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April 11, 1972

C.F. MUELLER COMPANY (a corporation), Plaintiff,
MARYLAND CASUALTY COMPANY (a corporation), Defendant

Shaw, District Judge.

The opinion of the court was delivered by: SHAW

This action arises out of a robbery which occurred at the C.F. Mueller Company (Mueller) plant in Jersey City on February 2, 1967. Plaintiff, Mueller, brings the action against defendant insurance carrier (Maryland) to recover its loss pursuant to the provisions of a policy of insurance issued by defendant. The policy of insurance is known as Paymasters Broad Form Coverage Policy which insured plaintiff for loss of payroll funds by the actual destruction, disappearance or wrongful abstraction thereof within the Mueller premises. The policy defines payroll funds as follows:

"Payroll funds" means money and securities intended solely for the payroll of the insured.

 The policy also defines the words "money" and "securities":

"Money" means currency, coins, bank notes and bullion; and travelers checks, register checks and money orders held for sale to the public.
"Securities" means all negotiable and non-negotiable instruments or contracts representing either money or other property and includes revenue and other stamps in current use, tokens and tickets, but does not include money.

 The sole issue presented for determination by the Court is whether the money taken from the Mueller plant on February 2, 1967, was a payroll fund within the definition contained in the policy.

 Upon trial to the Court without a jury the following pertinent facts emerge:

 On February 2, 1967, at approximately 2:00 p.m. a man entered the Mueller plant and stated to the receptionist that he was a Mr. Martin from the Internal Revenue Service. When his presence was announced, plaintiff's secretary-treasurer, Mr. Post, met him. The president of Mueller, Mr. Toner, for whom Mr. Martin had inquired was absent. Martin began talking in a loud voice and Mr. Post invited him to his office because he did not want others to hear what Martin had to say with respect to plaintiff's tax liability. Once inside the office, Martin removed a gun from his attache case and threatened to kill Mr. Post if he did not do exactly what Martin told him to do. Post closed the office door and told his secretary that he would receive no calls. Martin then asked Post for a bank statement of the Mueller Company covering the previous month. Post called his assistant, Mr. Geils, on the telephone and asked him to bring the statement into his office. Martin kept the gun concealed when the bank statement was brought into the office. After looking at the statement, Martin told Post to draw a check in the sum of $24,640 to the order of cash. Mr. Post advised Martin that such a check could not be drawn on the First National Bank of Jersey City because such a check would have to be signed by either Mr. Toner or Mr. Mueller, both of whom were absent.

 Martin then said he wanted a check drawn on another bank in Jersey City in the same amount. Post then called Geils and told him to draw a check to cash in the amount of $24,640 on the Commercial Trust Company in Jersey City and that he would explain the reason at some later time. Pursuant to Post's request, Geils produced a check for the amount requested with his own signature on it and put it on the desk and left. Post then signed the check as instructed. Martin then compared the signature on this check with those on cancelled checks of plaintiff which Martin had before him.

 After the check had been signed, Martin instructed Post to call the Commercial Trust Company, ask for the president, and tell him that he wanted money and that he was sending a check over for $24,640. Post made the call while Martin listened in on another telephone. Post spoke to a Mr. Duffy, an officer of Commercial Trust Company at the Grove Street Branch, saying, "We have an emergency. We need money for payroll funds. I am sending over a messenger with a check to receive payroll money." Since the Trust Company did not have its armored car available at that time, Mr. Duffy requested Post to send his messenger who could pick up the money. Post made these arrangements while still under gunpoint. Each time anyone came into the office Martin concealed his gun in his attache case, keeping his hand in the case on the gun. Mr. Duffy from the bank arranged in the meantime for a police escort for the messenger to bring the money back to the plant. The messenger returned with the money. Martin placed it in his attache case. Martin then compelled Post to borrow Geils' car and leave the plant with him. He then ordered Post to get behind the wheel and drive away. They drove to an empty lot in the rear of a plant in the Greenville section of Jersey City where Martin made Post get into the trunk and then drove the car himself to a parking lot below the Jersey City Medical Center where he left Post in the trunk and made off with the money. Subsequently Martin telephoned Geils at the plant and advised him that Post was in the trunk of the car in the lot.

 First it should be noted that neither proof of loss nor the amount of loss is in dispute. Post admitted on cross-examination that when he told Mr. Duffy the money was needed for an emergency payroll, it was not the truth. According to Post, he made the statement that he needed payroll money because it was the only money he could think of that the bank would ever send over in cash. The proofs established that Mueller had four bank accounts. Two were at Jersey City banks, one in a New York bank, and the other in a Newark bank. The bank account which plaintiff maintained at First National Bank of Jersey City was a depository account into which all accounts receivable were placed. From this account monies were transferred to the other accounts as the needs of the company required. From the account at Commercial Trust Company in Jersey City all cash payrolls were paid. The money on deposit there was also available for payment of other expenses of the Mueller business. Post admitted on cross-examination that money on deposit with Commercial Trust Company could be withdrawn by way of checks to pay taxes, operating expenses and other business expenses.

 A statement made by Mr. Post four days after the robbery to a representative of defendant was admitted into evidence. The eight page statement was transcribed by the insurance company representative to record Mr. Post's answers to questions propounded to him. Post signed each page of the statement and above his signature on the last page is the statement, "The above statement of 8 pages is true and correct." On the last page of the statement the following appears:

. . . Commercial Trust Co. account is also used for operating expenses. It is all one balance. There is no special allocation for payroll ...

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