Adams Co. v. Western Surety Co.

POLLEY, J.

[1] This action is brought to recover on a fidelity bond. The defendant Nesbit had been in the employ of plaintiff for a year or more before the execution of the bond, and by the terms of the bond the defendant surety company agreed to indemnify the plaintiff for any loss, not exceeding $2,000, -it might suffer by reason of the fraud or dishonesty of the said Nesbit. The 'bond was- executed on the 9th day of January, 1913, and was to remain in force for one year after 'the 18th day of January, 1913. In its complaint plaintiff alleges that, between the 18th day of January, 1912, and the 24th day of February, 1913, said Nesbit fraudulently and dishonestly appropriated to his own use various sums, aggregating an amount of money in excess of the amount specified in the bond. To this complaint the defendant surety company demurred, on the ground that the complaint does not state facts- sufficient to constitute a cause of action. From an order overruling thi© demurrer, said surety company appeals.

It will be noted that the defalcations of the said Nesbit are alleged to have taken place between the 18th day of January, 1912 —one year prior to- the execution of the -bond' — and the 24th day of February, 1913. It is claimed by appellant that this allegation fails to show any liability against the appellant, because, admitting the -defalcations to hav-e taken place between the dates named, still the entire loss may have occurred before the execution of the bond, and, for that reason appellant would not be liable. On the other hand, it is contended -by respondent that, under the allegations of the complaint, at least a part of the sums of money so misappropriated were misappropriated after the execution of the bond, and that, so far as such sums are concerned, the -complaint does state a cause of action. This is upon the theory that, where a series of acts are alleged to have occurred between two- dates, it will be presumed that the first and last acts occurred, respectively, on the first and last dates named. But we know of no such presumption of law. Of course, under the allegations of *196the complaint, it is possible that some, or even all, of the acts complained) of may have occurred after the bond was executed ; but, on the other hand, it is'just as possible that all of the acts complained of occurred prior to the execution of the bond, and for -which appellant would not be liable. Thus the allegation's of the complaint may be literally true, and still the appellant not be liable. The defect in the complaint is more than a mere question of uncertainty. It goes to the sufficiency of the complaint, and such complaint is insufficient, unless', as claimed by respondent, under the terms of the bond in question, appellant became liable not only for such sums of money as may have been misappropriated after the execution of the bond, but for such sums, if any, as may have been misappropriated, prior thereto..

[2] This presents a question that is altogether novel to this court. Of course a bond could be so framed as to render a surety liable for past delinquencies-, but language must be used that clearly shows such was the intention and understanding of the surety when the bond was- executed. Our attention is called to the rule that bonds of this character are usually prepared- by the surety, and, if doubtful, should be construed- most strongly against the surety and in favor of the indemnity which the assured had reasonable grounds to expect. But has the assured in this case any reasonable ground to expect the indemnity it is now 'contending for? In other words, is there anything in the bond to furnish grounds for any such expectation? By the terms of the bond, appellant covenants -to make good- and- reimburse respondent for any and -all pecuniary loss sustained by respondent “by reason of the fraud or dishonesty” of the said defendant Niesbit, not exceeding the amount named in the bond, and that said bond shall “be and continue in force for one year from January 18, 1913.” The first clause, including, as it does, any and all pecuniary loss that might be - sustained- by respondent by reason of the fraud or dishonesty of the said Nesbit, is broad enough, standing alone, to include losses that occurred before the execution of the bond as well as after; and, because the latter clause, fixing the period within -which the bond is to continue in force, does not expressly lim-it respondent’s liability to losses that occurred between- January 18, 1913, and January 18, 1914, counsel contend that it fails to provide any limitation whatever as to the time of the *197occurrence of losses, except that they must occur before the 18th of January, 1914. ' With this contention we cannot agree. It is the general, if not the invariable, rule that contracts such as fidelity bonds, insurance policies, and the like, look only to- the future, and bind the surety or insurer only for losses that occure in the future; and, in 'the absence of language -in the bond or-policy clearly showing a contrary intent on the part of a surety, we hold that appellant is not liable for losses that occurred before the bond was executed.’

Our attention has been called to but two cases where a question similar to the one presented here was considered by the court. Supreme Council Catholic K. of A. v. Fidelity & Casualty Co., 63 Fed. 48, 11 C. C. A. 96, was an action to recover on a fidelity bond. The bond sued on was accepted iby the company on the 20th clay of July 1891. It contained a recital that it was “made July 1, 1891,” and, on the back of the bond was indorsed: “Date of bond July 1, 1891; expires July 1, 1892.” The bond was dated July 19, 1891, but the company received a .premium covering one year, expiring July 1, 1892, and the court held that the bond was in effect from July 1, 1891, to July 1, 1892, and covered losses that occurred between the 1st and 10th of July, 1891. Dorsey v. Fidelity & Casualty Co., 98 Ga. 456, 25 S. E. 521, was an action on a fidelity bond wherein the surety company covenanted to indemnify the receiver of a railroad for the failure of his employes, upon the termination of their employment, to deliver to said receiver any property in their hands to which the receiver was entitled. A certain employee failed, upon terminating his employment, to deliver to the receiver property to which the receiver was entitled1, but it appeared that the property in question had been wrongfully delivered to a third party before the bond was executed, and the court held that the receiver was not entitled to recover. Neither of these opinions support the position of respondent.

The complaint fails to state a cause of action upon either theory advanced Iby respondent, and the demurrer should have been sustained.

The order appealed from is reversed.