Southern Federal Savings & Loan Ass'n v. Firemen's Benevolent Ass'n

• Decision Date: 21 June 1945
• Docket Number: 30897.
• Citation: 34 S.E.2d 674,72 Ga.App. 663
• Court: Georgia Court of Appeals
• Parties: SOUTHERN FEDERAL SAVINGS & LOAN ASS'N v. FIREMEN'S BENEV. ASS'N.

34 S.E.2d 674

72 Ga.App. 663

SOUTHERN FEDERAL SAVINGS & LOAN ASS'N v. FIREMEN'S BENEV. ASS'N.

No. 30897.

Court of Appeals of Georgia, Division No. 2.

June 21, 1945

Rehearing Denied July 12, 1945.

SYLLABUS BY THE COURT.

1. Where a depositor sues one of its officers to recover as its own the money which the officer has withdrawn from the bank in depositor's name without authority, it cannot thereafter sue the bank to recover the deposit on the inconsistent theory that the money stolen by the officer belonged to the bank.

2 3. In view of the foregoing ruling it is not necessary to pass on points 2 and 3.

4. Point 4 is not involved in this case under the pleadings.

The Firemen's Benevolent Association, hereinafter called the Association, filed a suit at law to recover $5,000 from Southern Federal Savings & Loan Association, hereinafter called Southern Federal. The only facts alleged on which recovery was sought were that on September 10, 1938, the Association deposited $5,000.00 with the defendant, and that on November 17, 1943, demanded payment of the deposit which demand was refused. The only prayers were for process and for judgment for $5,000 with interest and costs of suit. The undisputed evidence showed: Albert V. Dodd secretary-treasurer of the Association, made a series of three loans in the name of the Association from Southern Federal on the security of the $5,000 deposit of the Association. In each instance Dodd gave a note containing the forged signature of the president of the Association and his signature as secretary-treasurer. In making these loans Southern Federal did not disburse any cash but in each instance gave its checks payable to the Association, drawn upon Southern Federal's account in the Citizen & Southern National Bank. On each renewal Southern Federal gave two checks, one to pay the balance of the previous loan which Dodd endorsed and returned to Southern Federal, and the other for the difference which was delivered to Dodd and retained by him. In each instance Dodd took the checks he retained, tained, endorsed them in the name of the Association 'by A. V. Dodd, secretary-treasurer,' and cashed them at the First National Bank of Atlanta, depositing a part of the proceeds to the credit of the Association and retaining the balances. A total of $1,850.50 of the proceeds of these checks was deposited to the credit of the Association and received by it. As stated before, the loans were made with the $5,000 deposit as security. In October, 1942, the deposit was applied to the outstanding loan of $4,000 and accrued interest, and the balance of $839.33 was disbursed by Southern Federal by a check payable to the Association which was delivered to Dodd and cashed by him at the First National Bank, he depositing a part to the credit of the Association and retaining the balance. In making the loans Southern Federal acted in good faith. As stated, the Association's president's signatures on the loan notes were forged by Dodd and were not authorized by the Association and Dodd misappropriated all of the money so borrowed except the $1,850.50 which he deposited to the credit of the Association. On November 2, 1943, the Association filed an action against Dodd and asked for a money judgment and a receiver. The petition in that case alleged that Dodd had appropriated to his own use $16,209.50 which belonged to the Association and that such sum included the proceeds of the deposit with Southern Federal which Dodd had withdrawn in the manner stated. There was no recovery from this action, no property of Dodd's being found, and it was dismissed by the Association. Dodd was under bond to the Association as principal with the U.S. Fidelity & Guaranty Company as surety. The bond was a personal fidelity bond which was executed by the surety for compensation upon an application filed by Dodd in which he gave information as to his trustworthiness and agreed to indemnify the surety against loss. The bond was conditioned to indemnify the Association for any loss up to $5,000 sustained by reason of Dodd's dishonesty 'amounting to larceny or embezzlement.' The surety company paid the $5,000 claim filed under the bond by the Association and it and the surety company entered into a contract whereby they agreed that any salvage or recovery in this case was to be divided between them, 32 per cent. to the surety company and 68 per cent. to the Association. The by-laws of the Association authorized the treasurer 'to collect money due' and 'to receive all money belonging to' the Association. The contract (signature card) between the parties required the signature of the president and the treasurer on any withdrawal of the Association's deposit. Judge A. L. Etheridge, a judge of Fulton superior court, trying the case without a jury, rendered judgment in favor of the Association in the sum of $3,149.50, plus interest, to which Southern Federal excepted on four grounds: '1. Plaintiff by instituting suit No. 144,449 in the superior court of Fulton County, Georgia, against Albert V. Dodd elected a remedy inconsistent with that asserted herein. 2. Under the undisputed facts Albert V. Dodd, as secretary and treasurer of plaintiff, was authorized to receive and did receive full payment of the debt of defendant to plaintiff arising as a result of the deposit by plaintiff with defendant of the $5000, the subject-matter of the suit instituted herein. 3. The plaintiff ratified Albert V. Dodd's endorsement of the checks drawn by the defendant payable to it and his receipt of the proceeds on its behalf by asserting that the said Dodd in misappropriating the same had embezzled its funds, and by stipulating in this case that the funds misappropriated by Dodd were the proceeds of said checks and were its funds. 4. Under the undisputed facts the equity of United States Fidelity & Guaranty Company is subordinate to that of defendant and judgment entered herein should have been reduced in proportion to the benefit accruing to said United States Fidelity & Guaranty Company as a result of said judgment.'

Jones, Williams & Dorsey and Moise, Post & Gardner, all of Atlanta, for plaintiff in error.

Smith, Kilpatrick, Clay & Cody, of Atlanta, for defendant in error.

FELTON Judge.

1. Under the allegations of Southern Federal's answer and the evidence, which is undisputed, the Association is estopped to bring the present action because it had previously instituted an action against Dodd which is wholly inconsistent with the present one. When the unauthorized loans were made the Association was not bound by them. The loans were not legally made to it. Southern Federal therefore had no authority to charge the loans against the deposit and give an illegal check for the difference, and the Association was at liberty to stand on its contract with Southern Federal and demand the deposit in full. However, the Association did not pursue this course. It instituted a suit against Dodd in which it claimed that Dodd had misappropriated its money. The only basis on which such an action could have been predicated was on the theory that the...