The Fidelity and Casualty Company of New York, a Corporation v. Bank of Altenburg

COLLET, Circuit Judge.

This action is brought by the plaintiff, a small bank, to recover on a bond executed by defendant insuring it against losses caused by “false pretenses”. The loss resulted from a “check kiting” scheme conceived and carried out by one William J. Schneier. Usually there are two banking institutions involved in such a scheme. In this instance they were the plaintiff and the Brazeau Bank. Both were small banks in rural communities only a few miles apart. Both incurred losses in substantial amounts. The Brazeau Bank closed as a result. It was taken over by the Federal Deposit…