Gaytime Frock Co. v. Liberty Mut. Ins. Co., 8625.
| Decision Date | 26 April 1945 |
| Docket Number | No. 8625.,8625. |
| Citation | 148 F.2d 694 |
| Parties | GAYTIME FROCK CO. v. LIBERTY MUT. INS. CO. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Harold A. Fein and George A. Gordon, both of Chicago, Ill., for appellant.
James J. McKenna and Henry H. Koven, both of Chicago, Ill., for appellee.
Before KERNER and MINTON, Circuit Judges, and LINDLEY, District Judge.
Plaintiff operates retail ladies wearing apparel stores in Chicago, Philadelphia, and other cities. It sued defendant on a fidelity bond to recover for inventory shortages claimed to have been caused by the dishonesty of its employees at five of its stores. The District Court, upon a trial without a jury, at the close of plaintiff's case, concluded that the evidence was not of such quality and character from which an inference of fraud or dishonesty of plaintiff's employee or employees could be drawn, and held for defendant and entered judgment for costs against plaintiff. To reverse the judgment plaintiff has appealed.
The bond relied upon was issued by defendant on November 6, 1941, but was effective September 30, 1941. It insured plaintiff against losses of money or other personal property including inventory shortages to the extent of $5,000 on each employee, sustained through theft or any other dishonest act or acts of an employee or employees. The bond also provided that in case a loss was caused by the fraud or dishonesty of an employee, and the insured was unable to designate the specific employee causing the loss, the insured should nevertheless have the benefit of the bond provided the evidence reasonably established that the loss was in fact due to the fraud or dishonesty of the employee.
The record discloses the manner in which plaintiff conducted its business, the system and routine concerning the daily inventory, bookkeeping, and the general controls and accounting system, the assignment of its employees to their respective duties, and the manner of inventorying, receiving, shipping, keeping and reporting its stock of merchandise. There was evidence as to the manner in which plaintiff protected its stores against burglaries and shoplifting, and there was evidence tending to prove that on October 2, 1941, and on certain other dates up to and including January 2, 1942, inventories were taken in the "Pin Money Dress Department" and in the dress and coat departments of the Philadelphia store indicating a shortage of $1,751.84 in the dress departments and $4,205.17 in the coat department, or a total of $5,957.01, and the claimed shortages in four Chicago stores was $6,243.71. In addition, plaintiff offered to prove what constitutes normal shrinkage and allowance for shoplifting in similar type businesses in Chicago and Philadelphia.
The proof pertaining to a loss at the Chicago Avenue store differed from the evidence relating to the inventory shortages. It appears that at about 9 o'clock on the evening of August 29, 1942, plaintiff's porter was instructed by plaintiff's manager to lock the outer back door of the store. He took a key from the manager's desk and proceeded to carry out the manager's order. It also appears that in the rear of the store there was a storeroom, the front of which was screened with wire mesh, having no exit leading into the alley, but there was a door leading into the alley adjoining the storeroom. At about the same time a saleslady unlocked the door to the storeroom and counted 39 dresses stored therein, after which she walked out of the storeroom, locked the door and placed the key on the manager's desk. While she was counting the dresses, the porter was in the rear of the store, vacuuming the floor. After leaving the storeroom she went to a washroom and within three or four minutes after she came out of the washroom she noticed that all the dresses in the storeroom were gone and that the porter was still in the rear of the store. She immediately reported...
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