Citations
- 314 F.2d 470
Full opinion text
SANBORN, Circuit Judge.
The Employers’ Liability Assurance Corporation, Limited (Employers), a foreign insurance company, as a subrogee and assignee of Mutual Benefit Health & Accident Association (Mutual) and United Benefit Life Insurance Company (United), both of Omaha, Nebraska, brought this diversity action on February 8, 1957, against L. J. Marcotte Insurance Agency (Marcotte Agency), a partnership, and its members to recover the amount of a loss suffered by Mutual and United which Employers, by the terms of an “Insurance Companies’ Blanket Bond” which it had issued to them, was obliged to pay. The Marcotte Agency was alleged to be liable for the loss, which had been occasioned by the dishonesty of an employee of the Agency in connection with the adjustment of claims on policies which it, as General Agent for Mutual and United, had written for those companies. The Marcotte Agency denied liability. The case was tried to the District Court, without a jury, upon a Stipulation of Facts and the evidence of two witnesses, one of whom was the Vice-President in charge of claims for Mutual and Claims Manager for United, and, the other, Robert D. Marcotte, one of the partners in the Marcotte Agency.
The District Court concluded “that the direction and control which Mutual and United exercised over the adjuster [the employee of the Marcotte Agency who had defrauded the companies] was of such a degree as to clearly preclude these companies from holding the Marcotte Agency responsible to them for the consequences of his actions.” Judgment was entered for the defendants, and the plaintiff has appealed.
It is unnecessary to state in complete detail the underlying facts. The most concise and easily understandable statement of how the loss came about is found in the sworn Proof of Loss dated October 1, 1956, submitted to Employers by Mutual and United. It reads as follows:
“It is hereby certified that the undersigned [Mutual and United] has sustained a loss through the dishonesty of Richard O. Channel employee of Marcotte Insurance Agency employed at said Marcotte Insurance Agency in the position of Claim Auditor.
“The circumstances and evidence of such loss are as follows: Richard O. Channel, Claim Auditor at the Mareotte Insurance Agency of Omaha, Nebraska, representing Mutual Benefit Health and Accident Association and United Benefit Life Insurance Company, handled claims originating through this agency in its territory. In such position he was authorized to draw drafts against the Companies in payment of valid claims. From October, 1955 to June, 1956, Channel drew various drafts on the Companies in payment of claims. In some of these cases it has been found that Channel created false proofs in excess of the actual liability under valid claims. In other cases, he established false claims and proofs. Drafts issued by him under both situations were honored by the Companies, and the total amount of such drafts constitutes the amount of this claim. In the-case of each draft Channel forged the endorsement of the insured and. retained the proceeds personally.
“The dates and amounts of such loss are set forth in detail on the reverse hereof. * * * ”
The total loss aggregated $12,111.23.
The liability of the Mareotte Ageney -nd its members for this loss depends-, upon whether, under the law of Nebraska, they were answerable to Mutual and' United for the misdoings of the Agency’s-, employee Channel.
During the period in suit, the MarcotteAgency was a General Agent of MutuaL and United, and was authorized “to write-business through sub-agents” for those-companies.
So much of the Stipulation of Facts asi seems pertinent is set out in the margin.
Mr. LeClair, Vice-President in charge