National Surety Co. v. Globe Grain & Milling Co.
| Decision Date | 25 February 1919 |
| Docket Number | 3209. |
| Citation | 256 F. 601 |
| Parties | NATIONAL SURETY CO. v. GLOBE GRAIN & MILLING CO. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Rehearing Denied May 12, 1919.
O'Melveny Millikin & Tuller and Hocker & Austin, all of Los Angeles Cal., for plaintiff in error.
W. G Van Pelt and E. S. Williams, both of Los Angeles, Cal., for defendant in error.
Before GILBERT, ROSS, and MORROW, Circuit Judges.
The defendant in error applied to the plaintiff in error to become surety, beginning October 15, 1915, for certain of its employes for the amounts and in the positions set opposite their names, respectively, including one T. F. Hayes.
'These employes, and each and every of them, while in the service of the undersigned employer,' the application expressly declared, 'have always performed their respective duties in a faithful and satisfactory manner. There has never come to the notice or knowledge of the employer any act, fact, or information tending to indicate that they or any of them are negligent, unreliable, deceitful, dishonest, or unworthy of confidence. As far as the employer knows, the habits of each and all of them are good, and the employer knows no reason why you cannot safely become surety for them and each of them.
'The above and foregoing statement and representations are each every, and all warranted by the employer to be true, and are made for the purpose of inducing the National Surety Company to become such surety, and said statements and representations shall apply to each and every employe hereafter added to the schedule to be covered by said bond as therein provided.
'Dated at Los Angeles the 15th day of October, 1915.' Upon that application the plaintiff in error issued its policy to the defendant in error in consideration of the payment of an annual premium computed at an agreed rate and payable on the 15th day of October during each and every year that the bond should continue in force, agreeing 'to make good within sixty (60) days after satisfactory proof thereof, to the Globe Grain & Milling Company, of Salt Lake City, Utah, employer, any loss which the employer may sustain by reason of any act of personal dishonesty, forgery, theft, larceny, embezzlement, wrongful conversion, or abstraction on the part of any employe named in the schedule' attached, including said Hayes, the amount of whose bond was $5,000. Subsequent to the issuing of the bond Hayes embezzled from the defendant in error $5,000, resulting in the present action by it to recover of the insurance company the amount so embezzled, with costs.
The case was tried before the court without a jury by stipulation of the parties, and resulted in certain findings of fact upon which judgment was entered in favor of the insured.
Allegations of fact made in defense of the action, to the effect that Hayes drank to excess, was accustomed to overdraw his account with the milling company, and was an habitual gambler on horse races and at poker prior to the giving of the insurance, with the knowledge of the president of the insured, were negatived by the findings made by the trial court, and under the well-established rule such findings are conclusive upon us, however convincing we might otherwise consider the argument of the plaintiff in error that upon the evidence such findings should have been otherwise. Tyng v. Grinnell, 92 U.S. 467, 23 L.Ed. 733; Dooley v. Pease, 180 U.S. 126, 21 Sup.Ct. 329, 45 L.Ed. 457; Meyer v. Everett P. & P. Co., 193 F. 857, 863, 113 C.C.A. 643.
The court below, however, found these further facts to be true That when Hayes (who had been the agent of the milling company at Woodland, Cal., before being transferred as its agent at Salt Lake, Utah) left Woodland he was overdrawn in his accounts in the sum of about $812.68, which overdrawing had been expressly permitted by the milling company, and was in the nature of a loan by it to him; that the same was not communicated by the milling company or any of its officers to the insurance company, which made no inquiry as to any indebtedness owing by Hayes to the milling company; that when Hayes was sent by the milling company to Woodland he stated to the president of that company that on account of some business ventures in which he had been formerly engaged in Mexico he had lost some money and was in debt and was obliged to make certain payments, and therefore asked the president of the milling company to be allowed to overdraw his account while at Woodland, which request was granted, and that he was so overdrawn when he left Woodland in the sum of $812.68, besides which he then owed the milling company $500 on a note, advanced to him by the milling company in order to enable him to maintain a loan at the Merchants' National Bank of Los Angeles for $2,500, which latter loan was secured by stock held by Hayes in a corporation operating in Mexico; that between September, 1914, when Hayes left Woodland, and the 1st of December, 1915, the overdraft was reduced to $304.32, and that, including the $500 note, he was on the day last mentioned indebted to the milling company in the sum of $804.32; that when he was sent to Salt Lake the permission theretofore given him to overdraw his account was withdrawn by the president of the milling company, who had, however, always implicitly believed in his integrity and honesty; that after the said Hayes went to Salt Lake City as such agent, and particularly after February 1, 1916, he abstracted, used, and applied the money of the milling company in betting on horse races, in buying grain on margins in the grain market, and otherwise for his own personal use, of which, however, the milling company had no notice until May 31, 1916, at which time it immediately discharged him from its employment; that on or about March 1, 1916, a balance sheet dated February 29, 1916, prepared by or under the direction of Hayes at his office in Salt Lake City, showing assets and liabilities of the milling company at its Salt Lake agency and containing an item marked 'Personal Accounts, $3,239.70,' was received through the mail at the office of the milling company at Los Angeles, from the office of Hayes at Salt Lake; that the time when such statement was delivered through the mail was not the time when the outside agencies of the milling company were expected or required to report...
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