MANUAL OF FIDELITY INSURANCE AND CORPORATE SURETYSHIP. Descriptive of Surety and Fidelity Bonds with their PREFACE. The need for a concise, accurate, and at the same time, simple treatise on Fidelity and Surety Bonds has frequently been brought to the attention of the writer, both by his friends among the soliciting fraternity and also as a result of his own experience in the surety business. To meet this lack of accessible information this manual has been prepared. In it, as far as possible, legal and technical phrases have been avoided, the effort being to make it comprehensive and useful to the agent and solicitor in their particular fields. Most of the literature upon the subject has been either the work of lawyers for their brothers of the profession-the matter being treated from a purely legal point of view-or the compilations of specialists, whose articles have been constructed on a purely technical foundation. The writer has been compelled to familiarize himself with the legal and technical literature on the subject, which is widely scattered, and not generally accessible to the agent or solicitor. The logical relation between this information, which usually treats of matters of interest to the general office or its legal department, and the basic principles of the surety business is not always clear. Although this work is primarily for the agent and solicitor, the basic principles on which the business is founded are explained; while the manner in which any individual proposition must be regarded by the home office is so discussed, that it is hoped the business man may overcome any uncertainty of mind in regard to the general subject existing on his part by reference to the following pages. The surety business is now so extensive and far reaching that there is scarcely any business or profession with which 222665 it does not come into contact, and on which its influence is not felt. This book, therefore, should be of interest not only to the agent or solicitor whose livelihood may depend upon his knowledge of suretyship, but also to many others who use corporate suretyship to a sufficient extent to be interested in its principles and workings. INTRODUCTION. HISTORICAL. The exact origin of suretyship is unknown, but we know that it is of ancient practice having been referred to in the Old Testament.* Many hundreds of years later, it was made the basis of one of Shakespeare's greatest plays, "The Merchant of Venice." The first recorded attempt to establish a society having for its purpose acts at all akin to the present form of fidelity insurance was made in London in the year 1720. The object of this society, however, extended no further than what might be termed the guarantee of hired servants, and did not embrace the numerous uses to which Fidelity Bonds are now put. About the year 1840, recognition was given to the application of the laws of average, which govern insurance, to the principles of fidelity insurance, and several years later the pioneer fidelity company was organized in England by a special act of Parliament. This was the first public or official recognition of the usage of fidelity insurance, for the act granted power to certain government officials to accept the company's bonds or policies in lieu of personal surety or securities formerly authorized to be taken by law. The first legislative recognition of this business in the United States was given by an act of Legislature of the State of New York in 1853. This enactment empowered insurance *Genesis, 43: 9-I will be surety for him; of my hand shalt thou require him; if I bring him not unto thee, and set him before thee, then let me bear the blame forever. Proverbs, 11: 15-He that is surety for a stranger shall smart for it and he that hateth suretyship is sure. |