Liberty Mut. Ins. v. HARRIS, KERR, FORSTER

American Institute of Aeronautics & Astronautics, Inc. (hereinafter referred to as the insured), protected itself from any loss caused by the dishonesty of an employee by contracts with Liberty Mutual Insurance Company (for the period March 11, 1963, to March 11, 1966) and General Insurance Company of America (for the period March 11, 1966, to January 1, 1968) whereby the insurers agreed to indemnify the insured for any loss due to the dishonesty of an employee.

The insured suffered a loss of $113,442.99 by the dishonesty of one of its employees, $38,861.59 of the loss being incurred while a contract was in force with one of the insurers and $74,581.40 of the loss being incurred while a contract was in force with the other insurer. Upon refusal of the insurers to indemnify the insured, the insured brought suit against the insurers.

The insurers answered denying liability, but each filed a cross-complaint (superseded by a first amended cross-complaint) against Harris, Kerr, Forster & Company (hereinafter the accountants) seeking declaratory relief in the form of a judgment that if the insurer is liable to the insured, the accountants are liable to the insurer. A demurrer…