Phenix Ins. v. Guarantee Co. of North America

Citations

• 115 F. 964
• 53 C.C.A. 360
• 1902 U.S. App. LEXIS 4269

Syllabus

<p>1. Indemnity Insurance — Construction of Contract — Warranties in Application.</p> <p>An application to a surety company for a bond to secure the faithful performance of his duties by the cashier of the applicant, a corporation, contained the following question and answer: “Will he receive remittances from customers on open accounts? If so, how often will you render customers a statement of balances due by them, and by whom will this be done? This should be done by some other person than the applicant, and is important as a means of verifying balances appearing on the ledger.” Answer: “Yes. Monthly by bookkeeper.” ¡Held, that such answer was not a warranty that such monthly statements should be delivered to the customers, or deposited in the mail, by the bookkeeper personally, but that it was complied with where such statements were made out by the bookkeeper, and deposited by him, in sealed envelopes, in the receptacle used for outgoing mail, according to the customary practice of the corporation’s business.</p> <p>2. Same.</p> <p>- Such application also contained the following question and answer: “It is suggested: (1) That all moneys and checks received be deposited intact in bank, and all disbursements be made either by check or from a petty cash fund drawn from the bank as required; and (2) that all checks received be indorsed ‘For deposit,’ to prevent any loss or conversion. To what extent will these practices be followed?” Answer: “Fully.” 'Held, that the employer complied with such warranty by adopting a regulation requiring all checks to be deposited, indorsed as therein specified, and by exercising reasonable supervision over its cashier to see that the practice was pursued; that the answer to such question could not be construed as an absolute warranty by the employer that its cashier would deposit all checks, properly indorsed, and to relieve the surety from liability for the failure to make such deposits, contrary to the employer’s regulations, and w