Kahn v. Maryland Casualty Co.

ST. SURE, J.

Action by plaintiffs on an indemnity bond of defendant for the market value of certain Liberty bonds owned by and lost to them. Judgment went for plaintiffs. Defendant appeals. Under the terms of the indemnity bond sued on defendant agreed to protect plaintiffs against any loss, not exceeding fifty thousand dollars, of bonds, debentures, scrip, certificates, or other similar securities, in which plaintiffs may have a pecuniary interest, or for which they are legally liable, sustained by the insured during the life ■of the agreement, through robbery, burglary, theft, or holdup, whether effected with or without violence, or with or without negligence on the part of any of the employees of plaintiffs. Another provision of the agreement reads as follows: “This bond does not cover any loss directly or indirectly effected by means of forgery, unless the forgery be committed by, or with the collusion of, one or more of the employees ...” of the insured. Provision is made in the bond for the giving of notice of loss and for furnishing the indemnity company with an itemized statement thereof within a certain period after the loss suffered. These provisions were complied with and the claim in both instances rejected by defendant, whereupon this suit was brought. •

The sole question presented by this appeal is whether the circumstances set forth show that the bonds for which indemnity is claimed were stolen, or whether their loss was due, directly or indirectly, to forgery without collusion of any

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employee of the plaintiffs. The former is plaintiffs’ contention, the latter defendant’s.

Plaintiffs are copartners engaged in the stock and bond brokerage business in San Francisco as J. Barth & Co. They buy and sell securities for clients and charge a commission for so doing.

On November 15, 1920, a stranger entered the office of plaintiffs and asked to be sold Liberty bonds for cash.

A

clerk explained the method of buying the bonds for him through an exchange, and the stranger signed an order, filled in by the clerk, for Liberty bonds whose face value amounted to three thousand five hundred dollars, using the name E. Kennard. Later he telephoned asking if the bonds were ready. Without waiting for investigation he said he would be in later in the day. About 4 o’clock in the afternoon he returned and the same clerk attended him, who went to the cashier’s cage to get the bonds and bill for the customer. The cashier being out he stepped into the cage himself and found the package of bonds for this particular customer with the bill and delivery tag attached. The customer had crossed the room so that he stood before the wicket of the cage. On being handed the bill the customer remarked that he had more money, asked the price of Standard Oil stock, and asked the clerk to take his order for two shares. With the Liberty bonds on the counter inside the grill of the cage, between the customer and himself, the clerk began writing an order for the Standard Oil stock. When he looked up again the bonds and the customer were nowhere to be seen, and on the counter before him was a “slip of paper,” a check of the Standard Oil Company to the order of Kennard & Bierce, indorsed “Kennard & Bierce Per E. K.” This check had not been tendered to the clerk in payment, and the statement of the customer had been concerning a transaction “for cash.” The cashier’s cage of plaintiff’s office faces north. A counter separating the employees from the public part of the office runs at right angles to the cashier’s cage east and west, directly opposite doors opening on the north side of California Street. A gate through this counter is the exit for those behind it and back of the cashier’s cage as well. Aside from going from the cashier’s cage around to a place behind this counter, whence