Florida Cent. & P.R. Co. v. American Surety Co. of New York

• Decision Date: 24 January 1900
• Docket Number: 3.
• Citation: Florida Cent. & P.R. Co. v. American Surety Co. of New York, 99 F. 674 (2nd Cir. 1900)
• Parties: FLORIDA CENT. & P. R. CO. v. AMERICAN SURETY CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

99 F. 674

FLORIDA CENT. & P. R. CO. v. AMERICAN SURETY CO. OF NEW YORK.

No. 3.

United States Court of Appeals, Second Circuit.

January 24, 1900

George Zabriskie and J. Archibald Murray, for plaintiff in error.

Henry L. Stimson and Henry C. Willcox, for defendant in error.

Before WALLACE and SHIPMAN, Circuit Judges.

SHIPMAN Circuit Judge.

The American Surety Company of New York issued on March 14, 1891 for a valuable consideration, to the Florida Central &amp Peninsular Railroad Company, a bond of indemnity against loss through the defalcation of its employes, who were to be named, among whom was W. Naylor Thompson, its treasurer. The railroad company was insured against loss by his dishonesty or culpable negligence in the sum of $25,000. In an action at law in the circuit court for the Southern district of New York upon this bond by the railroad company against the surety company to recover the amount of the defalcations which will hereafter be specified, a verdict for the defendant was directed by the court, and to review the judgment which was entered upon the verdict this writ of error was brought.

Before March 14, 1891, the surety company had annually, while it was insuring the plaintiff, issued to it a new bond of indemnity but after the date of the bond in suit no new and separate bond was issued. The bond provided as follows:

'Whereas, the employer has in its service certain employes, whose names, occupations, and locations appear in the schedule register marked 'Florida, Central and Peninsular Railroad Company Bond Record with the American Surety Company of New York,' and which is hereby made a part of this bond; and whereas, the employer requires security for the performance of the duties devolving on said employes in the respective capacities to which they now are or may hereafter be assigned by said employer; and whereas, the employer may hereafter require like security for other employes who now are or may hereafter be engaged in its service, and whose names may, in the manner hereinafter indicated, be inserted in said schedule register:

'Now, therefore, in consideration of the payment of forth cents, annual premium for each one hundred dollars of security required of the company by the employer, it is hereby agreed that, subject to the conditions herein contained, the company does hereby insure the employer to the extent of the insurance on each employe against any and all pecuniary loss sustained by the employer of money, securities, or other personal property in the possession of said employes, or for the possession of which any of them is responsible, by dishonesty or culpable negligence on the part of any of said employes in the positions hereinbefore referred to, or the duties in the employer's service which he may hereafter be called upon to perform during the continuance of his insurance under this bond, and which loss shall be discovered during said continuance and within six months after the death, dismissal, or retirement of the employe causing such loss; but in no event shall the company be liable for a greater sum than that for which the insurance on the defaulting employe is granted, and which insurance, and the period thereof, are stated

in the schedule register hereinbefore mentioned, opposite each employes name; and the company shall pay to the employer within sixty days from the receipt of a satisfactory proof of a loss under this bond the amount of said loss, but not exceeding the extent of the insurance on the employe or employes whose dishonesty or culpable negligence occasioned such loss: provided, that the company shall not be liable under this bond for the amount of any balance that may be found due the employer from the employe, and which may have accrued prior to the date of said insurance, and which may be discovered within the period of said insurance, it being the true intent and meaning of this bond that the company shall be responsible as aforesaid, for money, securities, or other personal property diverted from the employer within the period specified in said insurance.

'And it is agreed further that the company, upon the execution of a stipulated amount of risk or insurance under the terms of this bond in behalf of any employe, shall not thereafter be responsible to the employer under any previous insurance of said employe, it being mutually understood that it is the intention of this provision that but one (the last) insurance of the employe shall be in force at one time, unless otherwise provided. (This paragraph is known in the case as 'Lines 62 to 66.')

'The right to make any claim under this bond shall cease at the expiration of six months from the date at which the defaulting employe shall cease to be in the service of the employer, or the date on which the company may elect to terminate the insurance on such employe as hereinafter provided.'

The surety company furnished to the railroad company a book called the 'Schedule Register,' and had in its office a copy or abstract of this book, in which were entered the names, occupations, and locations of the employes for whose conduct security was required, and the amount of the indemnity which was agreed to be furnished. At the expiration of each year from and after March 14, 1891, until March 1895, the railroad company made out a new and similar...