Quick Service Box Co. v. St. Paul Mercury Indemnity Co.

• Decision Date: 16 February 1938
• Docket Number: No. 6258.,6258.
• Citation: 95 F.2d 15
• Parties: QUICK SERVICE BOX CO., Inc., v. ST. PAUL MERCURY INDEMNITY CO. OF ST. PAUL.
• Court: U.S. Court of Appeals — Seventh Circuit

95 F.2d 15 (1938)

QUICK SERVICE BOX CO., Inc., v. ST. PAUL MERCURY INDEMNITY CO. OF ST. PAUL.

No. 6258.

Circuit Court of Appeals, Seventh Circuit.

February 16, 1938.

Albert K. Stebbins, G. Kenneth Crowell, and Kenneth Grubb, all of Milwaukee, Wis., for appellant.

August C. Moeller and Emmet Horan, Jr., both of Milwaukee, Wis., for appellee.

Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

LINDLEY, District Judge.

Defendant appeals from a judgment of the District Court awarded as recovery upon a blanket forgery bond covering all of plaintiff's employees at its various places of business in the United States.

The bond indemnifies plaintiff against loss through the payment by any depositing bank of any check drawn by or purporting to be drawn by plaintiff at any of its offices upon which the "signature of the insured" or "the signature of any endorser" "shall have been forged" or which "shall have been raised or altered in any other respect."

The stipulated facts show that one Tawes was employed by plaintiff as office manager and bookkeeper. He was not authorized to sign checks unless they were complete on their face, signed by either Gates or Blum, both vice-presidents, drawn on certain specified banks and issued for the purchase of merchandise used in the operation of the business and ordinary operating expenses, including salesmen's commissions and pay rolls. He had no authority to draw checks payable to "cash" in an amount exceeding $50 or for "additional amounts for expenses of officers or employees." He was not authorized to draw checks for the amounts and purposes of those involved in this litigation.

During his employment, and while the bond was in force, Tawes presented blank checks to one of the two vice-presidents and obtained the signature of one of them to each of the checks. He then filled in the dates, numbers, and amounts and wrote on the face the word "cash" as payee, all without authority. He then countersigned each check below the signature of the company and that of its vice-president and wrote his own name on the back as endorser, presented the check to the bank for payment, received the proceeds and appropriated them to his own use. The checks were marked "paid" and thereafter returned by the bank to the plaintiff at New York as canceled vouchers, where they again came into the possession of Tawes as office manager. On some of them he then wrote over the word "cash" the names of various purported payees, erased his own name appearing on the back, and substituted, as endorsers, the names of various purported payees, banks and the New York Clearing House. On others he did not erase his endorsement, alter the word "cash," or substitute the names of other purported endorsers. All these acts were committed with intent to defraud plaintiff. Through these means, he misappropriated $24,385.

Defendant contends that the acts of Tawes were not within the provisions of the bond, in that there was no forging of the signature of plaintiff or of any endorser within the meaning of the instrument.

The District Court concluded that the signature of plaintiff appearing on the face of each check was fraudulently and illegally executed and forged within the meaning of the bond, and plaintiff insists that the undisputed evidence justifies this conclusion.

The bond, having been prepared by the defendant, should be construed in favor of the insured. American Surety Co. v. Pauly, 170 U.S. 133, 18 S.Ct. 552, 42 L.Ed. 977. It covers the forgery of the signature of plaintiff upon any check drawn upon and paid by the latter's depositing bank. Each check bore the printed name of the insured as drawer. This printed signature, however, was not legally effective as a signature until and unless signed by a vice-president and by the office manager Tawes. The latter had no authority to draw checks in blank and no authority to draw checks under the circumstances and for the amounts of those here in evidence. Consequently every act of Tawes from the time he presented the blank check to the vice-president for signature until he cashed and received the proceeds was unlawful, unauthorized and done with intent to defraud. So far as his authority was concerned, the effective completion of the signature of the drawer depended upon his signature thereto. Had the name of the company not been printed but written by him and had he then had attached the signature of the vice-president and that of himself, a contention that forgery had not occurred would fail. It seems apparent that the result is the same whether the signature of the company was printed or written by himself. It came in to effective existence as a purported signature of the company only when he signed his name, and when he wrongfully did so he gave apparent probity to a...