Guarantee Co of North America v. Mechanics Savings Bank Trust Co
| Decision Date | 03 April 1899 |
| Docket Number | No. 224,224 |
| Citation | 173 U.S. 582,19 S.Ct. 551,43 L.Ed. 818 |
| Parties | GUARANTEE CO. OF NORTH AMERICA v. MECHANICS' SAVINGS BANK & TRUST CO |
| Court | U.S. Supreme Court |
W. L. Granbery, for petitioner.
E. H. East, for respondent.
The plaintiff in this suit—originally brought in the chancery court at Nashville, Tenn., and subsequently removed into the circuit court of the United States for the Middle district of Tennessee—is the Mechanics' Savings Bank & Trust Company, a Tennessee corporation suing to the use of James J. Prior, assignee, under a general assignment of all the assets, rights, and credits of that company in trust for the benefit of creditors.
The principal defendant is the Guarantee Company of North America, a corporation created under the laws of the dominion of Canada.
teller and collector, and from the latter date until his death was cashier, of the plaintiff company.
The object of the present suit is to have an accounting and a decree as to the amount due the plaintiff on two bonds executed by the Guarantee Company of North America to the Mechanics' Savings Bank & Trust Company; one insuring the latter corporation against such pecuniary loss as it might sustain on account of the fraudulent acts of Schardt as teller and collector, the other insuring the same corporation against pecuniary loss by reason of fraudulent acts by him in his office of cashier.
The bill alleges that, while acting as teller and collector of the plaintiff company, Schardt fraudulently embezzled of its moneys the sum of $78,956.11, of which $50,856.77 was embezzled during the year ending January 1, 1893; and that during the period covered by the bond insuring his fidelity as cashier he fraudulently appropriated of the plaintiff's moneys the sum of $22,817.30.
The bill also alleged that a few days before his death Schardt assigned to the plaintiff company, as additional indemnity for the losses he had brought upon it, certain policies on his life, amounting to $80,000; that upon those policies $2,000 had been collected, and the residue was in dispute; and that Schardt did not give any direction as to which of the bonds insuring his fidelity the insurance moneys when collected should be applied.
The Guarantee Company, in its answer, insisted that by reason of the violation of the terms and conditions upon which the bonds in question were issued it was not liable to the plaintiff in any sum.
By the decree in the circuit court it was adjudged that the amount embezzled by Schardt during the years 1890 and 1891 had been paid out of the assets and collections transferred by him to the bank just before his death; that his e bezzlements from and after September 1, 1890, and up to January 1, 1893, amounted, principal and interest, to $52,736.17, while his embezzlements during his term as cashier amounted, principal and interest, to $23,128.69; and that the total amount, princi- pal and interest, of all his embezzlements while occupying the two positions of teller and cashier, was $107,223.36.
The decree continued:
'It appearing that Schardt had assigned to the bank, to indemnify it against loss, two lots of land assigned to J. B. Richardson, and life insurance policies amounting to $80,000, some of which policies have been paid to the assignee without suit, and others are now in litigation in this court, or pending on appeal or writ of error to the appellate court of this circuit held at Cincinnati, the court adjudges, upon inspection of said guaranty bonds, their terms and various conditions, and the proof submitted, that the bank has complied with the same, and all its undertakings thereunder, substantially; and that said Schardt embezzled and fraudulently appropriated the moneys of the bank while he filed said two positions, to the amounts named; and that interest should be calculated upon said sums from the end of his respective terms.
'The court, after considering the various and numerous defenses set up by defendant company why a recovery should not be had upon either of said bonds, or both,...
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...non-bankruptcy context are divided. The leading case holding an analogous order non-final is Guarantee Co. v. Mechanics' Savings Bank & Trust Co., 173 U.S. 582, 19 S.Ct. 551, 43 L.Ed. 818 (1899). In Guarantee Co., a bank sued an insurance company to recover on an insurance bond issued to pr......
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