Champion Ice Mfg. & Cold Storage Co. v. American Bonding & Trust Co.

• Decision Date: 10 June 1903
• Citation: 115 Ky. 863,75 S.W. 197
• Parties: CHAMPION ICE MFG. & COLD STORAGE CO. v. AMERICAN BONDING & TRUST CO.
• Court: Kentucky Court of Appeals

75 S.W. 197

115 Ky. 863

CHAMPION ICE MFG. & COLD STORAGE CO. v. AMERICAN BONDING & TRUST CO.

Court of Appeals of Kentucky.

June 10, 1903

Appeal from Circuit Court, Kenton County.

"To be officially reported."

Action by the Champion Ice Manufacturing & Cold Storage Company against the American Bonding & Trust Company. From a judgment for defendant, plaintiff appeals. Reversed.

J. W Bryan and S.D. Rouse, for appellant.

Frank M. Tracey, for appellee.

SETTLE J.

The appellant, Champion Ice Manufacturing & Cold Storage Company is a corporation doing business in Covington, Ky. It had in its employ a bookkeeper, Geo. H. Weitkamp by name, of whom it required a bond of indemnity, which was furnished by the appellee, American Bonding & Trust Company, for the consideration of $12.50 paid it in cash. By the terms of this bond, appellee agreed to indemnify appellant for one year for any "loss which it might sustain by reason of any fraudulent or dishonest act upon the part of Weitkamp amounting to larceny or embezzlement," that might occur while he continued in appellant's service as bookkeeper. It appears that Weitkamp, while in appellant's service wrongfully converted $94.91 of its money, and, in addition, raised five of its checks, each $100 in amount, which he caused to be cashed at the First National Bank of Covington, and appropriated to his own use the amounts thus fraudulently realized. These frauds seem to have been committed in the following manner: The weekly pay roll of the appellant company, as prepared by one of its officers, was furnished Weitkamp, as bookkeeper, with direction to make out the checks, payable to himself, for the amounts indicated. Upon thus filling out the checks as directed, Weitkamp handed them to the proper officer of the company, who signed and returned them to him to take to the bank to be cashed. Weitkamp raised five of these checks $100 in amount, each, had them cashed, and retained the amounts of the excess over and above the sums for which they were originally and truly issued. The checks thus fraudulently raised are supposed to have been destroyed by Weitkamp. At any rate, they have not been found or produced by appellant. The aggregate amount realized by Weitkamp, from the fraudulent alterations of the checks was $500, and the additional sum of $94.91 he retained out of moneys collected by him as bookkeeper of appellant, or took from its money drawer. Weitkamp, upon learning that his peculations were about to be discovered by appellant, fled to parts unknown, and has ever since remained concealed and unapprehended; and this action was instituted by appellant in the Kenton circuit court to recover of appellee, on the bond mentioned, the sum of $594.91 fraudulently appropriated by Weitkamp in the manner stated. The appellee filed answer to the petition, denying any liability on the bond, except to the extent of $94.91, made up of small amounts taken by Weitkemp from the cash drawer, or collected of appellant's customers, which it tendered to appellant, and, in addition, averred, in substance, that the remainder of the sum lost to appellant is not covered by the terms of the bond, and that the First National Bank, which cashed the checks raised by Weitkamp, is the sole loser by his fraud, and must account to appellant, under the laws of banking, for the amount of his defalcation, and, further, that appellee cannot be held liable on the bond given for Weitkamp, for the reason that appellant, in order to procure the bond, made various misrepresentations as to the duties and responsibilities to be imposed upon Weitkamp, because of which alleged misrepresentations appellant is estopped from recovering on the bond. After the filing of the reply, which controverted the affirmative allegations of the answer, the case went to trial, and upon conclusion of appellant's testimony the lower court, upon appellee's motion, gave the jury a peremptory instruction to find for appellee, which they accordingly did. Judgment was thereupon entered dismissing the petition and allowing appellee its costs. Thereafter appellant entered motion and grounds for a new trial, which was refused. Of the judgment dismissing its petition and refusing the new trial, appellant now complains, and asks a reversal at the hands of this court.

The appellee company is engaged in the business of furnishing bonds to secure the honesty and fidelity of fiduciaries and employés, and the one sued on in this case provides, among other things, that appellee "does hereby agree that it will within three months after receipt of proof, satisfactory to its officers and subject to the conditions hereinafter expressed, reimburse the employer [appellant], to an amount not in excess of the penalty of this bond [$2,500], for such pecuniary loss as the employer shall have sustained of money securities, or other personal property belonging to the employer, or for which the employer is responsible, by any act of fraud or dishonesty amounting to larceny or embezzlement committed by the employé during the continuance of this bond, in the performance of the duties of said office, or position, or such other position as he may be subsequently appointed to, or called upon to fill by the employer in said service." The bond further provided that, in case of discovery of default or loss, the appellant should give immediate notice to appellee, etc. There can be no question but that the covenants of the bond cover such a loss as was sustained by the appellant. Its only purpose was to insure against loss that might result to appellant from the fraud or dishonesty of Weitkamp, amounting to larceny or embezzlement, whether the loss was that of money, securities, or other personal property belonging to appellant, or for which it might be made responsible; and the indemnity thus afforded by the bond not only applies to any act of fraud or dishonesty which Weitkamp may have committed in the performance of his duties as bookkeeper, but also to such as he may have committed in any other position in appellant's employment to which he may have been appointed, or called upon to fill. It is not material, therefore, whether the fraudulent and dishonest acts of Weitkamp which caused loss to appellant were committed by the making of false entries in its books, by the raising of its checks, or by abstracting money from its money drawer; nor is it material whether he was at the time acting as bookkeeper, or in some other capacity in appellant's service. In either or in any of these events, appellee, under the terms of...