Long Brothers Grocery Co. v. United States Fidelity & Guaranty Co.

• Decision Date: 04 May 1908
• Citation: Long Brothers Grocery Co. v. United States Fidelity & Guaranty Co., 110 S.W. 29, 130 Mo.App. 421 (Kan. App. 1908)
• Parties: LONG BROTHERS GROCERY COMPANY, Respondent, v. UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant
• Court: Kansas Court of Appeals

110 S.W. 29

130 Mo.App. 421

LONG BROTHERS GROCERY COMPANY, Respondent, v. UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant

Court of Appeals of Missouri, Kansas City

May 4, 1908

Appeal from Jackson Circuit Court.--Hon. Jackson L. Smith, Special Judge.

AFFIRMED.

Judgment affirmed.

Ball & Ryland for appellant.

(1) The original bond was void by reason of false representations in the application therefor. Savings & Loan Co. v. Guarantee Co., 183 U.S. 402. (2) The renewal of the bond was void by reason of false statements in the employer's statement therefor. Van Cleve v. Casualty & Surety Co., 82 Mo.App. 668; McQuiddy v. Brannock, 70 Mo.App. 550.

Karnes New & Krauthoff for respondent.

(1) The report of a referee is equivalent to a special verdict, and will not be disturbed, on appeal, as being against the weight of evidence, and we will not go into a consideration of the sufficiency of the evidence to support the finding of the referee. Lingenfelder v. Brewing Co., 103 Mo. 589; Wiggins Ferry Co. v. Railway, 73 Mo. 419; Howard Co. v. Baker, 119 Mo. 407; Bertholdt v O'Hara, 121 Mo. 97; Bank v. Iron Co., 97 Mo. 43; Bender v. Markle, 37 Mo.App. 242; Goetz v. Peel, 26 Mo.App. 634; Tufts v. Latshaw, 172 Mo. 359. (2) Before the renewal was made, the appellant was notified that he, Knauber, was to be engaged on a commission and with such notice, it accepted the premium and issued the renewal receipt. Adopting the somewhat puerile phrase, used by appellant's distinguished counsel, "isn't it a shame," that with respondent's money in its pocket, for this renewal, such an effort should be made by this appellant to escape liability on such ground. (3) In statement for renewal, appellant said they had examined his books, to March, 1901. There is no evidence of any dishonesty up to the time of the renewal. In fact, there was none. The embezzlements were all after May 1, 1901. State v. Healy, 48 Mo. 531. (4) Primarily it must be remembered that this is an action upon a contract of insurance. 1 Cooley's Brief of the Law of Insurance, p. 9; American Surety Co. v. Pauly, 170 U.S. 134. (5) It is said that the original policy issued by the defendant to the plaintiff herein is void. The reason of this is given that in the application for the original policy it was stated that Knauber was employed on a salary, when in truth and in fact, he was employed on a commission basis. In Cracker & Candy Co. v. Insurance Co., 41 Mo.App. 530, the word "void," as applied to a policy of insurance, was carefully defined.

OPINION

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 appear 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; 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 fifty 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 employee, or for the possession of which he is responsible, by any act of fraud, or dishonesty, on the part of said employee, 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 employee, 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 employee 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 employee, 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 employee, and upon the issuance of any bond subsequent hereto upon said employee 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, and plaintiff notified him that no more money would be paid him until the overdraft had been paid. He continued to work and in the latter part of April, becoming discouraged, applied to another concern for employment. Defendant contends that he was given the employment sought and actually left the service of plaintiff, but the referee finds, and we think is supported in the finding by substantial evidence, that Knauber did not discontinue his employment by plaintiff. Learning that such change was contemplated, plaintiff, to prevent it, began paying Knauber $ 22 per week on account and permitted him to draw that amount until the discovery of the fact that he was a defaulter.

In January or February, 1901, Knauber told the manager of plaintiff's cigar department that while drunk he had been drugged in a saloon and robbed of $ 200. He spoke as though the money were his own and plaintiff did not know or suspect that he had misappropriated or lost any of its money. It appears that Knauber's customers were chiefly dramshop keepers and that it was usual for cigar salesmen such as he to spend money at the places of such customers in drinking and treating others.

May 1 1901, defendant issued the following renewal certificate to plaintiff: "In consideration of the sum of five dollars, the United States Fidelity and Guaranty Company hereby continues in force bond No. 68400, in the sum of one thousand dollars, on behalf of T. W. Knauber, in favor of Long Brothers Grocery Company, for the period beginning the 1st day of May, 1901, and ending on the 1st day of May, 1902, subject to all the covenants and conditions of said original bond heretofore issued on...