Gamble-Robinson Company v. Massachusetts Bonding & Insurance Company
| Decision Date | 16 December 1910 |
| Docket Number | 16,861 - (111) |
| Citation | 129 N.W. 131,113 Minn. 38 |
| Parties | GAMBLE-ROBINSON COMPANY v. MASSACHUSETTS BONDING & INSURANCE COMPANY |
| Court | Minnesota Supreme Court |
Action in the municipal court of Minneapolis to recover upon defendant's indemnity bond the sum of $499, alleged to have been embezzled by plaintiff's traveling salesman. The complaint alleged that plaintiff had performed all the conditions of the bond on its part, and attached a copy of the bond to its complaint.
The answer alleged that if any loss were sustained by plaintiff by reason of the dishonesty or fraud of Frisbee which amounted to either embezzlement or larceny, it occurred prior to August 3, 1908, of which plaintiff had knowledge on or about that day, and that plaintiff knew of said acts of dishonesty on September 7, 10, 27, and at all times between August 3 and September 27; and that on September 7 plaintiff made a settlement with Frisbee for any loss covered by the bond, without defendant's consent, and that at that time plaintiff condoned an act for which defendant might have been liable; that this was also done on September 17 and 27; that plaintiff did not, upon discovery of the fraud, immediately give defendant notice there-of; that plaintiff did not give in writing to defendant full particulars of any claim made under the bond within sixty days after discovery of the fraud.
The case was tried before Waite, J., who directed a verdict in favor of defendant. From the judgment entered pursuant to the verdict, plaintiff appealed. Affirmed.
Fidelity insurance -- unreasonable delay in giving notice of dishonesty.
Appellant was informed by the written cash reports of its employee, a traveling salesman, that he was indebted to the company in the sum of $553.21, and received from him $25 on account with the statement that there were credits and discounts due him sufficient to balance the account. During the succeeding three weeks appellant caused the books to be checked up and the accounts of the customers to be examined, to determine the correctness of his report and the existence of the discounts and credits claimed; but for the period of four weeks thereafter nothing special was done in that direction. The employee continued in appellant's employment in another locality, and made three payments of $25 each out of his own salary to apply on his account. It was then discovered that he had collected an account which had never been reported, and he was discharged, and the bonding company notified of the shortage.
In an action against the respondent bonding company to recover the amount of the shortage, held, that the delay to notify respondent of the facts was unreasonable, and not in accordance with the provisions of the bond, which provided that the insurer should indemnify the employer for pecuniary loss sustained by reason of the fraud or dishonesty of the employee, and required that upon discovery of any act of fraud or dishonesty the employer should immediately give notice thereof to the bonding company.
Walter Holsinger, for appellant.
Brown Albert & Guesmer, for respondent.
The Gamble-Robinson Company was a corporation engaged in the fruit commission business at Minneapolis. Appellant, Gamble-Robinson Company, was an associate corporation engaged in the same business at Rochester, Minnesota; the officers of both corporations being identical, all residing at Minneapolis. This action was brought to recover $499 from the respondent, claimed to be the amount of shortage in an account of an employee, W.J. Frisbee. The surety bond provided as follows:
At the close of the trial the court directed a verdict for respondent, upon the ground that appellant had failed to notify respondent, within a reasonable time after its knowledge, of the acts of dishonesty which Frisbee had been guilty of.
The rules of law governing such cases have been stated as follows: " The general rule is that the question of reasonable time is one of fact, and must be submitted to the jury with proper instructions; but when the facts are undisputed, and only one reasonable conclusion can be drawn therefrom, it is the duty of the trial judge to instruct the jury accordingly." George A. Hormel & Co. v American Bonding Co., 112 Minn. 288, 128 N.W. 12. If a bond is fairly and reasonably susceptible of two constructions, one favorable to the insured and the other to the insurer, if consistent with the objects for which the bond was given, that construction favorable to the insured must be adopted. Though the insured may have had suspicions of irregularities, or fraud, he is not bound to assume that an employee is guilty of acts of dishonesty until he has acquired the knowledge of such specific fraudulent or dishonest acts as might involve the insurer in liability for misconduct. American Surety Co. v. Pauly, 170 U.S. 133, 18 S.Ct. 552, 42 L.Ed. 977. The object of giving such a notice is to enable the insurer to take steps for its protection, and what is a reasonable time and what constitutes knowledge...
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