Maryland Casualty Co. v. Cook
| Decision Date | 08 October 1940 |
| Docket Number | No. 623.,623. |
| Citation | 35 F. Supp. 160 |
| Parties | MARYLAND CASUALTY CO. v. COOK et al. |
| Court | U.S. District Court — Western District of Michigan |
Mason, Davidson & Mansfield and Walter A. Mansfield, all of Detroit, Mich., for
Maryland Casualty Co., and United States Fidelity & Guaranty Co.
Arthur J. Kinnane, of Bay City, Mich., for Jonathon Cook and Commercial Casualty Ins. Co.
Hyman Hoffman, of Flint, Mich., for City of Flint.
Dexter G. Conklin, of Flint, Mich., in pro. per.
Dexter G. Conklin was appointed city treasurer by the City of Flint, Michigan. This appointment was confirmed by the City Commission. The period of employment was continuous, beginning April 5, 1928, and ending October 24, 1935. The employment was discontinued by resignation. The resignation was given by reason of and immediately following the discovery of misappropriations and embezzlements by said Dexter G. Conklin.
In this suit the United States Fidelity & Guaranty Company of Baltimore, Maryland, a Maryland Corporation, is designated as defendant. While it is designated as defendant, actually it appears in these proceedings presenting a statement of a cause of action as against Jonathon Cook, d/b/a Jonathon Cook & Company of Chicago, Illinois, and the Commercial Casualty Insurance Company of Newark, New Jersey, analogous to the statement of the cause of action of the Maryland Casualty Company of Baltimore, Maryland. Both the Maryland Casualty Company and the United States Fidelity & Guaranty Company present claims which are identical, excepting as to amounts, and both are therefore plaintiffs.
The City of Flint carried fidelity bond insurance for its protection, said fidelity bonds providing that if Dexter G. Conklin should embezzle, misappropriate or misapply funds belonging to the City of Flint then the surety on such fidelity contracts was to be chargeable for such loss.
During the period of time involved in this case the surety companies protected the city of Flint against embezzlement by Dexter G. Conklin as city treasurer. The dates of coverage and the amount of coverage were as follows:
Maryland Casualty Company, 6/1/31 to 6/1/32 $200,000.00
" " " 6/1/32 to 6/1/33 200,000.00
" " " 6/1/33 to 7/30/34 200,000.00
United States Fidelity & Guaranty Co., 7/30/34 to 8/19/35 200,000.00
Maryland Casualty Company, 8/19/35 to 10/24/35 200,000.00
By reason of its contracts of fidelity insurance, the Maryland Casualty Company, a Maryland Corporation, was required to pay, and did pay, to the City of Flint on account of losses incurred by the City of Flint by reason of fraud, misappropriation and embezzlements of Dexter G. Conklin, City Treasurer, the amount of $12,969.15.
By reason of its contract of fidelity insurance the United States Fidelity & Guaranty Company, a Maryland Corporation, was required to pay, and did pay, to the City of Flint on account of losses incurred by the City of Flint by reason of fraud, misappropriation and embezzlements of Dexter G. Conklin, City Treasurer, the amount of $3,148.21.
On effecting such payments, the Maryland Casualty Company and the United States Fidelity & Guaranty Company became subrogated to and were assigned all of the rights of the City of Flint to the extent of the payments as by them effected.
The City of Flint had prepared "specifications for audit" for the year period beginning July 1, 1931, ending June 30, 1932. These specifications for audit were submitted to any certified public accountant who cared to make a bid for the doing of the work as required thereby. The specifications provided in part as follows:
* * * * * *
* * * * * *
* * * * * *
Defendant Jonathon Cook, of Chicago, Illinois, an individual, doing business as Jonathon Cook & Company, submitted his bid to the City of Flint in accordance with these specifications. This provided in part:
"We are submitting herewith our sealed bid on the audit of the books and records of the various departments of the City of Flint, Michigan, for the period from July 1, 1931 to June 30, 1932, in accordance with specifications issued by you, for a total sum not to exceed ($2,975.00) Two Thousand Nine Hundred Seventy-Five Dollars including all expenses.
* * * * * *
"Jonathan Cook & Company have been bonded at numerous times in similar cases and shall be pleased to furnish same as requested.
* * * * * *".
Subsequently a contract was entered into by and between defendant Jonathon Cook and the City of Flint, which contract provided in part as follows:
In accordance with such specifications, the Commercial Casualty Insurance Company, a New Jersey corporation, a hired surety for profit, executed bond on behalf of Jonathon Cook & Company to the benefit of the City of Flint in the sum of $2,975, the condition of their said bond being as follows:
This bond was typed on the letterhead stationery of the Commercial Casualty Insurance Company; was executed in Chicago by the agent of the Commercial Casualty Insurance Company, and was sent to the City of Flint and countersigned by a Michigan agent of the Commercial Casualty Insurance Company. It was approved by the ...
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