Court Opinion

ID: 6878484
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:11:12.43063+00
Date Added: 2024-06-11T16:05:32.499988
License: Public Domain

HANEY, Circuit Judge
(dissenting).
I conceive that the majority opinion fundamentally errs by favoring appellant with an exceedingly narrow construction of provisions written by such company in a bond. I know of no rule of law, and the parties cite none, requiring us to bestow such a benefit on the company.
The company agreed . “to indemnify and save harmless * * * [appellee] from any and all loss which it may sustain” in any of the following contingencies: (1) Failure of any employee named therein “to faithfully perform such duties as may be required of him from time to time”; (2) failure of such employee “to account for all funds * * * which may come into his possession belonging to” appellee; or (3) commission by such employee “of any fraudulent or unlawful deed”. Each of these three clauses is connected with the conjunction “or” which obviously means that each is an independent undertaking of the company. There is not á word in the bond which permits the company to choose which clause it shall be liable upon, or which restricts the right of appellee to *784make such a choice. The effect of the majority opinion, however, is to read such a provision into the bond. I think such construction is unwarranted, since Washington follows the general rule that such a bond is to be interpreted most strongly in favor of appellee. Duke v. National Surety Co., 130 Wash. 276, 227 P. 2.
It is conceded that the liability of the company under provisions (1) and (3) above is restricted to $20,000, but appellee rightly contends that it has the right to choose which of the three provisions it will rely on. The majority denies this by making the selection for appellee, and by selecting the first provision it nullifies appellee’s attempt to protect itself. Examination of the cases relied on by the majority, in my opinion, discloses their inapplicability.
It seems clear to me that the provisions in the bond are obviously independent of each other, but assuming for the purposes of argument that it is doubtful whether they are dependant or independent, then Duke v. National Surety Co., supra, requires the holding that each provision is a separate' undertaking and appellee has the option to make a choice between them.
Provision (2), the one relied on .by appellee, makes the company liable’"for the failure of any employee named in the bond “to account for all funds * * * which may come into his possession belonging to” appellee. The amount of liability is dependent upon the time of the failure “to account” in accordance with Zagar v. Columbia Casualty Co., 181 Wash. 487, 43 P.2d 949, 951: “It is a well-recognized principle of law that a principal, having several successive bonds covering different periods, upon committing a default renders liable that bond in force when the default is committed. * * * The obligation to pay arises when the principal commits a breach of duty. In cases of defaults by an official, the bond covering the period during which the default occurred is liable. * * * ” The duty was “to account”. The words “account for” may mean not only a statement or rendition of the account, but also delivery of the money. See: The Idaho, 93 U.S. 575, 579, 23 L.Ed. 978; Hale County, Tex. v. American Indemnity Co., 5 Cir., 63 F.2d 275, 278; United States v. Rehwald, D.C.Cal., 44 F.2d 663; 1 C.J.S., Account, page 576. In the view of the rule announced in Duke v. National Surety Co., supra, the default occurred, therefore, at the time when Gormley was required to deliver the money in his custody.
Appellee was permitted an “incidental expense fund in such amount as the port commission may direct”. Laws of Wash., 1933, Ch. 189, p. 846, § 16. This fund was in Gormley’s custody. I find nothing in the Washington statutes specifying when he should account therefor, and the reasonable rule would be that Gormley was required to account on demand. When the demand was made, Gormley failed to account, and at that time appellant was subject to a liability of $50,000. For these reasons, I think the judgment should be affirmed.