Provident Trust Co. v. National Surety Corporation, 8329.
| Citation | 138 F.2d 252 |
| Decision Date | 07 October 1943 |
| Docket Number | No. 8329.,8329. |
| Parties | PROVIDENT TRUST CO. v. NATIONAL SURETY CORPORATION. |
| Court | U.S. Court of Appeals — Third Circuit |
George E. Beechwood, of Philadelphia, Pa., for appellant.
Harvey A. Miller, of Pittsburgh, Pa., for appellee.
Before JONES and McLAUGHLIN, Circuit Judges, and KIRKPATRICK, District Judge.
This appeal involves the construction of a so-called "Bankers' Blanket Bond" issued by the defendant insurance company to the plaintiff bank. In that bond under Section D-5, as amended, coverage was provided for "any loss" "(5) through transferring or paying any money or funds or transferring or delivering any securities or establishing any credit on the faith of forged or altered written instructions or advices from any customer or from any banking institution, not including telegraphic, cable, radio or teletype instructions or advices." Under Section 2(a) the bond specifically did not cover "any loss effected directly or indirectly by means of forgery, except when covered by insuring clause (A) or (D)." Under Section 2(d), the bond did not cover "any loss resulting from any loan made by the Insured or by any of the Employees whether authorized or unauthorized, except when covered by insuring clause (A)." The insuring clause (A) referred to, has to do with loss through any dishonest, fraudulent or criminal act, if any, of the employees, etc. Admittedly there were no such acts involved here.
The plaintiff loaned $15,000 on the security of certain warehouse receipts representing 632 barrels of liquor which had a value of $15,000 or more. It is conceded that there were only 141 barrels of liquor in existence at the time the receipts were given. Those particular barrels were encumbered by prior liens. The borrower went into bankruptcy. The only amount recovered by the bank was $77.62 as its share of the proceeds of the said 141 barrels of liquor. The bank in this case sued the insurance company under the latter's bond, for the balance of its loss. There was a judgment, in favor of the plaintiff bank, from which this appeal is taken. The base of the recovery in the district court was that (a) the false statements in the warehouse receipts constituted forgery under the pertinent Pennsylvania law and (b) said receipts are embraced within the policy language in Section D-5, namely, "written instructions or advices." The defendant company says that by virtue of Section 2(d) of the policy, the transaction is not within the contract at all. It also maintains that the warehouse receipts are not forgeries under the law of Pennsylvania; and that they are not within the category of "written instructions or advices."
We do not see that the excluding Section 2(d) of the policy so controls, as to of itself eliminate responsibility of the insurance company for the loss in question. The prior 2(a) clause with D(5) as amended, covers "any loss effected directly or indirectly by means of forgery" "through transferring or paying any money * * * on the faith of forged or altered written instructions or advices, etc." To hold that 2(d) destroys the plain substance of 2(a) would render meaningless, the deliberate insertion of 2(a) into the policy. At least, a confusing situation is presented, which has been caused by the scrivener insurance company. This is to be resolved against the company rather than the policy holder.
On the question as to whether the warehouse receipts are to be classed as forgeries; both sides agree that the law of Pennsylvania governs. That law on the point involved is set out in Commonwealth v. Pearlman, 126 Pa.Super. 461, 191 A. 365. The relevant facts of that case are stated in the opinion which reads, 126 Pa.Super. at pages 467, 468, 191 A. at page 368:
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