Ciancetti v. Indemnity Ins. Co.

California Court of Appeal Feb 10, 1959 No. 63Published

Before: Dewolf

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Holding. The court held that an employee's prior unauthorized taking of funds from a petty cash drawer constituted embezzlement, and because the employer had knowledge of this act, the fidelity bond was void under a provision excluding coverage for employees with known prior dishonest acts.

Issues

Whether an employee's unauthorized taking of funds, despite subsequent repayment, constitutes a 'dishonest act' under a fidelity bond.
Whether the employer's knowledge of a prior act of embezzlement bars recovery under a bond provision excluding coverage for employees with known prior dishonesty.

Disposition. reversed

Quotations verified verbatim against the opinion

“Section 14 of the bond gives to the defendant a good defense if, according to the best knowledge of the plaintiff, she knew of prior dishonest acts on the part of Tobin. Plaintiff knew of Tobin's prior embezzlement.”

168 Cal.App.2d Supp. 785 (1959) 335 P.2d 1048 ANGIE D. CIANCETTI, Respondent,

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA (a Corporation), Appellant.

Docket No. 63. Court of Appeals of California, Appellate Department, Superior Court, Fresno.

February 10, 1959. Harold A. Parichan for Appellant.

John D. Chinello for Respondent.

[786] DeWOLF, J.

Plaintiff owned and operated a furniture store. On the 19th of April, 1954, plaintiff had issued to her a fidelity bond by the defendant company. In the bond the defendant agreed to reimburse to plaintiff any money losses which were due to misappropriation by any of her employees after the effective date of the bond.

In the month of June, 1954, plaintiff discovered that one Charles Tobin, an employee of hers, had misappropriated $769.26 between the dates of April 19, 1954, and June 12, 1954. Plaintiff thereupon filed her claim for this sum with defendant and demanded that defendant reimburse her in accordance with the terms of the bond. When defendant refused to pay this sum, plaintiff filed an action in the lower court, and, from a judgment in her favor, the defendant prosecutes this appeal.

[1] The defendant does not deny that Charles Tobin misappropriated the money claimed, but bases its refusal to pay on the ground that the bond states that it is subject to the following condition and limitation:

"PRIOR FRAUD OR DISHONESTY.

"Section 14. No Employee, to the best of the knowledge of the insured, or of any partner or officer thereof not in collusion with such Employee, has committed any fraudulent or dishonest act in the service of the insured or otherwise."

It is defendant's contention that plaintiff, at the time the bond was issued to her, on April 19, 1954, had knowledge of the fact that Charles Tobin, while in her employment, had committed a dishonest act in the month of February, 1954. Defendant urges that the evidence is susceptible of no other interpretation, and, consequently, the judgment of the lower court should be reversed.

Ciancetti v. Indemnity Ins. Co.

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