Bartlett v. Massachusetts Bonding & Insurance

Braley, J. This is an action of contract on a bond of the defendant to indemnify the plaintiffs for any pecuniary loss sustained of moneys, securities or other personal property through the fraud or dishonesty of Louis F. Underwood “general bookkeeper” while in their employment. The bond was dated August 10, 1909, and the jury could find on the auditor’s report, the only evidence introduced at the trial, that the plaintiffs paid the initial premium, and succeeding premiums for renewal to July, 1918, and that during the period from November 10, 1914, to September, 1917, Underwood, in one form or another, defrauded the plaintiffs of $4,569.01, due notice of which defalcation was given in accordance with the terms of the bond. It provided, however, among other conditions, that “This Bond is issued on the express understanding that the Employee has not within the knowledge of the Employer at any former period [307] been a defaulter, and will be invalid and of no effect unless signed by the Employee.” The reason for this condition is found in a subsequent clause, that the employee “for himself, his heirs, executors and administrators, covenants and agree to and with the said Company, that he will save, defend and keep harmless the said Company from and against all loss and damage of whatever nature or kind, and from all legal and other costs and expenses, direct or incidental which the said Company shall, or may at any time, sustain, or be put to (whether before or after any legal proceedings by, or against it to recover under this Bond, and without notice to him thereof), or for, or by reason, or in consequence of the said Company having entered into the present Bond.” And the in testimonium clause, in so far as material, reads, “In Witness Whereof, the said Lords F. Underwood'. . . hath hereunto set his hand and seal.” The delivery of the bond, which was then unsigned by Underwood, was not a waiver of the condition, and the receipt of the first premium, and the renewal premiums, without knowledge that at the date of payment, the bond, as the auditor found, and the jury could say, had not been executed by him, does not estop the defendant. Wilcox v. Massachusetts Bonding & Ins. Co. 223 Mass. 482. Larner v. Massachusetts Bonding & Ins. Co. 238 Mass. 80. The plaintiffs’ cause of action accrued when they discovered early in January, 1918, the wrongdoing of Underwood. But at that time the bond had not been executed by him. It therefore was unenforceable, and the procurement by the plaintiff of his signature after the event was neither a compliance with the precedent condition, nor the creation of a new contract making the defendant responsible for prior delinquencies. The exceptions to the refusal of the motion for a directed verdict accordingly must be sustained, and judgment is to be entered for the defendant. So ordered.