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Paddleford v. Fidelity & Casualty Co.

November 17, 1938

PADDLEFORD ET AL.
v.
FIDELITY & CASUALTY CO. OF NEW YORK; SAME V. HARTFORD ACCIDENT & INDEMNITY CO.



Appeals from the District Court of the United States for the Northern District of Illinois, Eastern Division; Charles E. Woodward, Judge.

Author: Major

Before EVANS, MAJOR, and TREANOR, Circuit Judges.

MAJOR, Circuit Judge.

This action was brought by the plaintiffs who were engaged in the general stock and grain brokerage business, to recover losses suffered by them through the dishonest acts of one of their employees, under Fidelity Bonds issued to plaintiffs by defendants, known as "Brokers' Basic Blanket Bonds," which bonds by their terms indemnified plaintiffs against any loss sustained "through any dishonest act of any of the employees, wherever committed and whether committed directly or by collusion with others." The bonds and endorsements of both defendants were standard forms of bonds and endorsements and were substantially identical.

The bond and endorsement of the Hartford Accident and Indemnity Company was in force from July 16, 1929 to July 16, 1931, and the bond of the Fidelity and Casualty Company of New York was in force from July 16, 1931 to November 15, 1931. The bond of the Hartford, for an annual premium consideration of $1452 undertakes to indemnify the assured as follows:

"Basic From for Private Bankers and Stock Brokers.

"Standard Form No. 13.

" * * * to indemnify the Insured * * * against any loss, to an amount not exceeding Fifty Thousand & no/100 dollars, of money,currency, bullion, bonds, debentures, scrip, certificates, warrants, transfers, coupons, bills of exchange, promissory notes, bills of lading, warehouse receipts, checks or other similar securities, * * * (all of such * * * being hereinafter referred to as Property), sustained by the Insured * * * ."

Here follows in the original bond several provisions indicated as (A), (B) and (C) which were changed and amended by a rider simultaneously issued as follows:

"To be attached to Standard Form No. 13."Rider Extending Coverage of Insuring Clauses A, B and C.

"For Private Bankers and Stock Brokers.

" * * * In consideration of an annual additional premium, the Underwriter does hereby amend the above described bond, * * * as follows:

"First. By eliminating Insuring Clauses 'A,' 'B' and 'C' and substituting in lieu thereof, the following:

"(A) Through any dishonest act of any of the Employees wherever committed, and whether committed directly or by collusion with others."

Paragraphs (B) and (C) relate to losses resulting through larceny, theft, burglary, etc. of property while in the assured's office or in transit under certain conditions and relate only incidentally, if at all, to the issues presented.

Following the enumerated items of coverage, there appears as follows:

"The foregoing agreement is subject to the following conditions ...


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