138 Minn. 240 | Minn. | 1917
Defendant is a Maryland corporation engaged in the business of bonding or guaranteeing to employers the fidelity of their employees. In January, 1913, it issued its bond in the sum of $10,000 to the Osseo State Bank guaranteeing it for one year against pecuniary loss sustained by reason of the fraud or dishonesty of Joseph B. Thompson, its then assistant cashier. Each year thereafter the bond was continued in force by a renewal certificate, the last being dated January 3, 1915. In July, 1915, it was discovered that Thompson had embezzled large sums from the bank. The state superintendent of bands took charge of the institution, and, after ascertaining the situation, brought this action on the bond to recover for the defalcation. A verdict for the full amount was returned. Defendant moved in the alternative for judgment notwithstanding the verdict or a new trial. The motion was denied and defendant appealed.
The numerous errors assigned have been grouped and discussed by appellant under four or five propositions:
“That for the consideration of the premises the Company shall, during the term above mentioned or any subsequent renewal of such term, and subject to the conditions and provisions herein contained, at the expiration of three months next, after proof satisfactory to the Company, as hereinafter mentioned, make good and reimburse to the said Employer, such pecuniary loss as may be sustained by the Employer by reason of the fraud or dishonesty of the said Employee in connection with the duties of his office or position amounting to embezzlement or larceny, and which shall have been committed during the continuance of said term, or of any renewal thereof, and discovered during said continuance or of any renewal thereof, or within six months thereafter, or within six months from the death or dismissal or retirement of said Employee from the service of the Employer within the period of this Bond, whichever of these events shall first happen; the Company’s total liability on account of said Employee under this Bond or any renewal thereof, not to exceed the sum of Ten Thousand Dollars. * * *
“That the Company, upon the execution of this Bond, shall not thereafter be responsible to the Employer, under any bond previously issued to the Employer on behalf of said Employee, and upon the issuance of any Bond subsequent hereto upon said Employee in favor of said Employer, all responsibility hereunder shall cease and determine, it being mutually understood that it is the intention of this provision that but one (the last) Bond shall be in force at one time, unless otherwise stipulated between the Employer and the Company.”
The last renewal reads as follows:
Series 1015 Bank Department Amount $10000.00 Premium 25.00
United States Fidelity and Guaranty Company 5981, Home Office, Baltimore, Md.
In consideration of the sum of twenty-five dollars the United States Fidelity and Guaranty Company hereby continues in force'Bond 300,-420-12 in the sum of ten thousand dollars, on behalf of Joseph B. Thompson, cashier, in favor of Osseo State Bank, Osseo, Minn., for the period beginning the 2nd day of January, 1915, and ending on the 2nd day of January, 1916, subject to all the covenants and conditions of said original bond heretofore issued, dating from the 2nd day of January, 1912.
Provided, however, that the Company’s liability on the original bond and all its renewals shall not exceed the penalty of the original bond.
Witness the signature of the president and assistant secretary, this 15th day of October, 1914. > John R. Bland,
(Corporate Seal) . President.
Wm.F.Morgan,
Assistant Secretary.
Authorities nepd not be cited to the well settled doctrine that indemnity contracts of this sort and the ordinary life or fire insurance policies are governed by the same rules of construction. Ambiguities therein are resolved in favor of the assured. The caption of the renewal instrument indicates a continuance or extension of an existing obligation. In the body of the writing, the instrument delivered January 2, 1912, is specifically continued in force with the provision that the defendant’s “liability on the original and all its renewals shall not exceed the penalty of the original bond.” It does not treat a renewal as equivalent’to the issuance of a new bond. The reading of the last paragraph quoted above from the bond increases the ambiguity, for it speaks of the execution of separate bonds and makes the penalty named in the last bond so executed the limit of recovery. In the paragraphs first quoted only one bond is mentioned, and it does not speak of the renewal of the bond but concerning the renewal of the term or period during which the bond is to be in force. With the provisions for renewals without the formality of the execution of a new bond, with the last renewal certificate making the penal sum
This is the construction placed upon like bonds of defendant and the renewals thereof in Green v. U. S. Fidelity & Guaranty Co. 135 Tenn. 117, 185 S. W. 726; U. S. Fidelity & G. Co. v. Citizens Nat. Bank, 147 Ky. 285, 143 S. W. 997; U. S. Fidelity & G. Co. v. Shepherd’s Home Lodge No. 2, 163 Ky. 706, 174 S. W. 487; Rankin v. U. S. Fidelity & G. Co. 86 Oh. St. 267, 99 N. E. 314; Chatham Real Est. & Imp. Co. v. U. S. Fidelity & G. Co. 18 Ga. App. 588, 90 S. E. 88. A somewhat similar bond and renewal were construed as one contract in American Bonding Co. v. Morrow, 80 Ark. 49, 96 S. W. 613, 117 Am. St. 72.
There are authorities to the contrary: Gilmore & P. R. Co. v. U. S. Fidelity & G. Co. 208 Fed. 277, 125 C. C. A. 477; Proctor Coal Co. v. U. S. Fidelity & G. Co. (C. C.) 124 Fed. 424. The force of City of Brunswick v. Harvey, 114 Ga. 733, 40 S. E. 754, as an authority for appellant, is entirely destroyed by what is said by the court in Chatham Real Est. & Imp. Co. v. U. S. Fidelity & G. Co. supra.
In passing it may be said, that defendant, by paragraphs 8 and 9 in the answer, virtually admits the existence of but one single contract continuing from its inception in 1912 to and including the last renewal in 1915.
“A statement in full of the conditions of insurance shall be incorporated in or attached to every policy, and neither the application of the insured nor the‘by-laws of the company shall be considered as a warranty or a part of the contract, except in so far as they are so incorporated or attached.”
“In all insurance against loss by fire the conditions of insurance shall be stated in full, and neither the application of the insured nor the bylaws of the company shall be considered as a warranty or a part of the contract, except so far as they are incorporated in full into the policy.”
It is to be noticed that in the chapter mentioned, being a codification of the insurance law, section 37 (p. 403), thereof states under seven subdivisions the different purposes for which insurance companies may be formed to do business in this state, and the fourth subdivision is: “To guarantee the fidelity of persons in position of trust, private or public, and to act as surety on official bonds and for the performance of other obligations.” Other provisions in the same chapter indicate that corporations engaged in the business of defendant come within its regulations and are to be regarded as insurance companies whether its contracts be known under the name of policies or bonds. With this definition of insurance companies it would have been plain that, had said section 53 read as does section 1616 in Revised Laws 1905 (section 3292, G. S. 1913), it would have applied to the bond here. But clearly the intention of the legislature of 1895 was to confine the provisions of said section 53 to insurance contracts. When the language so confining was deliberately dropped out in the revision of 1905 and the section placed in the insurance chapter under the “Provisions Common to all Companies,” the inference is almost conclusive that the intention was to make the section applicable to all companies dealing in insurance as defined in the preceding section 1597, R. L. 1905 (section 3258, G. S. 1913). True, it has been held that the section in question does not apply to fraternal beneficiary associations (Louden v. Modern Brotherhood of America, 107 Minn. 12, 119 N. W. 425), but that conclusion was arrived at because of the fact that under sections 1687, 1695, 1703 and 1710, R. L. 1905, such corporations were excepted from the general provisions applicable to the ordinary life insurance companies which now unquestionably come within section 1616, R. L. 1905 (section 3292, G. S. 1913).
The instant case exemplifies the wisdom of the change. It is sought to bind the bank by certain promises of monthly examinations, by the directors, made in the application. The application is in the hands of the defendant. The bond or insurance was continued from year to year.
That the section in question applies to ordinary insurance policies is beyond doubt. We hold it applicable to the contract or bond of defendant. A similar Iowa statute was similarly construed in U. S. Fidelity & G. Co. v. Egg Shippers S. B. & F. Co. 148 Fed. 353, 78 C. C. A. 345.
It follows that the promises or warranties made by the bank in the application cannot be considered as part of the contract, because not attached to or incorporated in the bond. Therefore the failure of the directors to make monthly examinations of 'the bank accounts or to pass upon the discounts or loans before the same were made could not avail as a defense. Nor do we think section 3300, G. S. 1913, makes the application admissible. It reads: “No oral or written misrepresentations made by the assured, or in his behalf, in the negotiation of insurance, shall be deemed material, or defeat or avoid the policy, or prevent its attaching, unless made with the intent to deceive and defraud, or unless the matter misrepresented increases the risk of loss.” There is nothing in the pleading or proof tending to show intent to deceive or defraud, or any misrepresentation of an existing fact. The promises in regard to future acts, if they could have been shown, might have become warranties in the contract. Hunt v. Fidelity & Casualty Co. 99 Fed. 242, 39 C. C. A. 496. But, under the pleadings and evidence received and offered, they could not be considered misrepresentations inducing the contract.
We find no error.
The order is affirmed.