Traner v. Crocker Anglo National Bank

O’DONNELL, J. pro tem.* This is an appeal by plaintiff from a summary judgment entered in favor of defendant.

Plaintiff is president of Traner-Small Company, Inc., a corporation. One May Scanlon, an employee of the corpora[780]tion, embezzled funds of the corporation. To conceal the embezzlement she forged plaintiff’s signature on a check for $3,500, made payable to the corporation, and drawn on plaintiff’s individual account with defendant. She deposited the check in the corporation’s account with the Bank of America. Upon presentation, defendant honored the check and debited plaintiff’s account accordingly. Upon discovery of the facts, plaintiff demanded that defendant credit his account with the amount of the cheek. Defendant refused.

At the times here involved there was in effect a fidelity bond executed by St. Paul-Mercury Indemnity Company, as surety, to the corporation, as obligee, indemnifying the corporation against losses arising from the defalcations of the latter’s employees. Having been refused reimbursement by defendant, plaintiff thereupon sought recovery of his loss from St. Paul, claiming that he was protected from such loss by the fidelity bond. St. Paul refused payment, on the ground that the sole obligee under its bond was the corporation. However, St. Paul did advance to plaintiff the sum of $3,500, and plaintiff, in turn, executed a “Loan Receipt” to St. Paul, in words and figures as follows:

“Loan Receipt

“Dated: August 2, 1957

“Received from St. Paul-Mercury Indemnity Company the sum of $3,500.00 as a loan, without interest, repayable only in the event and to the extent of any net recovery the undersigned may make from any person, firm or corporation in connection with a forged check in the amount of $3,500.00, dated June 12, 1957, and drawn upon the Crocker-Anglo National Bank, which check was honored by said bank and credited to the account of Traner-Small Co., Inc., or from any insurance or bond effective in connection with said forged check, and as security for such repayment the undersigned hereby pledges to the said St. Paul-Mercury Indemnity Company all his, its, or their claims against said persons, firms or corporations and any recovery thereon and hereby agrees to deliver to St. Paul-Mercury Indemnity Company all evidence of such claims as it may have in connection with said forged check.

“The undersigned covenants that no settlement has been made by the undersigned with any person, firm or corporation against whom a claim may lie in connection with said forged check and no release has been given to anyone in con