Indemnity Insurance Co. v. Pioneer Valley Savings Bank

• Decision Date: 30 March 1965
• Docket Number: No. 17625.,17625.
• Citation: 343 F.2d 634
• Parties: INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, a corporation, Appellant, v. PIONEER VALLEY SAVINGS BANK, a corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

343 F.2d 634 (1965)

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, a corporation, Appellant, v. PIONEER VALLEY SAVINGS BANK, a corporation, Appellee.

No. 17625.

United States Court of Appeals Eighth Circuit.

March 30, 1965.

COPYRIGHT MATERIAL OMITTED

Wiley E. Mayne, of Shull, Marshall, Mayne, Marks & Vizintos, Sioux City, Iowa, made argument for appellant and filed brief with Jesse E. Marshall and Charles R. Wolle, of Shull, Marshall, Mayne, Marks & Vizintos, Sioux City, Iowa.

Kenneth T. Wilson, of Stilwill, Wilson & Rhinehart, Sioux City, Iowa, made argument for appellee and filed brief with Charles F. Stilwill, of Stilwill, Wilson & Rhinehart, Sioux City, Iowa.

Before VAN OOSTERHOUT and MEHAFFY, Circuit Judges, and DELEHANT, Senior District Judge.

DELEHANT, Senior District Judge.

Pioneer Valley Savings Bank v. Indemnity Insurance Company of North America, D.C., 225 F.Supp. 404, has been brought to this court on appeal by Indemnity Insurance Company of North America, the defendant therein. In the combined service of brevity and simplicity, its only two parties are severally referred to herein by their respective designations in the trial court, that is to say, the appellee as "plaintiff," and the appellant as "defendant." The appeal has been fully submitted.

A disclosure of the pleadings in the trial court is first offered. The complaint of the plaintiff is set out in two separarately numbered counts. Each of the two counts seeks recovery against the defendant of the same claimed sum of money, but upon a different and distinct ground or theory.

By the first six numbered paragraphs of Count I, plaintiff alleges its incorporation in, and citizenship within, the state of Iowa; the defendant's incorporation under the laws of the Commonwealth of Pennsylvania, and legally authorized engagement in business in Iowa; the existence of diversity of citizenship, and of a controversy between the parties exceeding the sum or value of $10,000.00, exclusive of interest and costs; the plaintiff's engagement at all material times in a banking business, with its principal place of business in Sergeant Bluff, Woodbury County, Iowa;¹ the execution by the defendant, on or about May 21, 1960, for valuable consideration, of its "Bankers' Blanket Bond, Form No. 24," numbered S226298 to and in favor of the plaintiff, wherein it agreed to indemnify and hold harmless the plaintiff to an amount not exceeding $75,000.00, from and against any losses therein set out, of which bond a copy was attached to the complaint, which bond was in full force and effect at all times material to the complaint; among which losses so covered, as quoted from the bond, was the following:

"ON PREMISES

(B) Any loss of Property through robbery, burglary, common law or statutory larceny, theft, false pretenses, hold-up, misplacement, mysterious unexplainable disappearance, damages thereto or destruction thereof, whether effected with or without violence or with or without negligence on the part of any of the Employees."

It is to be understood that, in its answer, the defendant expressly admits all of the foregoing factual allegations. Without more, they are to be regarded as true in the litigation at its every stage.

Those admitted allegations are followed by the allegation by the plaintiff, in the 7th numbered paragraph of the complaint, that:

"7. On or about the 13th day of October, 1960, the plaintiff sustained a loss of property in the amount of $35,000.00 through false pretenses, said loss being indemnified against by the aforesaid bond and occurring as hereinafter more fully set out."

And that averment is followed by allegations in successive paragraphs numbered as now set out and quoted, or summarized, in this manner:

Paragraph Numbered Substance

8 On or about October 10, 1960, there were received at Early Savings Bank, Early, Iowa, several checks exceeding in their aggregate sums $33,000.00 drawn by Paul Dick of Early, Iowa, on his account in that bank, which had theretofore been deposited in the account of his sister, Marie Longman, in Citizens State Bank, Sac City, Iowa, against which checks and deposit, Citizens Savings Bank had paid out funds in the sum of $33,610.70. When such checks arrived at Early Savings Bank, no funds were in the account in such bank of Paul Dick wherewith to pay them. Early Savings Bank notified Citizens Savings Bank that the checks were being returned for insufficient funds. Citizens Savings Bank notified Paul Dick that the checks were being returned, and he informed the bank that he would get a draft wherewith to pay them.

9 Thereafter, but also on October 10, 1960, Paul Dick and his mother, Elizabeth Dick, went to Arthur Trust and Savings Bank, Arthur, Iowa, and to it presented two checks each for the sum of $17,500.00, bearing date October 10, 1960, drawn against her account in Citizens Savings Bank, Sac City, Iowa, by Marie Longman, Paul Dick\'s sister, and payable to the order of Elizabeth Dick, and therewith purchased draft numbered 21,691 of Arthur Trust and Savings Bank, on its correspondent bank, The Iowa Des Moines National Bank, dated October 10, 1960, for $35,000.00.

10 During the afternoon of the same day, namely, October 10, 1960, draft numbered 21,691, so drawn by Arthur Trust and Savings Bank for $35,000.00, and by that time, endorsed by the payee, Elizabeth Dick, was by Paul Dick deposited in an account by him maintained in Early Savings Bank under the name of "Early Iron and Metal Company," which draft was, by the drawee bank, Iowa Des Moines National Bank, honored and paid on October 11, 1960. And from the funds thus provided, Paul Dick, on October 12, 1960, purchased Draft No. 23,821 of Early Savings Bank on its correspondent bank, The Iowa Des Moines National Bank, in the sum of $33,610.70, payable to the order of Citizens Savings Bank, Sac City, Iowa, which Paul Dick delivered to Citizens Savings Bank, Sac City, Iowa, in exchange for his checks which had theretofore been deposited in the account of his sister, Marie Longman, in Citizens Savings Bank, Sac City, Iowa, and been returned to it unpaid, for want of sufficient funds, by Early Savings Bank. (see paragraph numbered 8, supra)

11 On October 12, 1960, the two checks of Elizabeth Dick, each for $17,500.00, thus aggregating $35,000.00, which had been given to Arthur Trust and Savings Bank for the purchase of its draft numbered 21,691 for $35,000.00, arrived at the drawee bank, Citizens Savings Bank, Sac City, Iowa, and there were insufficient funds for their payment; whereupon, Citizens Savings Bank so notified Paul Dick, and Paul Dick informed Citizens Savings Bank that he would, by noon, October 13, 1960, have a deposit for the account of his sister, Marie Longman, to the credit of Citizens Savings Bank, in its correspondent bank, Security National Bank, Sioux City, Iowa, to cover such checks.

12 In the morning of October 13, 1960, Paul Dick and his mother, Elizabeth Dick, came by automobile to plaintiff\'s bank at Sergeant Bluff, Iowa. Plaintiff was theretofore and then acquainted with Paul Dick, and knew him as an officer of Early Savings Bank, Early, Iowa, and the operator of a scrap and salvage yard at Early, Iowa, and also as a former bank examiner for the State of Iowa. Paul Dick, at that time and place, made the folowing statements and representations to plaintiff: that he was then on his way to Omaha to bid on some rail scrap and rails; that he then needed a draft or cashier\'s check in the amount of $35,000.00 to be used in making the bids; that the alleged sellers of the scrap wanted the draft or cashier\'s check to be payable to Citizens Savings Bank; that he had in his possession at that time sufficient funds to cover his checks to be given in payment of the cashier\'s check or draft; that the checks to be given by him in payment for the cashier\'s check or draft were absolutely good; and that he was then vice president of Early Savings Bank, Early, Iowa. The plaintiff, believing and relying upon the truth and good faith of those statements and representations of Paul Dick, drew and sold and delivered to him its draft numbered 28,780 for the sum of $35,000.00 drawn on its correspondent bank, The Live Stock National Bank, Sioux City, Iowa, of which draft a copy is attached to the complaint and made a part thereof, and accepted in payment therefor two checks of Paul Dick, each for $17,500.00, drawn on Early Savings Bank, Early, Iowa, of each of which two checks a copy was also attached to the complaint, and made a part thereof.

13 Paul Dick used his own account in Early Savings Bank, the account of Early Iron and Metal Company, in Early Savings Bank, and the account of his sister, Marie Longman, in Citizens Savings Bank, Sac City, Iowa, and caused to be issued in the name of his mother, Elizabeth Dick, draft numbered 21,691 of Arthur Trust and Savings Bank, and the checks given in payment therefor to further his fraudulent scheme and purpose, as set out in the complaint.

14 After so obtaining the draft of plaintiff in the amount of $35,000.00, supra, and also, on October 13, 1960, Paul Dick proceeded to Security National Bank, Sioux City, Iowa, a correspondent bank for Citizens Savings Bank, Sac City, Iowa, and deposited such draft of plaintiff in Security National Bank to the account of Citizens Savings Bank, Sac City, Iowa, to be credited to the account therein of Marie Longman. Citizens Savings Bank, Sac City, Iowa, was notified that the draft in the sum of $35,000.00 was deposited to its credit in Security National Bank, Sioux City, Iowa, and at "their" (sic) request, the draft was taken by messenger to Live Stock National Bank, Sioux City, Iowa, and presented for payment, and a cashier\'s check of Live Stock National Bank was obtained. Citizens Savings Bank then honored the two checks, each for $17,500.00, which had been given to Arthur Trust and Savings Bank, and had been presented for payment, the payment of such

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