Liberty Bank v. Fidelity & Deposit Co.

The defendants gave their bond to the plaintiff to indemnify and save the plaintiff harmless from any loss “ through any dishonest or criminal act of any of the employees ” of the plaintiff “ wherever any such act may be committed and whether committed directly or by collusion with others.” In a previous action between the plaintiff and a customer of the plaintiff relating to a note and the right to hold collateral on a banker’s lien as security for such note, judgment went for the defendant, establishing that the note was not executed by the customer to cover the purchase price of stock bought by the bank through one of its employees for the reason that the customer had not authorized such purchase or ratified it and signed the note in the belief that he was simply signing instruments relating to collateral security for other loans. The judgment in that case establishing, as it does, the unauthorized purchase of stock by an employee at the expense of the bank followed by the securing of the signature of *598the customer to a note for the purchase price without the knowledge of the purchaser that he was signing such a note, conclusively establishes dishonest acts on the part of employees. No hypothesis of innocence is possible under the stated circumstances. Therefore, although the former judgment does not expressly establish fraud, bad faith, dishonesty or criminality, it establishes facts from which no inference can be drawn except of dishonesty, and the judgment was, therefore, conclusive that the loss which followed falls within the terms of the bond. Under these circumstances, it was not open to the defendants to offer evidence bearing upon the factual innocence of the employees.

The judgment and order should be affirmed, with costs.

All concur. Present — Sears, P. J., Taylor, Thompson, Crosby and Lewis, JJ.

Judgment and order affirmed, with costs.