Federal Insurance v. Allen

Opinion

DRAPER, P. J.

Plaintiff-appellant was the surety upon a fidelity bond issued to Goodyear Tire & Rubber Company, indemnifying Goodyear against the theft or embezzlement of its property by any of its employees. Over a period of some two years, one Scott, a Goodyear warehouse foreman, took from his employer a number of heavy duty equipment tires. He concealed the thefts by juggling of the books. When the loss was discovered, Goodyear filed its claim against plaintiff for $50,068.64. The bond provided for deduction of the first $5,000 of the loss, and plaintiff paid $45,068.64, taking from Goodyear an assignment of all its rights against those who might be liable to Goodyear in connection with the loss. Some 75 of the tires stolen from Goodyear were sold by Scott to defendants Allen and Bergen, tire dealers. Plaintiff brought this action to recover the value of such tires from defendants.

Upon substantial evidence, the trial court found that neither of defendant

[650]

purchasers had any reason to question Scott’s ownership of the tires or knew that Scott, formerly an independent tire dealer, was in Goodyear’s employ. It also found that nothing in the price or other circumstances of Scott’s offers or sales to them could have put either purchaser on notice or inquiry of Scott’s lack of title, and that Goodyear in fact was negligent in its supervision of its employee and was put on notice, early in the series of the thefts, of facts which should have permitted it to prevent them. Judgment was for defendants, and plaintiff appeals.

Appellant surety argues that the action is one at law for conversion, to be treated as though brought by Goodyear, and that negligence is not a defense to such an action. We need not determine whether the findings here support an estoppel against Goodyear’s assertion of its title

(Meadows

v.

Hampton Live Stock Com. Co.,

55 Cal.App.2d 634 [131 P.2d 591]). Rather, the issue is resolved by the rule that a surety for compensation upon a fidelity bond does not stand in the shoes of the employer whose loss he has paid.