Fuller v. Home Indem. Co.

• Decision Date: 06 March 1945
• Citation: 60 N.E.2d 1,318 Mass. 37
• Parties: FULLER et al. v. HOME INDEMNITY CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

318 Mass. 37

60 N.E.2d 1

FULLER et al.

v.HOME INDEMNITY CO.

Supreme Judicial Court of Massachusetts, Suffolk.

March 6, 1945.

Exceptions from Superior Court, Suffolk County; Swift, Judge.

Action of contract by Samuel L. Fuller and others against the Home Indemnity Company to recover for an alleged loss under a broker's blanket bond issued by defendant. General findings were made for plaintiffs, and defendant brings exceptions.

Exceptions overruled.

Before FIELD, C. J., and LUMMUS, QUA, WILKINS, and SPALDING, JJ.

A. Sigel, of Boston, for plaintiffs.

J. W. Blakeney, Jr., and G. Sullivan, both of Boston, for defendant.

SPALDING, Justice.

This is an action of contract to recover for an alleged loss under a so called ‘brokers' blanket bond’ issued by the defendant. The case was tried before a judge of the Superior Court who made a general finding for the plaintiffs. The defendant except to the denial of certain requests for rulings which are set forth in the footnote ¹ and to various rulings on evidence. There is no merit in the plaintiffs' contention that the exceptions to the denial of the requests for rulings were not properly saved. The bill of exceptions expressly states that the defendant ‘duly saved exceptions' to the denial of them.

The evidence in its aspect most favorable to the plaintiffs was as follows: The plaintiffs were stockbrokers doing business in Boston. On April 3, 1941, Thornton & Curtis, who also carried on a stockbrokerage business in Boston, ordered from the plaintiffs seventy-four shares of common stock of Eastern Utilities Associates, the price of which was to be $1,739. On April 8, 1941, the stock was delivered to Thornton & Curtis by a messenger of the plaintiffs. At the time of the delivery of the stock, Thornton & Curtis gave to the messenger a receipt for it and their check in the sum of $1,739, drawn on the Pilgrim Trust Company of Boston, which the plaintiffs deposited the same day in their bank. On the following day (April 9) the plaintiffs were notified by their bank that the check had been returned to it by the Pilgrim Trust Company with the notation ‘no funds.’ On that same day the plaintiffs notified Thornton & Curtis of this fact and demanded payment or a return of the securities, both of which were refused. At no time thereafter did the plaintiffs ever receive either the securities or payment for them.

At the close of business on April 8, 1941, and at the opening of business on April 9, Thornton & Curtis had standing to their credit with the Pilgrim Trust Company the sum of $23,489.08. On April 8 Thornton & Curtis owed the bank slightly in excess of $79,000. The bill of exceptions is not as clear on this point as it might be, but we infer that the insufficiency of funds to pay the check on April 9 arose from an application by the Pilgrim Trust Company of a portion of the deposit in reduction of the indebtedness of Thornton & Curtis to it. This resulted in overdrafts aggregating $5,308.15 on that day.

At the time the plaintiffs received the check from Thornton & Curtis they were insured under a ‘brokers' blanket bond’ issued by the defendant. The bond covered losses of various sorts, but only that provided in clause C is pertinent to the issues here. Under this clause the plaintiffs were insured with respect to ‘Any loss of Property through larceny (whether common-law or statutory) * * * while such Property * * * [is] in transit anywhere in the custody of any of the * * * Employees or any other person acting as messenger for the Insured * * * such transit to begin immediately upon receipt of such Property * * * by the * * * Employee or Employees, or other person * * * and to and immediately upon delivery thereof at destination.’ The bond further provided that ‘The Insured shall give to the Underwriter written notice of any loss hereunder as soon as possible after Insured shall learn of such loss, and within ninety days after learning of such loss shall file with the Underwriter an itemized proof of claim duly sworn to.’

The judge did not err in denying the defendant's requests for rulings. There was evidence that made it permissible for him to find that there had been a loss covered by the bond, namely, statutory larceny. General Laws (Ter.Ed.) c. 266, § 37, as appearing in St.1937, c. 99, provides that ‘Whoever, with intent to defraud, makes, draws, utters or delivers any check, draft or order for the payment of money upon any bank or other depositary, with knowledge that the maker or drawer has not sufficient funds or credit at such bank or other depositary for the payment of such instrument, although no express representation is made in reference thereto, shall be guilty of attempted larceny, and if money or property is obtained thereby shall be guilty of larceny. As against the maker or drawer thereof, the making, drawing, uttering or delivery of such a check, draft or order, payment of which is refused by the drawee, shall be prima facie evidence of intent to defraud and of knowledge of insufficient funds in, or credit with, such bank or other depositary, unless the maker or drawer shall have paid the holder thereof the amount due thereon, together with all costs and protest fees, within two days after receiving notice that such check, draft or order has not been paid by the drawee.’ There was evidence that property was obtained from the plaintiffs in exchange for a check drawn and delivered by Thornton & Curtis on a bank at which they did not have sufficient funds for its payment. But this without more would not constitute larceny under the statute; the person drawing the check must do so (1) with intent to defraud and (2) with knowledge that he has insufficient funds in the bank or other depositary for the payment of it. But elsewhere in the statute it is provided that prima facie evidence of the intent to defraud and knowledge of insufficient funds is supplied ‘unless the * * * drawer shall have paid the holder * * * [of the check] the amount due thereon * * * within two days after receiving notice that such check * * * has not been paid by the drawee.’ The evidence in the case at bar was sufficient with the aid of this provision of the statute to constitute a prima facie case of larceny. The ‘prima facie evidence’ created by the statute did not disappear upon the introduction of evidence to the contrary; it remained evidence throughout the trial and warranted a finding of larceny. Cook v. Farm Service Stores, Inc., 301 Mass. 564, 566, 17 N.E.2d 890.

A more difficult question is whether there was a larceny ‘in transit’ within the meaning of clause C quoted above. If the larceny took place at the moment of delivery, we think a finding that it occurred in transit was warranted. This conclusion was reached by the Court of Appeals of New York in Underwood v. Globe Indemnity Co., 245 N.Y. 111, 156 N.E. 632, 54 A.L.R. 485, in construing a bond with a provision essentially the same as that under consideration. In that case Del Re, a salesman of the plaintiff, delivered certain securities to one Dunn, who...