214 F.2d 825 (5th Cir. 1954), 14772, New Amsterdam Cas. Co. v. W. D. Felder & Co., Inc.

Docket Nº:14772.
Citation:214 F.2d 825
Party Name:NEW AMSTERDAM CAS. CO. v. W. D. FELDER & CO., Inc.
Case Date:July 30, 1954
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 825

214 F.2d 825 (5th Cir. 1954)



W. D. FELDER & CO., Inc.

No. 14772.

United States Court of Appeals, Fifth Circuit.

July 30, 1954

Rehearing Denied Sept. 7, 1954.

Page 826

Allen Wight, Dallas, Tex., for appellant.

Stanley E. Neely and Wayne O. Woodruff, Locke, Locke & Purnell, Dallas, Tex., for appellee.

Before STRUM, Circuit Judge, and DAWKINS and HOOPER, District Judges.

HOOPER, District Judge.

Appellee, W. D. Felder & Company, Inc. (also referred to as plaintiff and as the insured) brought suit against New Amsterdam Casualty Company, the appellant (also referred to as the insurer and as defendant) on a blanket fidelity bond protecting against losses of money or property by reason of dishonest acts of employees. It covered:

'that part of any inventory shortage which the insured shall conclusively prove has been caused by the fraud or dishonesty of any employee or employees.

The case was tried to the Court without a jury, a verdict was rendered in favor of plaintiff in the sum of $57,025.26. The defendant appealed. All of the points insisted upon by appellant may be grouped under five classifications which are discussed below:

(1) It is contended the trial court erred in ruling that plaintiff, who is not the first named assured in the bond sued upon, had the right to maintain the action because of provisions in the bond to that effect. Rule 17(a), Federal Rules of Civil Procedure, 28 U.S.C.A., provides that 'Every action shall be prosecuted in the name of the real party in interest', subject to certain exceptions not pertinent here. Appellee suggests that the purpose of inserting the above provision in the bond might have been for the convenience of insurer in connection with collection of premiums and mailing of notices and that it was not inserted for the purpose of burdening the first named insured with the duty of prosecuting all claims in behalf of the other insureds. Whatever might have been the purpose of inserting that clause in the bond, we are clear in our opinion that under the facts of this case this insured was entitled to maintain this action and that no rights of the defendant or of the first named assured in the bond are jeopardized thereby.

(2) It is insisted that the evidence does not show that plaintiff's loss was caused 'by the fraud or dishonesty of any employee or employees.' Appellee contends that the loss involved was not an inventory loss, but with that contention we do not agree. Tending to show, however, that the loss was caused by dishonesty of employees, the evidence shows the following:

Plaintiff, a cotton merchant, received cotton samples in its sample room. After serving their purpose they were thrown on the floor as loose cotton. Two colored porters, Daniels and Lister, had the duty of rolling and sacking this cotton, and when the sample room reached its capacity taking it to the basement.

Page 827

It was there placed in bins to which these porters had keys.

Suspecting thefts of this cotton insured employed Burns Detective Agency which placed one of its colored operatives named Glenn in plaintiff's offices as a porter. Glenn soon discovered that Daniels and Lister several times each week were separately taking cotton from the sample rooms and hauling same away in their automobiles. Acting on advance information the detective agency placed a white operative named Smith at this place the night of August 21st, at which time Daniels and Lister were discovered taking this cotton. Daniels was pursued but eluded his pursuers and sold the cotton to a mattress factory from which it was recovered. 1

While we do not agree with appellee in the contention that the sample cotton was not inventory, we do agree with its claim that the requirement in the bond that this loss must be shown by conclusive evidence, should be given a reasonable...

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