Fidelity & Casualty Co. of New York v. Harrison

• Decision Date: 16 May 1925
• Docket Number: (No. 11166.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 274 S.W. 1002
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. HARRISON.
• Court: Texas Court of Appeals

274 S.W. 1002

FIDELITY & CASUALTY CO. OF NEW YORK v. HARRISON.

(No. 11166.)^*

Court of Civil Appeals of Texas. Fort Worth.

May 16, 1925.

Rehearing Denied June 20, 1925.

Appeal from District Court, Tarrant County; Bruce Young, Judge.

Action by the Fidelity & Casualty Company of New York against Sidney M. Harrison. From a judgment for plaintiff, in the sum of only $10, plaintiff appeals. Judgment reformed.

Capps, Cantey, Hanger & Short, W. D. Smith, and Warren Scarborough, all of Fort Worth, for appellant.

Greathouse & Low and Herbert C. Wade, all of Fort Worth, for appellee.

DUNKLIN, J.

This suit was instituted by the Fidelity & Casualty Company of New York City against Sidney M. Harrison to recover $930, the amount paid out by the plaintiff to the American Express Company under and by virtue of the terms of an indemnity bond executed by the defendant as principal, and by the plaintiff as surety, and from a judgment in favor of the plaintiff for only $10 of the amount sued for, plaintiff has appealed.

During the year 1918, the defendant purchased of the American Express Company at its office in Paris, France, travelers' checks issued by that company payable to the legal holders when countersigned by the defendant, in different denominations ranging from $10 to $200, each, and aggregating $930. On defendant's return to New York City on his route home to Fort Worth, Tex., he made a written application, dated February 4, 1919, to the American Express Company for the payment of the amounts of those checks, which he claimed had been lost or destroyed, and had not been disposed of by him. The company agreed to pay the same without surrender of the checks at the time, if the defendant would execute to it a bond with the Fidelity & Casualty Company of New York as surety to indemnify the express company against losses sustained by it by reason of having paid the amount of the checks to the defendant without presenting and surrendering them at that time. The indemnity bond so required was furnished and, having been accepted by the express company, it paid to the defendant the total amount represented by the travelers' checks which the defendant claimed to have lost. Later, 18 of those checks were presented to the American Express Company by persons holding them and were paid by that company. And on demand therefor the Fidelity & Casualty Company of New York, surety on the indemnity bond, reimbursed the express company for the amount so paid. This suit was to recover that amount.

The checks issued by the express company to the defendant contained the genuine signatures of the defendant at the top, his signature being written therein at the time of issuance. Just above the signatures were the following words: "When countersigned below with this signature." The name of the payees of the check was left blank following the words "Pay to the order of," and at the bottom the printed word "countersigned" was just above a line on which a blank was left for the signature of the defendant. The checks were all introduced in evidence, and the originals have been brought to this court as part of the record. As written, the name of defendant appears on the line just below the word "countersigned," and after the words "pay to the order of," in the body of the check, the blanks are filled in with pen and ink with the names of divers and sundry persons whose names are likewise indorsed on the backs of the checks. Those checks aggregate the sum of $930.

The only defense offered by Harrison to the suit was that the purported signatures at the bottom of the checks under the word "countersigned" were all forgeries, and the defendant introduced testimony to support that plea, with the exception that he admitted on the witness stand that one of the checks for the sum of $10 was not a forgery. Defendant, Harrison, made the express company a party to the suit and sought a recovery over against it for any sum that might be adjudged against him. The plea was based upon allegations that the payments, made by the express company on the checks, when presented, were made upon forged indorsements and therefore were unauthorized.

The case was tried before a jury, and in answer to special issues a verdict was returned sustaining the defense of forgery as to all the checks except one for $10, which defendant testified was not a forgery. That verdict was the basis of the judgment from which the appeal is prosecuted by plaintiff. The court further decreed that defendant, Harrison, was not entitled to recover any amount against the express company.

The indemnity bond executed by the defendant with the plaintiff as surety, after stipulating that the defendant, Sidney M. Harrison, as principal and the plaintiff company as surety are bound to pay the American Express Company of New York City, state of New York, the sum of $1,020, contained these further provisions:

"Whereas, the principal claims to be the owner of the following travelers' checks issued by the obligee. (Here follows the numbers and amounts of the different checks.)

"Whereas, the principal alleges that the said travelers' checks have been lost or destroyed and cannot be found; and

"Whereas, the obligee is willing to pay to the principal the amount represented by the said checks without first requiring the surrender of the said checks for cancellation if indemnified against all loss, costs, and expenses which may be occasioned it by reason of its so doing.

"Now, therefore, the condition of the foregoing obligation is such that if the above bounden parties shall fully protect, indemnify, and save harmless the obligee from and against any and all loss, costs, and expenses, which may be occasioned it by reason of its having paid to the principal the amount represented by the said travelers' checks without first requiring the surrender of the said checks for cancellation, then this obligation shall be void, otherwise it shall remain in full force and effect."

The indemnity bond was executed by plaintiff company upon the defendant's written application therefor. The application embodied a statement by defendant that he had lost the checks and had not disposed of them, and further stipulated that:

"In consideration of the execution by the Fidelity & Casualty Company of New York, hereinafter called the Company, of the bond herein and hereby applied for, Sidney M. Harrison of Fort Worth, state of Texas, hereinafter called the applicant, agrees as follows: (1) To pay on the execution of the said bond $20.40 as the premium thereon. (2) To indemnify the Company against any losses, damages, costs, charges, and expenses that the Company may in any way sustain, incur, or become liable for in consequence of the said bond, or any renewal thereof, or any new bond issued in continuation thereof, or as a substitute, therefor, and any proper evidence of the payment by the Company of any such losses, damages, costs, charges, or expenses shall be conclusive evidence against the applicant of the fact and extent of the applicant's liability to the Company under this agreement."

Plaintiff furnished proper and conclusive evidence of the payment by it of the losses sustained by the express company.

Plaintiff's suit against the defendant for reimbursement of the amount it had been compelled to pay the American Express Company was not predicated upon the commonlaw rules allowing a recovery by a surety against his principal for amount paid by the surety on the principal's debt, but was based upon his agreement contained in subdivision 2, copied above, of his written application to the plaintiff to sign said indemnity bond as surety. That agreement by the defendant is plain, specific, and unambiguous and entitled plaintiff to a judgment in its favor, if given legal effect as written, as we believe should be done.

Appellee insists that since the jury found that the checks when presented were paid by the American Express Company upon forgeries of his signature, the loss, sustained by plaintiff surety company in reimbursing the express company for such payments, was not such a loss as is legally comprehended in the language used in his contract of indemnity, referred to above, or in his separate contract with the plaintiff. Appellee especially attacks as contrary to public policy and therefore void the language contained in his separate agreement with the indemnity company, to wit:

"And any proper evidence of the payment by the Company of any such losses, damages, costs, charges, or expenses shall be conclusive evidence against the applicant of the fact and extent of the applicant's liability to the Company under this agreement."

The cases chiefly relied upon by appellee to support that contention are Fidelity & Casualty Co. of New York v. Eickhoff, by the Supreme Court of Minnesota, 63 Minn. 170, 65 N. W. 351, 30 L. R. A. 586, 56 Am. St. Rep. 464; Fidelity & Deposit Co. of Maryland v. Nordmarken, by the Supreme Court of North Dakota, 32 N. D. 19, 155 N. W. 669; Fidelity & Casualty Co. of New York v. Crays, by the Supreme Court of Minnesota, 76 Minn. 450, 79 N. W. 531; Guarantee Co. of N. A. v. Charles, by the Supreme Court of South Carolina, 92 S. C. 282, 75 S. E. 387, Ann. Cas. 1916B, 687; Jones v. Enoree Power Co., by the same court, 92 S. C. 263, 75 S. E. 452, Ann. Cas. 1914B, 293.

The case first cited (Fidelity & Casualty Co. v. Eickhoff) was the earliest of those decisions, and it is cited in the opinions in the other decisions. In that case the Fidelity & Casualty Company sued Eickhoff to recover the...