Franklin State Bank v. Maryland Cas. Co.

• Decision Date: 02 April 1919
• Docket Number: 3327,3328.
• Parties: FRANKLIN STATE BANK v. MARYLAND CASUALTY CO. SAME v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. Court of Appeals — Fifth Circuit

256 F. 356

FRANKLIN STATE BANK v. MARYLAND CASUALTY CO.

SAME v. UNITED STATES FIDELITY & GUARANTY CO.

Nos. 3327, 3328.

United States Court of Appeals, Fifth Circuit.

April 2, 1919

Henry Bernstein and Allan Sholars, both of Monroe, La., for plaintiff in error.

P. M Milner, of New Orleans, La., and J. S. Atkinson, of Shreveport, La., for defendants in error.

Before WALKER and BATTS, Circuit Judges, and GRUBB, District Judge.

GRUBB District Judge.

These cases arise, so far as the alleged loss is concerned, upon identical facts. They differ only as to the terms of the policies, which are the bases of the suits. They are both actions on policies, providing banks with indemnity protection against losses of money or securities, through burglary and robbery. The facts being identical, the cases may be best treated in one opinion.

The plaintiff in error was plaintiff in each case in the court below, and upon the trial in the District Court a verdict was directed against it in each case, though upon different grounds. From the judgments entered, the writs of error were taken.

The plaintiff was a state bank, engaged in business at Winnsboro La. Evidence was introduced by plaintiff tending to show that on the night of February 12, 1917, about 9 o'clock, while the vice president of the bank, Heatherwick, and a citizen Judge Holstein, were in the bank for the purpose, as claimed of agreeing on and settling the amount of an overdraft in Judge Holstein's account, a man with a flash light in one hand and a pistol in the other appeared and ordered Heatherwick to give him the bank's money, and then forced them both into the bank vault, which had been opened to get the ledger showing Holstein's account with the bank. The man himself, standing outside at the door of the vault, threw Heatherwick a flour sack, and, continuing to point the gun at him, forced him to open the inner safe, which was not locked and which was supposed to contain the money, and to put the money in the sack. Heatherwick testified that he filled the sack with currency and asked the robber if he wanted the silver. The robber shook his head in reply, and Heatherwick then threw the sack to the robber, who grabbed it and quickly slammed the outside door of the vault, and, by turning the combination, locked Heatherwick and Holstein on the inside of the vault, and disappeared with the sack, containing about $44,000 in currency. Heatherwick and Holstein got out of the vault by the use of a screwdriver and iron bar, left in it, as claimed, to meet such an emergency.

The inner safe had a combination and a time lock, but both had been habitually disused, at least during the years 1916 and 1917, and for a period up to within a few days of when the safe was installed. Heatherwick testified that the combination of the safe had been forgotten by the officers of the bank. Presumably the ledger, which the witnesses Heatherwick and Holstein say was needed in making their settlement, and the need for which, according to their evidence, accounted for the opening of the vault, was in the vault, but not in the safe. It was not claimed that the inner safe was unlocked by Heatherwick. The vault was built in a corner of the banking inclosure, its walls forming a part of the walls of the building, within the railed-off portion used for the transaction of the bank's business by its employes.

There are many other facts in evidence which reflect on whether or not there was an actual robbery, or whether the supposed robbery was merely a ruse to cover a shortage, existing in the accounts of Heatherwick and Womble, its vice president and cashier, at the time of the occurrence; but, as they are not material to the disposition of the appeals, they are not recited.

The District Judge directed a verdict in the case in which the Maryland Casualty Company was defendant, upon the ground that the policy did not cover the loss; the undisputed evidence showing that the money was taken from an open safe. In the case in which the United States Fidelity & Guaranty Company was defendant, the verdict was directed because the policy issued by it was held to include losses from daylight robberies only. If the verdicts were properly directed, for a reason different from that assigned by the District Judge, the result would be an affirmance of the judgments entered on them.

In the Maryland Casualty Company's case, its policies agreed to indemnify the Franklin State Bank:

'A. For all loss of money and securities in consequence of the felonious abstraction of the same during the day or night from the safe or safes (or from the vault, if contents of same are specifically insured) after said safe or safes or vault have been duly closed and locked, described in said schedule, while located in said banking room, also described in said schedule, hereinafter called the premises, by any person or persons, after forcible entry into such safe or safes or vault, or by any accomplice of such person or persons. In the event that the said safe or safes or vault are not locked by time lock, the company shall not be liable for loss of said money and securities feloniously abstracted therefrom, unless said forcible entry is made therein by the use of tools, explosives, chemicals, or electricity directly thereupon.

'B. For all loss by damage to said money and securities, and to said safe or safes or vault, described in said schedule or to the premises, or to the office furniture and fixtures therein, caused by such person or persons while making or attempting to make such entry into said premises, vault, safe, or safes.

'C. For all loss by robbery (commonly known as hold-up) of money and securities: (1) From within the banking inclosure reserved for the use of the officers or office employes of the assured while at least one officer or office employe of the assured is present and regularly at work in the premises; (2) from an officer or an office employe of the assured while transferring the same during the assured's regular office hours, either way between the said banking inclosures and any safe or vault described in the schedule as located in the premises outside of the said inclosures; (3) from within that part of the safe or safes or vault insured hereunder, caused by robbers during the day or night, by compelling under the threat of personal violence an officer or office employe of the assured to unlock and open the safe or safes or vault.' The construction of the policies, as to what risks were insured, is to be ascertained from these clauses. The contention of the plaintiff is that subdivision (1) of clause C, which indemnifies the bank for all loss by robbery (commonly known as hold-up) of money and securities within the banking inclosure reserved for the use of the officers or office employes of the bank, while at least one officer or office employe of the bank was present and regularly at work in the premises, covers a robbery of the safe, while it was unlocked, if it was within the inclosure. The plaintiff's contention was that the vault and safe from which the money was taken is a part of this reserved inclosure; that it was taken while Heatherwick, an officer of the bank, was regularly at work within the inclosure, and hence that the robbery fulfills every requisition of this subdivision. The defendant's contention is that the safe was no part of the reserved inclosure, though the door of the vault opened into it, and hence that robbery from the safe in the vault did not come within the terms of subdivision 1 of clause C, which is the only one that could cover it.

Construing the policy as an entirety, and looking at clauses A, B, and C, as including the subject-matter insured, we have reached the conclusion that it was not the intention of the policies to insure loss from an unlocked safe under any contingencies, and regardless of the particular location of the safe with reference to the banking inclosure.

Clause A covers losses caused by abstraction from a locked safe by force. Clause B covers losses to the safe and to the furniture of the banking room caused by forcible entry or...