Earl v. Fidelity & Deposit Co.

HAHN, J., pro tem. Defendant appeals from a judgment rendered against it for the sum of $10,085 upon a “broker’s blanket bond” issued by defendant to plaintiff, to indemnify him against any losses suffered by him through certain prescribed acts of his employees in the brokerage business in which he was engaged in the city of Los Angeles.

The provisions of the surety bond in question which are material to the points raised on this appeal read as follows: “In consideration of the premium of Eleven Hundred and 00/100 ($1100.00) Dollars, paid by Wm. . Jarvis Earl & Company, hereinafter referred to as the Insured, to the Fidelity and Deposit Company of Maryland, hereinafter referred to as the Underwriter, . . . the Underwriter hereby undertakes and agrees'to indemnify the Insured, and hold it harmless from and against any loss, to an amount not exceeding twenty-five Thousand and 00/100 ($25,000.00) Dollars, of money, currency, bullion, bonds, debentures, scrip, certificates, warrants, transfers, coupons, bills of exchange, promissory notes, cheeks, warehouse receipts, bills of lading, or similar securities, in which the Insured has a pecuniary interest, or held by the Insured as collateral, or as bailee, trustee or agent, . . . sustained by the Insured ...

“ (a) Through, any dishonest act of any of the Employees wherever committed, and whether committed directly or by collusion with others.

“(b) Through larceny, whether common law or statutory, robbery, burglary, holdup, theft, or other fraudulent means, ...

[437]“This bond does not cover— (f) Any loss directly, or indirectly from trading, actual or fictitious, whether in the name of the Insured or otherwise, and whether or not within the knowledge of the Insured, and notwithstanding any act or omission on the part of any Employee in connection therewith, or with any account recording the same.”

In plaintiff’s employ was one R. V. Kessler, who, as “head customers’ man”, had authority to confirm and put through customers’ orders, when such orders were executed on the New York Stock Exchange. Another employee was Fred T. Lane, who as cashier had general oversight of customers’ accounts and also had authority to confirm and direct the execution of customers’ orders. A third employee was one W. C. Gatlin, who, as a “customers’ man”, was engaged in securing customers’ orders. Such orders required the confirmation of either plaintiff, Kessler or Lane before they were accepted and executed.