Haskel Engineering & Supply Co. v. Hartford Accident & Indemnity Co.
Opinion
Lead Opinion
Thompson, J.
This appeal from a summary judgment in declaratory relief raises an issue apparently not previously considered in California, We are required to determine whether, where the obligor on a fidelity bond has fully reimbursed its obligee for loss caused by the embezzlement of an employee, the obligor or the obligee is entitled to increases in value of property acquired by the employee with the embezzled funds. Recognizing that the equitable principles of constructive trust and subrogation collide when applied to the issue, we conclude that the obligor is entitled to the benefit of the increase in value to the extent that the increase, when combined with other amounts recovered from the employee, does not exceed the payments made to the obligee by the obligor.
Hartford Accident and Indemnity Company issued its fidelity bond in the amount of $ 100,000 to Haskel Engineering & Supply Company. The bond obligates Hartford to “pay [Haskel] for . . . Loss of Money, Securities and other property which [Haskel] shall sustain through any fraudulent or dishonest act or acts committed by any ... Employees ....”