Ritchie Grocer Co. v. Aetna Casualty & Sur. Co.

• Decision Date: 12 May 1970
• Docket Number: No. 19866.,19866.
• Citation: 426 F.2d 499
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: RITCHIE GROCER COMPANY, Appellant, v. AETNA CASUALTY & SURETY COMPANY, Appellee.

426 F.2d 499 (1970)

RITCHIE GROCER COMPANY, Appellant, v. AETNA CASUALTY & SURETY COMPANY, Appellee.

No. 19866.

United States Court of Appeals, Eighth Circuit.

May 12, 1970.

J. E. Gaughan, of Gaughan, Laney, Barnes & Roberts, Camden, Ark., for appellant.

Dennis L. Shackleford, of Shackleford & Shackleford, El Dorado, Ark., for appellee.

Before VAN OOSTERHOUT, Chief Judge, and MATTHES and GIBSON, Circuit Judges.

PER CURIAM.

We affirm the judgment entered below in this suit on a contract for employee fidelity insurance for the cogent reasons expressed by the Honorable Oren Harris in his unpublished memorandum opinion, attached hereto as an appendix.

Two additional arguments, not pressed before Judge Harris, are made in this court by appellants. Neither is persuasive. First, the exclusion clause embodied in Section 7 of the insurance contract in question is neither unenforceable as against public policy nor ambiguous. See St. Joe Paper Co. v. Hartford Accident & Indemnity Co., 376 F.2d 33, 35 (5th Cir.), cert. denied, 389 U.S. 828, 88 S.Ct. 91, 19 L.Ed.2d 86 (1967); J. S. Fraering, Inc. v. Employee's Mutual Liability Insurance Co. of Wisconsin, 242 F.2d 609, 612-613 (5th Cir.1957); Verneco, Inc. v. Fidelity & Casualty Co. of New York, 207 So.2d 828 (La.Ct.App.1968), aff'd, 253 La. 721, 219 So.2d 508 (1969). Second, knowledge possessed by Joe Polk, branch manager for one of appellant's stores, that Wayne Kemp had previously committed tire theft is fully attributable to the "Insured" — appellant — within the meaning of Section 7. "A corporation must necessarily act through agents, and the general rule is that knowledge of an agent acquired in the ordinary discharge of his duties for the corporation is ordinarily to be imputed to the principal." Bank of Hoxie v. Meriwether, 166 Ark. 39, 50, 265 S.W. 642, 646 (1924). Accord, United States v. United United States Cartridge Co., 198 F.2d 456, 464 (8th Cir.1952), cert. denied, 345 U.S. 910, 73 S.Ct. 645, 97 L.Ed. 1345 (1953). It is undisputed here that Polk held unfettered authority in the personnel management of appellant's branch store. His act of hiring Wayne Kemp was certainly within the scope of that authority. It is not important whether or not Polk had actual knowledge of the scope and effect of Section 7. Appellant, as corporate signatory to the insurance contract, did have such knowledge.

Affirmed.

APPENDIX

MEMORANDUM OPINION

(Filed July 2, 1969, in the United States District Court for the Western District of Arkansas)

This action by the plaintiff, Ritchie Grocer Company, was originally brought in state court, Circuit Court of Union County, Arkansas, Second Division, against the defendant, Aetna Casualty & Surety Company, for the recovery of loss sustained by the plaintiff as a result of money shortage by the action of one of the plaintiff's employees, Wayne Kemp, during a period of time from about June 1966, until November, 1967. It was removed from the state court to the United States District Court, El Dorado Division, on petition by the defendant, the amount exceeding the sum of $10,000 exclusive of interest and costs and by reason of diversity of citizenship between the parties. Jurisdiction is not questioned.

On motion for leave to amend petition for removal the Court entered an order permitting the amendment to the petition for removal to the effect that defendant, Aetna Casualty and Surety Company, is a corporation organized under the laws of the State of Connecticut, with its principal place of business in Hartford, Connecticut, and the plaintiff, Ritchie Grocer Company, is a corporation organized under the laws of the State of Arkansas and its principal place of business in El Dorado, Arkansas, in technical compliance with jurisdictional requirements for diversity of citizenship. Jurisdiction is established.

The Court has this matter for consideration on motion for summary judgment by both parties in that there is no genuine issue of any material facts and that judgment should be determined as a matter of law. Both parties have filed briefs and reply briefs.

This action is based on a contract of insurance issued by the defendant to the plaintiff under date of March 26, 1965. The relevant provisions of the contract are as follows:

"The Company, in consideration of the payment of the premium, and subject to the Declarations made a part hereof, the General Agreements, Conditions and Limitations and other terms of this Policy, agrees with the Insured to pay the Insured for:

"INSURING AGREEMENTS.

"Employee Dishonesty Coverage.

"I. Loss of Money, Securities and other property which the insured shall sustain through any fraudulent or dishonest act or acts committed by any of the Employees, acting alone or in collusion with others."

And the following provision, to-wit:

"The Foregoing Insuring Agreements and General Abatements Are Subject to the Following Conditions and Limitations:

"Prior Fraud, Dishonesty or Cancelation.

"Section 7. The coverage of this Policy shall not apply to any Employee from and after the time that the Insured or any partner or officer thereof not in collusion with such Employee shall have knowledge or information that such Employees has (sic) committed any fraudulent or dishonest act in the service of the Insured or otherwise, whether such act be committed before or after the date of employment by the Insured."

The facts are not in dispute. The plaintiff, Ritchie Grocer Company, is engaged in the wholesale grocery business with a branch office at DeQueen, Arkansas. The plaintiff employed Wayne Kemp upon application filed with the company about December, 1965. Joe Polk is the manager of the DeQueen office with full authority to act on behalf of the company. After application for employment by Wayne Kemp, and before becoming employed, the manager, Joe Polk, made an inquiry of the Sheriff Louie L. Hilton about Kemp as to Kemp's reputation and being trustworthy as an employee. On such inquiry Sheriff Hilton advised Polk that some time about April, 1965, Wayne Kemp and two other boys broke into a garage or filling station in the vicinity of Kirby, Arkansas, and took some tires and money. It is not revealed how many tires or how much money was stolen after the break in of the business. Neither is it indicated what time of the day the burglary and theft took place, but there is strong inference that it occurred in the nighttime.

Sheriff Hilton discussed the incident with Mr. Joe Polk, Manager of Ritchie Grocer Company, and told him what he knew about it, including the arrest and the hearing before the court in Clark County. Sheriff Hilton advised that the boys were detected at the time they broke into the filling station. He was notified and picked up the boys and the tires they stole from the service station. He advised that the tires were returned to the owners and the boys were turned over to the authorities in Clark County at Arkadelphia. Sheriff Hilton also advised Mr. Polk that he had discussed the incident with the Sheriff of Clark County and it was felt that this was a case where teenage boys had made a mistake and the charges had been dismissed.

In his deposition taken on the 14th day of November, 1968, Mr. Polk after describing his duties as branch manager with full authority, to act in carrying on the affairs of the business, stated that Sheriff Hilton told him about the difficulty Harold Wayne Kemp had with "law violation".

Questions by Mr. Shackleford and Answers by Joe Polk:

"Q. What did you learn about that? A. He said there were three boys in a car had taken some tires; but he was a boy who\'d admitted his mistake; that he and the sheriff in Clark recognized it as a mistake and wanted to give them a break, and the charges were dismissed by the judge. The judge looked at it the same way. The way I looked at the thing, the thing was dismissed; it was a mistake.

* * * * * *

Q. You learned, though, that he had been involved in the theft of tires from _____ A. I did.

* * * * * *

Q. Well, then you

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