Anderson
C.J., and McClellan, J., dissenting in part.
Appeal
from City Court of Birmingham; John C. Pugh, Judge.
Action
by Thomas B. Donaldson, receiver, etc., against the Illinois
Surety Company and others. From judgment for plaintiff
defendant Surety Company appeals. Reversed and remanded.
This
action is for the breach of a surety company's bond
given by appellant to the Employers' Indemnity Company.
The plaintiff is Donaldson, special deputy insurance
commissioner of the state of Pennsylvania, who, in virtue of
his office, is in charge of the liquidation of the
Employers' Indemnity Company, which formerly did business
in Alabama. A.T. De Bow was the person whose fidelity the
bond assured, to the amount of $5,000. From a judgment in
favor of the plaintiff, based of course upon an adjudicated
breach of the bond, the defendant appeals.
The
presently material provisions of the bond are these:
"Whereas,
A.T. De Bow, hereinafter called the 'employé'
occupies the position of general agent in the service of
the Employers' Indemnity Company of Philadelphia,
hereinafter called the 'employer': ***
"Now
therefore, in consideration of the sum of twenty-five and
no/100 dollars, paid as a premium for the period from
November 1st, 1912, to November 1st, 1913, at 12
o'clock noon, and upon the faith of the said warranties
of said employer as aforesaid, it is hereby agreed, that,
subject to the obligations imposed by this bond on the
employer, the performance of which shall be conditions
precedent to the right on the part of the employer to
recover under this bond, the company shall, at the
expiration of three months next after proof of pecuniary
loss, as hereinafter mentioned, has been given to the
company, reimburse the employer, to the extent of the sum
of five thousand and no/100 dollars, and no further for
such pecuniary loss as the employer shall have sustained by
any act of larceny or embezzlement upon the part of the
employé in the performance of the duties of the office or
position in the service of the employer hereinbefore
referred to, as such duties have been, or may hereafter be
stated in writing by the employer to the company, and
occurring during the continuance of this bond, and
discovered at any time within six months after the
expiration or cancellation of this bond, or in case of the
death, resignation or removal of the employé prior to the
expiration or cancellation of the bond, within six months
after such death, resignation or removal. ***
"That
the employer, on his becoming aware of any act which may be
made the basis of any claim hereunder, shall, within 10
days, give the company notice thereof by telegraph at the
company's expense, and in writing by a registered
letter, addressed to the secretary of the company, Chicago,
Illinois, and shall, within ninety days after his so
becoming aware of such act as aforesaid, file with the
company his itemized claim hereunder at his own cost and
expense with full particulars thereof duly sworn to; and,
if required, the employer shall also produce in support
thereof for investigation by the company or its
representative at the office of the employer all
appropriate books, vouchers and evidence as may be required
by the company; and this bond shall become void both as to
any existing or future liabilities thereunder unless the
aforesaid notice shall have been given as provided for, and
unless claim is filed within the time and manner above
specified, and until such books, vouchers and evidence (if
required) shall have been furnished to the company for
investigation as above stated, provided that no claim shall
be payable hereunder that shall be filed with the company
after the period of six months from the expiration or
cancellation of this bond, or after a period of six months
from the death, resignation or removal of the employé
occurring prior to the expiration or cancellation of this
bond. Provided further that there shall be no liability on
this bond for any act of larceny or embezzlement committed
by the employé after the employer's first becoming
aware of any act which may be made the basis of a claim
hereunder. ***
"That
the employer shall, if so required by the company, duly
apply for a warrant for the arrest of the employé for the
act of larceny or embezzlement, which is the basis of any
claim hereunder, and give all the aid and information in
his power (at the cost and expense of the company), to
bring the said employé to justice, or to aid the company to
sue for and obtain reimbursement from the employé of his
estate or third person, of moneys which the company shall
have paid or become liable to pay, by virtue of this bond.
"That
if without previous notice to and consent of the company
thereto, in writing, the employer shall continue the
employé in his employment, after having become aware of any
act which may be made the basis of any claim hereunder, or
make any settlement with the employé for any loss
hereunder, or do any act whereby the liability of the
employé to him is changed in any material respect, this
bond shall be null and void, both as to any existing or
future liabilities hereunder, and any willful misstatement
or suppression of facts in any claim made hereunder shall
render this bond void from the beginning."
The
written contract under which De Bow engaged to serve the
Employers' Indemnity Company contained these, among
other, provisions:
"Witnesseth,
that the said party of the first part hereby appoints the
said party of the second part its agent, to solicit and
procure applications for liability insurance, in the
following territory, to wit: State of Alabama; and the said
party of the second part accepts the said appointment,
which is made and accepted upon the following terms and
conditions to be strictly kept and observed by the parties
hereto:
"(1)
The party of the first part shall not appoint any other
agents in said territory to solicit and procure
applications for liability insurance.
"The
party of the second part shall represent the party of the
first part solely and to the exclusion of all other
persons, firms or corporations for the purpose of this
agreement.
"(2)
The
said party of the first part shall not be responsible for any
expenses incurred by said party of the second part, in
maintaining an office, in procuring applications for
insurance, collecting premiums thereon, or for any other
purposes whatsoever.
"(3)
The said party of the second part shall receive as his sole
compensation for services rendered hereunder, commissions at
the rate of twenty per cent. (20%) of the net cash premiums
actually received by said party of the
first part for all contracts of liability insurance and
renewals thereof, written by it upon application procured by
said party of the second part hereunder. ***
"It
is understood, however, that any checks to the order of the
said party of the first part received by said party of the
second part in payment of premiums shall be at once forwarded
to the home office of said party of the first part in the
city of Philadelphia; and that the said party of the second
part shall have no authority to sign or indorse checks or
drafts in the name of the said party of the first part.
"He
shall account for, and pay over to the said party of the
first part not later than the fifteenth day of each month
hereafter, all premiums charged or payments, less his
commissions, for contracts of insurance (both new and
renewal) collected by him prior to and including the last day
of the preceding month. ***
"(6)
The said party of the first part reserves the right to
collect directly from the assured, any premiums which may
remain due and unpaid on the fifteenth day of any month
hereafter, upon the contracts written or renewals made
forty-five days prior thereto, and the expense of collecting
such overdue premiums shall be deducted from the commissions
thereon to which said party of the second part may be
entitled hereunder. ***
"(4
1/2) It is understood and agreed that upon insurance written
as herein provided by the party of the first part, the
applications for which are procured from, or through a
sub-agent, or insurance broker regularly engaged in the
business of insurance, and in consequence thereof the party
of the second part is obligated to pay a portion of his
commission to such subagent or insurance broker, the rate of
commission to be paid hereunder to the party of the second
part for all such insurance shall be twenty-five per cent.
(25%), provided the party of the second part shall, upon
forwarding applications to the party of the first part,
advise the party of the first part in writing of the name and
address of and rate of commission to be paid to the subagent
or insurance broker by the party of the second part."
The
grounds of demurrer referred to in the opinion are as
follows:
"(A)
Said count fails to show a breach of the bond in this: That
it fails to aver that the Employers' Indemnity Company
sustained a pecuniary loss by an act or acts of larceny or
embezzlement upon the part of A.T. De Bow in the performance
of the duties of the office or position in the service of the
Employers' Indemnity Company as such duties have been
stated in writing by the employer to this defendant.
"(2)
Said count refers to a writing which is not set out hæaec
verba nor according to its legal effect.
"(3)
Said count fails to show what duties the said A.T. De Bow was
stated by plaintiff's predecessor in title to defendant
was engaged to perform.
"(6)
The count shows on its face that the entire contract is not
set out nor pleaded according to its...
