Graydon-Murphy Oldsmobile v. Ohio Casualty Insurance

This is an action on an insurance contract for loss sustained by reason of the dishonest acts of an employee in embezzling her employer’s funds. Plaintiff, the corporate employer, was insured under an employee dishonesty policy issued by the defendant-insurer in the sum of $10,000. The policy became effective on January 28, 1964.

Dixie Mason was plaintiff’s office manager. During the three years prior to the commencement of the aforesaid policy, she embezzled $33,436. Following execution of the policy, she stole an additional $14,750. In early November 1964, she advised her employer that she was going to terminate her employment on November 13. On that date, she met with her superior and confessed that she had stolen an estimated $28,000 over a period of years. At the same time, she offered to deed 80 acres of land in San Diego County to plaintiff and agreed to make restitution of the balance at the rate of $400 per month, commencing in January 1965. She signed an informal memorandum to such effect at the time she confessed, but not a formal conveyance.

On November 20, 1964, plaintiff filed an action against Dixie Mason in the Los Angeles County Superior Court and…