New Amsterdam Casualty Co. v. Central Nat. Fire Ins. Co.

• Decision Date: 13 February 1925
• Docket Number: No. 6631.,6631.
• Citation: 4 F.2d 203
• Parties: NEW AMSTERDAM CASUALTY CO. v. CENTRAL NAT. FIRE INS. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

4 F.2d 203 (1925)

NEW AMSTERDAM CASUALTY CO. v. CENTRAL NAT. FIRE INS. CO.^*

No. 6631.

Circuit Court of Appeals, Eighth Circuit.

February 13, 1925.

Oscar Strauss, of Des Moines, Iowa (O. M. Brockett, of Des Moines, Iowa, on the brief), for plaintiff in error.

George F. Henry, of Des Moines, Iowa (Phineas M. Henry, of Des Moines, Iowa, on the brief), for defendant in error.

Before SANBORN, Circuit Judge, and TRIEBER and PHILLIPS, District Judges.

TRIEBER, District Judge.

The cause was tried to the court, a trial by jury having been waived by written stipulation of counsel, and judgment for the amount claimed rendered for the plaintiff, after a motion of the defendant for judgment had been denied. The parties will be referred to as they appeared in the trial court, the insurance company as the plaintiff, and the casualty company as the defendant.

The bond executed by the defendant on May 29, 1920, was for the sum of $30,000 to indemnify the plaintiff for any losses sustained by it by reason of the default of the Ballard-Greene-Smith Corporation, appointed general agents of the plaintiff for writing fire insurance for it in the states of Pennsylvania, Maryland, New Jersey, and New York. The contract between the plaintiff and this general agent, dated May 28, 1920, after reciting the appointment of the agent and the power bestowed on it, contained the following additional provisions:

"The said second party shall forward to the home office of the Central National Fire Insurance Company at Des Moines, Iowa, at least twice each week original daily reports and indorsements of policies issued by them or received from subagents appointed by them, and shall, not later than the 15th day of each month, forward a regular monthly account current to the first party at Des Moines, Iowa, of their own business and the original account currents received from their agents, containing detailed statement of the business done by each subagent during the preceding month, accompanied by all canceled policies and vouchers for charges made therein, together with a monthly recapitulation of all the business of said agency, and shall, not later than seventy-five (75) days after the month for which statement is rendered, forward a remittance to the said company for the balance shown to be due by monthly statement."

It further provided:

"The second party assumes and agrees to pay any and all liability of Rickert, Mellinger & Co., of Lancaster, Pa., to the Central National Fire Insurance Company arising under the contract between said parties dated December 2, 1918, for the months of November and December, 1919, and January, February, March, and April, 1920. The amount due for November and December, 1919, and January, February, and March, 1920, is hereby agreed to be the sum of twenty-two thousand four hundred twenty-eight and 38/100 dollars ($22,428.38). The amount thereof for the months of November and December, 1919, and January, 1920, shall be paid by the second party to the first party on or before May 15, 1920, and the further payments due under said contract shall be paid according to the terms thereof."

The condition of the bond of the defendant contained, among others, the following provisions:

"The condition of this bond being that the said Central National Fire Insurance Company and the said Ballard-Greene-Smith Corporation have entered into a general agency contract, a copy of which is hereto attached, the faithful performance of which on the part of the said Ballard-Greene-Smith Corporation is hereby guaranteed:

"Now, therefore, if the said Ballard-Greene-Smith Corporation shall well and faithfully perform each and every condition of its contract with the Central National Fire Insurance Company, there can be no claim under this bond; otherwise, it shall be of full force and effect.

"Provided, however, that no changes or amendments to the contract hereto attached shall be made without the written consent of the surety, and that the obligee, upon learning of any act which may be made the basis of any claim hereunder, written notice thereof shall be mailed to the surety at its office at No. 60 John street, New York City, New York, within thirty days after so learning of any such act; that the surety may at its option cancel this bond by giving forty-five days' notice in writing to the obligee, and this bond shall be deemed canceled at the expiration of said thirty days, the surety remaining liable for any act of the principal which may have been committed by the said principal up (to) the date of said cancellation, but shall not be liable for any act of the principal committed after the expiration of said thirty days; and that any suits at law or proceedings in equity brought on this bond to recover any claim hereunder must be instituted within six months next after the obligee first becoming aware of any act which may be made the basis of a claim hereunder."

The petition, after setting out the agreement between the plaintiff and the corporation, alleged:

"That prior to the 2d day of July, 1920, the said Ballard-Greene-Smith Corporation mailed to this plaintiff, and this plaintiff received, a statement of the indebtedness of said corporation to this plaintiff growing out of the business transacted by said corporation under said contract during the month of May, 1920, showing an indebtedness to this plaintiff on account of such business in the sum of $3,491.91. That thereupon, and on the 2d day of July, 1920, this plaintiff wrote said corporation stating that the proper balance chargeable to said corporation upon said May account was $3,482.18, instead of $3,491.91, and the said corporation made no objection to such correction, and on the 21st day of August remitted to plaintiff upon said May account the sum of $2,538.61, leaving a balance of $943.57, which has not been paid, except as hereinafter stated."

It then sets out failures of the corporation to remit the amounts due for policies written by it for the plaintiff every month thereafter, which on April 1, 1921, showed a balance due the plaintiff from the corporation of $8,857.85 for moneys collected by it for policies it issued for and in behalf of the plaintiff, and the sum of $2,408.67 balance due on the Rickert, Mellinger & Co. indebtedness assumed by the corporation in its contract with the plaintiff.

A demurrer to the petition and amendment thereto was by the court overruled, whereupon the defendant filed its answer. In view of the conclusion reached by us, it is only necessary to set out the following plea in the answer, to wit:

"That one of the conditions of the bond given by it jointly with the Ballard-Greene-Smith Corporation unto the plaintiff, and under which the liability of the defendant to the plaintiff, if any, arises, which liability is sought to be enforced in this action, reads as follows, to wit: `That the obligee, upon learning of any act which may be the basis of any claim hereunder, written notice thereof shall be mailed to the surety at its office, No. 60 John street, New York City, New York, within thirty days after so learning of any such act'; and the defendant further alleges that it was provided in said bond that, upon the failure to perform the conditions thereof, the said bond should be void and of no effect."

It is then alleged that "on July 15, 1920, a large sum became due from the Ballard-Greene-Smith Corporation unto the plaintiff under the terms of the contract, Exhibit B, amounting to many thousand dollars, but the exact amount of which the defendant is now unable to state, and that default was made at such time by the Ballard-Greene-Smith Corporation in the payment of the amount due, and that the default became and was known unto the plaintiff and its officers on July 15, 1920. The defendant further alleges that from month to month during the year 1920 there became due to the plaintiff from the said Ballard-Greene-Smith Corporation sums of money by the terms of said contract, Exhibit B, and that the defendant and its officers were fully advised and were aware of the fact that such sums were due monthly and were fully advised of the fact that default was made in the payment thereof from month to month, and that such defaults might furnish the basis of a claim against this defendant under its bond, Exhibit A, and now assert the defaults in such payment as a basis of the claim in this suit. The defendant alleges that the plaintiff wholly failed, within thirty days from the time of the said separate and several defaults, or at any other time, to furnish the defendant with notice of the said defaults of the said Ballard-Greene-Smith Corporation, except that on January 11, 1921, the plaintiff did mail a letter to the defendant informing it that the Ballard-Greene-Smith Corporation was indebted to the plaintiff in approximately the sum of $16,000, of which $7,913.59 was past due, and demanded payment of the amount due."

And it pleads that by reason of the failure to give the defendant the notice, as required by the terms of its bond, it is not liable. The undisputed evidence is that the first notice by the plaintiff to the defendant of any default or breach of the contract by the corporation was given on December 20, 1920, although the current balances due to it from the corporation, beginning in May, 1920, and continuing every month thereafter, were not accounted for or paid by the corporation to the plaintiff, as required by the contract between them.

It was also shown that on June 11, 1920, the plaintiff wrote to the corporation that "practically no canceled policies received in this office, yet there have been numerous cancellations requested, and we have been advised by your office from time to time that certain canceled policies were in your possession and would come forward at some future date. We would like to have these canceled policies forwarded at least once a week, as by holding them in your office we will...