Globe Indemnity Co. v. Wolcott & Lincoln

• Decision Date: 26 December 1945
• Docket Number: No. 13138.,13138.
• Citation: 152 F.2d 545
• Parties: GLOBE INDEMNITY CO. v. WOLCOTT & LINCOLN, Inc.
• Court: U.S. Court of Appeals — Eighth Circuit

152 F.2d 545 (1945)

GLOBE INDEMNITY CO. v. WOLCOTT & LINCOLN, Inc.

No. 13138.

Circuit Court of Appeals, Eighth Circuit.

December 26, 1945.

Thomas E. Deacy, of Kansas City, Mo. (C. B. Kimberly and Milligan, Kimberly & Deacy, all of Kansas City, Mo., on the brief), for appellant.

Wilfred Wimmell, of Kansas City, Mo. (M. W. Borders and Borders, Reinhardt, Margolin & Wimmell, all of Kansas City, Mo., on the brief), for appellee.

Before SANBORN, WOODROUGH, and JOHNSEN, Circuit Judges.

SANBORN, Circuit Judge.

The question for decision is whether the appellee, the insured under two "Depositors Forgery Bonds" issued by the appellant, is entitled to recover $10,000 under each of the bonds, or $10,000 under both of the bonds.

The facts are not in dispute. The appellant, on May 9, 1940, issued to the insured a "Depositors Forgery Bond" covering, to the extent of $10,000, losses sustained during the period June 6, 1940, to June 6, 1943, from the forgery of checks, drafts, promissory notes, and similar instruments made or drawn by the insured at its principal office in Kansas City, Mo., if such losses were discovered prior to the expiration of twelve months after the cancellation, termination, or expiration of the bond. The bond had attached to it a "Superseded Suretyship Rider" and superseded a like bond of the Maryland Casualty Company which terminated June 6, 1940. On May 12, 1943, the appellant issued a second "Depositors Forgery Bond" to the insured. It differed in no substantial respect from the first bond, except that it covered the period June 6, 1943, to June 6, 1946, had attached to it another form of "Superseded Suretyship Rider", and superseded the first bond issued by the appellant to the insured, instead of a bond written by another insurance carrier.

Within twelve months from June 6, 1943, the date of the termination of the first bond issued by the appellant, the insured discovered that it had sustained, during the period covered by that bond, a loss from forgery, at its principal office, which exceeded $10,000. It also discovered that it had sustained a like loss during the period of the second bond. The insured notified the appellant of these losses and demanded that it pay $10,000 under each bond, or a total of $20,000. In reliance upon what it regarded as a limitation of the aggregate amount of its liabilities under both bonds in the "Superseded Suretyship Rider" attached to the second bond, the appellant tendered the insured $10,000 in full payment of its losses under both bonds. The tender was declined, and this action was brought by the appellant for a declaratory judgment determining that the total amount for which it was liable under both bonds was $10,000. In its answer, the insured demanded judgment for $20,000. The case was tried to the court. The court decided that the appellant owed the insured $20,000, and entered judgment accordingly. This appeal is from the judgment.

Briefly stated, the contention of the appellant is that the "Superseded Suretyship Rider" attached to the second bond in plain and unequivocal language limited the aggregate amount of the appellant's liabilities under both bonds to $10,000. This rider reads as follows:

"Superseded Suretyship Rider for Depositors Forgery Bond which supersedes Depositors Forgery Bond — Bonds executed by Same Company. * * *

"Rider

"To be attached to and form a part of Depositors Forgery Bond, issued by Globe Indemnity Company (hereinafter called Company), dated the 6th day of June, 1943, and in favor of Wolcott & Lincoln, Inc. (hereinafter called Insured).

"Whereas, the Company issued a Depositors Forgery Bond (hereinafter called prior bond), dated the 6th day of June, 1940, and in favor of the Insured; and

"Whereas, the prior bond, as of the time the attached bond becomes effective has expired or has been cancelled or terminated by notice or agreement as is acknowledged by the issuance and acceptance of the attached bond and this rider.

"Now, Therefore, it is hereby understood and agreed as follows:

"1. That the attached bond shall be construed to cover, subject to its terms, agreements, limitations and conditions, any loss or losses under the prior bond which shall be discovered after the time limited therein for the making of claim or the discovery of loss thereunder and before the expiration of the time limited in the attached bond for the discovery of loss thereunder, and which loss or losses would have been recoverable under the prior bond had it continued in force until the cancellation, termination or expiration of the attached bond, and are covered by the attached bond at the time it becomes effective.

"2. That there shall be no liability under the attached bond as extended by this rider on account of any office covered under the prior bond unless such office be also covered under the attached bond at the time it becomes effective.

"3. That liability under the attached bond as extended by this rider for loss or losses under the prior bond on account of any office shall not exceed the amount carried on such office under the attached bond at the time the attached bond becomes effective less all deductions on account of all payments made on account of such office under the attached bond and the attached bond as extended by this rider, and less all other deductions therefrom required to be made by the attached bond, or the amount which would have been recoverable under the prior bond on account of such loss or losses had the prior bond continued in force until the cancellation, termination or expiration of the attached bond, if the latter amount be the smaller.

"4. That liability under the prior bond and the attached bond on account of any office shall not be cumulative in amounts and to that end losses under the prior bond on account of such office shall be paid first, and any sum or sums which shall be paid under the attached bond on account of such office shall be deducted from any amount or amounts carried under the prior bond, and any sum or sums which shall be paid on account of such office under the prior bond and/or the attached bond as extended by this rider shall be deducted from any amount or amounts carried under the attached bond, such deduction, in either of the above cases, to be made in the same manner and subject to the same limitations and conditions as payments under the attached bond on account of any office are required to be deducted, but any sum or sums so deducted from any amount or amounts of the attached bond shall be restored thereto as provided in the attached bond and an additional pro rata premium shall be paid as provided therein.

"Signed, sealed and dated this 6th day of June, 1943.

"Globe Indemnity Company "By R. E. Fitzherbert "Attorney-in-fact "Joseph M. Rehm "Assistant Secretary."

It is paragraph 4 of the rider upon which the appellant relies to limit the amount of its liabilities under both bonds to $10,000.

The District Court, in effect, decided: (1) That the only subject with which the rider dealt was the conditional assumption of liability by the appellant for losses sustained but not recoverable under the first bond because not discovered within twelve months from the termination of that bond. (2) That the purpose of paragraph 4 of the rider was to make it entirely clear that the liability of the appellant for losses from forgery sustained during the term of the...