American Surety Co. v. De Carle

• Decision Date: 26 March 1928
• Docket Number: No. 5166.,5166.
• Parties: AMERICAN SURETY CO. OF NEW YORK v. DE CARLE, County Treasurer, et al.
• Court: U.S. Court of Appeals — Ninth Circuit

25 F.2d 18 (1928)

AMERICAN SURETY CO. OF NEW YORK v. DE CARLE, County Treasurer, et al.^*

No. 5166.

Circuit Court of Appeals, Ninth Circuit.

March 26, 1928.

Sterling M. Wood and Robert E. Cooke, both of Billings, Mont., for appellant.

Rudolph Nelstead, of Miles City, Mont., for appellees De Carle et al.

Charles H. Loud and William B. Leavitt, both of Miles City, Mont., for appellees Commercial National Bank et al.

Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.

RUDKIN, Circuit Judge.

This is an appeal from a decree dismissing an amended and supplemental complaint in equity. The facts, so far as deemed material to a proper understanding of the questions presented for decision, are as follows: On June 10, 1922, the Commercial National Bank of Miles City, Mont., made application to the American Surety Company of New York for a bond of suretyship in the sum of $75,000, in favor of the treasurer of Custer county, Montana, in order to qualify the bank as a depository of public funds. The application provided that the bank should indemnify and keep indemnified the surety company from any liability, loss, costs, charges, suits, damages, counsel fees, and expenses of whatever nature which the surety company should or might for any reason, at any time, sustain or be put to in consequence of having executed the bond. February 14, 1921, the bank, as principal, and the Surety Company, as surety, executed a bond in the penal sum of $75,000 in favor of the treasurer, conditioned that the bank and the surety company would indemnify and save harmless the treasurer, his successors in office, and the state of Montana from all damages and loss of every kind by reason of deposits of public moneys in the bank. It will be observed that the bond antedates the application by more than a year, and the discrepancy in dates is not explained, but perhaps the bond was dated back for some reason or other. At least, we may so assume for the purposes of this case. On February 8, 1924, the bank became insolvent and suspended business, and one Turner was appointed receiver thereof by the Comptroller of Currency. When the bank suspended the treasurer had on deposit public moneys of Custer county to the amount of $164,895.66. On January 22, 1926, the surety company paid to the treasurer the amount of the penalty of the bond, with accrued interest to that date. Since the bringing of this suit, the receiver has declared and paid two dividends to general creditors, of 10 per cent. each, and $15,000 has been deposited in bank by stipulation of the parties to abide the result of this suit; the $15,000 thus deposited being a portion of the dividends declared in favor of the treasurer of Custer county. The surety company has filed with the receiver its claim for the sum of $75,000, together with the interest paid by it. On the foregoing facts the relief sought is that the surety company be adjudged to be the owner of the $15,000 deposited in bank pursuant to the stipulation of the parties; that the bank and its receiver be required to allow the claim of the surety company as presented; that the surety company be paid the same dividends thereon that have been, or may hereafter be, paid to the general creditors; that the claim of the treasurer against the bank be reduced and diminished by the amount paid by the surety company under the terms of the depository bond; that the receiver be enjoined and restrained from paying dividends on the claim of the treasurer in excess of the balance remaining after deducting the amount paid by the surety company from the amount of the original claim, and for general relief.

The rule is well settled that in the distribution of the assets of an insolvent national bank a secured creditor may prove and receive dividends upon the face of his claim at the time of the declaration of insolvency, without crediting either his collateral or collections made therefrom after such declaration, subject always to the proviso that dividends must cease when from them and from collateral realized the claim has been paid in full. Merrill v. National Bank of Jacksonville, 173 U. S. 131, 19 S....