Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

تمرين 25

Ohio Savings Bank (OSB) bought first mortgage loans from a branch of Advantage Investors Mortgage (AIM). OSB wired funds to an escrow account of AIM's closing agent, First National Title (FNT). Borrowers signed notes and mortgages to AIM as lender, AIM assigned them to OSB; and FNT was to disburse the loan proceeds appropriately from its escrow account, primarily to pay off existing first mortgages. James Niblock, who secretly owned FNT and controlled the AIM branch, embezzled $1 million from the FNT escrow account after borrowers' notes and mortgages were executed and assigned to OSB. The prior loans were unpaid, so the borrowers refused to pay the mortgage loans assigned to OSB. It sued Progressive Casualty Insurance Co., which had issued a bond covering losses "resulting directly from the Insured's having, in good faith accepted or received or acted upon the faith of any real property mortgages... which prove to have been defective by reason of the signature thereon of any person having been obtained through trick, artifice, fraud or false pretenses...." Did the bond cover OSB's losses?