MONONGAHELA COAL CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND, 94 F. 732

SHELBY, Circuit Judge, after stating the ease, delivered the opinion of the court. The bond sued on is one of indemnity, but it is a contract imposing different obligations on the several makers. The plaintiff in error is called in the bond the “employer,” the defendant in error the “company,” and the J. B. Donnally Company, Limited, the “employé.” These terms will be used, for brevity. The contract first recites that the employé “has been required to furnish a bond for his honesty in the performance of his duties in said position” (meaning as agent for the employer).

After reciting the consideration, and making other recitals not material here, the agreement is that “the company shall * * * make good and reimburse to the employer, to the extent of the sum of ten thousand dollars, * * * all and any pecuniary loss sustained by the employer, of moneys, securities, or other personal property, belonging to the employer in the possession or custody of the employé, or for the possession of which he is responsible, directly occasioned by larceny or embezzlement on the part of the employé in connection with the duties of the office or position. * * *” The employer, if required by the company, is to give aid and information “for the purpose of prosecuting and bringing the said employé to justice. * * *” It is declared by its terms that the “true intent and meaning” of the bond are “that the company shall be responsible * * * for moneys, securities, or property diverted from the employer through fraud or dishonesty on the part of the employé. * * *” These provisions all relate to the obligations of the company.

From them it appears that the liability of the company is restricted to claims based upon the larceny, embezzlement, or at least the dishonesty, of the employé. The obligation of the company does not cover every liability or claim which might accrue in favor of the employer and against the employé. A loss by carelessness or inattention to business might be the foundation of a just claim against the employé by the employer, which would impose no liability on the company by the terms of its obligations in the bond.

If, with the consent of the employer, expressed or implied ■ from the course of dealings between it and the employé, the latter used or retained moneys, charging itself with them, it would be no obligation covered by the insurance or indemnity of the company. It follows, therefore, that the fact that the account between the employer and the employé shows an indebtedness from the latter to the former is not sufficient of itself to support a claim on the bond •against the company. To recover in an action on a bond, defense being made, there must be an allegation of a breach of it, sustained by evidence.

There is neither allegation nor proof that the employé has, through fraud or dishonesty, diverted from the employer moneys, securities, or oilier property, nor that it has committed larceny or embezzlement of such property. O’Neill and Theis, the only witnesses, testify that the course of business between the employer and employé was for the latter to transmit the notes of the purchasers for coal sold on credit, and subsequently out of .cash sales to retain commissions on account of the sales for which the notes were given. Such dealings made it necessary to keep accounts of debit and credit.

Fraud and dishonesty are not to be presumed. The law presumes that every man acts honestly, till the contrary is shown. No fact is shown tending to prove that the debt originated in the fraud or dishonesty of the employé. As late as the 20th of April, 1897, O’Neill, tí»; president of the employer company, furnished a certificate that the employé had performed its duties in an acceptable manner, “and that we know of no reason why the guaranty should not he continued.’' The amount of the debt of the employé to the employer is $6,634.10. Fart of this sum ($1,088.64) was collected in 1896.

The remainder was collected in April and June of 1897. J. B. Donna Uy, Si'., the president of the employé company, died August 29, 1897. The fact that on settlement the employé owed the employer was discovered November 24, 1837, nearly three months after Don-nally's death. Under the circumstances, the fact that the employé, on settlement, is found to owe the employer, is not sufficient to show that the debt originated in fraud or dishonesty, in embezzlement or larceny.

It is alleged in the petition that the company— “Did bind and obligate itself unto your petitioner, in the sum of ten thousand dollars, that it would save, defend, and.keep harmless your petitioner from and against all loss and damage whatsoever, of any nature or kind, and from all other legal costs and expenses, direct or indirect, incidental thereto, which petitioner shall or may at any time sustain.” The bond sued on does not contain this or any similar obligation on the part of the company to the employer.

Such language, in substance, is in the latter part thereof, but it is the obligation of the em-ployé (the J. 13. Ponnally Company, Limited) to the company (the Fidelity & Deposit Company of Maryland).

That part of the bond is as follow?: “And the said employé doth hereby * * * agree that he will save, defend, and keep harmless the said company from and against all loss and damage of whatever nature and kind, and from all legal and other costs and expenses, direct or Incidental. * * *” This part of the bond is the agreement of the employé to reimburse the company if it has to pay anything to the employer by reason of the contract. It contains no such obligation of the company to the employer..

There was no evidence, in our opinion, before the jury, to sustain the allegations of the petition, or to justify a recovery in the case. It was proper to direct a verdict for the Fidelity & Deposit Company of Maryland. The judgment of the circuit court is affirmed,