Salley v. Globe Indemnity Co.

• Decision Date: 05 February 1926
• Docket Number: 11918.
• Citation: 131 S.E. 616,133 S.C. 342
• Parties: SALLEY v. GLOBE INDEMNITY CO. ET AL.
• Court: South Carolina Supreme Court

131 S.E. 616

133 S.C. 342

SALLEY v. GLOBE INDEMNITY CO. ET AL.

No. 11918.

Supreme Court of South Carolina

February 5, 1926

Appeal from Common Pleas Circuit Court of Orangeburg County; Thos S. Sease, Judge.

Action by J. Stockes Salley, as receiver, against the Globe Indemnity Company and another. From a judgment for plaintiff defendants appeal. Reversed and remanded, with directions.

W. C Wolfe and J. L. Dukes, both of Orangeburg, for appellants.

A. H Moss and M. E. Zeigler, both of Orangeburg, for respondent.

RAMAGE J.

This action was brought to enforce an alleged liability upon a bond written by the Globe Indemnity Company. It appears that the Orangeburg Bonded Warehouse Company was engaged in the business of storing cotton for hire in the city of Orangeburg, S.C. By an order of the court, this company was put into the hands of a receiver in October, 1920, and J. Stokes Salley was appointed receiver to take charge of this warehouse, and he still holds this position. A fire occurred in December, 1920, which burned a portion of the cotton stored there. For some time previous to October 26, 1920, defendant George L. Blackmon was the manager of this warehouse and, upon the appointment of J. Stokes Salley as receiver, he continued the said Blackmon in the position as manager. He was required by Salley to furnish bond. The following is a copy of such portions as are material to the inquiry here:

The bond was dated 18th of February, 1921, and was to be effective from March 18, 1921, to March 18, 1922; was in the sum of $10,000; "the surety * * * shall * * * reimburse the employer * * * for such pecuniary loss as the employer shall have sustained of money, securities or other personal property belonging to the employer or in the employer's possession and for which the employer may be legally liable, by any act of fraud, dishonesty, forgery, theft, embezzlement, unlawful abstraction, or willful misapplication upon the part of the employee in the performance of the duties of the office or position in the above service of the employer hereinbefore referred to, as such duties have been or may hereafter be stated in writing by the employer to the surety, and occurring during the continuance of this bond and discovered at any time within 6 months after the expiration or cancellation of this bond. * * *"

At the time of the fire in December, 1920, when a portion of the cotton was destroyed, the insurance company settled for the burned cotton and there was a record left as to how much cotton still remained in the warehouse. In December, 1921, the warehouse was checked up and a shortage of 50 bales of cotton was discovered. This action is brought against the defendants for this shortage, on the above-mentioned bond.

As it will be necessary to go into the testimony fully in this case in order to determine the issues, further statement of same need not be made here.

This case was tried on circuit, before Judge Sease and a jury at the October, 1923, term of the court for Orangeburg county. A verdict was returned for the plaintiff for the amount sued for, and defendants appealed from the action of the circuit court.

Under our view of the case only two questions will be considered: (1) What is the rule as to the weight of testimony to be applied in this case? (2) Was it error to refuse to direct a verdict for the defendants?

1. Judge Sease held that the plaintiff only had to prove his case by the greater weight of the evidence and not beyond a reasonable doubt. We think Judge Sease was right in this holding. The rule is so well established that a plaintiff in the court of common pleas is only required to prove his case by the greater weight of the evidence as not to require even citation of authority Any other rule would only produce confusion worse confounded." If there be any statements in any of the cases to the effect that the "preponderance of evidence" rule is not universal in the common pleas court, such statement and such case is so glaringly and utterly in opposition to the law and practice of the courts as to be entirely disregarded. Judge Sease was decidedly right, and is supported by the following authorities in his position: 25 Corpus Juris, p. 1114, and cases cited in L. R. A. 1916F, at bottom of page 435 (second column) and at the top of page 436, in the argument of counsel. The main case is referred to further on in this opinion.

2. The next question that arises is as follows: Was it error to refuse to direct a verdict for the defendants? As a preliminary, certain questions of law and fact will have to be examined.

The words in the bond are "fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, or willful misapplication." It is plain that mere negligence or carelessness will not be sufficient to hold the surety under this bond. This is apparent from even a casual reading of the words. The language used implies positive acts of wrongdoing. The authorities are equally as positive and to the point. "Thus a loss resulting from the employee's carelessness or inattention to business, or other acts or omissions, not fraudulent or dishonest, imposes no liability on the insurer." 25 Corpus Juris, pp. 1093, 1094; Monongahela Coal Co. v. Fidelity, etc., Co., 94 F. 732, 36 C. C. A. 444; State Bank v. Hartford Acc., etc. Co., 28 Pa. Dist. R. 847; Sinclair v. National Surety Co., 107 N.W. 184, 132 Iowa, 549; Kansas Flour Mills Co. v. American Surety Co., 158 P. 1118, 98 Kan. 618. "Surety bond, indemnifying principal against loss sustained by fraud or misapplication of agent, does not extend to loss by simple mistake of agent without fraud in paying for merchandise." Kansas Flour Mills Co. v. American Surety Co., 158 P. 1118, 98 Kan. 618. "Where a fidelity bond insured the obligee as principal against loss through the personal dishonesty of its factor, the mere failure of the factors to turn over to the principal on demand property belonging to him, or the proceeds thereof, is not a breach of the bond rendering the surety company liable." Sinclair v. National Surety Co., 107 N.W. 184, 132 Iowa, 540. There are more cases to the same effect cited on pages 1094 and 1095 of volume 25 of Corpus Juris.

Now let us see if there was any testimony to go to the jury on this allegation of the complaint, which condenses the contention of the plaintiff:

"That, while the said bond was in force and operative, plaintiff lost 50 bales of cotton, of the value of $5,615.24 from its possession, and for which it was legally liable, and said loss was occasioned by the acts of fraud and dishonesty of the defendant George E. Blackmon, its said manager, and by other acts of the said (George E.) Blackmon against which the plaintiff was protected in and by the aforesaid bond, and the said defendants are justly and truly indebted to plaintiff in the said sum of $5,615.24 for the said cotton, etc."

We have seen the charge; now we shall investigate whether or not it is sustained by the evidence, as to fraud and dishonesty.

J. S. Salley, plaintiff sworn, says:

"Warehouse was burned on December 25, 1920, audit was made, insurance company paid for 700 bales of burned cotton audit showed 905 bales of cotton left in the portion of the warehouse not burned, continued Blackmon as manager required him to furnish bond. I discovered a shortage of 50 bales of cotton in warehouse in December, 1921. Blackmon had been manager continuously from the fire in December, 1920, to discovery of the shortage--shortage was discovered by an audit, a report made by accountants H. S. Blanton and R. M. Wilson. The duties of Blackmon as manager were to go to warehouse every day except Sunday and to follow my instructions. He had the keys to warehouse; I had none. I did not carry or keep any of the keys. I instructed him to keep close watch on the warehouse all of the time. I did not require him to be there every minute, but he was presumed to be there all day, and to deliver cotton when called for by the patrons of the warehouse and to bring me the canceled receipts and the storage money; he did that, generally. Blackmon was responsible to me for that cotton. I require Blackmon to report to me practically every day, and he made such reports. I cautioned him to keep the gates and the doors properly locked and to watch the premises and see that nothing was tampered with, and he told me everything was all right; never told me anything was wrong. The auditors, not Blackmon, discovered the shortage--warehouse is two stories, 38 bales short in the upper story and 12 in the lower. Blackmon delivered cotton along during the year 1921, when called for, some from the upper and some from the lower story. I think 13 deliveries were made when shortage was discovered, asked Blackmon to explain, but didn't do so to my satisfaction, being very vague--he told me that he did not have any watchman at the

...