No. 151 October Term, 1979, No. 186 October Term, 1979, Appeal from Order entered December, 1978, by the Court of Common Pleas of Delaware County, Pennsylvania, Civil Action-Law Division at No. 76-7776.
Joseph E. Lastowka, Jr., Media, for appellant (at No. 151) and for appellee (at No. 186).
Andrew J. Forbes, Media, for appellee (at No. 151) and for appellant (at No. 186).
Spaeth, Cavanaugh and O'Kicki, JJ.*fn* O'Kicki, Judge, dissenting.
[ 284 Pa. Super. Page 262]
Plaintiff, Eddystone Fire Company, No. 1 [Eddystone], brought suit against several insurance companies, collectively known as the Continental Insurance Companies [Continental], seeking to recover, pursuant to certain fidelity bonds, monies embezzled by Eddystone's treasurer. The trial judge, sitting non-jury, ruled that Eddystone suffered losses in the amount of $10,495 during the years 1971 through 1974 and that, under the terms of the fidelity agreement, Continental was liable for such losses but only to the extent of $5,000.
[ 284 Pa. Super. Page 263]
Continental filed exceptions to this ruling alleging that Eddystone is not entitled to recovery because (1) it failed to establish that it incurred a loss as defined in the bonding contract and (2) it did not comply with the provisions of the bonds requiring it to examine and verify the books of account. Eddystone excepted to that portion of the ruling limiting its recovery to $5,000. Eddystone contends that the fidelity bonds, issued yearly by different companies, are separate and distinct contracts and that it is entitled to judgments from each company for losses it sustained over the three-year period. All exceptions were denied and both parties appealed. We affirm.
We first dispose of Continental's challenge to the adequacy of the evidence establishing its liability. It is well established that a trial judge's findings of fact in a non-jury trial have the weight of a jury verdict and cannot be disturbed on appeal unless unsupported by competent evidence in the record or predicated upon errors of law. Courts v. Campbell, 245 Pa. Super. 326, 331, 369 A.2d 425, 428 (1976). Furthermore, the evidence must be viewed in the light most favorable to the verdict winner. Courts v. Campbell, supra.
Viewed in this light, the evidence reveals that from 1969 through 1975, Continental, through its agent, Robert S. Maxam, issued yearly fidelity bonds insuring Eddystone against any losses it might sustain as a result of dishonest acts committed by its treasurer and assistant treasurer. The annual premium was $25.00 and recovery was expressly limited to a maximum of $5,000 for each named officer. Pursuant to the Schedule of Statements of each bond, Eddystone agreed to conduct an annual examination and verification of the books of account kept by each named official.
It was admitted in the pleadings that Eddystone properly sent to Continental prompt notice of its claim. At trial, a certified public accountant, who examined Eddystone's books in 1974, testified that as a result of the dishonesty of William Rankin, now deceased, who served as treasurer, losses were incurred by Eddystone during the periods of 1971 to 1972, 1973 and 1974. The loss sustained in 1971 to
[ 284 Pa. Super. Page 2641972]
amounted to $495, while the losses sustained in 1973 and 1974 each exceeded $5,000. The secretary of Eddystone confirmed that an annual audit of the treasurer's books was conducted by a committee elected from the members of the fire company and that this committee reported that the books were in order. Nevertheless, Continental argues that the certified public accountant testified that a layman who would have examined the books would have discovered the discrepancy between the treasurer's reports and the bank statements. Such testimony, it argues, proves that the Committee did not examine the books. This argument has no support in the record since the certified public accountant expressly declined to offer an opinion that a layman would have discovered the discrepancy.
Since the secretary's testimony was sufficient to support the trial judge's ruling that Eddystone fully complied with the terms of the fidelity agreement, Continental is liable for the loss suffered by Eddystone. Accordingly, Continental's exceptions were properly denied.*fn1
Eddystone contends that because the three fidelity bonds in issue are separate and distinct contracts it is entitled to recover up to $5,000 for losses sustained during the term of each bond. The basis of this agreement is that each bond refers to a different insurance company. While at first blush this argument is persuasive, closer analysis reveals a continuing bonding scheme with express non-cumulative provisions which operate to restrict Eddystone's total recovery to a maximum of $5,000.
[ 284 Pa. Super. Page 265]
Whether a bond imposes cumulative liability is a question that must be determined in light of the particular facts of each case and the provisions of the bond under which the claim arose. Bradley v. Fidelity & Casualty Co. of New York, 141 Pa. Super. 85, 14 A.2d 894 (1940). Because a fidelity bond is a contract of insurance, the rules governing the interpretation of insurance policies will apply. Booker Page 265} Brothers, Inc. v. American Casualty Co., 57 D. & C.2d 353 (1971), aff'd per curiam, 221 Pa. Super. 762, 291 A.2d 896 (1972). Accordingly, our duty is to determine the intent of the parties as manifested by the language of the written agreement. Mohn v. American Casualty Co., 458 Pa. 576, 326 A.2d 346 (1974); Central Dauphin School District v. American Casualty Co., 271 Pa. Super. 218, 412 A.2d 892 (1979). The agreement must be read in its entirety and, where the language is clear and unambiguous, its terms are to be given their plain and ordinary meaning. Central Dauphin School District v. American Casualty Co., supra; Blocker v. Aetna Casualty & Surety Co., 232 Pa. Super. 111, 332 A.2d 476 (1975).
In the instant case, each of the three fidelity bonds designate a different insurance carrier as the "Company." The bond in effect during the years 1969 and 1970 (BND 173-11-16) refers to the Phoenix Assurance Co. of New York; the bond in effect during 1971 and 1972 (BND 181-68-09) refers to the National Ben Franklin Insurance Co. of Pittsburgh; and the bond in effect during 1973 and 1974 (BND 190-87-94) refers to the Fireman's Insurance Co. of Newark, New Jersey. In all other respects, however, the bonds are identical. All three contain the following language declaring that the insurer's liability under the bonds is not cumulative:
2. . . . Regardless of the number of years this bond shall continue in force and the number of premiums which shall be payable or paid, the Company's liability as to any Official covered hereunder shall not be cumulative from year to year or from period to period.
8. If this bond is issued as a continuation of a bond previously issued by the Company to the Assured, it is understood and agreed that in order that the change from such prior bond to this bond may not impair the Assured's interests, this bond shall be construed to cover every loss within the period of the prior bond that ...