Title: Gotcher Eng. & Mfg. Co. v. United States Fid. & Guar. Co.

State: mississippi

Issuer: Mississippi Supreme Court

Document:

193 So. 2d 115 (1966) GOTCHER ENGINEERING & MANUFACTURING COMPANY, Inc. v. UNITED STATES FIDELITY & GUARANTY COMPANY. No. 44178. Supreme Court of Mississippi. December 19, 1966. Sullivan, Dunbar & Smith, Clarksdale, for appellant. Brewer, Brewer & Luckett, James E. Upshaw, Clarksdale, for appellee. JONES, Justice. Appellant sued appellee in the Circuit Court of Coahoma County, Mississippi, and from a judgment of that court sustaining a demurrer to the declaration, and, upon appellant refusing to plead further, dismissing the case, it comes here. We affirm. Appellant manufactured and sold agricultural machinery, equipment, and supplies. In the furtherance of its business it maintained a warehouse in the City of Plainview, Texas for the storing of its products. At the time complained of there was in force an insurance policy issued by appellee and termed, "Comprehensive Dishonesty, Disappearance and Destruction Policy," under the terms of which each employee was covered to the extent of $10,000. The declaration alleged that at the Texas warehouse mentioned there were two employees, Dale and Bill Price, brothers, who were the only employees of plaintiff (except the president of the company) having access to the warehouse and its contents. That, when said brothers were employed, a physical inventory showed the warehouse contained products of the aggregate value of $26,923.79. That from the date of the employment (February 20, 1962) until August 31, 1963, plaintiff shipped its products *116 to the warehouse in the amount of $29,999.69; re-shipped from the warehouse $42,461.22 in merchandise; and, there should have been left in said warehouse an inventory aggregating $14,462.26 in value. That on September 5, 1963, an inventory was taken which revealed only $791.13 in aggregate value accounted for, resulting in a shortage of $13,671.15. It was charged that the Price brothers had exclusive authority and control over said warehouse. It was also alleged, after discovering said shortage, that an investigation revealed said employees, prior to August 31, 1963, sold one of the missing items, accepting the purchaser's check for $1,010 and appropriating same to their own use. It was then charged these circumstances create a probable and reasonable conclusion that the remaining shortage was also fraudulently and dishonestly appropriated by said employees. It charged also that the liability for the item sold by said employees had been admitted by the defendant. Attached to the declaration was what is marked as Exhibit B, "Items Missing from Plainview, Texas Warehouse." This exhibit consisted of six pages in which various items were listed, with the quantity of each item and the value. There were items of value ranging from ten cents, or less, to $2,000 on one or two. The quantity of each item was given, and it ran from one to 900. The insuring clause of the policy, which was attached to the declaration as an exhibit, provided, in part, as follows: Another provision of the policy under the head, "Exclusions," reads: The question involved is whether the declaration brought the case without the provisions of Section 2(b). It will be noted the declaration charges directly that the employees misappropriated only one item. The other items are charged or alleged to be missing because they were undisclosed by an inventory. The loss is only shown by the difference in inventory. The only way in which the employees are sought to be charged with fraud and dishonesty is by alleging that they were the only employees (except the president) who had access to said warehouse, and that their control thereof was exclusive. *117 In Fort Smith Tobacco & Candy Co. v. American Guaranty & Ins. Co., 208 F. Supp. 244 (W.D.Ark. 1962), there was involved an insurance policy of the same type and with exactly the same insuring clause and the same exclusionary clause. The loss there involved cigarettes, drugs and sundries, appliances, miscellaneous items, Camp Chaffee account, and cash collections. The total claim was over $26,000. The fact that a loss had occurred was discovered September 15, 1959, but the plaintiff did not know exactly when it occurred, and the extent thereof was not known until an audit was completed October 23, 1959. One Hard-castle was charged as the employee whose fraudulent or dishonest act caused the loss. He had repaid nearly $3,000. There was no claim that any employee other than Hard-castle was guilty. Hard-castle denied any responsibility except in connection with cigarettes. This is a long opinion, and we only quote excerpts therefrom, to-wit: Finally, the holding of the Court insofar as it affects the present case is summarized in Headnotes 2 and 5, which read as follows: General Truck Sales, Inc. v. American Fire & Cas. Co., 100 So. 2d 202 (Fla. 1958), was a case involving a suit on an employee's fidelity bond in which summary judgment was entered and the part thereof applicable to the instant case is as follows: The Supreme Judicial Court of Maine had before it Lipman Bros., Inc. v. Hartford Accident & Indemnity Co., 149 Me. 199, 100 A.2d 246 (1953), in which a similar bond, although not worded exactly as that here sued upon, was involved, and the holding of the Court is succinctly stated in Headnote 23, as follows: In 1951, our own Court decided the case of Hartford Accident & Indemnity Co. of Hartford, Conn. v. Hattiesburg Hardware Stores, Inc., 49 So. 2d 813 (Miss. 1951), and, while it was alleged that the employee "was charged with the exclusive control and management of the properties," it was there held: We find the provisions of the policy not ambiguous; that the allegations of the declaration failed to take the case out of the exclusionary provision; that the lower court was correct in sustaining the demurrer, and the case is affirmed. Affirmed. GILLESPIE, P.J., and RODGERS, PATTERSON and INZER, JJ., concur.