Capital Fire Insurance Company v. Watson
| Citation | 79 N.W. 601,76 Minn. 387 |
| Decision Date | 25 May 1899 |
| Docket Number | 11,555 - (96) |
| Parties | CAPITAL FIRE INSURANCE COMPANY v. GEORGE H. WATSON and Others |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county to recover $653.41 on a bond executed by defendant Watson as principal and by defendants Haag and Reese as sureties. The case was tried before Willis, J., who directed a verdict in favor of plaintiff for $304.47 as against defendant Watson, and for $279.97 as against defendant sureties. From an order denying a motion for a new trial, defendant Haag appealed. Reversed.
Bond of Insurance Agent -- Reports of Business Done -- Res Gestae -- Evidence.
In an action on a bond made by W. to the plaintiff insurance company, conditioned for the faithful performance of his duties as its agent, held, the reports made by him to the company of business done and moneys received by him as such agent, in the regular course of his business, are a part of the res gestae, and are admissible in evidence against his sureties.
Verdict Sustained by Evidence.
Held on the issues tried, the evidence is conclusively in favor of the verdict ordered for plaintiff.
Knowledge of Agent's Former Dishonesty -- Representations of Company to Bondsmen -- Fraud.
By proposing to take W. for its agent, the plaintiff impliedly represented that, so far as it knew, he was honest, and that it believed him to be so. If, prior thereto, it knew he was dishonest, and had wrongfully converted to his own use moneys received by him as agent of other insurance companies, and it failed to disclose these facts to the sureties on the bond who were ignorant thereof, it was guilty of fraud which avoids the liability of the sureties.
Knowledge of Agent's Subsequent Dishonesty -- Failure to Inform Bondsmen.
The employment of W. as agent of plaintiff was during the pleasure of both parties. Held, if plaintiff subsequently discovered that W. was dishonest in the course of his service as its agent, and after such discovery it continued him in its service without notifying the sureties of what it had discovered, they are not liable for any losses thereafter arising from his dishonesty.
Charles J. Berryhill, for appellant.
The reports were inadmissible as against the sureties to show receipt of the premiums. Lancashire Ins. Co. v. Callahan, 68 Minn. 277, 279; White v. German, 56 Tenn. 475; Kellum v. Clark, 97 N.Y. 390; Stetson v. City, 2 Oh. St. 167; Lee v. Brown, 21 Kan. 458. The defense relating to Watson's previous conduct with the Pacific Company constituted a defense. Traders Ins. Co. v. Herber, 67 Minn. 106; 2 Brandt, Sur. § 423; 24 Am. & Eng. Enc. 763; Howe v. Farrington, 82 N.Y. 121, 125. The second defense was good pro tanto. Lancashire Ins. Co. v. Callahan, supra; Manchester F. A. Co. v. Redfield, 69 Minn. 10, 13; Rapp v. Phoenix, 113 Ill. 390; Wilmington v. Ling, 18 So. C. 116; Roberts v. Donovan, 70 Cal. 108, 110; Atlantic v. Barnes, 64 N.Y. 385, 389.
Clapp & Macartney, for respondent.
Watson continued to be the agent of plaintiff from May 8 to August 28, 1897, and this action is brought on the bond to recover a balance claimed to be due from Watson for premiums which it is claimed he collected as such agent. On the trial, the court ordered a verdict for plaintiff, and from an order denying a new trial the defendant Haag appeals.
1. The court correctly received in evidence the reports made by Watson to plaintiff. They were made in the usual course of business, it was a part of his duty as such agent to make these reports, and they are a part of the res gestae. See Lancashire Ins. Co. v. Callahan, 68 Minn. 277, 71 N.W. 261.
2. The evidence is conclusively in favor of the verdict ordered by the court, and therefore the court did not err in ordering the verdict. There is nothing in appellant's claim that the bond does not cover insurance premiums collected by Watson which he has failed to pay over.
3. But, in our opinion, the court, on the trial, erred in striking out of the answer two defenses contained therein.
One of these defenses alleged that, at the date of the bond, on...
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