Cobb v. American Bonding Co. of Baltimore
| Citation | 118 F.2d 643 |
| Decision Date | 02 April 1941 |
| Docket Number | No. 9609.,9609. |
| Parties | COBB et al. v. AMERICAN BONDING CO. OF BALTIMORE. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
H. J. Bernard and King C. Haynie, both of Houston, Tex., for appellants.
Newton Gresham, of Houston, Tex., for appellee.
Before FOSTER, HUTCHESON, and McCORD, Circuit Judges.
A. D. Cobb, Jr., and A. D. Cobb, Sr., owned and operated a chain of retail liquor stores in Houston, Texas. On July 1, 1938, the American Bonding Company of Baltimore issued its "Blanket Position Bond" insuring the Cobbs against any loss of money or property through fraud, theft, or any other dishonest act or acts of an employee or employees. By the terms of the contract recovery was to be allowed for "that part of any inventory shortage which the Insured shall conclusively prove is caused by the dishonesty of any Employee or Employees". The Cobbs brought suit against the bonding company to recover for inventory shortages totaling $3,883.29, which shortages were alleged to have been caused by the fraud or dishonesty of one or more employees. The cause was tried to a jury and at the close of the plaintiffs' evidence the court, on motion, instructed a verdict for the defendant.
The appellants contend that their evidence made a case for the jury; that the court gave undue emphasis to that portion of the bond contract which provides that in the event of inventory shortage "the Insured shall conclusively prove" that such shortage was caused by the "dishonesty of any Employee or Employees"; and that the court erred in directing a verdict for the defendant bonding company.
It is contended that the contract provision requiring conclusive proof is invalid. Sovereign Camp v. Martinez, 132 Tex. 580, 126 S.W.2d 10; Sovereign Camp v. Robinson, Tex.Civ.App., 187 S.W. 215; Supreme Ruling v. Hoskins, Tex.Civ.App., 171 S.W. 812; Sovereign Camp v. Boden, 117 Tex. 229, 1 S.W.2d 256, 61 A.L.R. 682. However, we do not find it necessary to decide this contention for, this provision aside, it was incumbent upon the plaintiffs to present evidence sufficient to take the case to the jury on the issue that the inventory shortages were due to the dishonesty of an employee or employees. This they failed to do.
The evidence shows that periodic inventory checks from September, 1938, through April, 1939, revealed shortages in eight of the plaintiffs' retail stores. The shortages for individual stores varied widely, and from time to time inventory checks would reveal overages. At no time did the inventories check exactly. The plaintiffs kept check on store inventories by a system of bookkeeping which they termed "a retail perpetual control". Each store was "an independent store to itself". Merchandise was billed out to the stores at full retail or "shelf" prices, and the book inventory of the particular store was...
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