Bremen State Bank v. Hartford Accident & Indemnity Co., 17721.

• Decision Date: 05 August 1970
• Docket Number: No. 17721.,17721.
• Citation: 427 F.2d 425
• Parties: BREMEN STATE BANK, Plaintiff-Appellant, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY and Bekins Van & Storage Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

427 F.2d 425 (1970)

BREMEN STATE BANK, Plaintiff-Appellant, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY and Bekins Van & Storage Company, Defendants-Appellees.

No. 17721.

United States Court of Appeals, Seventh Circuit.

April 30, 1970.

Rehearing Denied August 5, 1970.

Thomas R. Schreiber, Paul Schreiber, Jr., Palos Heights, Ill., for plaintiff-appellant, Schreiber, Mack & Pieper, Palos Heights, Ill., of counsel.

Edward D. Lapperre, Vincent P. Reilly, Medard M. Narko, Chicago, Ill., for defendant-appellee, Hartford Accident and Indemnity Co., Russell, Bridewell & Lapperre, Chicago, Ill., of counsel.

Before SWYGERT, Chief Judge, DUFFY, Senior Circuit Judge, and FAIRCHILD, Circuit Judge.

SWYGERT, Chief Judge.

Plaintiff, Bremen State Bank, brought this diversity action in the district court to recover $10,342.03, which sum was lost during a move by the bank from one location to another within the village of Tinley Park, Illinois. On the day before the move the bank instructed its tellers to put their money at the end of the day in canvas bags on the floor of the vault rather than in metal lockers inside the vault, the usual practice. One teller, Mrs. Laucke, did not receive these instructions and thus put her cash drawer money, $10,342.03, in her metal locker instead of on the vault floor.

Arrangements had been made for the Tinley Park police to move the bank's money and for defendant, Bekins Van & Storage Company, to move the office equipment, including the metal lockers, inside the vault. After the police, under guard, had moved the money from the vault floor to the new location, Bekins' employees entered the bank and began their job. While removing some of the metal lockers from the vault, one of Bekins' employees, Danny Francis, noticed that something was inside one of the lockers. After placing them in a van, he opened the locker used by Mrs. Laucke and discovered the money. Francis finished working that day and later absconded with the $10,342.03, none of which was ever recovered.

Plaintiff's complaint contained two counts: Count I sought recovery against Hartford Accident and Indemnity Company on a "Banker's Blanket Bond" issued by Hartford to the bank; Count II sought recovery in the alternative against Bekins on the theory of respondeat superior. The district court granted summary judgment against the bank on both counts¹ and this appeal followed. We reverse as to Count I and affirm as to Count II.

I

The banker's blanket bond issued by Hartford contained the following relevant clauses:

ON PREMISES

(B) Any loss of Property through robbery, burglary, common-law or statutory larceny, theft, false pretenses, hold-up, misplacement, mysterious unexplainable disappearance, damage thereto or destruction thereof, whether effected with or without violence or with or without negligence on the part of any of the Employees, and any loss of subscription, conversion, redemption or deposit privileges through the misplacement or loss of Property, while the Property is (or is supposed to be) lodged or deposited within any offices or premises located anywhere, except in an office hereinafter excluded or in the mail or with a carrier for hire, other than an armored motor vehicle company, for the purpose of transportation.

* * * * * *

IN TRANSIT

(C) Any loss of Property (occurring with or without negligence) through robbery, common-law or statutory larceny, theft, hold-up, misplacement, mysterious unexplainable disappearance, being lost or otherwise made away with, damage thereto or destruction thereof, and any loss of subscription, conversion, redemption or deposit privileges through the misplacement or loss of Property, while the Property is in transit anywhere in the custody of any of the Employees or partners of the Insured or of any other person or persons acting as messenger except while in the mail or with a carrier for hire other than an armored motor vehicle company for the purpose of transportation, such transit to begin immediately upon receipt of such Property by the transporting Employee or partner or such other person, and to end immediately upon delivery thereof at destination.

The bank claims coverage only under Clause B, arguing that the loss was occasioned through "misplacement" of the money. Hartford contends that although the money was misplaced "in a loose sense," the loss resulted through theft after the money had left the bank premises, and was therefore not covered by the bond. The fallacy of Hartford's argument lies in its reliance on the events which occurred after the money had been misplaced. We think it is plain from the language of the bond that a loss resulting from misplacement of money, regardless of subsequent events, was contemplated as being covered. Surely the bank's loss in the instant case would not have been suffered had it not been for Mrs. Laucke's misplacement of the money. The subsequent theft by Danny Francis resulted from that misplacement and does not take the loss out of the coverage of the bond.

To hold against coverage in this case would fly in the face of the intention of the parties when the blanket bond was purchased. It is well settled under the law of Illinois, as well as most other jurisdictions, that if an insurer does not intend to insure against a risk which is likely to be inherent in the business of the insured, it should specifically exclude such risk from the coverage of the policy. Canadian Radium & Uranium Corp. v. Indemnity Insurance Co., 411 Ill. 325, 334-335, 104 N.E.2d 250 (1952). This compliments the general rule that contracts of insurance should be liberally construed in favor of the insured and against the insurer. Farber v. Great American Insurance Co., 406 F.2d 1228, 1230 (7th...