Aetna Casualty & Surety Co. v. Wedgwood

• Decision Date: 04 May 1937
• Docket Number: 6384
• Citation: 69 P.2d 128,57 Idaho 682
• Court: Idaho Supreme Court
• Parties: AETNA CASUALTY & SURETY COMPANY, a Corporation, Appellant, v. GEORGE W. WEDGWOOD, as Commissioner of Finance of the State of Idaho, H. A. COLLINS, as Liquidating Agent of the Citizens Bank & Trust Company, and CITIZENS BANK & TRUST COMPANY, a Corporation, Respondents

69 P.2d 128

57 Idaho 682

AETNA CASUALTY & SURETY COMPANY, a Corporation, Appellant, v. GEORGE W. WEDGWOOD, as Commissioner of Finance of the State of Idaho, H. A. COLLINS, as Liquidating Agent of the Citizens Bank & Trust Company, and CITIZENS BANK & TRUST COMPANY, a Corporation, Respondents

No. 6384

Supreme Court of Idaho

May 4, 1937

BANKS AND BANKING-CLOSING AND LIQUIDATION-CLAIMS-SURETY ON BOND OF COUNTY OFFICER-JUDGMENT-APPEAL-THEORY OF CASE.

1. Surety which had paid full face of bond securing deposit of county funds could not seek allowance of common claim against defunct bank and trust company on theory that county was not required to file claim under sovereignty doctrine, where surety had been a party to prior action wherein allowance of pre- ferred claim had been sought on theory that county had filed a proper claim.

2. Parties to an action are bound by theory on which they try it.

3. Where supreme court adjudged that county's deposits were entitled to be classified and paid as common claims, surety which had paid full face of bond securing deposit of county funds was entitled under statute to common claim against bank and trust company in the amount paid by surety company. (I C. A., secs. 25-912, 25-913, 25-915, subds. 1-3.)

APPEAL from the District Court of the Fifth Judicial District for Bannock County. Hon. Isaac McDougall, Judge.

Action to procure a decree directing the commissioner of finance and liquidating agent to allow a claim against a defunct bank and pay dividends thereon. Judgment for defendants. Reversed.

Reversed and remanded with direction. Costs awarded to appellant. Petition for rehearing denied.

Merrill & Merrill, for Appellant.

Where a paid surety discharges the claim of the principal such surety becomes possessed of the precise rights of its principal whether the principal be a sovereign state or private individual. (Fidelity & Deposit Co. v. State Bank, 117 Ore. 1, 242 P. 823; American Surety Co. v Shumaker, 81 Colo. 241, 254 P. 999; Guthrie v Ensign, 36 Idaho 673, 213 P. 354; In re Bank of Nampa, Ltd., 29 Idaho 166, 157 P. 1117.)

Bannock county's claim has been paid in full. The plaintiff paid $ 15,000 of the claim and the balance has been realized by the county out of securities pledged by the Citizens Bank & Trust Company. The plaintiff, therefore, is entitled to the full and complete rights of the county with reference to that portion of the claim not paid by the Citizens Bank & Trust Company, to wit: $ 15,000. There is no limitation on its right of subrogation. The rule against subrogation on part payment has disappeared. (60 C. J., at pp. 721, 722; 25 R. C. L. 1319; Piedmont Coal Co. v. Hustead, 294 F. 247, 32 A. L. R. 556; Brown v. Thompson, 99 W.Va. 56, 128 S.E. 309.)

B. W, Davis, for Respondents.

The allowance or rejection by the commissioner of finance of a claim against a defunct bank has the same force and effect as a judgment. (People ex rel. Nelson v. Farmers and Merchants State Bank of Mendota, 281 Ill.App. 354; Henderson v. Farmers Sav. Bank of Harper, 199 Iowa 1156, 200 N.W. 581; Dorland v. Fidelity Dev. Co., 104 Misc. 97, 171 N.Y.S. 1000.)

The plaintiff at the time of the presentation of the claim relied upon by Bannock County, held only a partial assignment of Bannock County's claim against the Citizens Bank & Trust Company and was not entitled to have it allowed at all. (Jenkins v. National Surety Co., 277 U.S. 258, 48 S.Ct. 445, 72 L.Ed. 874; United States v. National Surety Co., 254 U.S. 73, 41 S.Ct. 29, 65 L.Ed. 143; National Surety Co. v. Salt Lake County et al., 5 F.2d 34; Commissioner of Banks v. White (Citizens Bank v. White), 202 N.C. 311, 162 S.E. 736.)

The plaintiff, having elected to proceed upon the theory that it had a preferred claim, is bound by that election, and has had its day in court, and having failed in the original action to raise the question as to its right to a third class claim, is barred by the original judgment. (Bernhard v. Idaho Bank & Trust Co., 21 Idaho 598, 123 P. 481, Ann. Cas. 1913E, 120.)

MORGAN, C. J. Holden, Ailshie and Givens, JJ., concur, Budge, J., concurs in the conclusion.

OPINION

MORGAN, C. J.

--The purpose of this action is to procure a decree directing the commissioner of finance, and the liquidating agent in charge of the assets of Citizens Bank & Trust Company, to allow plaintiff's claim against the bank and to pay dividends thereon. A demurrer to the amended complaint was sustained and, plaintiff having failed to plead further, judgment of dismissal was entered. This appeal is from the judgment. The order sustaining the demurrer and the making and entering judgment of dismissal are assigned as error.

At the time the amended complaint was filed Ben Diefendorf was commissioner of finance. Since then his term of office expired and George W. Wedgwood was appointed his successor. Wedgwood duly qualified and became, and is, commissioner of finance and, by agreement of the parties litigant, he has been substituted for Diefendorf as a party respondent.

It appears from the amended complaint, among other things, that September 23, 1931, Citizens Bank & Trust Company, of Pocatello, failed and the commissioner of finance took charge of its assets and appointed an agent to liquidate it; that at the time of the failure of the bank there was on deposit therein public funds of Bannock County in various accounts, in the names of the county treasurer, the county sheriff, and the county assessor, in their respective official capacities, the sum of $ 20,709.95; that as security for said deposits the bank placed in possession of the county auditor a surety bond, executed by appellant as surety, in the sum of $ 15,000, together with certain interest-bearing bonds and warrants of the aggregate par value of $ 6,817.84; that January 22, 1932, and within the time fixed by those in charge of the liquidation of the bank, and on forms prescribed by the commissioner of finance for so doing, the county officers in whose names the deposits had been made, together with Bannock County, presented claims to the liquidating agent for the moneys so deposited and demanded that, because said moneys were public funds, the claims therefor be allowed as for a trust fund and paid as a preference claim; that notwithstanding the requirements of law that the commissioner classify and allow claims presented to him with the priority to which they are entitled, he, acting through his liquidating agent, rejected said claims without classifying or allowing them in any amount or in any class; that action was commenced in the district court for the purpose of establishing said claims as preferred, or class 2 claims, which action resulted in denial of such preference; that after presentation of the claims appellant, on demand of Bannock County, January 22, 1932, for the purpose of meeting the requirements of the bond given by it, paid $ 15,000 to the county and it sold, assigned and set over to appellant its rights in the claims to the extent of the proportionate amount to which, under the law, the payment of $ 15,000 entitled appellant; that since the assignment the balance of the deposit liability to the county has been liquidated and paid out of moneys arising from the sale of bonds and warrants delivered by the bank to the county auditor; that there still remains unsatisfied the obligation of the bank to pay, on account of the deposit, the $ 15,000 above mentioned, in such proportionate amounts, and at such times, as payments are made to other common depositors but, notwithstanding that duty and obligation, respondents have failed, neglected and refused to pay appellant its share, as dividends, of the assets of the bank accumulated and assembled for payment to common depositors.

As a second count appellant alleged, among other things, the payment of $ 15,000 to the county, in satisfaction of the bond and the assignment by the county to it of the claims against the bank to the proportionate amount which the payment of said sum entitled it; that by virtue of said payment and assignment appellant became, and is, subrogated to the rights of the county in and to the claims against the bank, to the extent and in the manner that the county would have been had the payment not been made by appellant; that payment has been made to the county of the full sum of its claims against the bank by the $ 15,000, so paid to it by appellant, and by moneys arising from sale of other securities pledged, as above stated, and that appellant has received repayment of no part of the $ 15,000 so paid to the county. It is further alleged that the county is a legal subdivision of the state and that the moneys were deposited in the bank to be used and handled in the county's governmental capacity and in the performance of its governmental functions; that the statutes of Idaho providing for the liquidation of failed banks do not include, within their scope, claims of sovereign bodies and that there was and still is, no necessity for, or obligation resting upon, the county to present or file claims in order to entitle it to recover its pro rata share of the assets of the bank; also that by paying the county, as by the bond required, appellant became, and is, subrogated to its right to participate in a distribution of the assets of the bank, among its creditors, to...