INSURANCE LAW JOURNAL. REPORTS OF DECISIONS RENDERED IN INSURANCE CASES IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS. WALTER S. NICHOLS, Editor. VOLUME XXIX. NEW SERIES, VOLUME IX. NEW YORK: PUBLISHED BY C. C. HINE'S SONS, 100 WILLIAM STREET. 1900. THE INSURANCE LAW JOURNAL. VOLUME XXIX. 1900. [NEW SERIES, VOLUME 9.] REPORTS OF DECISIONS RENDERED IN INSURANCE CASES IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS. From certified transcripts in our possession. UNITED STATES SUPREME COURT. AMERICAN SURETY CO. OF NEW YORK V8. PAULY.* A requirement in a fidelity bond of notice of defalcation as soon as practicable after knowledge of the employer, does not require notice in case of mere suspicion which would not justify an accusation of dishonesty. A provision that a written statement of the loss, certified by an officer of the employer and based on its accounts, shall be prima facie evidence, makes such statement prima facie evidence in a suit, and not merely for the purpose of presenting the claim to the insurer. The suspension of a bank and its possession by an examiner is not in itself a retirement of the president or cashier within the meaning of a surety bond. A bank president is not authorized, in the ordinary course of business, to certify to the fidelity of a cashier for the purpose of his securing a bond. Where an agent is doing acts not in performance of any duty to his principal, nor in accord with his authority, but for his own selfish purposes, a presumption that the agent informed his principal, as in duty bound, does not exist. The above syllabus embraces also the more essential points decided in another case between the same parties, decided by the same court on the same date.-[ED. INS. L. J. WALTER C. DAVIDGE and HENRY C. WILLCOX, for Plaintiff in Error. EDWARD WINSLOW PAIGE, for Defendant in Error. HARLAN, J., delivered the opinion of the court. The defendant in error, as receiver of the California National Bank of San Diego, Cal., brought this action against the plain* Decision rendered, April 18, 1898. tiff in error, a corporation of New York, upon a bond of the latter for $15,000, guarantying or insuring the bank, subject to certain conditions, against any act of fraud or dishonesty committed by George N. O'Brien in his position as cashier of that institution. This bond was based upon an application by O'Brien to the surety company, accompanied by written declarations and answers to questions relating to his age, history, habits, financial condition, etc. He presented with the application the following certificate, signed by J. W. Collins, as president of the bank: "I have read the foregoing declarations and answers made by George N. O'Brien, and believe them to be true. been in the employ of this bank during three years, and to the best of my knowledge has always performed his duties in a faithful and satisfactory manner. His accounts were last examined on the 28th day of March, 1891, and found correct in every respect. He is not, to my knowledge, at present in arrears or in default. I know nothing of his habits or antecedents affecting his title to general confidence, or why the bond he applies for should not be granted to him." The bond was executed July 1, 1891. After reciting that the employee, O'Brien, had been appointed in the service of the employer, the bank, had been assigned to the office or position of cashier, and had applied to the American Surety Company of New York for a bond, it provided:— "Now, therefore, in consideration of the sum of seventyfive dollars, lawful money of the United States of America, in hand paid to the company, as a premium for the term of twelve months ending on the first day of July, one thousand eight hundred and ninety-two, at 12 o'clock noon, it is hereby declared and agreed that, subject to the provision herein contained, the company shall, within three months next after notice, accompanied by satisfactory proof of a loss, as hereinafter mentioned, has been given to the company, make good and reimburse to the employer all and any pecuniary loss sustained by the employer, of moneys, securities, or other personal property in the possession of the employee, or for the possession of which he is responsible, by any act of fraud or dishonesty on the part of the employee, in connection with the duties of the office or position herein before referred to, or the duties to which, in the employer's service, he may be subsequently appointed, and occurring during the continuance of this bond, and discovered during said continuance, or within six months thereafter, and within six months from the death or dismissal or retirement of the employee from the service of the employer. It being understood that a written statement of such loss, certified by the duly-authorized officer or representative of the employer, and based upon the accounts of the employer, shall be prima facie evidence thereof; provided, always, that the 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 the employee in and about all or any matters wherein he shall have been vested with discretion, either by instruction or rules and regulations of the employer. And it is expressly understood and agreed that the company shall in no way be held liable hereunder to make good any loss which may accrue to the employer by reason of any act or thing done or left undone by the employee in obedience to, or in pursuance of, any direction, instruction, or authorization conveyed to and received by him from the employer or its duly authorized officer in that behalf; and it is expressly understood and agreed that the company shall in no way be held liable hereunder to make good any loss, by robbery or otherwise, that the employer may sustain, except by the direct act or connivance of the employee. "The following provisions are to be observed and binding as a part of this bond: "That the company shall be notified in writing, at its office in the city of New York, of any act on the part of the employee which may involve a loss for which the company is responsible hereunder, as soon as practicable after the occurrence of such act shall have come to the knowledge of the employer. That any claim made in respect of this bond shall be in writing, addressed to the company, as aforesaid, as soon as practicable 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 employee committed subsequent to the making of such claim, and shall be surrendered to the company on payment of such claim. 666 "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 the employee up to the date of such determination, and discovered and notified to the company within the limit of time herein before provided for. |