Such a policy is in no sense a contract be tween the insurer and the employe, and any sum paid by the company to the employer on account of the death of an employe, whose widow had a right of action, is not an asset of the estate of the deceased ; Haw kins v. McCalla, 95 Ga. 192, 22 S. E. 141.
It is generally provided in such policies that the insurer shall have control of the defence of any suits against the employer on claims covered by the insurance, and such a condition is strictly enforced; 15 Can. L. T. 86.
Fidelity Insurance. A contract to indemni fy the insured against loss by reason of the default or dishonesty the employe.
Bonds of indemnity given by fidelity insur ance companies are analogous to ordinary policies of insurance, and are governed by the same principles of interpretation ; Me chanics' Savings Bank & Trust Co. v. Guar antee Co., 68 Fed. 459.
All conditions in the policy must be com plied with as in other cases of insurance, and where one of them is the prosecution of the person whose action is insured against, before he can recover, against the insurer, it was held, by an equally divided court, that the insured must conform to this condi tion even if he thereby became liable to an action for damages ; 9 Ins. L. J. 160.
A statement in the application as to the frequency of measures usually taken by the employer to secure the fidelity of the em ployed is a warranty the breach of which will defeat recovery ; 28 Scot. L. Rep. 394; but in an application for insurance, declara tions of the integrity of a clerk, in answer to questions which manifestly relate to the course of business of the employer, are mere representations and not warranties ; 7 Exch. 744. Where the bond provides that answers made to questions asked in the application shall be warranties, and the answers are made on the employer's "best knowledge and belief," mere falsity of the answers is not sufficient to avoid the bond, but the company must show that they are "knowingly false ;" Mechanics' Savings Bank & Trust Co. v. Guarantee Co., 68 Fed. 459; and if such an swers involved no misrepresentation or con cealment, the contract could not he affected by loose parol statements, or concealment of facts about which no inquiry was made, or conduct on which no reliance was placed; Supreme Council Catholic Knights of Ameri ca v. Casualty Co., 63 Fed. 48, 11 C. C. A. 96.
A representation that the person whose integrity is insured "has never been in ar rears or default of his accounts" covers any which may have occurred prior to the time when he entered the service of the insured; 30 U. C. C. P. 360. To charge an embezzling employe with interest on the money embez zled converts the embezzlement into a debt and the insurer is not liable therefor; Mil waukee Theater Co. v. Casualty Co., 92 Wis. 412, 66 N. W. 360.
Leaving money temporarily in an inse curely locked room when there were various means of safe-keeping available, was held a violation of a guarantee of "diligent and faithful performance of his duty," for which an insurer was liable ; 6 Leg. N. (Can.) 311; 16 Can. L. J. 334. So allowing a customer to make an overdraft on a bank was held negligence in the bank's agent who permit ted it, the agent and the customer being to gether involved in brokerage transactions; 7 Revue Legale 57; s. c. 14 L. C. Jur. 186.
Where the employer retains the employe in his service after he knows of the latter's dishonesty, and without notice to and as sent of the insurer, he cannot recover ; Lan cashire Ins. Co. v. Callahan, 68 Minn. 277, 71 N. W. 261, 64 Am. St. Rep. 475; but this rule will not apply to mere breaches of duty or contract obligation, not involving dishonesty of the servant or fraud and concealment on the part of the master ; id.
A bank cannot recover for loss occurring after it has been informed that its teller is engaged in speculation and where it has not so notified the insurer, or not made any in vestigation; Guarantee Co. of N. A. v. Trust Co., 183 U. S. 402, 22 Sup. Ct. 124, 46 L. Ed. 253 ; the employer is not bound to use dili gence to discover dishonesty, but where, in the exercise of reasonable and ordinary care, he could not have failed to infer dishonesty, he may properly be charged with knowledge of such fact; National Bank of Asheville v. Casualty Co., 89 Fed. 819, 32 C. C. A. 355; and if a bank's cashier leaves without no tice, taking $5,000 of its money, and the president, with knowledge of the facts, but without disclosure to the company, renews the cashier's bond and pays the premium, there can be no recovery on the bond ; id.