Texas Nat. Bank of Dallas v. Fidelity & Deposit Co. of Maryland
| Decision Date | 29 August 1975 |
| Docket Number | No. 5458,5458 |
| Citation | 526 S.W.2d 770 |
| Parties | TEXAS NATIONAL BANK OF DALLAS, Appellant, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Appellee. |
| Court | Texas Court of Appeals |
Crocker & Murphy, Terence J. Murphy, Dallas, for appellant.
Strasburger, Price, Kelton, Martin & Unis, Frank L. Skillern, Jr., James K. Peden, III, Dallas, for appellee.
This is a suit on a 'Banker's Blanket Bond,' by a bank against a bonding company. The trial court sitting without a jury held that the bank take nothing against the bonding company, from which the bank appeals. We affirm.
Plaintiff-Appellant Texas National Bank of Dallas (hereinafter called 'the bank') brought this suit against Defendant-Appellee Fidelity and Deposit Co. of Maryland (hereinafter called 'the bonding company') and Leslie L. Stewart, a customer of the bank. The bank sued Stewart for the unpaid balance due upon his note owing to the bank in the principal amount of $40,326.91 plus 10% Interest and attorney's fees (as called for in the note) with an alternative cause of action based upon fraud. The bank sued the bonding company for $40,326.91 plus 10% Interest based upon the 'Banker's Blanket Bond' known as 'Standard Form No. 24' which the bonding company had theretofore issued to the bank.
The trial court sitting without a jury awarded the bank judgment against Stewart for $40,326.91 plus interest and attorney's fees as prayed for; however, the bank was denied any recovery against the bonding company, from which take-nothing judgment the bank appeals.
As of January 5, 1970, Stewart was indebted to the bank in the amount of $65,000.00, consisting of three notes, a $36,000.00 note, a $21,000.00 note renewed on that date, and an $8,000.00 note executed on that date. The proceeds of the latter note were the last monies advanced to Stewart by the bank at any time. The $36,000.00 note was subsequently renewed in March, 1970, and the $8,000.00 note was renewed in April 1970. As of April 13, 1970, Stewart's indebtedness to the bank remained at $65,000.00. On the last-mentioned date Stewart delivered to the bank as collateral for his debts two stock certificates representing 2,000 shares of Graphic Science, Incorporated. Stewart made no payment on his indebtedness at that time. On April 24, 1970, Stewart renewed his $21,000.00 note, and on July 3, 1970, Stewart's three notes were combined into a single note for $65,000.00. On July 31, 1970, Stewart delivered two additional stock certificates representing 2000 shares of the same company, Graphic Science, Inc., these certificates being in the name of Allen Glover to be similarly held as collateral for his debt, which remained at $65,000.00.
Stewart's note was subsequently renewed on November 6, 1970; and on December 24, 1970, Stewart made a payment which reduced the debt to $61,436.21. Thereafter, the balance of the indebtedness was reduced by the disposition of collateral held by the bank, until at the time of trial the balance of the note was $40,326.91.
It is undisputed that the stock certificates representing 4000 shares of Graphic Science, Inc., were forgeries and worthless at all times material to this controversy. Stewart delivered these instruments to the bank at the times above-mentioned because of a threat by the bank each time to call his loans and demand immediate payment thereof. The bank did not discover the forged nature of the certificates until April, 1971.
Appellant bank asserts one point of error contending the trial court erred in failing to render judgment for the bank against the bonding company 'after Stewart delivered counterfeit securities to Texas National (Bank) as collateral for his note, loss was effected therefrom and F. & D. refused payment to Texas National under its banker's blanket bond, especially Insuring Agreement (E) which promised payment for such loss.' We overrule this point.
The pertinent provisions of Insuring Agreement (E) of the bond in question, (upon which the bank seeks recovery against the bonding company) provides that the bank is indemnified and held harmless for the following:
'(E) Loss (1) Through the Insured's having, in good faith and in the course of business, whether for its own account or for the account of others, in any representative, fiduciary, agency or any other capacity, either gratuitously or otherwise, purchased or otherwise acquired, accepted or received, or sold or delivered, or given any value, extended any credit or assumed any liability, on the faith of, or otherwise acted upon, any securities, documents or other written instruments which proved to have been
(a) counterfeited or forged, as to the signature of any maker, drawer, issuer, endorser, assignor, lessee, transfer agent or registrar, acceptor, surety, or guarantor or as to the signature of any person signing in any other capacity or . . ..' (emphasis supplied).
By the language thus used, it is only loss occurring Through the activity described which raises coverage under the bond.
The trial court made findings of fact and conclusions of law, pertinent of which are as follows:
'7. On or about April 13, 1970, Defendant Stewart pledged to Plaintiff certain stocks as security for his debt, including what purported to be two stock certificates in the name of Defendant Stewart for 1,000 shares each in a company named Graphic Sciences, Inc., which certificates are Plaintiff's exhibits 3 and 4. Said certificates were not genuine but were counterfeit, Defendant Stewart having caused same to be printed. Said certificates were worthless at the time they were pledged and at all times thereafter.
8. At the time of the delivery of said certificates, Plaintiff could not have collected its debt from Defendant Stewart if Plaintiff had called Defendant Stewart's loan.
9. Plaintiff did not sustain a loss through the pledge by Defendant Stewart of the two stock certificates referred to in Finding 7.
10. On or about April 24, 1970, Pl...
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