Roark v. City Trust, Safe Deposit And Surety Co.
| Decision Date | 04 May 1908 |
| Parties | J. E. ROARK, Respondent, v. CITY TRUST, SAFE DEPOSIT AND SURETY COMPANY et al., Appellants |
| Court | Kansas Court of Appeals |
Appeal from Johnson Circuit Court.--Hon. Nick M. Bradley, Judge.
AFFIRMED.
Judgment affirmed.
Paul V Janis and O. L. Houts for appellants.
(1) It was Roark's duty to disclose to the surety company any fact, materially affecting the risk, coming to his knowledge prior to his actual notification that the application had been accepted by the surety. Bank v. Owen, 101 Mo 582; Harrison v. Insurance Co., 8 Mo.App. 41; Bank v. Traube, 6 Mo.App. 221; 1 Story's Equity Jurisprudence (13 Ed.), sec. 215, p. 234; 1 Joyce on Insurance, sec. 107, p. 166; 1 Brandt on Suretyship Guaranty (3 Ed.), secs. 475, 476; Insurance Co. v. Chase, 53 L. R. A., p. 510; Insurance Society v. McElroy, 83 F. 636; Bank v. Fidelity and Casualty Co., 89 F 819; 1 May on Insurance, p. 385, sec. 190; 1 May on Insurance, pp. 76, 77, secs. 43g, 43h. (2) There must be a notification of acceptance of the application before a contract can exist. Making an application and paying the premium does not constitute a contract of insurance, nor does delay in accepting make a contract. Travis v. Insurance Co., 104 F. 488; Horton v. Insurance Co., 151 Mo. 620; Kilcullen v. Insurance Co., 108 Mo.App. 61; Pace v. Life Assur. Society, 113 F. 13; Mohrstadt v. Insurance Co., 115 F. 81; Miller v. Insurance Co., 111 F. 465; Lungstrass v. Insurance Co., 48 Mo. 201; Wallingford v. Insurance Co., 30 Mo. 46; Misselhorn v. Life Ass'n, 30 F. 545; May on Insurance (4 Ed.), sec. 43h, p. 76. (3) The fact that the subject-matter (Clary's honesty) ceased to exist before the contract was consummated, avoided the bond. Paine v. Insurance Co., 51 F. 689; 1 May on Insurance (4 Ed.), sec. 190, p. 385; 1 Joyce on Insurance, sec. 107, p. 166; 16 Am. and Eng. Ency. Law (2 Ed.), p. 847; Worth v. Insurance Co., 64 Mo.App. 587; Wallingford v. Insurance Co., 30 Mo. 46. (4) The plaintiff set out the bond in haec verba in his petition. The bond contained a condition, numbered 6, to the effect that if the plaintiff at the time of the execution of the bond knew that the employee in question was a defaulter, then the bond should be void as to such employee. Plaintiff admitted at the trial, his knowledge of Clary's dishonesty prior to the execution of the bond and should have been nonsuited. Hough v. American Surety Co., 90 Mo.App. 482.
J. W. Suddath for respondent.
(1) A contract of suretyship against loss by dishonesty of employees is a contract of insurance, and the company issuing it is an insurance company, and the company and contract must be governed and construed under the insurance law. 15 Am. and Eng. Ency. Law (2 Ed.), p. 1; People v. Rose, 174 Ill. 310; People v. Fid. & C. Co., 153 Ill. 32; Shockman v. U. S. System Co., 92 Wis. 366, 66 N.W. 526; American Surety Co. v. Pauly, 170 U.S. 138; Ice Mfg. & Cold Storage Co. v. Bond & Trust Co., 75 S.W. 197. (2) All provisions of the policy must be construed most strongly against the company and in favor of plaintiff, insured. Shoe Co. v. Casualty Co., 172 Mo. 149; Am. Surety Co. v. Pauly, 170 U.S. 133; Ice Mfg. & Cold Storage Co. v. Bond & Trust Co., 75 S.W. 197; 13 Am. and Eng. Ency. Law (2 Ed.), p. 10; Fidelity Co. v. Bank, 25 S.E. 392. Insurance policies must be liberally construed in favor of the insured. Howerton v. Insurance Co., 105 Mo.App. 583. (3) A policy antedated covers loss occurring prior to delivery and actual date of policy. Stockman v. Credit System Co., 66 N.W. 528; 1 Joyce on Insurance, sec. 105; Worth v. Insurance Co., 64 Mo.App. 583; Insurance Co. v. Folsam, 85 U.S. 827; Insurance Co. v. Insurance Co., 3 Am. Rep. 301; Hubbard v. Insurance Co., 11 Am. Rep. 125. (4) When a contract of insurance has been completed by the party applying doing all that is required to be done on his part, although the agent acting for the company has not power to issue a policy, the risk commences from the time of making such contract if there be no stipulation to the contrary. Palm v. Insurance Co., 20 Ohio 529; Krum v. Insurance Co., 40 Ohio St. 225; Worth v. Insurance Co., 64 Mo.App. 583. (5) When a jury is waived and the cause is tried by the court, its finding has the conclusiveness of a verdict, and the higher court must presume the facts to be as found. Rogers v. Hopper, 94 Mo.App. 437; Creighton v. M. W. A., 90 Mo.App. 378; Baumhoff v. Railroad, 171 Mo. 120; Hanlan v. McManus, 100 Mo. 124; Swayze v. Bride, 34 Mo.App. 413; Sinclair v. Railway, 70 Mo.App. 588.
--The plaintiff was superintendent of the Metropolitan Life Insurance Company and had engaged in service, in places of trust, a number of employees, the one concerned in this case was John W. Clary. He desired to be indemnified against loss through the dishonesty of Clary, if such misfortune should occur. The latter applied in writing to defendant as a surety company for a bond indemnifying plaintiff. A bond was afterwards executed by defendant to plaintiff, dated July 15, 1904. Afterwards, in the latter part of September, Clary embezzled funds of the company in the sum of $ 494.55, and absconded. This action is founded on that bond and plaintiff recovered judgment in the trial court.
Written application was made for the bond on July 23rd with the request that it be dated back to July 15th, that being the time of the last examination of Clary's account with his employer. Plaintiff signed an employer's statement by filling out a blank furnished by defendant. The application and statement were delivered by plaintiff to defendant's agent at St. Louis on July 25th, and the premium, $ 3.75, was paid to him for which he gave a written receipt: The application made by Clary and delivered by plaintiff contained the names of persons whom he gave as reference and the trial court found that the evidence showed a valid agreement for a bond if these references responded satisfactorily to defendant's inquiries. It further found that such responses were favorable and that they were received by defendant about August 3rd and that on August 15th the application was approved by the endorsement thereon: "Approved 8-15-1904. J. W. Anderson." Though the application was thus approved, the surety bond was not issued and forwarded to plaintiff until October 4th. This delay was occasioned, not by a desire for further inquiry, but for the reason that defendant had, in some way, become impressed with the idea that plaintiff wished it to hold the bond until other applications which were to be made had been received. The defendant expressed regret at the delay.
Plaintiff's office was at Sedalia, while Clary's headquarters were at Warrensburg, the distance being about forty miles. Plaintiff was notified on September 26th that Clary had absconded and on next day he went to Warrensburg to investigate and examine his accounts. Realizing that he had not yet received the Clary bond, plaintiff, on September 27th, next day after learning of his having absconded, wrote to defendant's agent at St. Louis asking if the application had been approved and if so when he might expect the bond. He said nothing as to what he had learned about Clary. Several days later, on October 4th, plaintiff wrote to defendant at Philadelphia asking if the application had been approved and what was causing the delay, and if it was for lack of replies from references he could perhaps assist in getting such replies. In this letter plaintiff also failed to state that he had information that Clary had absconded.
It was in answer to this last letter that defendant wrote under date of October 6th that it had sent the bond on October 4th and had not sent it sooner because of the impression spoken of above and expressing regret at the delay. Plaintiff received the bond and then, on October 12th, he wrote to both the agent at St. Louis and to defendant at Philadelphia notifying them that Clary had absconded on September 26th, leaving a shortage of $ 494.55. On the next day, October 13th, the agent at St. Louis acknowledged receipt of the notice and asked plaintiff to send any other information he might obtain. There was further correspondence to which we will refer further on.
The defendant contends that it was led to issue the bond through the fraud and deception of plaintiff in the letters asking that the bond be sent to him when he knew of the defalcation and fraudulently suppressed such knowledge. The contention is that no valid contract was made by defendant. A contract of suretyship against loss by dishonesty of employees is, for all practical purposes, a contract of insurance, and the contract must be governed and construed as an insurance policy. [Shockman v. U.S. System Co., 92 Wis. 366; Champion Ice Co. v. American Bond Co., 115 Ky. 863, 75 S.W. 197]. An insurance company's contract, drawn by such company, is to be construed most strongly against the company. [Wertheimer Shoe Co. v. Casualty Co., 172 Mo. 135, 72 S.W. 635; American Surety Co. v. Pauly, 170 U.S. 133, 42 L.Ed. 977, 18 S.Ct. 552.] And no reason exists why the same rule should not apply to a bond surety company giving bond to secure employers against loss by dishonesty of employees. With this preliminary statement of the law, we will ascertain whether there was a valid contract between the parties and when it took effect.
When an application for fire insurance is made and the terms thereof agreed upon between the company's authorized agent and the insured, and a policy agreed to be issued embodying such terms, the agreement is complete; even though credit be extended for the premium. [Baldwin v. Insurance...
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