Fidelity Savings & Loan Ass'n v. Aetna Life & Casualty Corp.

MEMORANDUM AND ORDER

These consolidated cases arise generally from the failure of the San Francisco National Bank (hereafter “SFNB”). That bank was closed by the Comptroller of the Currency on January 22, 1965, after a period of its economic distress. On the date of closure, plaintiff Security Savings and Loan Association (hereafter “Security”) had on deposit with the bank certificates of deposit totaling $600,000. The predecessors in interest to plaintiff Fidelity Savings and Loan Association (hereafter “Fidelity”) had on deposit $1,204,669.40, in the form of certificates of deposit and a commercial checking account. Neither plaintiff recovered its deposits in full.

At the time of the bank’s failure, both Security and Fidelity were insured by the respective defendants under a standard savings and loan association blanket bond, Form No. 22, as required by 12 C.F.R. § 563.19 . Clause (E) of these bonds provided that the insured would be indemnified for, “[a]ny loss of property [occurring] through any other form of fraud or dishonesty by any person or persons whether employees or not.” Contending that the loss of their deposits resulted from various fraudulent or dishonest acts of…