Court Opinion

ID: 8747848
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:14:28.59841+00
Date Added: 2024-06-11T17:00:46.334315
License: Public Domain

ACHESON, Circuit Judge
(dissenting). I am not able to agree with my Brethren in their expressed conclusions, and I dissent from the judgment of affirmance.
1. In my view, there was no question of law properly reserved, upon which the court below could enter judgment for the defendant against the verdict in favor of the plaintiff. After evidence on both sides had been put in, and at the close of the court’s charge, the learned judge said: “I reserve the question whether there is any evidence to go to the jury in support of the' plaintiff’s claim;” and, in response to an observation by the defendant’s counsel as to the scope of the reservation, the judge added: “I reserve your last point, which asks for binding instructions.” With great respect for the learned judge below and my associates here, I must express my conviction that this *455was not a reservation of any question of law, but a reservation of the whole case. If, under such reservation, judgment may be entered for the defendant notwithstanding a verdict in favor of the plaintiff, then the verdict becomes a mere matter of form, and the court ultimately exercises the function of both judge and jury. I cannot agree that such disposition of a case is equivalent to a binding instruction to the jury to find in favor of the defendant. For in that case judgment would be entered for the defendant upon a verdict in his favor. But here the verdict of the jury upon the facts was in favor of the plaintiff, and no stated question of law was reserved. The mode of procedure here followed, I think, is an unwarrantable departure from the constitutional provision: “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.”
2. But assuming that there was a proper reservation, the court, I think, erred in giving judgment for the defendant. Under the charge of the court, the jury, in rendering a verdict for the plaintiff, must have reached the conclusion that the employer, the Bourse Restaurant Company, Uimited, at no time before the last renewal of the indemnity bond in December, 1899, had discovered any fraudulent or dishonest act on the part of its manager, Fssner, and that no fact had been brought to its attention which would fairly and properly give that information. The evidence fully justified such a finding. The bond required on the part of the employer good faith and reasonable diligence only. Section 9 of the bond declares that “any material misstatement or suppression of fact by the employer, in any statement or declaration to the company,” shall avoid the bond; and section 10 provides that the bond shall be avoided “if the employed has, within the knowledge ■of the employer, been a defaulter at any time during his service.” Now it is demonstrable by this record that the jury must have found that the plaintiff company had no such knowledge at the time of the last renewal of the bond or before. Moreover, the certificate of December 23, 1899, which the defendant sent to the plaintiff company to be executed, and which Mr. Ostheimer, the company’s treasurer, signed, in terms is “to the best of our knowledge *and belief.” The evidence showed the exercise of great vigilance by the Bourse Restaurant Company in respect to the acts of its manager, Essner, in the conduct of its business. Annually, after the close of the business year, which ended on January 31st, there was an audit of his accounts and books by expert accountants. Then monthly reports or statements in writing were made by the company’s bookkeeper (West) from the books, and were laid before the board of directors at their monthly meetings, which were held on the second Tuesday of every month. Such a report or statement was before the board at its meeting in December, 1899. There was no reason for the board, or Mr. Ostheimer, who was present at that meeting, to doubt the completeness •of that statement made by the company’s bookkeeper from the books. It disclosed nothing wrong in the manager’s accounts or booksl The learned judge below fell into inadvertent mistake of fact in saying that *456“no examination whatever had been made of the books and accounts of the employed at the date named or for nearly a year before,” and that the statement presented to the company in December, 1899, was made “by the bookkeeper of Mr. Essner.” It clearly appears that Mr. West was the company’s own bookkeeper, and the evidence justifies the conclusion that his December statement was made up from his examination of the books and accounts. The certificate of December 23, 1899, was signed by Mr. Ostheimer, the company’s treasurer, in perfect good faith, after the December examination of the books and written statement were made by West. Such an examination had to be made by some competent employé, and, under the proofs, I cannot doubt that Mr. Ostheimer, in signing the certificate, had a right to act upon West’s examination and written report. When the condition of this indemnity bond speaks of the employer’s knowledge that the employé is a defaulter, surely it means actual knowledge, and not constructive notice through some subordinate employé who may have acted negligently in his examination or report. The mere negligence of the insured or his servant does not take a loss thereby occurring out of the protection of the policy. Wood, Ins. § 101. If the foregoing views are not sound and apt, then, truly, are employers’ indemnity bonds (so-called) instruments “that palter with us in a double sense,—that keep the word of promise to our ear, and break it to our hope.”
West did not call the attention of the board to Essner’s overdraft, and it was not known to Mr. Ostheimer or to any of the officials or directors of the company. The fact that Essner had overdrawn his-account did not necessarily imply embezzlement. His ledger account on its face showed regular debit entries for all moneys he had drawn-out. There was no attempt at concealment. Before the end of the then current business year, the balance against Essner had been reduced to $969. The expert accountants who made the audit in February, 1900, treated this balance of $969 as a legitimate debit! Moreover, Mr. Haye's, one of these expert accountants, testified thus:
“Q. In making this report in February, 1900, did you find any evidence of any fraud? A. No, sir; we saw no evidence of that kind. Q. Was there anything that you saw in the books to make you suspicious that Mr. Essner was embezzling the moneys of that concern? A. No.”
The report of the experts made in February, 1900, which covered the preceding business year, was entirely favorable to Essner. It was-for the jury to determine whether entries appearing in the books in-December, 1899, imported embezzlement. Indeed, upon every question of fact, it was for the jury, and not for the court, to draw from the evidence the proper inferences.