Continental Bank & Trust Co. v. St. Paul Fire & Marine Insurance Co.

ELLETT, Justice: Plaintiff Bank brought an action seeking indemnity under a banker’s blanket bond. Defendant underwriter moved for a summary judgment, which was granted. The plaintiff appeals seeking a trial on the merits. Plaintiff’s allegations were these: That in April of 1971, Clark Tank Lines Company, Inc. and Service Tank Lines, Inc. sued plaintiff for damages in excess of $600,000, alleging the loss was occasioned by the actions of one J. Moroni Stoof (an agent of Clark), being aided and abetted by Continental under circumstances constituting bad faith; that Continental kept St. Paul informed at all pertinent times, requested St. Paul to assume liability and defense of the claims, which request was refused; that Continental was required to obtain counsel for defense of the action; that the action was subsequently settled for $15,600, and in addition Continental expended $13,330.91 for attorney’s fees and costs; that St. Paul was informed of the settlement; but responded that it was not affected, since the critical issue was whether Continental was covered by the bond. Continental further pleaded that its loss occurred through the conduct of J. Moroni Stoof, who materially altered certain checks with intent to defraud and convert the checks to his own use; that the settlement with Clark and Service was a loss to Continental through forgery and alteration. [223] In order for the appellant to recover under its policy with the respondent it must prove that the loss was sustained: 1. By reason of a forgery or alteration of a check; or 2. By reason of dishonest, fraudulent or criminal acts of an employee of the bank; or 3. Because Mr. Stoof (employee of Clark Tank Lines) materially altered a check without authorization and through fraudulent misrepresentations; or 4. Because the Bank aided and abetted Mr. Stoof in his embezzlement from the Bank. The Bank’s answers to interrogatories were as follows, to wit: 1. State the names and addresses of all persons who have knowledge that the checks alleged in the First Cause of Action were signed in blank, or were obtained, completed and materially altered without authorization and through fraudulent misrepresentation by J. Moroni Stoof. ANSWER: Plaintiff has no independent knowledge of persons who have knowledge that the checks alleged in the First Cause of Action were signed in blank or were obtained, completed, or materially altered without authorization through fraudulent misrepresentation by J. Moroni Stoof. . . . 2. State Plaintiff’s understanding of how Stoof obtained, completed and materially altered said checks without authorization, and of the fraudulent misrepresentations he made. ANSWER: Plaintiff has no independent understanding of the information requested by this interrogatory. 3. State the names of the persons who acted on Plaintiff’s behalf in bad faith and with actual knowledge of Stoof’s lack of authority as alleged in Paragraph 26. ANSWER: * * * Plaintiff knows of no persons who acted upon plaintiff’s behalf in bad faith and with actual knowledge of Stoof’s lack of authority. 4. State the names of plaintiff’s employees who aided and abetted Stoof in the embezzlements as alleged in Paragraph 27. ANSWER: . . . Plaintiff knows of no employees of plaintiff who aided and abetted in the embezzlement. 5. State the names of Plaintiff’s employees who converted funds to Plaintiff’s use as alleged in Paragraph 25 and describe how Plaintiff converted funds to its own use as alleged in that paragraph. ANSWER: . . . Plaintiff knows of no employees who converted funds to its use nor does it know of funds which were converted to its own use. 6. State the names and addresses of Plaintiff’s employees who were dishonest, fraudulent or acted or committed criminal acts as alleged in Paragraph 29 and describe those acts. ANSWER: . . . Plaintiff knows of no employees of plaintiff who were dishonest, fraudulent or acted or committed criminal acts in connection with the subject matter of this action. The answers given by the appellant to the foregoing questions clearly show that no recovery can be had under its policy. The trial court was correct in granting a summary judgment in favor of the respondent. Some ten days after the summary judgment was given, the appellant undertook to file supplemental answers to the interrogatories which it had previously made. In the proposed new answers it affirmed that it had no knowledge contrary to that which it had stated before, but asserted that an attorney for Clark Tank Lines in the prior action had knowledge of certain other cases in the courts of this State, and that the information contained therein was available to the respondent. Even if the belated answers are to be considered, it would not affect the judgment as rendered. The judgment is affirmed and costs are awarded to the respondent. [224] HENRIOD, C. J., and CROCKETT, J., concur.