The opinion of the court was delivered by: Robson, District Judge.
MEMORANDUM ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Plaintiff moves for summary judgment in this declaratory
judgment suit for construction of a fidelity savings and loan
blanket bond issued by the defendant, insuring against
defalcations by the officers of the Beverly Savings and Loan
Association. The Bank's obligations were insured by the
plaintiff, which assumed them when the Bank liquidated.
The very narrow issue is whether defendant's liability under
Section 6 of the bond is limited to $470,000 for all of Quinn's
defalcations, or whether a sum up to that limitation is
recoverable for each instance of loss due to his misconduct.
Section 6 provides:
"Non-Reduction of Liability. * * Payment of loss
under this bond shall not reduce the liability of
the Under-writer under this bond for other losses
whenever sustained; PROVIDED, however, that the
total liability of the Underwriter under this bond
on account of * * * (c) any loss other than those
specified in (a) and (b) preceding, caused by acts
or omissions of any one person * * * or acts * * *
in which such person is concerned or
implicated. * * *" (Italics supplied.)
The plaintiff draws favorable inferences from the fact that
prior to September, 1960, subsection (c) had read "any loss
or losses" and therefore it is evident from the deletion of the
word "losses" that the $470,000 limitation was not intended to
ceiling a plurality of losses, but only that of a particular
loss. Defendant says that the "substitution was made in the
interests of clarity and simplicity because it understood and
believed that the word `loss' is a generic term which includes
both the singular and the plural. * * * No change in coverage
was intended thereby." Defendant's position is supported by the
affidavit of John F. Fitzgerald, secretary of the Surety
Defendant states the revision in the language was merely an
"editorial" change as evidenced by the fact that the deletion
was not even noted or explained in the statement covering the
Plaintiff relies heavily on the established principle that
where there is an ambiguity in an insurance instrument it is
construed against the party who drafted it. Paddleford v.
Fidelity & Casualty Co. of New York, 100 F.2d 606 (7th Cir.
The form of the bond was drafted and issued by the Surety
Association of America in collaboration with the United States
Savings & Loan League as Standard Form Number 22, Revised to
September, 1960. Defendant was a member of that Association
whose members are surety companies.
Plaintiff in its complaint cites the statement in the Manual
of the Association:
"BLANKET BONDS-FINANCIAL INSTITUTIONS
Limit of Liability for Single Loss — Non Reduction
Coverage under each bond is written for a
specific amount which is the limit of liability
for any single loss, as that term is defined in
the bond, but any number of separate losses may
be recovered ...