Appeal from the District Court of the United States for the Western District of New York.
Before MANTON, L. HAND, and CHASE, Circuit Judges.
The plaintiff, a manufacturing company, sued upon a fidelity bond given to indemnify it against the defalcations of its secretary, Watson. At the trial it proved the execution of the bond on October 25, 1929, and Watson's thefts of more than the penalty, and then it rested.The defense was that the company had given false answers on October 18, 1929, in a statement signed by its president, Moore, on the faith of which the bond had been issued. This statement was in form as follows:
"Employers General Statement.
"Payable to Becker, Moore & Co., Inc., Address, Michigan St., No. Tonawanda, N.Y. Employer's General Statement Applying to Employes Holding Position of Secretary."
Then followed nine questions, most of them subdivided, among which were the two here in question:
"Is any one employe now in debt to you? Explain.
"Do you know any circumstance tending to indicate that any one employe is not a proper person to bond?
The whole concluded with a statement that
"The undersigned * * * warrants the above statement * * * and agrees that such statement shall be taken as the basis and consideration of said bond."
At the same time Watson filled out and signed a statement to go along with Moore's. This contained answers to other inquiries, spoke of "the issuing of the Bond or Security hereby applied for," and was signed by Watson as "applicant." The occasion for the bond was that an earlier bond of another surety was expiring, and would have to be renewed. One, Humphrey, an agent of the surety, learning of this from Watson, went to Moore and asked for the renewal; Moore "ordered" the bond which issued in the company's name and of which it paid the premium. The answers made by Moore above quoted were not true; Watson had personally embezzled $500 before ...