COMMUNITY NAT. BK., MONMOUTH v. ST. PAUL F. & MI CO., RI-CIV-75-9.
| Decision Date | 12 September 1975 |
| Docket Number | No. RI-CIV-75-9.,RI-CIV-75-9. |
| Citation | 399 F. Supp. 873 |
| Parties | COMMUNITY NATIONAL BANK IN MONMOUTH, a National Banking Association, Plaintiff, v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, a Capital Stock Company, Defendant. |
| Court | U.S. District Court — Southern District of Illinois |
Howard & Padella, Monmouth, Ill., for plaintiff.
Gilmartin, Wisner & Hallenbeck, Ltd., Chicago, Ill., James D. Mowen, Bozeman, Neighbour, Patton & Noe, Moline, Ill., for defendant.
DECISION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This is a suit for declaratory judgment, brought in the Circuit Court of the Ninth Judicial Circuit of Illinois, Warren County, and removed here by defendant under Section 1441(a) of Title 28, United States Code, based on asserted diversity of citizenship of the parties. There is no contest of jurisdiction here or over possible differences between the Illinois statute on declaratory judgments (ch. 110, Ill.Rev.Stat. § 57.1) and the federal statute and rule. (28 U.S.C. §§ 2201 and 2202 and Rule 57, F.R.Civ.P.)
The problem on the merits arises over construction of the language of a so-called "Bankers Blanket Bond" issued by defendant to plaintiff and in effect at the time of the loss alleged by plaintiff to be covered. An acknowledged photocopy of said bond is attached to the Complaint. Defendant has moved for summary judgment in its favor on the theory that certain language of the bond, excluding coverage of the loss in question, is unambiguous, that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law.
Plaintiff contends that there is an ambiguity in the language, founded on "grammar" and the punctuation used, and that "this case depends on resolution of conflicting inferences of facts which may be drawn from disputed terms of writing." It sought to strike the motion for summary judgment on the assertion that "there is a genuine issue of material facts," with which Motion to Strike were filed affidavits of plaintiff's attorney and of a Doctor of Philosophy college professor of English. The court has previously denied the motion to strike, has accepted the affidavits as opposing affidavits under Rule 56(c), F.R.Civ.P., and has invited and received additional briefing on the motion for summary judgment.
It is clear and undisputed that plaintiff bank made money loans totaling some $60,000 to one George Robson Gossett, based on false information provided by the borrower, and that said Gossett was convicted in this court of the federal criminal offense of knowingly making false statements to a bank, the deposits of which are insured by the Federal Deposit Insurance Corporation (18 U.S.C. § 1014). The loans were not fully repaid, leaving a deficit of some $35,000; and it is this loss which plaintiff seeks to recover through the bond in question.
The printed language and grammatical structure of the bond which is involved is as follows:
"TABLE OF LIMITS OF LIABILITY
"The Underwriter's limit(s) of liability under each
Insuring Clause is as follows, subject to these Declarations
and the General Conditions of this Bond and the
terms and limitations of the Insuring Clause having
reference thereto and any of its endorsements
LIMITS OF
INSURING CLAUSES LIABILITY
(A) DISHONESTY of Employees $ 175,000.00
(B) ON PREMISES BURGLARY, ROBBERY
OFFICES AND EQUIPMENT
LOSS OR DAMAGE, etc. $ 175,000.00
(B1) MISPLACEMENT, MYSTERIOUS
UNEXPLAINABLE DISAPPEARANCE
Without Tellers Shortage Exclusion $ NIL
(B2) MISPLACEMENT, MYSTERIOUS
UNEXPLAINABLE DISAPPEARANCE
With Tellers Shortage Exclusion $ 175,000.00"
* * * * * *
Following more than two pages of text material, none of which is directly relevant to the problem here, the bond again takes up the subject of Insuring Clauses in the following language and form:
INSURING CLAUSES
(A) DISHONESTY
* * * * * *
(B) ON PREMISES BURGLARY, ROBBERY, ETC.
The Underwriter agrees to indemnify the Insured to any amount not exceeding the amount stated in the Declarations for this Insuring Clause, or endorsement amendatory thereto, from and against (1) any loss of Property through robbery, common-law or statutory larceny, embezzlement, burglary, theft, false pretenses, hold-up, riot, civil commotion, damage thereto or destruction thereof (including damage or destruction by vandalism or malicious mischief), 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 such Property is or was (or is supposed to be) located or lodged or deposited within any offices or premises located anywhere, and (2) any loss, through any hazard specified in this Insuring Clause, or through the misplacement or mysterious unexplainable disappearance, of any of the items enumerated in the paragraph defining Property (Page 4), while such items are or were within any of the Insured's offices and in the possession of any customer of the Insured or of any representative of such customer, or through robbery or hold-up while such customer or representative is actually transacting business with the Insured at an outside window or other similar facility offered to the public and attended by an Employee of the Insured, at any of the Insured's offices covered hereunder, or through robbery or hold-up during banking hours while such customer or representative is in any building or on any driveway, parking lot of similar facility maintained by the Insured as a convenience for such customers or representatives using motor vehicles provided that any such customer or representative is present in such building or on such facility for the purpose of transacting banking business with the Insured at any of the Insured's Offices covered hereunder, whether or not the Insured is legally liable for the loss thereof, provided the loss is not caused by such customer or any representative of such customer.
The Underwriter agrees to indemnify the Insured to any amount not exceeding the amount stated in the Declarations for this Insuring Clause, or endorsement amendatory thereto, against any loss of or damage to (except, in either case, by fire) any of the Insured's offices, furnishings, fixtures, stationery, supplies or equipment, safes and vaults (including any wallet, bag, satchel or chest), caused by robbery, larceny, burglary, theft, hold-up, or attempt thereat, or by vandalism or malicious mischief, and any loss by damage (except by fire), to any of the Insured's building in which any of the Insured's offices or branches are located, caused by robbery, larceny, burglary, theft, hold-up, or attempt thereat.
This Insuring Clause does not cover —
(a) * * * *;
(b) * * * *;
(c) Loss the result of the complete or partial non-payment of or default upon any loan made by or obtained from the Insured, whether procured in good faith or through trick, artifice, fraud or false pretenses;
(d) * * * *;
(e) * * * *;
(f) * * * *.
(Then follow individual and multiple paragraphs of text to (B1), (B2), and (C) through (S), all of which are completely irrelevant to the problem here, except as the form thereof may be some guide to interpretation of the relevant text.)
Defendant argues generally that this is not a proper case for declaratory relief because plaintiff's loss has been incurred, and it is not in peril of avoidable loss as alleged, so that an ordinary action at law on the bond is the appropriate remedy. While this may be true, it is conceded that decision on the merits in this action is within the discretion of the court; and it would appear that concern about the form of the action in the present posture of the case would be wasteful for all concerned.
Defendant's argument on the merits is that the loan exclusion clause (c) obviously and unambiguously relates to the entire "Insuring Clause (B)," and hence excludes coverage of this loss on the fraudulently obtained Gossett loans.
Plaintiff argues that because of the rules of grammar and the syntactic structure, said loan exclusion clause (c) can relate only to the immediately preceding "insuring clause" headed "Offices and Equipment...
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