Cole v. Myers
| Decision Date | 09 December 1916 |
| Docket Number | 19668 |
| Citation | 160 N.W. 894,100 Neb. 480 |
| Parties | WILLIAM A. COLE, RECEIVER, APPELLEE, v. ORVAL C. MYERS ET AL., APPELLEES; NATIONAL FIDELITY & CASUALTY COMPANY, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Nuckolls county: LESLIE G. HURD JUDGE. Affirmed.
AFFIRMED.
Nye F Morehouse, for appellant.
Montgomery Hall & Young, Bernard McNeny and Stubbs & Stubbs, contra.
This is a suit in the nature of a bill of interpleader. The First National Bank of Superior failed when Nuckolls county was an unpaid depositor therein to the extent of $ 13,189.61, including an overdeposit of $ 3,189.61 made by the county treasurer in violation of statute. Rev. St. 1913, sec. 6662. For the protection of county funds deposited in the bank the American Surety Company had become liable on the bank's depository bond in the penal sum of $ 10,000. The National Fidelity & Casualty Company was surety on the county treasurer's official bond. After the bank failed the county treasurer filed with the receiver a claim for $ 13,189.61. The American Surety Company promptly paid the county the amount of its liability as surety ($ 10,000) and to that extent procured an assignment of the deposit. Later the Fidelity & Casualty Company paid the county the remainder of the deposit ($ 3,189.61), took an assignment of it, and also obtained a formal assignment of the claim for $ 13,189.61, which the county treasurer had filed with the receiver. The receiver afterward paid the National Fidelity & Casualty Company a dividend of $ 1,979.37, being 15 per cent. of the county's entire deposit of $ 13,189.61. The sureties are rival claimants to dividends. The purpose of the suit, which was brought by the receiver, is to determine the respective rights of the sureties. As defendants they are joined with Orval C. Myers, county treasurer. The trial court held that the American Surety Company, the surety on the bank's depository bond, is entitled to share the dividend with the National Fidelity & Casualty Company, the surety on the treasurer's bond, in the proportion that $ 10,000 bears to $ 3,189.61. Judgment was accordingly rendered in favor of the American Surety Company against the National Fidelity & Casualty Company for $ 1,664.50, being 15 per cent. of $ 10,000, with interest. The latter has appealed.
The sureties are not contesting the validity or priority of separate claims against the insolvent bank, but are asserting hostile claims to dividends on a single uncontested claims for an unpaid deposit of $ 13,189.61.
The treasurer's surety calls attention to the liability of the bank's surety for the bank's obligation to safely keep the deposits of county funds, to pay "each and every part thereof, upon the written demand of the county treasurer," and to "save and keep the people of Nuckolls county, and the county treasurer harmless and indemnified." In this connection the treasurer's surety argues that, having paid the debt of $ 3,189.61 owing by the treasurer and the bank to the county, it is by subrogation entitled to all of the rights and remedies of both; that the county and the treasurer, after receiving $ 10,000 from the bank's surety, are entitled to dividends on $ 13,189.61, until the overdeposit of $ 3,189.61 is fully paid; that the effect of allowing the bank's surety to draw dividends before the overdeposit is paid from the assets of the bank is to reduce the penalty in the depository bond below $ 10,000, thus injuring the county and the treasurer; that the bank's surety is not entitled to the benefits of subrogation until the bank's debt is paid in full. On the other hand, the bank's surety insists that, when it discharged its full liability by paying $ 10,000, which would have been the maximum amount of its principal's indebtedness to the county, except for the illegal overdeposit made by the treasurer, it was, to the extent of $ 10,000, subrogated to all of the rights of the county. The question thus presented is not free from difficulty. The courts have not agreed on the solution. There is reason on both sides of the controversy. The doctrine invoked by the treasurer's surety has been stated as follows:
"As a surety is not entitled to subrogation until the debt is paid in full, a surety on a bond to secure a city in the deposit of moneys in an insolvent banking institution is not entitled to subrogation, though he has paid the bond, where the bank was still largely indebted to the city, and the total amount of dividends, together with the amount of the bond, would not discharge the obligation; for in such case, if the surety were pro rata subrogated to the city's right to receive dividends, the city would be injured." Knaffl v. Knoxville Banking & Trust Co., 133 Tenn. 655, 182 S.W. 232. Board of Health v. Teutonia Bank & Trust Co., 137 La. 422, 68 So. 748; Buffalo German Ins. Co. v. Title Guaranty & Trust Co., 99 N.Y.S. 883; Commissioner of Banking v. Chelsea Savings Bank, 161 Mich. 691.
There is a recognized exception to the general rule, however, where the surety discharges his full liability to the creditor by paying the entire debt protected by his suretyship, though the principal still owes the creditor an additional sum. The doctrine on which the exception is based seems to have been first announced in Ex parte Rushforth, 10 Ves., Jr. (Eng.) 409. In a later English case the principle was...
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