Fletcher Sav. & Trust Co. v. American Sur. Co. of New York

• Citation: 175 N.E. 247,92 Ind.App. 651
• Decision Date: 04 March 1931
• Docket Number: No. 13997.,13997.
• Court: Indiana Appellate Court
• Parties: FLETCHER SAVINGS & TRUST CO. v. AMERICAN SURETY CO. OF NEW YORK et al.

92 Ind.App. 651

175 N.E. 247

FLETCHER SAVINGS & TRUST CO.

v.AMERICAN SURETY CO. OF NEW YORK et al.

No. 13997.

Appellate Court of Indiana, in Banc.

March 4, 1931.

Appeal from Marion Circuit Court; Harry O. Chamberlain, Judge.

Action by the Fletcher Savings & Trust Company against the American Surety Company of New York and another. From an adverse judgment, plaintiff appeals.

Reversed, with instructions.

John F. Beals and Donald S. Morris, both of Indianapolis, for appellant.

Henry M. Dowling, of Indianapolis, for appellees.

PER CURIAM.

This is a proceeding by appellant to recover, by virtue of its contract of indemnity, from appellee American Surety Company of New York for loss suffered by appellant on account of the dishonest acts and embezzlement or theft of funds by one of the employees of appellant.

The trial court sustained the demurrer of appellee to appellant's second amended complaint. The appellant refused to plead further, and judgment was entered accordingly.

The only error relied upon for reversal is that the court erred in sustaining appellee's demurrer to the second amended complaint.

The amended complaint alleged, in substance, the following facts: The appellant was a corporation organized under and pursuant to the laws of the state of Indiana, with its principal place of business in the city of Indianapolis, and was engaged at all times herein mentioned in carrying on a business authorized and permitted by the laws of Indiana relative to loan, trust, and safe deposit companies, and that as a part of its business received money, checks, and other orders for the payment of money from its customers, held such money on deposit, paid checks drawn against such deposit accounts, and maintained a savings department; that the appellee American Surety Company of New York is a corporation and was engaged at all times herein mentioned in a general surety-ship business for compensation; that appellant at and during all the time and dates mentioned herein, employed many persons in conducting and transacting its business, and, desiring to protect itself against loss caused and occasioned by any dishonest or criminal act or acts, of its employees, or through larceny, theft, misplacement, or destruction of currency, bullion, promissory notes, checks, or similar securities in which appellant had a pecuniary interest or which it held as collateral, or as bailee, trustee, custodian, agent, or in any other capacity, applied to appellee American Surety Company for a bond or contract indemnifying appellant against such losses or any of them; that on April 9, 1923, appellee American Surety Company did execute and deliver to appellant its written contract or bond which it designated and called “Banker's Blanket Bond,” wherein and whereby appellee American Surety Company agreed and bound itself to indemnify appellant against any losses as hereinbefore set out and enumerated not in excess of $100,000; that a copy of the bond is attached to the complaint made a part thereof, and marked “Exhibit A”; that the bond so executed as aforesaid remained in full force and effect from the date of its execution up to and including February 15, 1926; that on January 28, 1925, appellee American Surety Company executed and delivered to appellant a modification of the provision of the bond, which was accepted by appellant; that the modification is made a part of the complaint and marked “exhibit B”; that appellant paid the named appellee a valuable consideration for the bond, and, when it was delivered by appellee, it was accepted by appellant, and thereafter it paid yearly premiums to appellee, which covered all charges due appellee by virtue of the bond up to and including February 15, 1926; that appellant had in its employ from April 9, 1923, to February 15, 1926, and thereafter, one Lloyd L. Orwig as a teller in appellant's savings department, to receive currency, checks, and other valuable orders for the payment of money, which persons desired to deposit in the savings department of appellant, and as such teller he frequently had in his possession large sums of money so deposited and belonging to appellant and so employed by appellant, and, while in possession of the sums and amounts, or some of them, Lloyd L. Orwig fraudulently and unlawfully stole and embezzled various sums, all of which were a part of the money belonging to appellant, all of which he was in possession of as an employee of appellant, whereby the sums were lost to appellant; that upon February 15, 1926, the total or aggregate amount of money so taken, stolen, or embezzled by Orwig was $3,300; that no part of the sum had been paid to appellant by Orwig, nor by any one else; that, on account of and by the theft and embezzlement of Orwig, the sum was, on and prior to February 15, 1926, but not prior to April 9, 1923, wholly lost to appellant, and thereby the appellant has suffered a loss of $3,300, with interest thereon from the dates of taking to the date of trial of this action; that on December 26, 1926, appellant was informed that during the month of December, 1926, Orwig as such employee had misappropriated or embezzled a sum of appellant's money, to wit, about $1,200, and that no part of the sum was embezzled prior to the month of December, 1926, and that the sum was the full amount of such embezzlement by Orwig; that on December 30, 1926, at about 3 p. m., appellant was informed and discovered that Orwig had embezzled or misappropriated an additional sum of about $3,300 of appellant's money prior to the month of December, 1926, and that the sum of some part thereof had probably been so embezzled by Orwig upon and prior to February 15, 1926; that on December 31, 1926, appellant notified appellee American Surety Company of New York in writing of a probable loss under the banker's blanket bond heretofore mentioned and described; that on January 20, 1927, appellant filed with the named appellee its written proof of the loss; that on May 9, 1927, appellant filed with appellee a more detailed proof of the loss occurring upon and prior to February 15, 1926, all in the form and manner as provided by the terms of the banker's blanket bond, and demanded that appellee American Surety Company of New York reimburse appellant for the loss, as provided by the terms and conditions of the banker's blanket bond; that appellee American Surety Company of New York neglected, failed, and refused to reimburse appellant for the loss or any part thereof and still so fails and refuses; that, by false entries and statements, forged checks, and other tricks and devices, Orwig hid and concealed his embezzlement from appellant, and appellant has been unable to discover the particular dates when each of the appropriations or embezzlements occurred for the separate amount of each of same, but that on February 15, 1926, and at the time of the expiration of the bond, the aggregate amount of the embezzlement of appellant's money by Orwig was $3,300; that the various items of the aggregate amount were embezzled by Orwig on and prior to February 15, 1926, and during the time the bond was in force, and that no part of the sum was embezzled or taken by Orwig at any other or different time; that appellant, through its employee Orwig, suffered loss in the sum and amount of $3,300 on and prior to February 15, 1926, but not prior to April 9, 1923; that all of the loss occurred and sustained by appellantduring the time appellee's bond was in full force and effect; that appellant has not been reimbursed for the loss or any part thereof; that appellant upon its part has performed and complied with all of the terms and conditions of the bond and the modification thereof attached to and made a part thereof, and appellee refuses to abide by and comply with the terms of the bond, and fails and refuses to indemnify and reimburse appellant for its loss suffered and sustained to its employee Orwig as promised and agreed in the bond, to the damage to appellant in the sum of $5,000.

The bond, omitting caption and signatures, is as follows:

“In consideration of an annual premium the American Surety Company of New York, hereinafter referred to as the Underwriter, hereby undertakes and agrees to indemnify Fletcher Savings and Trust Company, and or Fletcher Joint Stock Land Bank of Indianapolis, and or Sixteenth Street State Bank, and or East Washington Street State Bank, and or Roosevelt Avenue State Bank, as their respective interests may appear, hereinafter referred to as the Insured, and hold it harmless, to an amount not exceeding One Hundred Thousand ($150,000) Dollars from and against any losses sustained by the Insured subsequent to noon of the date hereof and while this bond is in force and discovered by the Insured subsequent to noon of the date hereof and prior to the expiration of twelve (12) months after the termination of this bond as provided in Condition 11 hereof, that is to say:

“(A) Any loss through any dishonest or criminal act of any of the Insured's officers, clerks or other employes employed in, at or by any of the Insured's offices covered hereunder during the currency of this bond (all of such officers, clerks and other employes being hereafter referred as Employees), wherever committed and whether committed directly or by collusion with others.

“(B) Any loss of money, currency, bullion, bonds, debentures, script, certificates, warrants, transfers, coupons, bills of exchange, promissory notes, checks or other similar securities, in which the Insured has a pecuniary interest or which are held by the Insured as collateral or as bailee, trustee, custodian, agent, or in any other capacity and whether or not the insured is liable therefor (all of such money, currency, bullion, bond, debentures, script, certificates, warrants, transfers, coupons, bills of exchange, promissory notes, checks or other similar security being hereafter referred to as Property) through robbery,...