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Tennant Finance Corp. v. Maryland Casualty Co.

December 18, 1936

TENNANT FINANCE CORPORATION
v.
MARYLAND CASUALTY CO.



Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; James H. Wilkerson, Judge.

Author: Briggle

Before SPARKS, Circuit Judge, and LINDLEY and BRIGGLE, District Judges.

BRIGGLE, District Judge.

Tennant Finance Corporation sued Maryland Casualty Company on an insurance contract indemnifying insured against loss on account of certain forged instruments. From a judgment in favor of the insurer, the insured appeals.

The insurance contract was called a "Combined Depositors-Commercial Forgery and Alteration Policy" and provided that appellee would indemnify appellant against any loss which might be sustained through the payment by the insured "of any draft or any other written direction or order to pay a sum certain in money directed to or drawn upon or against the insured upon which the signature of the maker or drawer or any endorser thereof shall have been forged." Appellant was engaged in the purchase of notes secured by chattel mortgage on automobiles and during the life of the policy purchased notes so secured to the extent of $6,615.87 on which the signatures had been forged. Twenty-three separate transactions were involved, all substantially similar but involving different amounts. As typical of all of them it was stipulated that on August 12, 1932, one B. K. Evans forged or caused to be forged the name of W. J. Sala to a certain note and chattel mortgage for the sum of $442 and to a certain other document, hereinafter called the "forged instrument," which is in the following language:

"Chicago, Ill., Aug. 12, 1932. "Tennant Finance Corporation:

"I have today executed a certain mortgage to B. K. Evans (Dealer) on one automotive vehicle described as follows: Make Packard Car No. 286907 Motor No. 287009 Type Sedan to the amount of $442.00, and request that you purchase this note for my account.

"I further declare and warrant that no representations whatsoever have been made by you to me regarding said automotive vehicle especially as to its condition, model, style, year and when built, and I hereby release you from any claim that I may have against the above mentioned dealer growing out of any representations that may have been made to me. I further declare and warrant that the above described automotive vehicle will at no time be used for the carrying of spirituous liquors. I further declare and warrant that the above described automotive vehicle will be used for pleasure and/or business purposes only, excluding the carrying of passengers for a consideration.

"In consideration of my receiving from you financial service on the purchase of said automotive vehicle, I agree that I shall not make any claim for any refund whatsoever providing I shall sell the car previous to one year from date hereof, and I hereby specifically waive and release you from any such claim.

"x W. J. Sala [Seal.] "Witness 45556 (Purchaser Sign Here)"

It is this "forged instrument" that is relied upon by insured to bring it within the terms of the policy.

These forged documents were brought by Evans, a broker, to appellant who, relying upon the signatures as genuine, purchased the note and mortgage, paying Evans therefor the sum of $367.50.

The question for determination is whether these facts bring the insured within the terms of its insurance contract.

Appellant concedes that the forgery of the note and mortgage are not covered by the policy but asserts that the "forged instrument" is such a "written direction or order" as is defined in the indemnity clause of the contract, and that its payment of the sum of $367.50 ...


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