148 F. 353 | 8th Cir. | 1906
.This was an action by the Egg Shippers’ Company upon a’ bond, of the Guaranty Company insuring the former against loss through the fraud or dishonesty of one Boardman, its treasurer. The plaintiff was an Iowa corporation organized by dealers in poultry and eggs, and its business was the purchase and sale of fillers for egg cases used in transportation. Though of small capital, it was thriving and prosperous from its organization down to .the time of- the conduct of its treasurer, which’ furnished the cause of this litigation. The fillers it dealt in were purchased from the manufacturer, the Tama Paper Mills & Filler Company, under a contract providing that the plaintiff should accept and honor the drafts of the Tama Company, due in 15 days, for all manufactured fillers which it ordered shipped, and drafts payable in 30 days for the remainder of the contract quantity that was manufactured, but not desired for immediate delivery. The contract specified that bills of lading should be attached to the first class of drafts, showing the fillers had been shipped, and warehouse receipts to the other class o'f drafts, showing that the fillers covered by them had been manufactured and were actually in the warehouse subject to the plaintiff’s order. Boardman was the treasurer of the plaintiff, with 'authority to execute notes' and accept drafts representing its bona fide, indebtedness. He was a salaried officer, and the financial management of the plaintiff’s affairs was largely in his charge between directors’ meetings, which were held semiannually. At one meeting his official report showed that he had allowed the Tama Company to overdraw its‘account about $2,600. He was at once instructed by the directors that he must not continue such course; that they were not satisfied of the integrity of the manager of the Tama Company; "that he must secure fillers balancing the overdraft; and that in the future nothing should be paid and no drafts should be accepted unless the goods already manufactured had either been shipped or were held in the warehouse subject to plaintiff’s order, and unless those conditions were shown by bills of lading or warehouse receipts.
There was substantial evidence tending to show the following facts, and on appeal we must assume them to be true. Boardman violated his official duty, ignored his instructions, concealed his conduct, and falsified his reports. When the crash came, there was outstanding about $70,000 of negotiable paper of the Tama Company upon which Boardman had obligated the plaintiff by way of accommodation, and in addition to this he had advanced to the Tama Company about $10,000 for which he had no bills of lading or warehouse receipts. These sums amounted to more than seven times the plaintiff’s capital, and the Tama Company soon failed for a large sum. ■ The plaintiff was made bankrupt. Boardman was found to have been using plaintiff’s money in his own affairs. He left the state soon afterwards, taking with him the check' stubs, canceled checks, drafts, and vouchers pertaining to plaintiff’s business, having previously refused to allow his successor in office to examine them, for the reason, as he alleged, that they also concerned his personal business. The items which entered into plaintiff’s verdict for $8,700 were $3,000 of a credit which Boardman took in his accounts as. having paid an obligation of the plaintiff, when, in fact, he had
Complaint is also made that the trial court excluded the written statement made by the plaintiff to secure the bond sued on. It was offered in evidence by defendant to show certain warranties and representations, the breach and falsity of which were relied on to defeat recovery. The evidence was not admitted because the defendant had failed to' comply with an Iowa statute (section 1741, Code of 1897) which provides that all insurance companies or associations shall attach to or indorse upon every policy “a true copy of any application or representation of the assured which, by the terms of such policy, are made a part thereof, or of the contract of insurance, or referred to therein, or which may in any manner affect the validity of said policy,” and that the omission to do so shall preclude the company issuing a policy from pleading or proving any such application or representations or the falsity of any part thereof in an action upon the policy. It is conceded by defendant that the bond in suit is an insurance contract,
Although differing slightly from the usual form of application for insurance, in that it recites than an application for the bond had already been made, nevertheless the writing is to all substantial intents and purposes a part of that preliminary step on the part of the applicant that is usually designated by that term. It contains various questions concerning the risk propounded by the defendant, the plaintiff’s answers, and a recital that it shall be the basis of the bond if issued. The bond contains a reference to it as part thereof, a warranty by plaintiff of the truth of its statements, and a provision that untruth in any respect shall make the bond void. It is altogether clear that the written statement which the defendant failed to attach to or indorse on the bond is an application or representation within the meaning of the Iowa statute.
The statute was originally enacted in 1880, and it is contended that at that time the business of insuring the fidelity of employés was unknown in Iowa, and that therefore it cannot be said to have been within the intent of the Legislature in the passage of the law. Assuming the premise to be true, there is nothing in the statute indicating a purpose to confine its operation to those subjects of insurance that were then known. On the contrary, it was framed in general and comprehensive terms that cover insurance of every kind and character. The virtue and the vitality of laws so framed are such that they extend to and embrace the new growth and development of the subjects to which they relate. With reason equal to that of the contention now made, it could be said that the commerce clause of the Constitution did not appl)- to our railroad systems of to-day because they were unknown at the time of its adoption. The unvarying construction of the statute by repeated decisions of the Supreme Court of Iowa is that it includes every insurance company, association, and individual doing an insurance business of any kind, and that its purpose is to require the insurer to attach to, or indorse upon, the policy a copy of every instrument that may affect its validity. Moreover, in 1897 a new Code for Iowa was adopted as the existing law, the provisions of the statute in question were incorporated in it, and all prior laws were repealed. In this Code there is explicit recognition of the business of insuring the fidelity of persons holding places of private or public trust, and that such business was then quite generally engaged in throughout the United States is a matter of common knowledge. «
There is nothing in the assignments of error upon the refusal to give instructions requested by the defendant that requires mention further than to say that such as should have been given were fairly embodied in the charge of the court.
The judgment is affirmed.