Am. Life Ins. Co. v. U.S. Fid. & Guar. Co.

• Decision Date: 03 January 1933
• Docket Number: No. 5.,5.
• Citation: 261 Mich. 221,246 N.W. 71
• Court: Michigan Supreme Court
• Parties: AMERICAN LIFE INS. CO. v. UNITED STATES FIDELITY & GUARANTY CO.

261 Mich. 221

246 N.W. 71

AMERICAN LIFE INS. CO.

v.UNITED STATES FIDELITY & GUARANTY CO.

No. 5.

Supreme Court of Michigan.

Jan. 3, 1933.

Appeal from Circuit Court, Wayne County; Vincent M. Brennan, Circuit Judge.

Action by the American Life Insurance Company against the United States Fidelity & Guaranty Company. Judgment for plaintiff, and defendant appeals.

Reversed without new trial.

Argued before the Entire Bench.

Payne & Payne, of Deroit, for appellant.

Fred H. Aldrich, of Detroit, George E. Leonard, and Harry F. Johnson, for appellee.

FEAD, J.

In May, 1921, Lew Wallace was plaintiff's Oregon state agent. Among his duties was the collection of premiums on policies. Defendant executed to plaintiff a bond to reimburse it to the sum of $2,000, for loss ‘directly occasioned by larceny or embezzlement on the part’ of Wallace. The bond expired June 1, 1921.

Wallace's contract provided that insurance premiums collected by him for plaintiff ‘shall be deemed to be held by him in a fiduciary capacity, and shall be used by him for no personal or other use whatever, but shall be by him immediately paid over to said party of the first part, unless specially otherwise authorized by the party of the first part.’

Between May 15th and 18th Wallace attended a conference called by plaintiff at Des Moines at which Wallace was offered a new contract, which he refused. On his return to Portland, Or., and under date of June 3d, Wallace telegraphed plaintiff as follows: ‘Because of your actions I consider that you have broken our contract and that I am no longer in your employ courtesy to you will attend routine matters until June 15th when I wish you would take charge of the business and arrange accounting with me confirmatory letter following.’

The confirmatory letter requested plaintiff to send a representative to check the account and take charge of the business.

Plaintiff's representative checked Wallace's account on June 9th and found him possessed of $3,189.84 of plaintiff's money collected on premiums, and owing an additional $1,500. Oral demand was made but Wallace refused to deliver the money. Warrant was sought for Wallace's arrest but refused by the district attorney awating trial in the civil courts. June 16th, Wallace sent plaintiff a full statement of premiums collected and advised that he was holding check for the money pending settlement of differences. June 17th he made a written proposal to pay the money and continue the business for ninety days, on later payment of $7,500 in lieu of all of his contract rights with plaintiff. June 20th, written demand for delivery of the money was served on Wallace, refused, and he was then notified of termination of his contract. Shortly thereafter, Wallace deposited the money in a bank on cashier's check, payable to himself as trustee, began suit against plaintiff for breach of contract and garnisheed the bank. Plaintiff filed counterclaim for the insurance funds. Wallace had judgment for $71,000, net, after allowance of plaintiff's claim. Plaintiff appealed. The judgment was reversed, Wallace v. American Life Ins. Co., 111 Or. 510, 225 P. 192,227 P. 465, but the court held the evidence sufficient to go to the jury on plaintiff's claim of breach of contract on May 18th. Pending the appeal, Wallace, upon order of the trial court, collected the sum deposited by him in the bank. On retrial, Wallace had judgment for $64,000, net, after allowance of plaintiff's claim. The judgment was reversed without new trial, 116 Or. 195, 237 P. 974, and judgment entered for plaintiff on the ground that, under the terms of his contract, Wallace, by entering the employ of another insurance company while indebted to plaintiff, had waived all claims accruing to him under the contract. The judgment against Wallace not having been paid, plaintiff sued defendant on the bond and had judgment on trial before the court.

The question is whether, before June 1, 1921, Wallace was guilty of larceny or embezzlement of plaintiff's moneys in his possession.

Oregon Laws, vol. 1, § 1955, provides: ‘If any officer, agent, clerk, employee, or servant of any person, co-partnership, or corporation, shall embezzle or fraudulently convert to his own use, or take or secrete with intent to embezzle of fraudulently convert to his own use, any money, property, or thing belonging wholly or in part to such person, co-partnership, or corporation, which may be the subject of larceny, and which shall have come into his possession, or be under his care by virtue of such employment, such officer, agent, clerk, employee, or servant, whether he has, or has not any interest, divisible or indivisible, in such money, property, or thing, shall be deemed guilty of larceny. * * *’

An essential of the crime is a felonious or fraudulent intent. The statute does not eliminate that essential. In State v. Cooke, 130 Or. 552, 278 P. 936, 938, the general definition is quoted with...