Krey Packing Company v. United States Fidelity & Guaranty Company
| Decision Date | 06 April 1915 |
| Parties | KREY PACKING COMPANY, Appellant, v. UNITED STATES FIDELITY & GUARANTY COMPANY, Respondent |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. Thos. C. Hennings Judge.
Judgment affirmed.
Muench Walther & Muench for appellant.
(1) Contracts of guaranty issued by surety companies are not entitled to the same favorable construction, so far as the guarantors are concerned, as personal bonds, but, being in every essential like ordinary insurance policies, they are to be construed, like these, most strongly against the company. 19 Cyc. 517; Lescher v. The U. S. F. & G. Co., 239 Ill. 502; Bryant v. Am. Bonding Co., 77 Ohio St. 90; Am. Surety Co. v. Pauly, 170 U.S. 133; Champion Ice Co. v. Am. Bonding Co., 115 Ky. 863; Roark v City Trust, etc., Co., 130 Mo.App. 401; Long Bros. Gro. Co. v. The U. S. F. & G. Co., 130 Mo.App. 421; Boppart v. Surety Co., 140 Mo.App. 683; Rule v. Anderson, 142 S.W. 358; Anderson v. Fitzgerald, 4 H. L. Cases, 484, 507; 15 Cyc. 1037; Title Guar. & S. Co. v. Bank, 89 Ark. 471, 479; Un. Am. F. I. Co. v. Am. Bonding Co., 146 Wis. 573; French v. Fid. & Cas. Co., 135 Wis. 259; R. R. v. U. S. Fid. & Guar. Co., 125 Tenn. 658; Frost., Guar. Ins. (2 Ed.), p. 11; Hunter v. U. S. F. G. Co., 129 Tenn. 572, 581; U. S. F. & G. Co. v. Bank, 137 Ill.App. 382, 387; Fid. & Dep. Co. v. Ice & Storage Co., 45 Colo. 443, 446; So. Surety Co. v. Tyler & Simpson Co., 30 Okla. 116, 121; numerous cases cited; note in 47 L.R.A. (N. S.), page 294. (2) Where a surety company, upon learning of a breach of conditions or promissory warranties, fails to act promptly in cancelling or declaring a forfeiture of the contract and returning the premium, such failure amounts to a waiver of the breach or an estoppel to deny liability, as the case may be. Roark v. City Trust, etc., Co., supra; Mo. Trust Co. v. Ins. Co., 79 Mo.App. 366; Keys v. Natl. Council, etc., 174 Mo.App. 671; Pace v. Am. Cent. I. Co., 173 Mo.App. 485; Rudd v. Am. G. F. M. F. I. Co., 120 Mo.App. 1; Carp v. Queen Ins. Co., 116 Mo.App. 528; Bank v. Ins. Co., 83 Ohio St. 309; Irrigation District v. U. S. F. & G. Co., 108 N.W. 157; Horton v. Home Ins. Co., 121 N.C. 498; Am. Cent. L. I. Co. v. Rosenstein, 92 N.E. 380; Schreiber v. German Am. Ins. Co., 43 Minn. 367; Ins. Co. v. Gray, 44 Kan. 731; Glen Falls Ins. Co. v. Michael, 8 L.R.A. (N. S.) 708; Swedish Am. Ins. Co. v. Knutson, 67 Kan. 71; Cooley's Briefs on Ins., p. 2764. (3) Since fidelity bonds issued by surety companies are, to all intents, ordinary insurance policies, the rule laid down in this State with regard to ordinary insurance should be applied to fidelity bonds, viz.: That active participation in the adjustment of a loss amounts to a waiver of the breach of the conditions and of a violation of the policy. Bowen v. Ins. Co., 69 Mo.App. 272; McCollum v. Niagara Ins. Co., 61 Mo.App. 352; 19 Cyc. 804, note 41; Keys v. Natl. Council, etc., 174 Mo.App. 671, 688; Pace v. Am. Cent. I. Co., 173 Mo.App. 485, 505; Rudd v. Am. G. F. M. F. I. Co., 120 Mo.App. 1, 13; Carp v. Queen Ins. Co., 116 Mo.App. 528, 543. (4) Even where a fidelity bond sued upon recites upon its face that it will be invalid without the principal's signature, the company issuing the policy is estopped from setting up the lack of signature as a defense, as against the obligee, where it has delivered the bond to the obligee without the signature of the principal and with the evident intention of being bound thereby; and where, moreover, upon learning of the lack of signature, it retains the premium and makes no effort to rescind the contract. U. S. F. & G. Co. v. Haggert, 91 C. C. A. (U.S.) 289; N. St. L. B. & L. Assn. v. Obert, 169 Mo. 507; Rule v. Anderson, 160 Mo.App. 347; William v. Marshall, 42 Barber, 528; Lovejoy v. Isbell, 70 Conn. 560; Pima County v. Snyder, 5 Ariz. 49; Deering v. Moore, 86 Me. 183; Douglas County v. Bordon, 79 Wis. 644; Surety Co. v. Bank of Fulton, 89 Ark. 471; St. Louis Brewing Assn. v. Hayes, 97 F. 859; Aetna Ins. Co. v. Crowe C. & M. Co., 154 F. 545. (5) The term "salary" means a "fixed payment made periodically to a person as compensation for regular work; now usually restricted to payments made for non-manual or non-mechanical work." Oxford Dictionary, 1914; Standard Dictionary of the English Language; Webster's Dictionary; Worcester's Dictionary; Bouvier's Law Dictionary; Words and Phrases, "Salary." (6) Promissory warranties contained in the employer's statement are in the nature of conditions subsequent only, and, being such, substantial compliance with them is sufficient. 1 May on Insurance, sec. 157; 3 Cooley's Briefs on Insurance, p. 2448; Copp v. German American Ins. Co., 51 Wis. 640; Rice v. Fid. & Dep. Co., 103 F. 427; Phoenix Ins. Co. v. Guar. Co. of Am., 115 F. 964; 19 Cyc., 524, note 49; Champion Ice Mfg. Co. v. Am. Bonding Co., 115 Ky. 863; Benham v. Guar., etc. , L. A. Co., 7 Exch. 744; Un. Am. F. I. Co. v. Am. Bonding Co., 146 Wis. 573; Title G. & T. Co. v. Bank, 89 Ark. 480. (7) The finding of the referee in favor of the appellant on the questions of correctness of Williamson's accounts on December 31, 1909, remittances twice a week and the indorsement of checks were fully warranted both by the facts and by the law. Railroad v. U. S. F. & G. Co., 125 Tenn. 658. (8) Provisions for notice immediately upon the occurrence of an act of omission likely to fasten liability upon a surety company are liberally construed in favor of the beneficiary, to obviate a forfeiture, and the notice in the case at bar, given, at the latest, four days after actual knowledge on the part of the beneficiary of a probable embezzlement by the insured, was sufficient to comply with the requirement of "immediate notice." Columbia P. S. Co. v. Fid. & Cas. Co., 104 Mo.App. 157, 166; McFarland v. Acc. Assn., 124 Mo. 218; Hoffman v. Acc. Co., 56 Mo.App. 301; Long Bros. Gro. Co. v. U. S. F. & G. Co., 130 Mo.App. 421; Aetna Indemnity Co. v. J. R. Crowe Coal and Mining Co., 154 F. 545; Fid. & Dep. Co. v. Courtney, 186 U.S. 342; Am. Surety Co. v. Pauly, 170 U.S. 133; Bldg. Assn. v. Co., 118 Iowa 720; Anoka Lbr. Co. v. Fid. & Cas. Co., 63 Minn. 286; Mandell v. Fid. & Cas. Co., 170 Mass. 173. (9) The burden was on the respondent to prove the alleged breach of the employer's statement and the bond by the appellant. Goldman v. Fid., etc., Co., 125 Wis. 390; Surety Co. v. Tyler, etc., Co., 30 Okla. 116; Fid. & Dep. Co. v. Ice Storage Co., 45 Colo. 443, 449; Perpet. Assn. v. U. S. F. Co., 118 Ia. 729; So. Surety Co. v. Tyler & Simpson Co., 30 Okla. 116, 122, and numerous cases cited.
John M. Wood for respondent.
(1) One hundred and fifty dollars a month paid to a traveling salesman, out of which is to be paid his hotel bills and other traveling expenses, is not a compliance with a warranty that such salesman receives a salary of one hundred and fifty dollars a month. His income was much less than $ 100 a month. This warranty is to be strictly construed. Life Ins. Co. v. Glaser, 245 Mo. 389. (2) To mail weekly statements of customers in arrears to the collector, under bond, to be by him delivered to such customers, is not a compliance with the warranty that such statements are "rendered weekly" to such customers, but such practice defeats the very purpose of such warranty by removing the check on such collector that a receipt of such statement by the customer would afford, and avoided the policy. Life Ins. Co. v. Glaser, 245 Mo. 389; Hunt v. Ins. Co., 99 F. 242; U. S. F. G. Co. v. Downey, 88 P. 451; Bank of Asheville v. F. & G. Co., 89 F. 819. (3) The respondent had no knowledge of such breaches until after the appellant had furnished proof of loss. Thereafter appellant expended no time or money, and did nothing except by letters to demand payment of respondent. There was, therefore, no waiver of or estoppel as against these breaches. Gibson v. Ins. Co., 82 Mo.App. 519; Dry Goods Co. v. Ins. Co., 100 Mo.App. 509; Oehler v. Ins. Co., 159 Mo.App. 708; Maloney v. Ins. Co., 154 N.W. 6. (4) The findings of facts by a referee after their approval by the circuit court, has the force and effect of a special verdict. State ex rel. v. U. S. F. & G. Co., 236 Mo. 375; State ex rel. v. Ice Co., 246 Mo. 168.
This is a suit brought upon a fidelity bond issued by the defendant company to indemnify plaintiff against loss by reason of dishonesty on the part of an employee of plaintiff, to the extent and upon contingencies specified. On motion of the defendant, the cause was referred to Clifford B. Allen, Esq., as referee, to try all of the issues. The referee in due time filed his report, setting out his findings of fact and conclusions of law, and recommending judgment for the defendant. The court overruled plaintiff's exceptions filed to the report, and entered judgment in accordance with the said recommendation of the referee; and the case is here upon plaintiff's appeal.
On March 25, 1909, plaintiff signed and delivered to the defendant an "Employer's Statement," giving written answers to a list of questions therein propounded. The instrument recited that an application had been made to defendant to issue a "bond of security" for one Williamson, as salesman and collector in plaintiff's service, to the amount of $ 2000; and that defendant desired to have answers to the questions propounded, which answers would "be taken as the basis of the bond if issued." The following questions therein contained, and the answers made thereto by plaintiff, are here pertinent, viz.:
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