*1 W. LEIGH CARY v. NATIONAL SURETY COMPANY.1

November 29,553. No. Doherty, Rumble, Bunn & for Butler, appellant. B.

8. Wennerberg and Sullwan Neumeier, respondent. £ EILTON, Justice.

Appeal from an order overruling a demurrer complaint. The demurrer ground the facts stated in the com-

1Reported in 251 N. W. 123. of action in plaintiff did not constitute cause favor plaint question defendant. The trial court certified that the For the was, opinion, doubtful. important its complaint of this case the are purposes allegations factual *2 true; to be considered as a thereof is neces- rather full statement sary. Bank of Rush to First National bond the issued its

Appellant by the any to loss sustained good make Minnesota, agreeing City, forgery, theft, of dishonesty, act personal bank reason of M. by G. or wrongful conversion, abstraction larceny, embezzlement, and its and of the bank president who was cashier vice Ericson, in the was and in thereof. The bond charge sole exclusive officer by re and January 1913, §5,000. 21, sum of It became effective January of by appellant was as newals continued until terminated impaired of 21, 1927, on bank closed because which date the was the United assets and one Adams receiver thereof appointed as comptroller currency. States of the He acted such until Decem as when receiver and is plaintiff Cary appointed ber was as still as from loss resulted acting such. The acts of Ericson which and for which sought is in action occurred between recovery this May 10, 1921,and May 29, 1926, both dates inclusive. of one guardian 7, appointed Ericson ivas April

On in kept and an account incompetent person, an Martin, E. L. Martin, L. He also Incompetent.” of Ernest “Estate bank entitled January 1, 1928, in the bank. On Ericson account personal had and one ivas as such guardian, Engberg appointed resigned 9, 1929, Engberg commenced an January 25, February On Adams as in behalf of the receiver action, incompetent, the sum of itself, as defendant the bank recover joined, and money Ericson used or loaned §8,500, alleging improperly that had incompetent, by withdrawing to the of belonging Martin, estate guardian converting of from his account as and §7,775 sum it to use of St. Croix Land & Loan Valley his own use in which had an account the bank. In such Company, also action had it that bank actual alleged either constructive knowl- acts of Ericson. edge alleged of the matters immediately began investigation

Adams an acts knowledge in did complaint. He not have Solely conversion or of Ericson. dishonesty part on the mat- purpose of information to as to the communicating appellant on the ters that alleged complaint might develop sent February 23, 1929, on the appellant bond, Adams it a com- telegram registered letter, advising mencement of the action and that he had bank in this matter for checking the records of the “just completed attor- the case so ascertaining the facts purpose From ney for trust can his answer court. prepare file question my mind my examination the records there is some * * or not I any irregularities as to whether there were but *, am not able to determine from the information I far have so been able to secure as to whether there has been default on the part of the employe your under bond. I However, feel that is my duty under the you circumstances advise facts that I just have from ascertained an examination of the records of the *3 bank. However, in provisions view the of the bond your with company, I am giving you this notice that there bemay an irregularity, and as soon Ias have completed my investigation and have ascertained the I facts the case will promptly write you and give such further may necessary. notice as be In the event that I should discover or determine that there has been a default on part the of the employe of the bank you will kindly advise me whether you have on forms which either notice or a claim may be or filed you.” -with acknowledging to the letter on March

Appellant replied receipt stating: thereof and bond provides:

“You will note that our “ duly presented hereunder must be Any against claim termination to within six months after the date of the * * reason. hereunder for surety’s that we are unable to enter- exceedingly regret we “Therefore, re- claim the matter and at the same time we must tain now known rights all of our and defenses that are to ourselves serve may develop.” or which hereafter

Shortly thereafter action was removed to federal court and there dismissed by plaintiff therein, begun and a new action July 20, by plaintiff against alone, the same bank complaint which contained substantially allegations the same as set out in the first action. As soon as Adams had notice thereof and on July 22, he sent a letter by registered appellant, mail to also a telegram, it of advising second commencement action and that the first had been In dismissed. this letter there was a comprehensive statement of the allegations complaint of the in that action as to the claimed improper by use Ericson of certain moneys to belonging the account of the and it further incompetent, stated: the trust receivership] allegations

“While denies the [the in order complaint, yet, protect claim matter, its interest this is respectfully made National New Surety Company York under the above described and policy amount, the above proof of alleged said being loss submitted herewith follows: follows a detailed when statement of the dates and amounts [Here Ericson had withdrawn money from account as guardian his transferred the same to the credit of own or his account of the St. Croix Valley Land & Loan Company]. claim under the City National Bank of Bush makes

“The First im- for all aforesaid sums reason aforesaid policy may or conduct that there have been on the illegal proper M. Ericson, bank, G. an officer of said who was covered National offers to furnish the policy. undersigned aforesaid require with other information as it Surety Company may such matter, in connection with aforesaid said desire *4 of loss.” proof 24 March July appellant

On wired the receiver: “See our letter in which fifth.” On wrote the receiver a letter July it was stated: among things other but your 22nd, letter of the just registered

“We have received 5th, you addressed March again your must call attention to letter " provides attention to fact that the bond calling a within six months duly presented claim must be to the surety’s liability. You the date of the termination you will relief appreciate give therefore we are unable this and unication instance, returning your are comm accordingly of July 22nd, wherein above you against make claim bond numbered. it would seem that the suit should

“From few facts before us of M. Guard- Ericson, on the bond G. against be directed Incompetent.” L. Martin, ian of the Estate of Ernest Bank (Martin federal court v. First Nat. trial [D. C.] 840) 1931, judgment 51 F. on resulted, August 10, [2d] the bank in the sum of with interest. $6,993, January 9, 1932, plaintiff further, On here wrote the appellant advising inclosing of the outcome of the of the de- action, copy cision, findings entry and order for as to judgment, advising its and that he had been advised that no relief could be obtained by and that appeal inevitable, the loss was a claim on the making bond of a $8,216.98. loss the sum of It was also stated therein:

“If there is further information can give you we can if you assistance we render or desire us action to take way appeal or please otherwise advise.” Appellant replied January on 15, 1932, saying: “We are herewith returning your letter of 9th January together with its enclosures. again your

“We call attention you to letters addressed to March 5th, 1929, July 25th, 1929, 26th, calling atten- July tion to duly the fact that the bond that a claim provides must be surety within six months after termination of the surety’s liability.

“This letter is written without prejudice with a full reserva- rights tion all and defenses which may we now have or later acquire under terms of the bond.” *5 and did compelled March receiver was to 23, 1932, plaintiff

On the (in judgment) on pay by Engberg account of the claim made present of the $4,962.85, sum and for the loss so occasioned the bank action of was, August 24, 1932, by commenced service summons in damages all complaint upon appellant, remitting however $2,975. excess of from precluded that is plaintiff are of

The contentions comply and its receiver failed'to the bank (1) Because recovery: be required given that notice bond which provision with the of facts becoming aware days ten after within surety company the Ericson and on the of dishonesty personal an act of indicating with to comply and its receiver of failure of the bank because com- surety with the requiring filing of the bond provision dis- days within 90 after statement of loss of an itemized pany and its of failure of the bank (2) because covery loss; requiring of the bond comply provision receiver to with the after within six months surety company claim to the be bond; under the surety’s liability of termination of the date for commencement of (3) because the bond limited the time an. of notice of claim. The years giving pro- action two after tbe to in first contention not cor- policy visions of the referred are It provides: therein. rectly summarized shall not have had at date here- “Provided, employer that the * * * any employee any new knowl- of, adding or at the date of act of any employees, having guilty any of said been edge or employer’s service, in the dishonesty any position personal * * notified and shall have person *, other the service ** * giving all by telegraph registered letter, * * days after (10) becoming within ten particulars *, known act of said indicating by any act or facts such aware of such (90) days loss, have, ninety such shall within employees, filed with the an itemized discovery loss, such * * * and rendered assistance loss, every statement of such * * * justice which bringing employee to aid such require.” surety may erro- upon are based first and third contentions

Appellant’s when bank occurred neous the loss presumption one to was bond of Ericson were committed. wrongful acts because by it any loss sustained indemnify good the bank—to make until the bank acts of No sustained Ericson. loss was guardian it to the March made payment when rendered judgment E. L. Martin, because of the incompetent, federal court. *6 liability, indemnify against a contract to upon

“To recover actual loss.” incurred, but liability only must show not plaintiff Dunnell, 150; 2 Am. R. 3 (461), 15 Minn. 376 Eames, Weller v. & (2 Supp.) Minn. ed. Dig. § within the loss notice of had given

If respondent after days, within 90 of loss statement an itemized days, and filed the ex- with complied have he would judgment, on the payment all had at respondent However, of the contract. pressed terms evi- He progressed. as matters fully advised kept appellant times within everything did faith and good in utmost dently acted defalca- claimed a list of the sending of reason, even to the extent order decision, findings, and a of the federal court’s copy tions nonliability its claim of Appellant for asserted judgment. It had the inclosures. letters, together returned with respondent’s not matter; prejudiced for of the ample investigation time now It cannot any any respondent. acts or omissions of way by bond, of the provisions assert a default successfully as defense of statement its letter had, by of which it performance subsequent exceedingly regret letters—“we March matter”—indicated any are unable to claim the we entertain disclaimer repeated not be absolute accepted. Appellant’s would other than the liability open respondent of all left no course Minn. & Dunnell, Dig. (2 Supp.) institution of an action. See 3 ed. also of the contention that 4686(a), disposes 4789. This §§ two-year brought period. action was not within the The action -was after had occurred. commenced about five months loss remains for appellant’s predicated There consideration contention upon provision bond, the six-months bond. The attached to and made a complaint, provided: terminate immediately hereunder shall liability surety “The of the (a) discovery by Upon of an subsequent employee, as to acts (b) Any employee; hereunder such employer default (30) days (c) Thirty leaving employer; the services employee from the of written notice employer receipt employees. or all said same, its desire to terminate as to * # * duly presented must be hereunder “Any claim of termination the date months after (6) six surety within and no action reason, liability hereunder surety’s (2) within two begun unless hereunder brought can be proceeding claim.” of such notice given have employer shall years after the absolutely termi- that all its contention is Appellant’s 1927), (January cancelation after the notice of days nated 30 months ceased at the end of six claim right and that the file of the above paragraph do not The first agree. thereafter. We lia- termination of the relative to quoted bond, provisions *7 subsequent employe. acts of an only refers bility surety, committed liability to when for acts There is no direct indication as The in force shall terminate. time that the bond was during the barred unless within presented that a claim is provide bond does not that the claim bond, after the termination but six months termina- “within six months the date of must be concede, light cannot in the surety’s liability.” tion of the We it the intention to bar quoted, that was provisions the other above during acts of Ericson which had occurred recovery improper in force. If such time that the bond was intention clear and appropriate language. should have been evidenced surety’s liability” that the “termination of the suggestion language bond, date of expiration means termination committed and improper regard- of when the acts Avere regardless If they approve. of when were we cannot discovered, less 198 con of tbe more than one language ambiguous—open bond is should chose against appellant, struction—it be construed who language respondent. used issued the bond, favor George 288, A. Hormel & v. 112 Minn. Co. American Co. Bonding 12, N. W. Co. L.R.A.(N.S.) Pearson v. U. S. F. & G. 513; 240, 138 Minn. 164 N. W. 919.

The demurrer was properly overruled.

Affirmed.

STONE, Justice.

I concur in the result.

ROSE ORTH v. ANDREW WICKMAN.1

November 29,558. No. *8 1Reported in 251 N. 127.W.