Remington v. Fidelity & Deposit Co.

• Decision Date: 25 February 1902
• Citation: 27 Wash. 429,67 P. 989
• Court: Washington Supreme Court
• Parties: REMINGTON v. FIDELITY & DEPOSIT CO. OF MARYLAND.

67 P. 989

27 Wash. 429

REMINGTON v. FIDELITY & DEPOSIT CO. OF MARYLAND.

Supreme Court of Washington

February 25, 1902

Appeal from superior court, Pierce county; W. O. Chapman, Judge.

Action by W. H. Remington against the Fidelity & Deposit Company of Maryland. Judgment for defendant, and plaintiff appeals. Reversed.

William M. Harvey and James M. Ashton, for appellant.

Wilshire & Kanaga and Ira A. Town, for respondent.

MOUNT J.

Appellant about the month of May, 1898, employed one John F. Bishop as his cashier and bookkeeper in the city of Tacoma. At the time of this employment Mr. Bishop was required to furnish to appellant a surety company bond protecting appellant against dishonesty. Respondent on July 12, 1898, issued its bond substantially as follows: 'Whereas, John Franklin Bishop hereinafter called the 'employé,' has been appointed to the position of cashier and bookkeeper in the service of William H. Remington, hereinafter called the 'employer,' and has been required to furnish a bond for his honesty in the performance of his duties in the said position; and whereas, the employer has delivered to the Fidelity and Deposit Company of Maryland, a corporation of the state of Marryland, hereinafter called the 'company,' certain statements and declarations relative to the duties and accounts of the employé, the manner of conducting the business of the employer, and other matters, which, together with any statements or declarations hereinafter required by or lodged with the company, do and shall constitute an essential part and form the basis of this contract: Now, therefore, in consideration of the sum of $35 paid as a premium for the period from July 1 1898, to July 1, 1899, at 12 o'clock noon, and upon the faith of the said statements and declarations as aforesaid by the employer, it is hereby agreed and declared that, subject to the provisions and conditions herein contained, which shall be conditions precedent to the right on the part of the employer to recover under this bond, the company shall, at the expiration of three months next after proof of a pecuniary loss, as hereinafter mentioned, has been given to the company, reimburse to the employer, to the extent of the sum of $5,000, and no further, such pecuniary loss as the employer shall have sustained by any act of fraud or dishonesty amounting to larceny or embezzlement upon the part of the employé in the performance of the duties of the office or position in the service of the employer hereinbefore referred to, as the same have been stated in writing by the employer to the company, and occurring during the continuance of this bond, and discovered during said continuance, or within six months after the death, resignation, or removal of the employé from the service of the employer, or the expiration or cancellation of this bond, whichever of these events shall first happen. This bond may be continued from year to year, at the option of the employer, at the same or an agreed premium rate, so long as the company shall consent to receive the same, in which event the company shall remain liable for any act of fraud or dishonesty amounting to larceny or embezzlement committed by the employé between the original date of this bond and the time to which it shall have been continued: provided, that the liability of the company as surety for the employé to the employer shall not exceed the amount above written, whether the loss shall occur during the term named, or during any continuation or continuations thereof, or partly during the said term and partly during said continuation or continuations; that the employer shall immediately give the company notice, in writing, by a registered letter addressed to the president of the company, Baltimore, Maryland, of the discovery of any default or loss hereunder, and shall file with the company his claim hereunder, with full particulars thereof (duly certified to, if required by the company) immediately thereafter, and any claim which shall not be filed by the employer with the company within six months after the expiration or cancellation of this bond, or within six months after the employé shall have ceased to be in the employer's service, shall not be payable hereunder, and upon the making of such claim this bond shall wholly cease and determine as regards any liability for any act of the employé committed subsequent to the discovery of such loss, and this bond shall be surrendered to the company on payment of such claim; * * * that this bond shall become void, as to any claim for which the company is responsible hereunder to the employer, if the employer shall fail to notify the company of the occurrence of such act immediately after it shall have come to the knowledge of the employer. And if, without previous notice and consent of the company thereto, the employer has intrusted or shall intrust the employé with money, securities, or other personal property, after having discovered any act of dishonesty, or condones any act for which the company may be liable hereunder, or makes any settlement with the employé for any loss hereunder, this bond shall be null and void, and any willful misstatement or suppression of facts in any claim hereunder renders this bond void from the beginning.' This bond was at its expiration on July 1, 1899, continued in force until July 1, 1900. Prior to the time of the issuance of the certificate continuing the bond in force, appellant made a certificate as follows: 'This is to certify that on the 20th day of July, 1899, the books and accounts of Mr. J. F. Bishop, in our employ as bookkeeper and cashier, were examined by us, and we find them correct in every respect, and all moneys handled by him accounted for. He has performed his duties in an acceptable and satisfactory manner, and we know of no reason why his guaranty bond should not be continued. His salary is now $100, and he is employed as same. Dated Tacoma, Wash., July 24th, 1899. [Signed] W. H. Remington, Employer.' At the time this certificate was made, and for some time thereafter, appellant had no knowledge or suspicion that Mr. Bishop was in default or dishonest in any way; but in fact at that time Bishop had embezzled a considerable sum of money from appellant. On August 20, 1899, appellant, having become suspicious of the conduct of Bishop, confronted him with acts of dishonesty, whereupon Bishop confessed to the appellant that he had taken funds belonging to appellant amounting to about $300; stating that the amount would not exceed $500 or $600. Appellant thereupon required Bishop to make up a statement of his shortage. Some two or three days later Bishop made a statement showing a shortage of $1,299, beginning at a period about April 1, 1899. Appellant several days previous to August 20th had suspended the authority of Bishop to draw checks, but continued him in his employ until April 15, 1900. As soon as appellant learned of the dishonesty of Bishop, he endeavored to obtain the services of a bookkeeper to ascertain the exact amount of Bishop's defalcation. A bookkeeper was obtained about the 1st of September, 1899. This bookkeeper finished an examination of the books and accounts on October 2, 1899, which examination showed the defalcation of Bishop to be $2,666.58, a part of which was taken by Bishop after August 20, 1899. Notice of the discovery of the defalcation, and the amount thereof, was sent by appellant to the respondent on October 3, 1899, by registered mail. Pending the examination of the books of appellant, Bishop and his wife turned over to appellant some $200 in money, and some household goods and other articles, amounting to about the sum of $300, which were received by appellant 'for whom it might concern,' and credited on Bishop's shortage, reducing the amount thereof to the sum of $2,666.58, as above stated. This action was afterwards brought by appellant against respondent to recover the sum of $2,666.58. The facts substantially as set out above were proven to the jury. Respondent thereupon moved the court for a nonsuit and judgment against appellant, upon substantially the following grounds: (1) That the plaintiff failed to immediately give the defendant company notice of the discovery of the default or loss under the bond; (2) that, after plaintiff had discovered that Bishop was a defaulter, plaintiff, without notice to and without consent of defendant, intrusted Bishop with money, securities, and property, and by reason thereof Bishop subsequently embezzled a large part of the money sued for; (3) that, after plaintiff knew that Bishop had committed acts of dishonesty for which defendant company would have been liable under the bond sued on, plaintiff made a settlement with Bishop without the knowledge or consent of the defendant; (4) that the statement made in the certificate for renewal was a warranty for the renewal of the bond, and that the facts stated therein were untrue, and that plaintiff knew, or ought to have known, that said statements were untrue at the time of making the same. This motion was sustained by the court. Judgment was entered in favor of defendant for costs, and from this judgment plaintiff appeals, alleging error of the court in sustaining the motion for a...