National Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. Young, 44309

• Decision Date: 20 March 1967
• Docket Number: No. 44309,44309
• Citation: 199 So.2d 70
• Court: Mississippi Supreme Court
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA v. James Leon YOUNG, Receiver for Great Southern Savings & Loan Association.

Page 70

199 So.2d 70

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH PENNSYLVANIA v. James Leon YOUNG, Receiver for Great Southern Savings & Loan Association.

No. 44309.

Supreme Court of Mississippi.

March 20, 1967.

Suggestion of Error Overruled June 5, 1967.

Butler, Snow, O'Mara, Stevens & Cannada, Roger C. Landrum, Harold D. Miller, Jr., Jackson, for appellant.

Daniel, Coker & Horton, Melvin B. Bishop, Jackson, for appellee.

JONES, Justice.

This suit involves the liability on a savings and loan blanket bond. The ground of liability being alleged to be losses through dishonest, fraudulent, criminal acts of employees. The suit was in the Chancery Court of the First Judicial District of Hinds County where judgment was rendered in favor of appellees for.$50,289.90, plus interest, and appellant hereinafter referred to as to bonding company appeals to this Court.

The bonding company filed three pleas in bar-one based upon Section 10 of the bond. All of these pleas, as well as special defenses also pleaded, were overruled.

In view of the decision of this Court, it is only necessary to discuss the first mentioned plea in bar.

Section 10 of the bond sued upon provided:

'This bond shall terminate in its entirety * * * immediately upon the taking over of the Insured by a receiver or other liquidator or by State or Federal officials, or (d) immediately upon the taking over of the Insured by another institution. * * *'

Our remarks are directed mainly to the last clause of the quoted section.

The bond was issued October 5, 1962, in favor of 'Washington Savings.' A rider was placed thereon dated February 19, 1964, effective as of December 12, 1963, providing:

'The Underwriter gives its consent to the change of the Name of the Insured from WASHINGTON SAVINGS to GREAT SOUTHERN SAVINGS & LOAN, INC.'

It was shown savings and loan associations often change their names. It was stipulated that Washington Savings was originally incorporated as 'Insured Savings & Loan' domiciled in Mississippi City. Later the domicile was changed to 174 Griffith Street, Jackson, Mississippi. The name was changed on December 12, 1960, to Washington Insured Savings & Loan Association, and domicile changed to North State Street, in the City of Jackson; in 1962, the name again was changed to Washington Savings. It was further stipulated that Great Southern was originally chartered November 28, 1960, as Church Finance Savings & Loan Association. In October 1961 the name was changed to Great Southern Savings & Loan Association.

At the time of the last change of name to Great Southern Savings & Loan Association and at the time hereinafter mentioned when the stock of said association was purchased by one Paul H. Noe, said Great Southern Savings & Loan Association was not conducting business.

On June 6, 1963, a bill of complaint was filed in the Chancery Court of the First Judicial District of Hinds County by the executive officer of the Savings and Loan Board of the State of Mississippi seeking to enjoin Washington Savings from operating as a savings and loan association and also seeking the appointment of a receiver of said association. The State Board of Savings & Loan Associations met on July 3, 1963, and there was presented to it by an Assistant Attorney General a proposal by American Savings Insurance Company to assume control of Washington Savings through transfer of sufficient capital stock to assure stock control. The insurance company agreed to pay all shareholders who asked for their money and to cease soliciting share accounts; also to place control of the association in the hands of financially responsible persons within a reasonable time, or put it in voluntary receivership. This proposal was unanimously accepted by the board, and the bill of complaint filed was withdrawn.

The American Savings Insurance Company was the insurance corporation which had insured the savings account of Washington Savings. As a part of said agreement it was understood that there would be assigned to American Savings 110,771 shares of Washington Savings capital stock presently held by American Trust Company and possibly others; that there would be assigned to another person 7331 shares of the stock and 10,000 should be retained by the American Trust Company. All airline credit cards and any and all other credit cards issued to Washington Savings should be surrendered immediately and no further use thereof be made.

It was stipulated that prior to August 13, 1963, the capital stock mentioned in said agreement was transferred to American Savings Insurance Company thereby placing that company in control of a majority of the capital stock of said association. A meeting of the members of said association was called and held on August 24, 1963, when an Executive Committee of H. J Hendrick, A. F. Jernigan and Bernard Shamp were authorized and directed to sell all of the assets of Washington Savings to a state savings and loan association and to transfer the savings account of Washington Savings to the association so acquiring such assets. The members of this committee were all employees of American Savings Insurance Company.

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