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Chicago Fire and Marine Insurance Company v. Fidelity and Deposit Company of Maryland

Supreme Court of Arizona

January 23, 1933


APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Judgment affirmed.

Messrs. White & Wilson, for Appellant.

Messrs. Silverthorne & Van Spanckeren, for Appellee.


[41 Ariz. 359] LOCKWOOD, J.

This is an action by Chicago Fire and Marine Insurance Company, a corporation, hereinafter called plaintiff, against Fidelity and Deposit Company of Maryland, a corporation, hereinafter called defendant, to recover on a certain indemnity bond issued by defendant in favor of plaintiff and claimed by the latter to guarantee it against loss occasioned plaintiff by reason of the larceny or embezzlement of one Charles E. MacMillin.

The case was heard before the court without a jury, [41 Ariz. 360] and at the close of plaintiff's evidence defendant moved for judgment, which motion was granted, and judgment was rendered accordingly. After the usual motion for new trial was overruled, this appeal was taken.

There are some four formal assignments of error, but together they raise but one question, and that is whether the evidence for plaintiff was sufficient to sustain a recovery on the bond. The facts developed by the evidence are as follows: Plaintiff is a corporation engaged nationally in the fire and marine insurance business. On February 14th, 1928, it appointed MacMillin Agency, Inc., of Phoenix, Arizona, its general agent and manager for the state of Arizona. In reality the MacMillin Agency Inc., was Charles E. MacMillin in his individual capacity, that being the name under which he conducted his business. Thereafter defendant executed in favor of plaintiff an indemnity bond, the vital clause of which reads as follows:

" . . . That the Fidelity and Deposit Company of Maryland, (hereinafter called Surety) does hereby agree to pay unto Chicago Fire and Marine Insurance Company, (hereinafter called Employer), within ninety days after proof of loss as herein set forth, the amount of any direct loss, which any Employee listed in the schedule hereto attached or added thereto as hereinafter provided, may, while in any position and at any location in the service of the Employer, directly or by collusion with others, cause to the Employer, not exceeding, however, the amount hereinafter set forth, through any act of larceny or embezzlement committed. . . ." (Italics ours.) ours.)

It is not disputed that the MacMillin Agency, which, as we have said, was the alter ego of Charles E. MacMillin, was included in the schedule referred to by the bond. The agency agreement is lengthy, and we shall merely summarize the features necessary [41 Ariz. 361] for us to consider in determining this case. By its terms MacMillin had all the power of general agent and manager for the plaintiff in Arizona. He could appoint all local agents in the state, which agents reported directly to him and not to plaintiff. He was required to give a monthly report of all insurance business written by him or the local agents

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in the state of Arizona and to forward to the plaintiff the balance shown by such statements within ninety days after the close of the month for which the account was made up. The contract further contained this clause:

". . . The Manager hereby agrees to carry out faithfully all instructions given or to be given and will be responsible to the company for all transactions and all balances due by his office and by agents appointed by him. . . ."

In other words, MacMillin assumed the responsibility of paying plaintiff the premiums for all business done by him or his local agents in the state of Arizona, regardless of whether they were collected or not.

MacMillin continued as such general agent for a period of approximately two years, and up to July, 1929, at least faithfully accounted to plaintiff under the terms of his contract. During all this period the premiums collected by MacMillin were deposited in Phoenix, Arizona, to the credit of the MacMillin Agency, and commingled with the funds received by him through other insurance companies which he represented, and all checks on said account were signed "The MacMillin Agency, Inc., By Charles E. MacMillin"; payments to plaintiff of the amounts due it being made by these checks. R. M. Nevins, the secretary of plaintiff, testified in substance that plaintiff neither knew nor cared how the money collected by MacMillin was handled, but knew he represented other [41 Ariz. 362] companies and assumed the funds were handled as above stated; that the contract with MacMillin Agency, Inc., provided that it was liable for the amount of the insurance written whether collected or not, and that so long as ...

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