Marion Iron And Brass Bed Company v. the Empire State Surety Company
| Decision Date | 18 February 1913 |
| Docket Number | 7,898 |
| Citation | 100 N.E. 882,52 Ind.App. 480 |
| Parties | MARION IRON AND BRASS BED COMPANY v. THE EMPIRE STATE SURETY COMPANY |
| Court | Indiana Appellate Court |
From Grant Circuit Court; H. J. Paulus, Judge.
Action by the Marion Iron and Brass Bed Company against The Empire State Surety Company. From a judgment for defendant, the plaintiff appeals.
Affirmed.
J. F Charles, for appellant.
Bamberger & Feibleman and Stein, Mayer & Stein, for appellee.
Action by appellant against appellee on a surety bond executed by the latter, for damages sustained by appellant through dishonesty and infidelity of its employe indemnified thereby. The complaint was in one paragraph. Appellee answered in two paragraphs; the first a general denial, and the second setting up an affirmative defense. A demurrer to the second paragraph of appellee's answer was overruled, and appellant then filed a reply thereto in general denial. The cause was submitted to the court for trial, and a special finding of facts was made and conclusions of law stated thereon. Appellant excepted to the conclusions of law, and filed a motion requesting the court to restate same, which motion was overruled, and judgment rendered in favor of appellee.
The errors assigned are : (1) the overruling of the demurrer to the second paragraph of appellee's answer; (2) the court erred in its conclusions of law on the facts specially found (3) the overruling of appellant's motion requesting the court to restate its conclusions of law; (4) the court erred in rendering judgment for appellee.
In substance, the complaint alleges that appellant had in its employ George H. Besancon, an agent located in Los Angeles California, who represented it as its sales manager in California, and who was charged with the duty of selling appellant's goods and remitting to it money received on account thereof. Appellant on November 15, 1906, purchased and paid for a certain indemnifying bond, securing it from loss on account of any embezzlement or misappropriation of its funds by said California agent. Certain breaches of said bond, aggregating the sum of $ 933.30, are set out in the complaint. There is no dispute as to the execution of the bond, the defalcation of the agent, nor that the bond was in force at the time of the defalcation.
Appellant insists that error was committed by the court in overruling the demurrer to the second paragraph of appellee's answer, and on the determination of this question this action must be decided.
The averments of this paragraph are, in substance, as follows: Appellee admits the execution of the contract on November 15, 1906, and its extension until November 15, 1908, as shown by the complaint; that on October 24, 1906, at the time the execution of the bond was under consideration, it submitted to appellant certain questions in writing, the answers to which were to be taken as conditions precedent, and as a basis of the bond applied for or any continuation thereof; that the answers returned by appellant were for the purpose of inducing appellee to execute the obligation in suit, and relying on the same and believing them to be true, appellee did execute the bond. These questions and answers were by the agreement of both parties made conditions precedent; that they are warranties, and entered into and became a part of the contract sued on. It is averred that appellant's business is carried on in the city of Marion, Indiana, and that it had a salesman in Los Angeles, California, one George H. Besancon, who had charge of its property and effects in that city; that among certain condition specified in the bond was the following: Among the questions which formed a basis for the execution of the contract are the following: It is averred that these questions and answers were conditions precedent to said obligation, and a warranty that appellant would require its agent and accountant, Frank Bethel, to remain in Oakland and daily check up the accounts of said Besancon, and do all of its shipping; that appellant wholly failed and neglected to have said Bethel do this, and for six months after the extension of the obligation he made no examination of said agent's cash account, did no shipping for appellant, and the agreement that he should do so was by appellant wholly abandoned and neglected; that no daily account of the cash of said agent was ever taken by appellant; that it permitted him to do all of his own shipping, and took no steps to examine his accounts or ascertain the amount of cash or stock on hand; that immediately on the execution of the obligation sued on, appellant wholly abandoned the proposed and agreed method of conducting its business, and left the agent to his own procedure; that during the time of the failure of appellant to carry out and perform its part of the agreement, the agent's defalcation occurred; that appellee had no knowledge thereof, but relied wholly on appellant's written condition and warranty, and that the failure to carry on its business in accordance therewith contributed to and caused the defalcation; that by reason of such failure, appellant violated the obligation sued on, and ought not to recover; that appellant represented by said answers that Besancon would receive a salary or commission of $ 750 per month during the term of his employment, which would be paid the first day of each month, and these conditions were made warranties under and by virtue of the application and bond; that appellant failed to pay Besancon said sum, under said warranty, and by reason thereof cannot recover.
A consideration of the general legal propositions presented, and an application of the principles to the questions in this case, will very much shorten this opinion.
It is insisted by appellee that the questions and answers set out in the second paragraph of answer present a condition precedent, and an obligation and warranty that the matters and things therein set out would be fulfilled, and that the failure so to do avoided the legal liability of appellee on said bond. There is no serious contention that there was a compliance with said conditions. Daily reports were not furnished, monthly statements were not furnished, and an agent of appellant was not on the ground supervising the business. Unless there has been a waiver of said breach, or some failure on the part of appellee changing the legal status, these must be held to be conditions precedent, to the fulfillment of which appellant was bound before it could recover.
Appellant argues (1) that the bond was valid and in force when issued; (2) that appellee is estopped from setting up the defense of forfeiture on account of such breaches, since it has not returned the premium received since the delivery of the bond.
As to the first proposition, there is no division of opinion. To the consideration of the second, therefore, we will give attention. When and under what circumstances is it necessary for the insurer to tender back the premium before it can maintain the defense herein set out? The application of the doctrine of estoppel to this...
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