Long Bros. Grocery Co. v. United States F. & G. Co.

• Decision Date: 04 May 1908
• Citation: 130 Mo. App. 421,110 S.W. 29
• Court: Missouri Court of Appeals
• Parties: LONG BROS. GROCERY CO. v. UNITED STATES FIDELITY & GUARANTY CO.

110 S.W. 29

130 Mo. App. 421

LONG BROS. GROCERY CO. v. UNITED STATES FIDELITY & GUARANTY CO.

Kansas City Court of Appeals. Missouri.

May 4, 1908.

1. APPEAL — REVIEW — REPORT OF REFEREE.

The report of a referee in a law case is to be treated as a special verdict of a jury, not to be disturbed on appeal as to the facts stated therein, where supported by substantial evidence.

2. INSURANCE — GUARANTY COMPANIES — CONSTRUCTION OF BONDS.

Unlike the ordinary surety or guarantor, whose contract will be construed most liberally in his favor, companies whose business is to issue contracts of guaranty or indemnity will be classed as insurers, and their contracts interpreted by the principles and rules applicable to insurance policies; so that, if the fidelity bond issued by such a company be reasonably susceptible of an interpretation favorable to the beneficiary, and of another favorable to the company, the former, if consistent with the objects for which the bond was given, will be adopted.

3. SAME — RENEWALS.

Even if a bond issued by a company to an employer guaranteeing the fidelity of his employé be void for omission of the application therefor to disclose that the employé had the option of working on a commission basis, its renewal, being a separate and distinct contract, made on a new consideration received and retained, and on a statement disclosing that the employé was then being paid by commissions on his sales, is binding.

4. SAME — MATTERS REQUIRING NOTICE FROM EMPLOYER TO FIDELITY COMPANY.

Under the provision of a bond of indemnity against loss from fraud or dishonesty of an employé requiring the employer immediately on learning thereof to notify the guaranty company "of any act of omission or of commission on the part of the employé which may involve a loss for which the company is responsible," the employer is not required to give notice that on one occasion the employé was drunk and robbed of what the employer supposed was his own money, or that he was allowed to overdraw his account, and that payment of his commissions was stopped for awhile for the purpose of having him pay the overdraft, and was afterwards commenced before the overdraft was paid.

Appeal from Circuit Court, Jackson County; J. S. Smith, Special Judge.

Action by Long Bros. Grocery Company against the United States Fidelity & Guaranty Company. Judgment for plaintiff. Defendant appeals. Affirmed.

R. E. Ball, for appellant. Karnes, New & Krauthoff, for respondent.

JOHNSON, J.

This is an action at law on a bond issued by defendant, a surety company, to guarantee to plaintiff, a wholesale merchant, the fidelity of T. W. Knauber, who was employed by plaintiff as a salesman and collector. By consent of parties Frank Brumback, Esq., a member of the Jackson county bar, was appointed "referee to try the issues of law and fact." In due course he filed his report, in which appears findings of fact and conclusions of law, with the final conclusion that plaintiff is entitled to recover judgment against defendant in the sum of $933.10, with interest from the date of the bringing of the suit. Exceptions to this report were filed by defendant and overruled by the court. Judgment was rendered accordingly, and defendant appealed.

Much of the attack on the judgment made by counsel is directed against the findings of fact, and is based on the contention that facts stated by the referee are in conflict with the evidence. As to all such matters we shall follow the well-settled rule of treating the report of the referee in a law case as the equivalent of a special verdict of a jury. We shall not weigh the evidence, but shall adopt as finally settled the facts stated by the referee, which we find to be supported by substantial evidence. Wiggins Ferry Co. v. Railway, 73 Mo. 389, 39 Am. Rep. 519; Lingenfelder v. Wainwright Brewing Co., 103 Mo. 578, 15 S. W. 844; Howard County v. Baker, 119 Mo. 397, 24 S. W. 200; Berthold v. O'Hara, 121 Mo. 88, 25 S. W. 845; Tufts v. Latshaw, 172 Mo. 359, 72 S. W. 679. The case may be stated as follows: Knauber was employed by plaintiff on May 1, 1900, to sell cigars and tobacco in portions of Kansas City and to make collections from his customers. His salary was fixed at $130 per month, with the understanding that within a month or so he could exercise the option of being paid a commission of 50 per cent. of the profits on his sales in lieu of a salary. May 19th he applied to defendant for a bond guaranteeing his fidelity to plaintiff. In the written application he was required to file he was asked many questions, among them: "Q. If paid by salary, state annual amount, and when payable." To which he answered; $130 per month, payable monthly." "Q. If you are remunerated on any other basis, state nature of engagement, with amount of probable monthly earnings." No answer was made to this question. It was stated that the applicant was employed by plaintiff as salesman and collector and had been since May 1st. Attached to the application was an "employers' statement" signed by plaintiff, in which the statement appears that "the replies of the applicant herein are to the best of my knowledge and belief correct." The bond issued to plaintiff on May 26th provided that it would continue in force for one year from May 1, 1900, and that on the faith of the statement made by the employer as a part of the application defendant would "make good and reimburse to the employer all and any pecuniary loss sustained by the employer of money, securities, or other personal property in the possession of the employé, or for the possession of which he is responsible, by any act of fraud or dishonesty on the part of said employé in connection with the duties of the office or position hereinbefore referred to and occurring during the continuance of this bond, or any renewal thereof," etc. Liability was limited to $1,000. Among the recitals of the instrument are the following: "The company shall not be liable under this bond for the amount of any balance that may be found due the employer from the employé, and which may have accrued prior to the date hereof, and which may be discovered within the period hereof; it being the true intent and meaning of this bond that the company shall be responsible as aforesaid for moneys, securities, or property diverted from the employer through fraud or dishonesty on the part of the employé within the period specified in this bond." "The company shall be notified in writing, addressed to the president of the company, at its office in the city of Baltimore, state of Maryland, of any act of omission or of commission on the part of the employé which may involve a loss for which the company is responsible hereunder, immediately after the occurrence of such act shall come to the knowledge of the employer." "The company, upon execution of this bond, shall not thereafter be responsible to the employer under any bond previously issued to the employer on behalf of said employé, and upon the issuance of any bond subsequent hereto upon said employé in favor of said employer all responsibility hereunder shall cease and determine; it being mutually understood that it is the intention of this provision that but one (the last) bond shall be in force at one time, unless otherwise stipulated between the employer and the company." At the end of the month of May, and after the bond had been issued, Knauber decided to work on a commission basis, and thereafter was credited by plaintiff with one-half of the profits made on his sales, less the amount of bad accounts which were charged to his account. He was permitted by plaintiff (and the practice continued until March 8, 1901) to draw $25 per week on account of commissions, and plaintiff made further advances to pay some debts contracted by him. All of these payments were made by plaintiff voluntarily, and none of the items charged to Knauber represented money of plaintiff collected by him. On the date last mentioned Knauber's account was overdrawn in the sum of $315.03,...