Opinion ID: 2178484
Heading Depth: 1
Heading Rank: 2

Heading: The settlement agreement as a covered instrument.

Text: There is another reason the ruling of the trial court was correct. This agreement was not within the bond's definition of securities, documents or other written instruments. Clause E is a standard provision of virtually all banker's blanket bonds. Annot., What are Securities, Documents or Other Written Instruments Within Terms of Bankers' Blanket Bond Insuring Losses From Counterfeiting or Forgery, 38 A.L. R.3d 1437 (1971). However, the parties agree there is little case authority as to the interpretation of its language. In the past, courts gave a very broad construction to securities, documents or other written instruments as used in the bond. Id. at 1439. This broad construction resulted in a 1969 amendment to the standard form, Wisner, Banker's Blanket Bond, Clause E: Recent Decisions, 39 Ins. Counsel J. 305, 307 (1972), which defined securities, documents or other written instruments as original (including original counterparts) negotiable or non-negotiable agreements in writing, other than as set forth in (b) and (c) below, having value which value is, in the ordinary course of business, transferable by delivery of such agreements with any necessary endorsement or assignment; . . .. The only case cited in the briefs which discusses the meaning of the standard clause, as amended to add the definition, is Union Investment Co. v. Fidelity & Deposit Co., 549 F.2d 1107 (6th Cir.1977). In that case, certificates of mortgage insurance authorizing loan disbursements, known as FHA Forms 2403, were forged and then furnished to a lender. The questions addressed by the court were whether the forms had value within the terms of the coverage, and whether an instrument, in order to be covered, had to be commercial paper in its ordinary meaning. Aided in part by the general principle that ambiguous language in an insurance contract is to be liberally construed in favor of the insured and against the insurer, the court resolved the issues against the bonding company. That case is clearly distinguishable because the court did not discuss the interpretations of original or original counterpart under the clause, which we deem to be the pivotal issues of interpretation in this case. [1] We agree that, as a general rule, ambiguous terms in an insurance contract must be resolved against the insurer. But no amount of liberal construction of original or original counterpart will allow this document to fall within the definition. It was clearly not an original. And an original counterpart, we believe, means one in which the writing in question is produced simultaneously with the original through carbon paper or other means. This is consistent with the view of at least one commentator, who has said that the purpose of the 1969 amendment, which limited covered writings to original or original counterparts, was to exclude photocopies and include only original documents. Wisner, supra at 307. The bank relies upon language of the clause that states [m]echanically reproduced facsimile signatures are treated the same as handwritten signatures. Since the signature on the photocopy was mechanically reproduced, it argues that the whole agreement falls within the definition. However, this provision is not a part of the definition of securities, documents or other written instruments which refers to original or original counterparts. The only reference to signatures within the definition concerns carbon impressions of signatures on copies of bills of lading, which are not involved here. In any event, even if this language did refer to the definition, it refers only to signatures and not to the entire document; it would not satisfy the requirement that the rest of the document be original.