Racine County National Bank v. Aetna Casualty & Surety Co.

The issue before us is:

Was the loss sustained by the bank due to the nonpayment of the loan so as to bar the bank’s recovery under the loan exclusion clause contained in the bond?

The appellant argues that the bond covers the loss of surrendered securities because it was fraudulently induced to release them to Studey and because the securities were within the definition of property and covered by insuring clause (B). This contention is founded on the supposition that there is a difference between a loss due to nonpayment of a loan and a loss due to the fraudulent procurement of collateral…