Summary
In Error to the Circuit Court of the United States for the Eastern District of Louisiana.
This is an action brought by the plaintiff in error against the J. B. Donnally Company, Limited, and the defendant in error, on a bond of insurance or indemnity. The said plaintiff in error had judgment against the J. B. Donnally Company, Limited, for $6,634.15; but the circuit court directed a verdict for the defendant in error, and judgment was rendered in its favor. Whether or not the court erred in directing a verdict for the Fidelity & Deposit Company of Maryland is the question for consideration here.
The petition, leaving out formal parts, is as follows:
“First. That on the 10th day of March, 1S96, it entered into a contract of agency with said defendant [the J. B. Donnally Company, Limited] to sell Pitts-burg coal of plaintiff in the state of Louisiana upon the terms, under the conditions, and for the commissions set forth in the agreement thereof, made part hereof; same expiring on the 31st of December, 1896. Second. That said contract was in writing, renewed for one year to the 31st day of December, 1897, as per renewal thereof annexed hereto as part hereof. Third. That, during the course of the business relations so existing between petitioner and said defendant, certain lots of coal were sold by said defendant, the proceeds thereof collected for account of petitioner by said defendant, and not paid over, and same amount to the sum of six thousand six hundred thirty-four and 1B/ioo dollars, with six per cent, per annum interest from the 1st October, 1897, aa will more fully appear by the stateinents annexed as part hereof. Petitioner further represents that demand has been made upon said defendant for the payment of said sum aforesaid, without avail. Your petitioner further represents that the Fidelity & Deposit Company of Maryland, a corporation created under and by virtue of the laws of the state of Maryland, and a citizen of said state, domiciled at Baltimore, Maryland, and having a legal representative and doing business in this district, did, by its bond No. 30,901, in consideration of the premium therein expressed and paid, bind and obligate itself unto your petitioner, in the sum of ten thousand dollars, that it would save, defend, and keep harmless your petitioner from and against all loss and damage whatsoever, of any nature or kind, and from all other legal costs and expenses, direct or indirect, incidental thereto, which petitioner shall or may at any time sustain or be put to in the premises, and against all and any pecuniary loss sustained by petitioner of moneys belonging to petitioner, in the possession or custody of the said J. B. Donnally Company, Limited, of New Orleans, or for the possession of which it is responsible, under their contract of agency and renewal hereinbefore set forth, which said bond is signed on the 20th of March, 1896, for a period of time of one year expiring the 20th March, 1897, and which bond was continued in full force and effect thereafter, for due consideration paid, for one year, to the 20th March, 1898, all of which will more fully and at large appear by reference io said bond and said continuation certificate, hereto annexed and made part hereof. Petitioner further represents that the amount so due and owing as aforesaid by tiie said J. B. Donnally Company, Limited, is a loss sustained raider and by virtue of the terms and provisions of ihe bond, and the continuation thereof aforesaid, and has boon duly demanded of the said Fidelity & Deposit Company of Maryland, which company has heretofore declined payment thereof.”
The defendant’s answer was a general denial, and an averment that it was not liable on the bond, except for pecuniary loss caused by Ihe larceny or embezzlement of the employe, the J. B, Donnally Company, Limited; that the respondent was discharged from liability on the bond by reason of a false cer-tifícale given by the plaintiff that it had examined the books of the employe, and found ¡hem correct, etc.
The bond sued on is as follows:
“Whereas, ihe. J. B. Donnally Company, Limited. New Orleans, Louisiana, hereinafter called the ‘employ*5.’ has been appointed to the position of agents in the service of the Monongnhela Coal Company, Pittsburg. Pennsylvania, hereinafter called ihe ‘employer.’ and has been required to furnish a bond for his honesty In the performance of his duties in said position; and whereas, the employer has delivered to the Fidelity and Deposit, Company of Maryland, a corporation of (lie stale of Maryland, hereinafter called the ‘company.’ certain sta¡ementa and declarations relative to the duties and accounts o? the, employ’d, the manner of conducting the business of the employer, raid other matters, which, together with any statements or declarations hereaflor required by or lodged with the company, do and shall constitute an essoníial part and form the basis of this contra'-i: Now. therefore, in consideration of the sum of seventy-five and oo/roo dollars paid as a premium for the period from March twentieth, 189(5, to March twentieth, 1897. at .12 o'clock noon, and upon the faith of tlio said statements and declarations ns afoiesaid by the employer, it is hereby agreed and declared that, subject io the provisions and conditions herein contained, which shall be conditions precedent to the right on the part of the em-ployin' Io recover under this bond, the company shall at (lie expiration of three months next after proof of a loss, as hereinafter mentioned, has been given to the company, make good and reimburse to the employer to the extent of the sum of ten thousand dollars, and no further, all anu any pecuniary loss sustained by the employer of moneys, securities, or other personal property belonging to the employer in the possession or custody of the employs, or for the possession of which he is responsible, directly occasioned by larceny or embezzlement on the part of the employe In connection with the duties of ihe office or posit ion in the service of the employ-6 hereinbefore referred to, as the same have been staled in writing by the employer to the company, and occurring during the continuance of this bond, and discovered during said continuance, or within six months thereafter, or within six months from the death or dismissal or retirement of the employe from the service of the employer within the period of this bond, whichever of these events shall first happen: provided, always, that said company shall not be liable by- virtue of this bond for any mere error of judgment or injudicious exercise of discretion on the part of said employ'd in and about all or any matters wherein he shall have been vested with discretion either by instruction or rules and regulations of (he said employer. And it is expressly understood and agreed that Ihe said company shall In no way be held liable hereunder to make good any loss that may accrue to the said employer by-reason of any act or thing done or left undone by the said employe in obedience to or in pursuance of any direction, instruction, or authorization conveyed to and received by him from said employer, or its duly-authorized officer in its behalf; and it is expressly understood and agreed that the said company shall in no way be held liable hereunder to make good any loss by fire, robbery, tliaft, or otherwise that said employer may sustain, except hy the direct act or connivance of the said employe. The following provisions also are to be observed and binding as a, part of this bond: That .the company shall be notified in writing, addressed to the president of the company, at its office, in the city q£ Baltimore, state of Maryland, of any acts of omission or of commission on the part of the employe which may involve a loss for which the company is responsible hereunder, immediately after the occurrence of such act shall come to the knowledge of the employer. That any claim made in respect of this bond shall be in writing, addressed to the president of the company as aforesaid, immediately after the discovery of any loss for which the company is responsible hereunder, and within six months after the expiration or cancellation of this bond as aforesaid.- And upon the making of such claim this bond shall wholly cease and determine, as regards any liability for any act or omission of the employer committed subsequent to the making of such claim, and it shall be surrendered to the company on payment of such claim. That if the employer shall at any time hold, concurrently with this bond, any other bond or guaranty of surety from or on behalf of the employe, the employer shall be entitled, in the event of loss by default of the employ®, to claim hereunder only such proportion of the loss as the amount covered by this bond bears to the whole amount of security carried, whether valid or not. That if the company shall so elect, this bond may be canceled at any time by giving one month’s notice to the employer, and refunding the premium paid, less a pro rata part thereof for the time said bond shall have been in force, remaining liable for all or any default covered by this bond which may have been committed by tire said employ® up to the date of such determination, and discovered and notified to the company within the limit of time hereinbefore, provided for. That the employer shall, if required by the company, and as soon thereafter as it can reasonably be done, give all such aid and information as may be in its power, at the cost and expense of the company, for the purpose of prosecuting and bringing the said employ® to justice, or for aiding the company in suing for and making effort to obtain reimbursement from the employ®, or his estate, of moneys which the company shall have paid or become liable to pay by virtue of this bond. That the company shall mot be liable under this bond, for the amount of any balance that maybe found due the employer from the employ®, and which may have accrued prior to the date hereof, and which may be discovered within the period hereof; it being the true intent and meaning of this .bond that the company shall be responsible aforesaid for moneys, securities, or property diverted from the employer through fraud or dishonesty on the part of the employ® within the period specified in this bond. That this bond will become void as to any claim for which the company is responsible hereunder to the employer, if the employer shall fail to notify the company of the occurrence of such act immediately after it shall have come to the knowledge of the employer. And if, without previous notice to and consent of the company thereto, the employer has intrusted or shall intrust the employ® with moneys, securities, or other personal property, after having discovered any act of dishonesty, or condones any act for which the company may be liable hereunder, or makes any settlement with the employ® for any loss hereunder, this bond shall be null and void, and any willful misstatement or suppression of facts in any claim made hereunder renders this bond void from the beginning. That no suit or action of any kind against the company for the recovery of any claim upon, under, or by virtue of this bond shall be sustainable in any court of law or equity unless such suit or action shall be commenced, and the process served on the company, within the term of twelve months (365 days) next after the presentation of such claim; and, in case any suit or action shall be commenced against the company after the expiration of the said period of twelve months, the lapse of time shall bo deemed as conclusive evidence against the validity of the claim thereby so attempted to be enforced. 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 employ®, and, upon the issuance of any bond subsequent hereto upon said employ® 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. That no one of the above conditions, or the provisions contained in this bond, shall be deemed to have been waived by or on behalf of said company unless the waiver be clearly expressed in writing, over the signature of its president and secretary, and its seal thereto affixed. And the said employ® doth'hereby, for himself, his heirs, executors, and administrators, covenant and agree to and with the said company that he will save, defend, and keep harmless the said company from and against all loss and damage, of whatever nature or kind, and from all legal and other costs and expenses, direct or incidental, which the said company shall or may at any time sustain or he put to (whether before or after any legal proceedings by or against it to recover under this bond, and without notice to him thereof), or for or by reason or iii consequence of Uto company having entered into the present bond. In witness whereof, the said J. :>. Donnally Company, Limited (the said employé), lias hereunto set Iris hand and seal, and the said company lias caused this bond to be signed by its president and its acting secretary, and its seal to be hereunto affixed, this twentieth day of March, one thousand eight hundred and ninety-six.
“Signed, sealed, and delivered by the said employé in the presence of
“J. B. Donnally Co., Ltd.
“[.Signed] J. B. Donnally, President. [Seal.]
“ühnployé.
“[Signed] JP. W. Dyer. [Signed] Kdwin Warfield, President.
“[Signed] Tho. L. Berry, Acting Secretary. [Seal.]”
The depositions of O’Neill and Theis, officers of the. plaint iff company, showed that there was found due from the employé to the plaintiff in error tho sum of !>t),(ib4.L) on settlement of accounts. Tho bond sued on was renewed, as averred in rlie petition, on the 1st day o£ May, 1897; the renewal to begin March 20, 1897, at 1he expiration of tlic bond as first given, and to continue till .March 20, 1898. O’Neill and Theis admitted that before this renewal was granted they gave the defendant in error a certificate in substance as follows:
“To the Fidelity and Deposit Company oí! Maryland: This is to certify that on the 17th day of March, 1897, the books and accounts of the J. B. Donnally Co., Limited, in our employ as agents, were examined by us, and we found them correct in every respect, and all moneys handled by him accounted for. He has performed his duties in an acceptable and satisfactory manner, and wo know of no reason why the guaranty bond should not be continued. His salary is now commissions, and he is employed as agents.
“Dated at Pittsburg, Pa.
■•[Signature] Monongahela Coal Company.
“Wm. W. O’Neill, Prest.
“April 201 h, 1897.”
They both testified that the books had not really been examined as staled in The certificate. Other facts are stated in the proper connection in the opinion.
The court, on request, instructed the jury to find for the defendant the Fidelity & Deposit Company of Maryland. The court said:
“The certificate must be taken as true, so far as this surety company lias a right to fake it, as to them, whether as a matter of fact it was false to O’Neill or not. There was nothing done by the surety company to mislead O’Neill into giving this certificate. The Inclosing the blank was a mere form, but it was essential fliat lie should give the certificate, if he expected the renewal of the contract of indemnity. Therefore he cliose to give it. It may have been false that (hey never examined the books, but the indemnity company had a right to take the fact stated as true; and the suggestion that it was a trick of the indemnity company does not count for anything, unless it be shown that O’Neill was misled Into a condition of tilings, which does not appear by the testimony. It was a voluntary contribution of O’Neill’s. He could have declined to send it, or that he would not send it, because he had not examined the books; but, wbpn lie did say that he examined the books and found them correct, the indemnity company had a right to take that fact to he true, and did take It for true, and acted upon it. Unquestionably, as between these contracting parties, O’Neill is estopped from denying that certificate, in law. He cannot he heard to deny it to screen himself from it, in law, as between the two contracting parties. Of course, that would cover all antecedent matters. But, ■ further, the inducement to the surety company to enter into the second contract was a false inducement. That inducement was in the statement of O’Neill that he had examined the hooks and found them correct. 1 think there must be a verdict for the indemnity company.”
Verdict and judgment were rendered for the defendant the Fidelity & Deposit Company of Maryland. The plaintiff in error assigns as error the instructions of the court.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
