Hansen v. American Bonding Co. of Baltimore

Decision Date03 September 1935
Docket Number25427.
PartiesHANSEN, Supervisor of Banking, v. AMERICAN BONDING CO. OF BALTIMORE.
CourtWashington Supreme Court

Department 2.

Appeal from Superior Court, Spokane County; R. M. Webster, Judge.

Action by Howard H. Hansen, Supervisor of Banking for the State of Washington, liquidating the American Bank of Spokane Washington, against the American Bonding Company of Baltimore. Judgment for plaintiff, and defendant appeals.

Affirmed.

Williams & Williams, of Spokane, for appellant.

Dillard & Powell, Robertson & Smith, and Hart Snyder, all of Spokane for respondent.

HOLCOMB Justice.

This action was brought by the present state supervisor of banking to recover on two bonds issued by appellant for losses alleged to have been guaranteed by the bonds of the now insolvent American Bank of Spokane.

The first cause of action is upon what is named Bankers' Blanket Bond, which is not a statutory bond, and is in the sum of $50,000; while the second cause of action is upon a statutory bond under which certain officers and employees of the bank are covered in the sum of $650 each. Judgment was entered on each cause of action in favor of respondent in the full sum of $50,000 on the blanket bond and $1,300 on the statutory bond on account of alleged misconduct of Clyde Johnson, president, and E. B. McBride, vice president. On these amounts offsets were allowed by reason of certain dividends or payments properly applicable thereto.

The discussion in the brief of appellant is largely directed to the blanket bond. The theory on which liability was imposed under that bond was that Clyde Johnson, the president of the American Bank of Spokane, had been guilty of dishonest acts within the terms of the bond through which the bank suffered a direct loss in a sum greatly exceeding the penalty of the bond.

The blanket bond, which bears date February 15, 1930, contains the following material portions upon which appellant relies:

'Section 1. American Bonding Company of Baltimore, * * * agrees to indemnify The American Bank of Spokane, * * * against the direct loss, sustained while this bond is in force and discovered as hereinafter provided, of any money or securities, * * * in which the insured has a pecuniary interest. * * *
'(A) Through any dishonest act, whereever committed, of any of the employees, as defined in section 6 hereof, whether acting alone or in collusion with others. * * *

'Section 6. The word 'Employees' as used herein shall be deemed to mean the officers, clerks, and other persons in the immediate employ of the insured during the currency of this bond, * * *

'Section 7. This bond does not cover * * *

'(d) Any loss resulting directly or indirectly from the act or acts of any director of the insured, other than one employed as a salaried official, or of any partner of the insured. * * *

'Section 15. This bond shall terminate as to any employee: * * * (b) immediately upon discovery by the insured of a default hereunder on the part of such employee.

'Section 16. This bond is subject to the following express conditions: At the earliest practicable moment, and at all events not later than ten days, after the insured shall discover any loss hereunder, the insured shall give the underwriter notice thereof by registered letter or telegram, addressed to it at its home office, and shall also, within three months after such discovery, furnish to the underwriter at its home office affirmative proof of loss with full particulars. Legal proceedings for recovery of loss hereunder shall not be brought prior to the expiration of three months from the furnishing of such proof, nor after the expiration of twelve months from the discovery of such loss. * * *

'Section 17. This bond is not intended as statutory bond, but as excess coverage over and above statutory bonds already furnished in accordance with the requirements of the banking department of the State of Washington.'

On April 15, 1932, the bank went into voluntary liquidation and was turned over to the state bank supervisor as liquidator.

The case was tried to the court without a jury, who, after the conclusion of the hearing, took the matter under advisement and later filed a comprehensive and very accurate memorandum opinion stating the issues of fact and law which will be largely drawn upon, with due credit to the trial judge. The trial court later made 38 findings of fact minutely covering all the facts at issue and rejected 31 special findings tendered by appellant. These findings are too lengthy to set forth in the proper limits of an opinion herein.

The arguments by appellant are very discursive and elaborate. Fifty-six errors are claimed as reasons for the reversal of the judgment herein. The principal argument upon behalf of appellant is based upon what it asserts is the fact that neither the blanket bond nor the statutory bond purports to insure the bank against its own acts, losses due to business methods adopted, losses on account of bad loans or other bad investments, but, so far as the blanket bond is concerned, it involves only direct losses due to dishonest acts of certain officers.

One premise relied upon by appellant is that the law presumes that every man acts honestly until the contrary is shown, citing cases from this and other courts. This is a truism which will be accepted.

The losses to the American Bank, for which respondent seeks recovery, arose out of certain loans made by Clyde Johnson, as president, and others in collusion with him. When the supervisor took over the bank, on April 15, 1932, its books did not disclose any loan made to Clyde Johnson by name. Auditing, examination, and inquiry disclosed, however, unpaid and uncollectable loans, in a sum exceeding $400,000, had been made and carried under titles or names which did not disclose the identity of any interested parties. The evidence is competent and strong and convincing to support the findings of the trial judge on nearly all of the material issues; all, in fact, which we consider necessary to support his findings and judgment.

Among other very material findings the trial court found that shortly after taking charge of the bank, on or about June 1 1932, at the earliest possible moment and within ten days after discovery thereof, the then state supervisor of banking, in charge of the liquidation of this bank, notified appellant of certain losses of moneys or securities, or both, sustained by the American Bank during the currency of the bond and while it was in force. Among other findings made by the court, and well sustained by the evidence, is that the net direct loss sustained by the American Bank while the bonds remained in force was, first, one involving a concern organized by Johnson and Davies, a director of the bank, to take over certain assets called the Hayes & Hayes assets and usually designated 'Aberdeen Assets' and which had no other assets. The balance of the loss to the bank, after realization of certain credited amounts, aggregated $193,181.17. A second net direct loss to the American Bank, through the management and collusion of Johnson and...

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4 cases
  • Mortgage Corp. of N. J. v. Aetna Cas. & Sur. Co.
    • United States
    • New Jersey Supreme Court
    • June 20, 1955
    ...Irvin Jacobs & Co. v. Fidelity & Deposit Co. of Md., supra; Exeter Banking Co. v. Taylor, supra; Hansen v. American Bonding Co. of Baltimore, 183 Wash. 390, 48 P.2d 653 (Sup.Ct.1935); Universal Credit Co. v. United States Guarantee Co., 321 Pa. 209, 183 A. 806 (Sup.Ct.1936). However, these ......
  • Turner v. OFFICERS, DIR. & EMP. OF MID VALLEY BANK
    • United States
    • U.S. District Court — District of Washington
    • August 24, 1988
    ...would result in an even lower recovery on the "assets", with comparably higher losses to FDIC. 2 See, e.g., Hanson v. Am. Bonding Co., 183 Wash. 390, 48 P.2d 653 (1935); Fidelity & Deposit Co. of Maryland v. Opportunity State Bank, 174 Wash. 245, 24 P.2d 399 (1933); F.D.I.C. v. Am. Bank Tru......
  • GMB Enterprises, Inc. v. B-3 Enterprises, Inc.
    • United States
    • Washington Court of Appeals
    • January 29, 1985
    ...may not be permitted to be accomplished circuitously. State v. Johnson, supra at 406-07, 40 P.2d 159. Accord, Hansen v. American Bonding Co., 183 Wash. 390, 48 P.2d 653 (1935); State v. Davies, 176 Wash. 100, 28 P.2d 322 (1934) (appellant who owned 99 percent of corporate shares could not u......
  • In re Petition of Board of Directors of Columbia Irr. Dist., 25729.
    • United States
    • Washington Supreme Court
    • September 3, 1935

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