Fidelity & Deposit Co. of Md. v. Colorado Ice & Storage Co.

• Decision Date: 03 May 1909
• Citation: 45 Colo. 443,103 P. 383
• Court: Colorado Supreme Court
• Parties: FIDELITY & DEPOSIT CO. OF MARYLAND v. COLORADO ICE & STORAGE CO.

103 P. 383

45 Colo. 443

FIDELITY & DEPOSIT CO. OF MARYLAND v. COLORADO ICE & STORAGE CO.

Supreme Court of Colorado

May 3, 1909

Rehearing Denied July 6, 1909.

Appeal from District Court, City and County of Denver; Jesse G Northcut, Judge.

Action by the Colorado Ice & Storage Company against the Fidelity &amp Deposit Company of Maryland. Judgment for plaintiff, and defendant appeals. Affirmed.

Guy Leroy Stevick, L. Ward Bannister, and Tom Herrington, for appellant.

Goudy &amp Twitchell, for appellee.

HILL J.

This is an action on a bond of indemnity and continuation certificates issued by the appellant bonding company, a corporation, to the appellee, a corporation, to save the latter harmless and indemnify it against loss occasioned by the larceny or embezzelment of Marion H. Compton, who was in the employment of the appellee, and stated in the bond 'as collector and ticket distributor.' The indemnity was applied for by Marion H. Compton, the employé. It appears he first secured a bond upon July 1, 1894, for the term of one year for the same position, although its terms were different as to the liability of the surety company than the one sued upon, covering a broader field, and that by certificates of extension this bond was continued in force until July 1, 1899, when the one now in controversy was issued. According to the custom of the company, an employé's statement was required to be signed by the obligee. This was done in the first instance prior to the issuance of the first bond. That statement contained a list of printed questions calling for answers by the employer, but no such request was made before the issuance of the second bond, but it appears (as was the custom of the surety company) before the issuance of its annual continuation certificate it required a certificate from the employer as to an examination of the accounts of the employé, in what capacity employed, etc., and in compliance with such regulation the appellee furnished such certificates annually from the year 1895 to 1900, inclusive. The record further shows that Compton while in the employ of the appellee was on or about June 6, 1901, found to be short in his accounts in the sum of $1,905.47. This bond was then in force by virtue of the last continuation certificate. The conditions in the bond as to notice, the furnishing of an itemized statement of claim for the amount of the shortage, etc., were complied with, and, upon appellant's refusal to make payment, this action was brought. Trial to a jury resulted in a judgment for appellee, from which appellant appeals.

Four general groups of assignments of error, including instructions given and refused, have been urged as reasons for the reversal of the judgment; the first being that the statement of the employer as to the duties of the employé is in the way of a guaranty that in the future they will continue to remain as stated in the application, and that in case of a change of such duties, as urged to have been in this case, it invalidates the bond. The record shows that the bond given states it was issued to the appellee to reimburse it to the extent of $2,000, etc., for loss sustained by any act of larceny or embezzlement of Marion H. Compton, who was in the employment of the appellee 'as collector and ticket distributor,' and it is claimed by the appellant that after the issuance of the bond sued upon Compton's duties were enlarged, and he became a solicitor of business for the company, and, on account thereof, he visited saloons and sundry other places which were not contemplated by his bond, and for that reason invalidates the same. In this case it might be questionable as to whether or not the validity of the present bond could be tested upon the question as to the truthfulness of the answers to the questions in the original application of the employé and employer for the reason (not necessary to determine in this case) it is questionable as to whether or not they were any part of the basis for the issuance of the present policy, it being different in form and limited to a smaller scope of liabilities upon the part of the appellant than the original policy; but for the purposes of this contention, assuming that the original application and statement was the basis for this policy, as held by the lower court, we find in the statement of the appellee in answer to the question 'What duties will devolve upon him?' (referring to Compton) the answer was, 'Distribute ice tickets, sell and collect for them, and collect ice bills.' In addition to this, we find thereafter each year, on or about the month of June, the appellee, at the request of the appellant in compliance with a provision of the policy, made a certificate as to the examination of the accounts of said Compton and as to what his duties then were. In the one May 31, 1895, it states 'Marion H. Compton, in our employ as collector, ticket agent, banking clerk,' etc. May 31, 1896, it states: 'In our employ as collector & ticket distributor.' June 1, 1897: 'Collector and ticket distributor.' May 31, 1898, the certificate states: 'In our employ as collector,' etc. May 31, 1899: 'As collector and ticket distributor.'July 1, 1900, it states in one place: 'As collector and ticket distributor'; in another place, 'Employed as collector.'

In the case of the American B. & T. Co. v. Burke, 36 Colo. 49, 85 P 692, it was held, in substance, that these bonds are simply policies of insurance, and, generally speaking, the same rules of interpretation and construction apply, and, if its language is uncertain or ambiguous, the interpretation must be in favor of the insured, and, if any clause is susceptible of two constructions, one in favor of the insured and the other against, the former will prevail, if consistent with the general object for which the bond is given, and statements or declarations by the insured are to be taken as representations merely, and not warranties, unless the written contract of indemnity itself expressly or by appropriate references makes them warranties. In this case the application of the employé, the original statement of the employer, and its annual certificate thereafter, with the answers therein above indicated, show conclusively that it was not the intention of the employer and could not have been so understood by the insurer that the employé's duties were to be exclusively limited to collector and ticket distributor. The company was so advised by these statements that the employment of Compton was not limited to one particular line, but was varied; and, under this condition, with this knowledge in its possession and its willingness to continue to accept the premium thereon from year to year for seven years, we do not think it is now in a position to make this contention in an attempt to avoid its liability under the provisions of this policy, unless it could show that these extra duties were the cause of the defalcation or led to the same, which was properly submitted to the jury. Further, we find no statement in the application or employer's certificate in connection therewith that his duties could not or would not be changed, and had the appellant, who prepared these statements, desired to have it understood that the duties of the party so insured should be limited to certain lines, and should not thereafter be changed during the existence of the policy, or that any change would terminate their liability thereunder, they could have had it stated in the policy, and by not doing so we are of the opinion that the proper interpretation to be given is that the statements so made were representations only as to the employé's duties as they existed and not guaranties that they would continue exactly so in the future, except where otherwise stated, as to what would be done in the future and where the same is made the basis of...