93 Cal. 7 | Cal. | 1892
Plaintiff is a fire insurance company having its office in the city of Yew York. Defendant is a corporation organized for the purpose of issuing indemnifying bonds to employers, guaranteeing the honesty of employees occupying positions of trust. Smith & Moody were the general agents for plaintiff in the state of California, with an office in the city of S.an Francisco. Upon October 21,1885, defendant issued its bond to plaintiff, guaranteeing the payment of all losses suffered by plaintiff through the fraud and dishonesty of its agents, Smith & Moody, and this bond was renewed for the year ending October 31,1887. In March, 1887, Smith & Moody failed in business, and at that time were indebted to plaintiff in the sum of $2,819.25, moneys collected by them as agents of plaintiff, which amount they converted to their own use, and this action is brought to recover from the agents and their surety, the appellant herein, the amount of such defalcation. Judgment went for the plaintiff in the lower court, and this is an appeal by the defendant surety company from the judgment and order denying a new trial.
It is conceded that plaintiff’s agents defaulted in a large sum of money during the life of the bond given by appellant, but, to defeat a recovery, appellant insists that the evidence establishes the fact that the bond was obtained by reason of false and fraudulent representations made by the plaintiff, and also that after its delivery, plaintiff’s agents were guilty of making many defaults in the settlement of their accounts, to the knowledge of plaintiff, and plaintiff failed and neglected to notify appellant of such facts as required by the provision of the bond hereinbefore set out. There are preliminary objections made by respondent pertaining to the construction to be placed upon the bond, the order of renewal, employer’s certificates, etc., that we will not pause to notice, but will examine the merits of the appeal upon the broad ground as above set forth by appellant.
Was the failure of plaintiff to give notice that Smith & Moody were not making their remittances at the time demanded by the contract a substantial violation of that condition of the bond wherein plaintiff agreed to notify appellant “ of any act of omission or commission on the part of the employees that might involve a loss for which the company is responsible hereunder ” ?
There is no evidence whatever in the record to support the allegation of the answer that the statements of
With reference to the quotations from the certificates of plaintiff already noticed, and others of which appellant complains as being false and misleading, we find no just cause for complaint. It appears that Smith & Moody, during the period of their agency, had failed to make their remittances at the time demanded by the terms of the contract, but had made them within a reasonable and satisfactory time thereafter, and were conducting the business in the ordinary and regular way. It further appears that their delay in forwarding remittances was not attributable to dishonesty or lack of integrity, but was due to the wide field covered by the agency, and their inability to make collections. The plaintiff had knowledge of these facts, and recognized and treated its agents’ acts, with the agents’ knowledge, as a substantial compliance with the terms of the contract. Plaintiff certainly had the right to, and did practically, waive that provision of the contract, and extend the time in which its agents were entitled to forward these remittances. Under such circumstances, can it be said that the agents were in default or arrearage at any time, unless by failure to remit upon demand of plaintiff? It could only be a default under a provision of the contract, — a provision which was waived, and thus such a technical, unsubstantial default, that it could never have served any purpose in the final determination by appellant as to the issuance or non-issuance of the bond of guaranty. The default or arrearage referred to in these certificates would seem to be such defaults and arrearages as would, to some extent at least, indicate dishonesty or want of integrity upon the part of the agents, and not such as were wholly innocent in themselves, and which might result to the most careful and honest of men.
Let the judgment and order be affirmed.
Paterson, J., and Harrison, J., concurred.
Hearing in Bank denied.