Guarantee Co. of North America v. Mechanics' Savings Bank & Trust Co.

Citations

• 183 U.S. 402
• 22 S. Ct. 124
• 46 L. Ed. 253
• 1902 U.S. LEXIS 723

Syllabus

<p>Where a bond insuring a bank against such pecuniary loss as it might sustain by reason of the fraudulent acts of its teller, contained a provision that the company would notify the insuring company on “ becoming aware” of the teller “being engaged in speculation o.r gambling,” it is the duty of the bank to give such notice, when informed that the teller is speculating, although, while confessing the fact of speculating, he asserts that he has ceased to do so.</p> <p>When the teller is in fact engaged in speculation and the bank is so informed, it cannot recover on such a bond for losses occurring through his fraudulent acts after the information is-received, when it has not notified the company of what it has heard, or made any investigation, but has accepted the tellers assurance of present innocence as sufficient, on the mere .ground that it had confidence in bis integrity.</p> <p>When at the time the teller’s bond was renewed, the books of the bank showed that he was a defaulter in the sum of $19,600 understated liabilities, and of $3765.44 abstracted from bills receivable, both of which could have been detected by the taking of a trial balance or a mere comparison between the books kept by him and the individual ledger kept by another person, and by a correct footing of the notes, the bank is open to the charge of laches, and a certificate that the accounts of the teller had been examined and verified is not truthful.</p> <p>Where it is known to the president of the bank that the insuring company regards engagement in speculation as unfavorable to an employe’s habits, and he is informed that the employe is speculating, a representation by the president that he has not known or heard anything unfavorable to the employé’s habits, past or present, or of. any matters concerning him, about which the president deems it advisable for the company to make inquiry, is a misrepresentation.</p>