102 Kan. 365 | Kan. | 1918
The opinion of the court was delivered by
The bank brought this action on a bond given by Colton, its former cashier, and the guaranty company as surety, to recover for loss sustained by reason of the fraud and dishonesty of Colton. The trial was by the court, resulting in findings that Colton had appropriated to his own use certain rents from property belonging to the bank, and had taken from its securities a note signed by his mother for $800, by which the bank sustained loss; and that his acts were of such a fraudulent and dishonest nature as amounted to embezzlement. The bank was given judgment for the loss sustained in these transactions, and defendants appeal.
By the terms of the bond the surety company agreed to reimburse the bank for all pecuniary loss sustained by reason of the fraud or dishonesty of Colton in connection with the duties of his office “amounting to embezzlement or larceny,” and the main contention urged is, that the demurrers to the petition should have been sustained on the ground, that the petition failed to allege that the cashier’s acts amounted to embezzlement or larceny. The bank’s location was in Oklahoma, and it is urged that the petition should have pleaded the laws of that state defining these offenses.
It was not necessary that the petition should allege, or that the proof should establish, facts sufficient to constitute the crime of embezzlement or larceny. The purpose of the bond was to indemnify the bank against pecuniary loss occasioned through the fraud, or dishonesty of Colton in connection with his duties as cashier, and the words “amounting to embezzlement or larceny” cannot be given the effect contended for. They do not so far qualify the words “fraud and dishonesty” as to relieve the surety, company from liability until the bank produced testimony which would haves been sufficient in a criminal case to convict Colton of one of these crimes. Bonds
“Such a narrow construction of the provisions of the contract is not required by the law, and was never contemplated by the parties to it. While larceny is a common-law crime, yet in this state the punishment therefor -is statutory. Embezzlement is purely a statutory crime, but the terms ‘larceny’ and ‘embezzlement,’ in the bond or policy sued on, are used as generic terms to indicate the dishonest and fraudulent breach of any duty or obligation upon the part of an employe to pay over to his employer, or account to him for, any money, securities or other personal property, the title to which is in the employer, that may in any manner come into the possession of the employe. It will be observed that the bond in this case is a printed pne — prepared, doubtless, by a skilled attorney in appellee’s employ. The contract expressed therein is but a form of insurance, and the law of insurance is that, in the- construction of policies, if there be any ambiguity in them, it must be construed most strongly against the insurance company.” (p. 872.)
To the same effect is City Trust, etc., Co. v. Lee, 204 Ill. 69. In Frost’s Law of Guaranty Insurance, 2d ed:, the author says:
“To summarize briefly what has preceded, it may be asserted with confidence that the term ‘embezzlement,’ as-used in fidelity insurance, does not call for the same technical proof of fraudulent acts on the part of the ‘risk’ amounting to the crime of embezzlement as would be required were the latter being prosecuted under the statute for the commission of such crime.” (p. 117, § 43.)
In McIntyre v. Surety Co., 97 Kan. 629, 156 Pac. 690, the conditions of the bond were somewhat broader than in the case at bar. The surety company agreed to pay the shortage of the
The plaintiff introduced in evidence the statutes of Oklahoma defining the offenses of embezzlement and larceny, but this was unnecessary. It furnished no assistance to the trial court in determining whether or not the cashier’s conduct constituted a breach of the bond. Since the trial was by the court, the defendants could not have been prejudiced by the evidence. Without regard to the statutory definition of these offenses, the facts established by the evidence justified the conclusion of law that the cashier’s conduct amounted to embezzlement within the meaning of that term as used in the bond. To hold otherwise would defeat the purpose for which the bond was given and the premiums accepted by the surety company. We think the term “embezzlement” as used in the bond has a generic, and not a specific, meaning. The purpose was to indemnify the bank from loss occasioned by the official’s fraud or dishonesty of the general character and nature usually involved in embezzlement or larceny. This accords with our previous decisions in the cases we have cited, holding such contracts mere forms, of insurance, and, applying to them the law of insurance, construing all ambiguities in their terms most strongly against the insurer.
Colton testified that in a conversation with Mr. Guernsey, one of the officers of the bank, he was authorized to withdraw the note, charge it off, and return it to the maker, and it is urged that the findings in respect to this transaction are contrary to the evidence; that while Colton may have been mistaken as to the extent of his authority, he acted under a claim of right and was not, therefore, guilty of any fraud or dis-, honesty. He was a defendant and his declaration must be regarded as self-serving; besides, Mr. Guernsey was a witness and denied that any such conversation took place. Manifestly, the court believed Mr. Guernsey’s testimony.
The judgment is affirmed.