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complainant on two bonds executed by the Guarantee Company to the bank; one insuring the latter corporation against such pecuniary loss as it might sustain by reason of the fraudulent acts of John Schardt, as teller and collector; and the other insuring the same corporation against pecuniary loss by reason of fraudulent acts committed by him in his office of cashier. On hearing a decree was rendered against the Guarantee Company on both bonds, 68 Fed. Rep. 459, which was affirmed on appeal. 47 U. S. App. 91. The case was then brought to this court by certiorari, and the decree of the Circuit Court of Appeals was reversed and the cause remanded on the ground that the decree of the Circuit Court was not final. 173 U. S. 587.

The Guarantee Company subsequently made an unsuccessful attempt to have the cause reopened for additional evidence alleged to have been discovered since the first decree. A final decree was rendered against the company, which, on appeal to the Circuit Court of Appeals for the Sixth Circuit, was modified and affirmed, 100 Fed. Rep. 559, and the present certiorari was then allowed.

The Mechanics' Savings Bank and Trust Company was a banking institution located at Nashville, Tennessee, with a capital of fifty thousand dollars. John Schardt was its teller from 1888 to January, 1893, when he was elected cashier and remained such until his death on April 17 following. As teller and cashier he embezzled more than one hundred thousand dollars of the funds of the bank, beginning in 1890 and continuing until about the time of his death. In discovering the defalcation the bank ascertained its insolvency, closed its doors, and made a general assignment for the benefit of its creditors.

The Guarantee Company of North America was a company organized under the laws of the Dominion of Canada, and engaged in the business of guaranteeing pecuniary losses by the fradulent acts of persons in positions of trust, and issued to the bank in 1888 a bond for the period of one year on Schardt as teller for ten thousand dollars, which was subsequently re

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newed each year until January, 1893, when it issued a bond on Schardt as cashier for twenty thousand dollars.

The defalcation of more than one hundred thousand dollars was occasioned by losses in speculation, and just prior to Schardt's death he assigned to the bank some property of slight value, and about eighty thousand dollars of life insurance as indemnity. From these collaterals the bank realized the sum of $46,448.86, and for the remainder of the default the company was held liable to the extent of each bond. On the second appeal to the Circuit Court of Appeals, that court found the default under the cashier's bond to have been some six thousand dollars less than as ascertained by the Circuit Court, and modified the decree accordingly.

The teller's bond was dated January 16, 1888, and described Schardt as the employé and the bank as the employer. It provided:

"Whereas, the employé has been appointed in the service of the said employer, and has been assigned to the office or position of teller and collector, by the said employer, and application has been made to the Guarantee Company of North America for the grant by them of this bond;

"And whereas, the employer has delivered to the company a certain statement, and it being agreed and understood that such statement constitutes an essential part of the contract hereinafter expressed :

"Now, therefore, in consideration of the sum of one hundred dollars lawful money of the United States of America, to the said company, as a premium for the term of twelve months, ending on the sixteenth day of January, 1889, at twelve o'clock, noon, and in order to effect a continuance of the currency of this bond, a like premium hereafter to be paid to the said company, on or before the sixteenth day of January in each year, as a premium for the ensuing year, so long as the said employer may wish to continue this bond, and the said company shall consent to receive said premiums, it is hereby agreed that the company shall, within three months after proof satisfactory to the directors, make good and reimburse to the employer such pecuniary loss as the employer shall have sustained by the fraudulent acts

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of the employé, in connection with the duties of his said office or position, or with any other duties assigned to him, by the employer in the said service, committed by him, and discovered during the continuance of the currency of this bond, and within six months from the employé's ceasing to be in the said service. "The following provisions are also to be observed and binding as a part of this bond:

"The actual payment of the premium and its acceptance by this company either for the issue or renewal of this bond, is essential to its currency, and a condition precedent, to the right or claim hereunder.

"That this bond is issued and renewed on the express understanding that the employé has not within the knowledge of the said employer at any former period, either in this or other employment, been guilty of any default or serious dereliction of duty.

"That the employer shall observe or cause to be observed all due and customary supervision over the said employé for the prevention of default, and if the employer shall at any time, during the currency of this bond, condone any act or default, on the part of the employé, which would give the employer the right to claim hereunder, and shall continue the employé in his service, without notification to the company, the said company will not be responsible hereunto for any default which may occur subsequent to said act or default of said employé, so condoned.

"That the employer shall at once notify the company on his becoming aware of the said employé being engaged in speculation or gambling, or indulging in any disreputable or unlawful habits or pursuits.

"That there shall be an inspection or audit of the accounts or books of the employé on behalf of the employer at least once in every twelve months from the date of this bond.

"That the company shall be notified in writing of any act on the part of said employé, which may involve a loss for which the company is responsible hereunder to the employer, immediately or without unreasonable delay, after the occurrence of such act shall have come to the knowledge of the employer; and

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upon the making of such a claim, this bond shall wholly cease and determine as regards any liability, for any act of the employé committed subsequent to the making of such claim, and shall be surrendered to the company on the payment of all claims due hereunder.

"That the company may cancel, this bond at any time, by notifying the employer and refunding the premium paid less a pro rata part thereof for the time said bond shall have been in force; but said cancellation shall not affect or impair the company's liability hereunder for any acts committed or discovered previous to such cancellation during the currency of this bond, and within three months after said cancellation."

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The statement referred to was signed by the then cashier and delivered to the company before the bond was issued. It commenced with a communication from the managing director of the Guarantee Company, desiring answers to certain accompanying questions. These answers were given by the cashier, who also declared his answers and representations to be true, and that he was "not aware of any matter or thing affecting the character or reputation of the applicant, which should create any doubt as to his reliability or trustworthiness." This bond was renewed each year up to January, 1893, and in each year before the bond was renewed, the company furnished the bank with a blank form, to be filled out, and stating: "It is necessary before the bond can be renewed that you obtain the certificate on the back hereof by your president or cashier and on its return with remittance of the premium, the renewal can be immediately effected."

The certificate on the back was filled up and signed by the cashier, and among other things stated that the accounts of said teller Schardt had been examined and verified by the finance committee of said bank; and the bond was not renewed in any year until this certificate had been made out and delivered to the company.

Before the cashier's bond was issued the company "submitted for reply on behalf of the bank," certain questions, addressed to

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the president, which, and the answers thereto by the president as such, are referred to in the bond as "employers' guarantee proposal No. 154,806." Among these questions and answers were the following:

"Q. 2. If a new employé, by whom was the applicant introduced, or how did he become known to you? If hitherto in continuous service, for how long, in what capacities, and has he uniformly performed his duties faithfully and satisfactorily? A. Applicant began service in this bank six years ago as collector cl❜k, and has since been advanced to bank's teller and now cashier.

"Q. 3. Has he ever been in arrears or default in the bank's service, or, as far as you have heard, in any previous employment? A. No.

"Q. 4. Have you known or heard anything unfavorable as to his habits or associations, past or present? A. No.

"Q.. Or of any matters concerning him about which you deem it advisable for the company to make inquiry? A. No. "Q. 5. Is he to your knowledge pecuniarily embarrassed or insolvent? Or is he in any way indebted to the bank?

"Q. 6. Is he now or about to be engaged in any other business or employment than in the bank's services? A. No.

"Q. 7. Applicant's position or capacity for which this bond. is required? A. Cashier.

"Q. 8. Amount of his salary or other emoluments, if any? A. $2000 per annum.

"Q. 9. Amount or bond hereby required, from what date to commence, and by whom premium will be paid? A. $20,000 to date from Jan. 1, 1893. Premium payable by bank.

"Q. 10. What further security, if any, will be held or required from applicant? A. None.

"Q. 11. Have you hitherto held other security from applicant? If so, why discontinued or changed to this? A. Formerly teller and general bookkeeper in this bank; elected cashier at annual meeting January 1, 1893.

"Q. 12. Has there been any fault in the bank by any employé in applicant's position? A. No.

"Q. 13. When were applicant's books and accounts (includ