of evidence inhibiting the contradiction. of a written instrument by parol testimony to permit him to deny. In the case at bar, it is averred that the endorsement guaranty sued upon were fraudulently procured by the plaintiff, by reason of which it received a benefit, and it is expressly denied that the defendants either authorized such and Defiance Common Pleas. endorsement and guaranty, or that they knew anything about it. In a question between the parties to an alleged fraudulent transaction such as set out in the cross petition, where the rights of innocent holders are not involved, considerations which led to the decision in the Dunn case have no place. And the case of Martin v. Webb, 110 U. S. 7 [3 Sup. Ct. Rep. 428; 28 L. Ed. 49], is abundant authority for holding that the conduct on the part of the bank's officers set out in the petition, which is relied upon to estop the bank from pleading the statute of limitations, sufficiently binds the bank in this behalf. The court is of the opinion that the demurrer is not well taken and it will be overruled. PRINCIPAL AND SURETY. [Hamilton Common Pleas, June 29, 1911.] ELIAS R. MONFORT ET AL. v. BANKERS SURETY CO. ET AL. 1. Stipulation of Building Contract Bond Requiring Notice of Default Waived by Designation of Another Contractor to Complete Construction. A provision of a surety company bond securing faithful performance of a building contract, requiring suit upon the bond to be brought within six months of the first breach thereof, will be deemed to have been waived by the surety, by its designation of a person to complete the work, the owners consenting, especially since the amount remaining to be done was so great that by no possibility could it have been completed within six months from the first breach. 2. Surety Estopped to Assert Failure of Owner to Retain Percentages until Contract Completed Since Payments Were Made to Surety's Agent to Complete Work. A surety company is estopped to complain that the owners of a building, the construction of which it secures, did not retain until the completion of the contract the percentage stipulated therein, since the payments were made to the person designated by the surety company to complete the work. [Syllabus approved by the court.] S. W. Merrell, Henry T. Hunt and W. R. Collins, for plain Monfort v. Surety Co. Cited and commented upon by the following authorities: 32 Cyc. 162; American Surety Co. v. Pauley, 170 U. S. 133 [18 Sup. Ct. Rep. 552; 42 L. Ed. 977]; New Haven v. Paving Brick Co. 78 Conn. 689 [63 Atl. Rep. 517]; Walker v. Holtzclaw, 57 S. C. 459 [35 S. E. Rep. 754]; Cowles v. Fidelity & Guar. Co. 32 Wash. 120 [72 Pac. Rep. 1032; 98 Am. St. Rep. 838]; Pacific Bridge Co. v. Fidelity & Guar. Co. 33 Wash. 47 [73 Pac. Rep. 772]; Van Buren v. Surety Co. 137 Iowa 490 [115 N. W. Rep. 24; 126 Am. St. Rep. 290]; People v. Rose, 174 Ill. 310 [51 N. E. Rep. 246; 44 L. R. A. 124]; North St. Louis B. & L. Assn. v. Obert, 169 Mo. 507 [69 S. W. Rep. 1044]; Kehm v. Insurance Co. 11 Dec. 739 (8 N. P. 542); Farmers' Ins. Co. v. Ashton, 31 Ohio St. 477; Amazon Ins. Co. v. Wall, 31 Ohio St. 628 [27 Am. Rep. 533]; Sun Mutual Ins. Co. v. Hock, 4 Circ. Dec. 53 (8 R. 341); Dayton Ins. Co. v. Kelly, 24 Ohio St. 345 [15 Am. Rep. 612]; Lorillard Fire Ins. Co. v. McCullough, 21 Ohio St. 176 [8 Am. Rep. 52]; Aurora F. & M. Ins. Co. v. Hosmer, 1 0. S. U. 45 (22 Bull. 290); Massachusetts Life Ins. Co. v. Eshelman, 30 Ohio St. 647. H. L. Gordon and Dolle, Taylor & O'Donnell, for defendants. CUSHING, J. This case is now heard on the demurrer of the plaintiffs to the second and third defenses stated in the answer of the Bankers Surety Company. The plaintiffs seek to recover the sum of $33,452.30, with interest thereon, from the said surety company on the bond executed by it. The surety company admits the execution of the bond, the default of W. H. Ellis & Company; that the plaintiffs, trustees, have been damaged in about the said amount, but do not admit that the amount stated. is the correct amount; and contends that the said surety company is not liable on its bond as provided therein for the reason that suit was not brought to recover on said bond within six months after the default of W. H. Ellis & Company on its contract; and also because plaintiffs did not hold the 10 per cent provided in said contract and bond until after the final completion of the contract. Hamilton Common Pleas. The admitted facts in the case are that in 1904 plaintiffs advertised according to law for bids to build a memorial hall at Grant and Elm streets in the city of Cincinnati; that W. H. Ellis & Company, a partnership, bid therefor the sum of $144,561; that the contract to build said memorial hall was awarded to W. H. Ellis & Company at their said bid; that the said Bankers Surety Company executed the bond in question, indemnifying the plaintiff's against loss by reason of any failure. of W. H. Ellis & Company to perform their contract according to the terms thereof; that said contract was in writing, dated March 4, 1905; that W. H. Ellis & Company attempted to perform said contract and defaulted therein May 9, 1905; that on May 13, 1905, the plaintiffs duly notified the said Bankers Surety Company of the said default and that it would be held. responsible for the completion of the contract according to the terms of the same and the bond executed by the defendant company; that on or about July 15, 1905, an agreement was entered into by the parties, the same being evidenced by the paper writing following, which purports to be a communication from Lillie I. Ellis, to wit: "Having indemnified the Bankers Surety Company of Cleveland, Ohio, who is surety on the bond of W. H. Ellis & Company, with whom you entered into a contract under date of March 4, for the construction of the Memorial Building at Grant & Elm Streets, Cincinnati, Ohio, I respectfully request in view of the fact that the firm is unable to complete its contract by reason of the proceedings pending between its members for a dissolution of the partnership, and I being ultimately liable for damages which may be sustained by the failure of the firm to complete their said contract, that I be granted permission to complete such contract in accordance with the plans and specifications forming part of the agreement, which you entered into with said firm, and herewith hand you the consent of the Bankers Surety Company to my undertaking such work." The second is from the Bankers Surety Company in the following language: "We have advised Mrs. Lillie I. Ellis of the demand made Monfort v. Surety Co. upon us as surety for the completion of the memorial building which W. H. Ellis & Company agreed to construct under contract which you entered into with them. "We agree to Mrs. Lillie I. Ellis completing the building in accordance with her request and agree that all bills for material and labor approved by her or W. H. Ellis or Harry E. Kennedy, or the architect, shall be evidence of the amounts expended for such purpose and shall be included in the cost of completion of such structure, and when so approved shall be binding upon us as surety under such contract, it being distinctly understood that our liability as surety for such contract is not changed, but shall remain as originally fixed by a bond given on which we are surety for the faithful performance of the contract of W. H. Ellis & Company." The amendment to the petition contains the following from the minutes of the trustees, viz.: "And this board being now advised that Lillie I. Ellis is willing to finish said building in accordance with the contract, plans and specifications, and desires to subrogate herself to the rights of W. H. Ellis & Company in the completion of the memorial building, and the said Bankers Surety Company of Cleveland, Ohio, having filed with this board its written consent to Lillie I. Ellis completing the building in accordance with her request, "Therefore Resolved, that Lillie I. Ellis be and hereby is granted permission to complete the said memorial building in accordance with the contract, plans and specifications as entered into by said W. H. Ellis & Company, and that she is permitted to proceed and faithfully perform said contract, plans and specifications in as complete a manner as the same were to be performed by the said W. H. Ellis & Company." The bond of the said defendant company contained among others the following provisions: "Provided further, that if the said principal shall fail to comply with the conditions of said contract to such an extent that the same shall be forfeited, then said surety company shall have the right and privilege to assume said contract and sublet |