Fidelity Savings and Loan Association, Cross-Appellee v. Aetna Life & Casualty Company, Cross-Appellant

At the time of the failure of the San Francisco National Bank (SFNB), the predecessor of appellant Fidelity Savings and Loan Association had on deposit with the bank the sum of $203,046.50 in certificates of deposit and accrued interest. In the course of receivership, FDIC, as receiver, paid $125,480.23 in liquidating dividends and $10,000 in deposit insurance, leaving $67,566.27 unpaid. At the time of the bank’s closure, appellant’s predecessor was insured by appellee Aetna Life & Casualty Company by a standard savings and loan blanket bond, with a limit of liability of $510,000. Clause E of the bond provided that Aetna would indemnify the insured against “any loss of property through any other form of fraud or dishonesty by any person or persons, whether employees or not.”

Fidelity has brought this action against Aetna, contending that its loss was due to fraudulent and dishonest acts on the part of the bank’s management, which caused closure and failure of the bank. The district court, following bench trial, entered judg-. ment in favor of Fidelity for approximately 70 percent of its claim. Fidelity has taken this appeal, contending that it should have judgment for its unpaid…