Nowell v. Mayor and Council of Monroe

• Decision Date: 14 September 1933
• Docket Number: 9318.
• Citation: 171 S.E. 136,177 Ga. 648
• Parties: NOWELL et al. v. MAYOR AND COUNCIL OF MONROE. MAYOR AND COUNCIL OF MONROE v. NOWELL et al.
• Court: Georgia Supreme Court

171 S.E. 136

177 Ga. 648

NOWELL et al. v. MAYOR AND COUNCIL OF MONROE.

MAYOR AND COUNCIL OF MONROE v. NOWELL et al.

No. 9318.

Supreme Court of Georgia

September 14, 1933

Rehearing Granted Sept. 22, 1933.

Judgment Adhered to Sept. 26, 1933.

Syllabus by the Court.

Where fidelity company sent Monroe city clerk, bonded by it for one year, bill for succeeding year and continuation certificate and clerk presented bill, which city paid without knowledge of certificate, bill and payment by city did not constitute renewal of original bond (Laws 1896, p. 216, § 15; Civ. Code 1910, §§ 4(7), 3222(2), 3223(2, 3), 3595, 4530, 4534, 4537).

Where original bond did not oblige fidelity company to renew it and fidelity company's continuation certificate expressly limited its liability to amount of original bond, fidelity company's liability would not be increased by each renewal bond issued.

Contract of fidelity insurance must be in writing, whether insurer is resident or nonresident corporation (Civ. Code 1910, §§ 2388 et seq., 2404, 2414, 2415, 2462, 2470, 2499, 2550-2562 3222(2); Laws 1912, p. 119; Laws 1921, p. 208).

Written fidelity insurance contract not providing for renewal cannot be renewed from year to year by insurer's presentation of bill for premium due, specifying number and amount of original policy and amount of premium due for next year, and stating at bottom, "Read your policy," although obligee pays premium and invoice is marked "paid" (Civ. Code 1910, §§ 2388 et seq., 2404, 2414, 2415, 2462, 2470, 2499, 2550-2562, 3222(2); Laws 1912, p. 119; Laws 1921, p. 208).

1. Where a fidelity company bonded a city clerk in the sum of $2,000 for the year 1920 in consideration of a premium of $10, the bond not providing for any renewal thereof; and where the city clerk was reappointed for the year 1921; and where, before the expiration of the year 1920, the agent of the fidelity company mailed to the city clerk a bill for $10 (which specified the number of the original bond, its amount, the amount of the premium due for the year 1921, and which had this expression on the bottom thereof: "Read your policy"), and at the same time mailed to the clerk a continuation certificate, expressly limiting the liability of the fidelity company to the amount of the original bond; and where the city clerk presented the bill to the governing authorities of the city, but retained in his possession the continuation certificate and did not let the city know anything about it, and the governing authorities of the city ordered payment of the bill for the premium, without knowledge of the existence of the continuation certificate, and payment was made by the city's voucher to the agent of the fidelity company, and the bill for the premium was marked paid, and the proceeds remitted to the fidelity company, such bill and the payment by the city of the premium specified therein did not constitute a renewal of the original bond, irrespective of the continuation certificate.

2. Where the facts as stated above were repeated from year to year for nine years after the year 1920, and where during each of the nine years the clerk "was a defalcator of the money of the city in excess of the amount of the original bond," the fidelity company "would not be liable for the defalcations of the clerk to the amount of the bond for each year."

3. It is "essential to the validity of a contract of fidelity insurance in Georgia that the same be in writing."

4. A written contract of fidelity insurance, which provides for no renewal thereof, cannot "be renewed from year to year by the presentation by the obligor of an invoice or bill for the premium due (which specifies the number of the original policy, its amount, the amount of the premium due for the next year, and which contains this expression on the bottom thereof: 'Read your policy'), and the payment of the premium by the obligee in the fidelity bond to the obligor therein, such invoice being marked paid."

Certified Questions from Court of Appeals.

Suit by the Mayor and Council of Monroe against I. H. Nowell, administratrix, and another. To review the judgment, defendants bring error, plaintiffs filing a cross-bill of exceptions, to the Court of Appeals, which certifies questions.

RUSSELL, C.J., and ATKINSON, J., dissenting. liability would not be increased by each renewal bond issued.

Questions answered.

Answers to certified questions conformed to in 171 S.E. 143.

The Court of Appeals certified the following questions:

"1. Where a fidelity company bonded a city clerk in the sum of $2,000 for the year 1920 in consideration of a premium of $10, the bond not providing for any renewal thereof; and where the city clerk was reappointed for the year 1921; and where, before the expiration of the year 1920, the agent of the fidelity company mailed to the city clerk a bill for $10 (which specified the number of the original bond, its amount, the amount of the premium due for the year 1921, and which had this expression on the bottom thereof: 'Read your policy'), and at the same time mailed to the clerk a continuation certificate, expressly limiting the liability of the fidelity company to the amount of the original bond; and where the city clerk presented the bill to the governing authorities of the city, but retained in his possession the continuation certificate and did not let the city know anything about it, and the governing authorities of the city ordered payment of the bill for the premium, without knowledge of the existence of the continuation certificate, and payment was made by the city's voucher to the agent of the fidelity company, and the bill for the premium was marked paid, and the proceeds of the premium remitted to the fidelity company, does such a bill and the payment by the city of the premium specified therein constitute a renewal of the original bond, irrespective of the continuation certificate?

"2. Should the foregoing question be answered in the affirmative, does such a renewal of the fidelity policy or bond constitute a separate and distinct contract for the period of time covered by such renewal; and is there a liability on the part of the insurer for the amount fixed by such original contract for a loss occurring during its life, and likewise a liability for the amount fixed in any renewal for a loss occurring during its life?

"3. Where the city clerk was reappointed each year for nine successive years after 1920 as such clerk, and identical bills were mailed to the city clerk each year, together with identical continuation certificates, as set forth in the first question, which bills were presented to the city authorities by the clerk, who retained the continuation certificates in his possession and did not let the city know anything about them, and the city paid the premiums specified in the bills thus presented to the agent of the fidelity company for each of said nine years, without any knowledge of the existence of such continuation certificates, and such bills were marked paid, and the agent remitted the proceeds of these premiums to the fidelity company; and where during each of the nine years the city clerk was a defalcator of the moneys of the city in excess of the amount of the original bond, would the fidelity company be liable for the defalcations of the clerk to the amount of the bond for each year?

"4. Is it essential to the validity of a contract of fidelity insurance in Georgia that the same be in writing? Civil Code (1910), §§ 2404, 2462, 2470, 2499, 2550, 3222 (2); Ga. Laws 1912, p. 119; Ga. Laws 1921, p. 208; Simonton v. Liverpool, etc., Ins. Co., 51 Ga. 77, 80; Augusta So. R. Co. v. Smith, 106 Ga. 867, 33 S.E. 28; Lippman v. Aetna Ins. Co., 108 Ga. 393, 398, 33 S.E. 897, 75 Am.St.Rep. 62; Sikes v. Mallonee, 11 Ga.App. 632, 75 S.E. 988; Fowler v. Preferred Accident Ins. Co., 100 Ga. 330, 28 S.E. 398; Mitchell v. Universal Life Ins. Co., 54 Ga. 289; Delaware Ins. Co. v. Pennsylvania Fire Ins. Co., 126 Ga. 380(4), 390, 55 S.E. 330, 7 Ann.Cas. 1134. Can a written contract of fidelity insurance, which provides for no renewal thereof, be renewed from year to year by the presentation by the obligor of an invoice or bill for the premium due (which specifies the number of the original policy, its amount, the amount of the premium due for the next year, and which contains this expression on the bottom thereof: 'Read your policy'), and the payment of the premium by the obligee in the fidelity bond to the obligor therein, such invoice being marked paid? In the event such a written fidelity policy can be thus renewed, and there are losses during the life of the renewals, exceeding the amount of the original bond, is the liability of the insurer cumulative, or is it limited to the amount of the original bond?"

H. C. Cox, of Monroe, and Little, Powell, Reid & Goldstein, James K. Rankin, and James H. Therrell, all of Atlanta, for plaintiffs in error.

C. N. Davie, J. F. Kemp, and Lawrence S. Camp, all of Atlanta, and A. M. Kelly, of Monroe, for defendants in error.

Marion Smith, of Atlanta, for defendants in error on motion for rehearing.

BELL Justice.

The certified questions, when considered with the name and style of the case, indicate that the litigation concerns a default of a clerk and treasurer of the city of Monroe; and hence the questions should be answered in the light of any pertinent provision of the charter of that municipality. While in other questions will be found the terms, "insurer," "fidelity company," and "fidelity insurance," the first question states that a fidelity company "bonded a city clerk" in the sum of $2,000 for the year 1920 in consideration of a premium of $10; the bond not providing for any renewal thereof. The charter of...