Western Indemnity Co. v. Free and Accepted Masons

• Decision Date: 27 October 1917
• Docket Number: (No. 8513.)
• Citation: 198 S.W. 1092
• Parties: WESTERN INDEMNITY CO. v. FREE AND ACCEPTED MASONS OF TEXAS.
• Court: Texas Court of Appeals

198 S.W. 1092

WESTERN INDEMNITY CO. v. FREE AND ACCEPTED MASONS OF TEXAS.

(No. 8513.)

Court of Civil Appeals of Texas. Ft. Worth.

October 27, 1917.

Rehearing Denied December 1, 1917.

Appeal from District Court, Tarrant County; Bruce Young, Judge.

Action by the Free and Accepted Masons of Texas (colored) against B. R. Bluitt and others. Judgment for plaintiff, and defendant Western Indemnity Company appealed. Reformed and affirmed.

Carden, Starling, Carden, Hemphill & Wallace, all of Dallas, for appellant. Mike E. Smith, O. W. Gillespie, and G. W. Dunaway, all of Ft. Worth, for appellee.

BUCK, J.

The Free and Accepted Masons of Texas (colored) instituted this suit against B. R. Bluitt, as principal, and the Western Indemnity Company, as surety, to recover the sum of $13,918.09, together with attorney's fees and penalties, on two certain fidelity bonds executed by Bluitt, as principal, and the Western Casualty & Guaranty Insurance Company, as surety. The last-named company, subsequent to the execution of the bond, sold and transferred to the appellant company all its rights, interest, and property, and the appellant company assumed its obligations. Hence the appellant company was regarded in the trial court as having executed the original bond, and will be so treated here. Bluitt answered by general demurrer and general denial, and the indemnity company answered by general demurrer, general denial, and various special exceptions, which will be noted in the course of this opinion.

Plaintiff alleged that Bluitt was the duly elected Grand Treasurer of the order in Texas, and that it was his duty to receive and safely keep in his possession certain sums of money belonging to plaintiff, consisting of dues, beneficiary, and per capita tax assessments, and sick benefit and entertainment funds collected by the plaintiff from its members, and to account to plaintiff for same. It alleged that on or about the 26th day of May, 1911, said Bluitt, as principal, and the Western Casualty & Guaranty Insurance Company, as surety, for a valuable consideration, executed and delivered to plaintiff two certain bonds in writing, one in the sum of $15,000, dated May 26, 1911, and the other in the sum of $10,000, dated May 31, 1911, and that said bonds by their terms were to cover a period of one year, ending on the 26th and 31st days of May, 1912, respectively. It was claimed by the plaintiff that the bonds were, and were intended to be, cumulative, and constituted an indemnity bond in favor of the plaintiff in the sum of $25,000; but the defendant below pleaded that the bond in the larger amount was intended, and was in fact, succeeded by the $10,000 bond, and the judgment hereinafter mentioned so finds.

Plaintiff alleged that on the 26th day of October, 1911, the said Bluitt, as plaintiff's Grand Treasurer, had on hand and in his possession as funds of plaintiff derived from the sources above mentioned the sum of $151.41, and that subsequent thereto, and up to and including July 12, 1912, plaintiff received from said sources the sum of $37,671.30, making a total of $37,821.71; that he paid out and accounted to plaintiff after October 26, 1911, various mentioned sums of money, aggregating $23,904.62; that said Bluitt fraudulently embezzled and misapplied and appropriated to his own use and benefit, during the period from October 26, 1911, to October 5, 1912, $13,918.09, and thereby defendant Bluitt became indebted to and bound to pay to plaintiff the said sum. It further pleaded that due notice of said shortage and embezzlement on the part of Bluitt had been given to the Western Indemnity Company by plaintiff, and that on April 26, 1913, it made a demand in writing upon said company for said amount. Copies of the two bonds sued upon were attached to plaintiff's petition as exhibits.

The defendant company specially pleaded that to induce the Western Casualty & Guaranty Insurance Company to execute said bond, and to become the surety of said Bluitt, plaintiff, acting through and by its Grand Master, John W. McKinney, made application in writing to the said bonding company, and in said application made statements, answers, and representations which were stated in said application to be true and correct, but that said answers, representations, and statements were in many alleged respects untrue and false, and that said statements and representations were material and induced defendant's predecessor in the bond to execute the same, and that it would not have executed said bond had it not relied upon the truth of said statements, answers, and representations. Wherefore defendant pleaded that it should be discharged. Defendant further pleaded that the plaintiff had failed to give the defendant immediate notice, as provided in the bond, of Bluitt's shortage and embezzlement, and that in fact more than 60 days elapsed after the fact of said shortage and embezzlement had become known to the Grand Master and other officers of the plaintiff before any notice thereof was given to the defendant, and on this ground it claimed to be discharged from the obligations of the bond.

The record in this case is very voluminous; the transcript consisting of 177 pages, the statement of facts of some 358 pages, the brief of appellant presents some 198 pages, while that of appellee contains 131 pages. Hence the consideration of the case has required considerable time and labor on our part, and it would be impracticable within the proper limits of an opinion to discuss separately each of the numerous propositions contained under the several assignments, or to discuss and seek to distinguish the various authorities cited, respectively, by appellant and appellee on the several issues presented. Wherefore we will content ourselves with a discussion of the controlling questions raised by appellant, submitting, in part, the authorities which, in our opinion, support the conclusions we reach.

Appellant's first assignment complains of the refusal of the court to give a peremptory instruction, basing its claim upon the contention that the bond in this case provided as a condition precedent that upon the discovery of any officer of the obligee of loss thereunder, "written notice of such loss shall be immediately given by the obligee to the company, * * * and failure to give such immediate notice * * * within such time shall relieve the company from all liability hereunder"; that the evidence without dispute disclosed that on September 30, 1912, Bluitt, who resided in Dallas, wrote to Grand Master McKinney, who resided in El Paso, a letter in which he disclosed the fact that he was unable to pay many of the warrants issued by the Grand Lodge, although he was supposed to have funds sufficient therefor in his possession as Grand Treasurer, and that he had negotiated loans on all his property to the full extent it would stand, and that he had no source from which he could get the money with which to pay these claims, except the sale of his property and his professional income as a physician; that, on October 5th thereafter, there was a meeting in Ft. Worth of various Grand Lodge officers, including the Grand Master, the Grand Secretary, and the Grand Treasurer, and that at said meeting Bluitt disclosed to those present his inability to pay these amounts mentioned, and that an audit of his books revealed that he was short in his accounts in the sum of $13,397.26; that in spite of the terms of the bond heretofore mentioned requiring immediate notice to defendant company of any shortage or embezzlement or defalcation on the part of Bluitt, plaintiff did not notify the defendant of the condition theretofore known to its officers until December 2, 1912, more than 60 days after Bluitt had written, and McKinney had received, the letter before mentioned. The evidence discloses that said letter was written by Bluitt on the date mentioned, and that the meeting of the Grand Lodge officers was held as claimed, and that the audit of the books disclosed the shortage in the amount alleged upon the date mentioned, and that no notice was given of such condition until December 2, 1912. The evidence further shows that at this meeting at Ft. Worth, Bluitt offered to turn over to the Grand Lodge his property, which he claimed to be reasonably worth $40,000 or $50,000; that an investigation was made by the Grand Master and other officers of the condition of said property, in order to determine whether or not the amount of shortage revealed could be made out of the sale of said property; that a deed of trust was executed by Bluitt in favor of William H. McDonald, Grand Secretary, on certain described property located in Dallas and belonging to Bluitt; that this instrument was rejected by the Grand Master, and that he stipulated that a straight deed should be made to such property to the Grand Lodge, in accordance with the offer he claimed Bluitt made at the Ft. Worth meeting; that an attorney was employed by McKinney to investigate the titles and condition of the property offered, and it was found, as testified to by McKinney and other Grand Lodge officers, that said property, each and all of it, was covered by mortgages or vendor's liens, which rendered the prospect of realizing out of the sale of such property sufficient funds to pay off the indebtedness extremely improbable; that thereupon McKinney refused to accept said property in satisfaction of said alleged shortage, and notified in writing the defendant company that Bluitt was in arrears in a sum not yet definitely determined, but supposed to be about $13,700, and that claim was made on the defendant company therefor; that Bluitt had been suspended from his office and was not authorized to further act as Grand Treasurer. In said letter a request was made for blanks for making proof of loss.

In order to determine the tenability of the contention made under this assignment and proposition, it will be necessary for us to...