Jenkins v. National Surety Co

• Citation: 277 U.S. 258,48 S.Ct. 445,72 L.Ed. 874
• Decision Date: 14 May 1928
• Docket Number: No. 424,424
• Parties: JENKINS et al. v. NATIONAL SURETY CO
• Court: United States Supreme Court

277 U.S. 258

48 S.Ct. 445

72 L.Ed. 874

JENKINS et al.

v NATIONAL SURETY CO.

No. 424.

Argued April 11, 12, 1928.

Decided May 14, 1928.

Messrs. Paul H. Ray, John Jensen, E. M. Bagley, and Harold M. Stephens, all of Salt Lake City, Utah, for petitioners.

[Argument of Counsel from page 259 intentionally omitted] Mr. Bynum E. Hinton, of Washington, D. C., for respondent.

[Argument of Counsel from pages 260-262 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

The petitioner Jenkins was appointed receiver of the National City Bank of Salt Lake City, an insolvent national bank, by the Comptroller of the Currency, under the provisions of section 5234, R. S. (12 USCA § 192). The respondent National Surety Company brought this action against the receiver to compel the allowance of and payment of dividends on its claim upon an indemnity agreement executed by the bank. The agreement was contained in the bank's application for a bond by which the bank as principal and the respondent company as surety undertook that the official deposits of the treasurer of Salt Lake county, Utah, up to a named sum, would be repaid on demand. The deposits at the time of the insolvency exceeded the amount of the bond. The District Court directed that dividends on the claim for indemnity be postponed until the county treasurer should have been repaid the full balance of his deposit. The Circuit Court of Appeals for the Eighth Circuit reversed the decree, with instructions that the respondent be paid dividends on an equal basis with other creditors, including the treasurer. National Surety Co. v. Jenkins, 18 F.(2d) 707. This court granted certiorari (275 U. S. 515, 48 S. Ct. 85, 72 L. Ed. —) to remove a conflict alleged to exist between the decision below and rulings by the Circuit Courts of Appeals in other circuits. Maryland Casualty Co. v. Fouts, 11 F.(2d) 71, 46 A. L. R. 852; Springfield National Bank v. American Surety Co., 7 F.(2d) 44.

In his answer the receiver prayed that Groesbeck, the county treasurer, and the American Surety Company be required to interplead. An order issued, and they filed a joint answer, from which it appeared that Groesbeck, as principal, and the American Surety Company, as surety, had given to Salt Lake county an official fidelity bond in the sum of $200,000. The treasurer deposited the county funds in his custody in the bank and took as security the respondent's bond in the sum of $125,000, bonds of other surety companies, executed to him as obligee, in the total sum of $100,000, and from the bank a certain amount of apparently doubtful collateral.

When the bank failed his official deposit amounted to $643,094.29. Salt Lake county was paid in full-$200,000 by the American Surety Company as surety of the treasurer's fidelity bond; $125,000 by the respondent National Surety Company; the balance by the other surety companies and by dividends paid by the receiver. When the second dividend was paid, it was sufficient to pay the final balance due from the treasurer to the county and leave a surplus of over $9,000; but there remained an unpaid balance of the deposit due from the bank to the treasurer.

The claim of the respondent company is for its pro rata share of this surplus and of all dividends paid or to be paid by the receiver as well as of the collateral given to the treasurer by the bank. The claim is resisted by the interpleaded petitioners, the treasurer and the American Surety Company, on two grounds: First, that the right of the treasurer and his surety to full repayment of his deposits before any dividends and paid the respondent is in this case res judicata; second, that the respondent is not entitled to share in the estate of the insolvent debtor until the balance of the creditors' claims have been fully satisfied. On both grounds the Circuit Court of Appeals ruled against the petitioners.

The plea of res judicata was based on the decree in an earlier suit brought in the District Court by the county treasurer and the American Surety Company against the receiver to determine their right to the excess of the second divided over the county's claim, to all future dividends and to the collateral. The National Surety Company, the respondent here, was interpleaded and answered. A decree in favor of the American Surety Company was affirmed by the Circuit Court of Appeals for the Eighth Circuit. National Surety Co. v. Salt Lake County, 5 F.(2d) 34. We think the court below was right in holding that the earlier litigation had determined only that the National Surety Company was not entitled to be subrogated to the treasurer's claim and remedies...