Crane v. Noel

• Decision Date: 01 December 1903
• Citation: 78 S.W. 826,103 Mo.App. 122
• Parties: CRANE, Respondent, v. NOEL AND COHN, Appellants
• Court: Missouri Court of Appeals

78 S.W. 826

103 Mo.App. 122

CRANE, Respondent, v. NOEL AND COHN, Appellants

Court of Appeals of Missouri, St. Louis

December 1, 1903

Appeal from St. Louis City Circuit Court.--Hon. Warwick Hough Judge.

REVERSED.

STATEMENT.

The petition in this case is in the nature of a bill in equity and the purpose of the action is to have the respondent subrogated to rights held by the Greenwich Insurance Company as the obligee of a bond made by Felix Levy as principal, and Noel and Cohn as sureties. Levy was appointed agent of the insurance company for the city of St. Louis and gave bond for the faithful performance of his duties, among which was the payment to the company of the premiums collected on policies. The bond was given in 1896. Respondent Crane was appointed agent in succession to Levy in October, 1897, and, as part of the consideration for his appointment, agreed to become surety for Levy and the appellants, his sureties on said bond, and to pay any premiums to the company those parties might fail to pay. The cause below was tried on this agreed statement of facts:

"It is hereby stipulated by and between plaintiffs and defendants that the above entitled cause may be submitted to the court for judgment on the following agreed statement of facts to-wit:

"That the Greenwich Insurance Company is a corporation, duly incorporated. That on or about the 29th day of December 1896, it was mutually agreed between the Greenwich Insurance Company, and Felix Levy, that said Felix Levy should act as agent for the said Greenwich Insurance Company in the city of St. Louis, Missouri, and as such agent should issue and sign and deliver policies of insurance in said Greenwich Insurance Company; collect the premium on the same and properly account for and pay over to said Greenwich Insurance Company all premiums on policies of insurance issued by him and all moneys which might at any time come into his hands or pass under his control as such agent. That before entering upon his duties as such agent, to-wit, on or about December 29, 1896, and as part of the agreement above referred to, Felix Levy made and delivered to said Greenwich Insurance Company a bond signed and sealed by said defendant, Felix Levy, as principal, and by defendants Harry G. Noel and M. A. Cohn as sureties, whereby said defendants bound themselves in the penal sum of one thousand dollars to the Greenwich Insurance Company, the condition of said bond being that if said Felix Levy should duly and properly account for and pay over to said Greenwich Insurance Company all premiums on policies of insurance issued by him, and all moneys which might at any time come into his hands, or pass under his control as such agent, then said bond should be void; otherwise to remain in full force and effect. Said bond being the same one attached to plaintiff's petition in this case.

"That thereafter, defendant, Felix Levy, did as such agent, issue policies in said Greenwich Insurance Company to various parties, the premiums on which policies amounted to the sum of $ 225.77, and as such agent collected from the said policy-holders the said sum of $ 225.77, which sum defendant Felix Levy failed to account for to said Greenwich Insurance Company, or to pay over to them and the same has not been paid the said Greenwich Insurance Company by his sureties aforesaid, H. G. Noel and M. A. Cohn.

"That before the said Felix Levy, Harry G. Noel and M. A. Cohn, became indebted as aforesaid, to-wit, on or about October 20, 1897, plaintiff Chas. L. Crane was appointed by said Greenwich Insurance Company general agent for the State of Missouri, and as part of the consideration for the said appointment, plaintiff Chas. L. Crane agreed and contracted with said Greenwich Insurance Company to become surety for the said Felix Levy, Harry G. Noel and M. A. Cohn, and to pay to the said Greenwich Insurance Company such premiums due on its policies of insurance issued by said Felix Levy, which the said Felix Levy or his sureties Harry G. Noel, or M. A. Cohn failed to pay. But the aforesaid agreement between Chas. L. Crane and Greenwich Insurance Company was made without the knowledge or request of either Harry G. Noel or M. A. Cohn.

"That by reason of the failure of said Felix Levy, Harry G. Noel and M. A. Cohn to pay said Greenwich Insurance Company the sum of $ 225.77 due as aforesaid and by reason of and pursuant to the contract and agreement aforesaid between Chas. L. Crane and the Greenwich Insurance Company, plaintiff Chas. L. Crane, did pay to said Greenwich Insurance Company the sum of $ 225.77, and said sum of $ 225.77 has not been repaid to Chas. L. Crane by Felix Levy, or his sureties, Harry G. Noel or M. A. Cohn, although the same has been demanded of them. But said payment of $ 225.77 by Chas. L. Crane to Greenwich Insurance Company was made without the knowledge or request of either Harry G. Noel or M. A. Cohn, and it is further admitted by both parties that defendants, Harry G. Noel and M. A. Cohn, were not notified of the said defalcation of Felix Levy, until June 1, 1901."

The action was originally brought against Levy as well as the appellants, but was subsequently dismissed as to him. Judgment went against Noel and Cohn, and they appealed.

Judgment reversed.

Lyon & Swarts and Thomas J. Hoolan for appellants.

(1) One who pays the debt of another without the knowledge or request of that other, is a volunteer, and as such, in the absence of an assignment of the claim to him, is not entitled to subrogation or indemnity. Norton v. Highleyman, 88 Mo. 621; Wolf v. Walter, 56 Mo. 293; Evans v. Halleck, 83 Mo. 376; Price v. Courtney, 87 Mo. 387; Wooldridge v. Scott, 69 Mo. 669; St. Francis Mill Co., v. Sugg, 83 Mo. 476; Anglade v. St. Avit, 67 Mo. 434; Aetna Life v. Middleport, 124 U.S. 534. Bispham on Equity (3 Ed.), par. 337. (2) One claiming to be a surety can not recover indemnity of his principal, unless he became a party to the transaction at the request of the principal. McPherson v. Meek, 30 Mo. 345; Executors of White v. White, 30 Vt. 338; Carter v. Black, 4 Dev. & Bat. Law (N. C.) 425.

Frank H. Haskins for respondent.

(1) When one becomes surety for a surety, as between the two sureties the first stands in the relation of a principal to the second. Chapese v. Young, 87 Ky. 476; 24 Am. and Eng. Ency. of Law (1 Ed.), p. 226; Hodgson v. Shaw, 3 Myl. and K. 183; Hall v. Smith, 5 How. U. S. 96. (2) A surety who pays the debt of his principal is entitled to be subrogated to all the rights and remedies of the creditor against the surety's principal. Clark v. Bank, 57 Mo.App. 277; Bank v. Reed, 54 Mo.App. 94. (3) Although in an action at law by a surety against his principal, to recover money paid to the use of the principal, it is in some jurisdictions necessary to show that the surety became such at the request of the principal; still, in an action in equity for subrogation, it is never necessary that the principal should have requested the surety to become such, and even though the surety became such without the knowledge of the principal, when the surety pays the debt he is entitled to be subrogated to the rights of the creditor. Chapese v. Young, 87 Ky. 476; Berthold v. Berthold, 46 Mo. 557; Hough v. Aetna Ins. Co., 57 Ills. 318; Mathew v. Aiken, 1 N. Y. (Comst.) 595; 2 Brandt on Suretyship (2 Ed.), sec. 298; Sheldon on Subrogation (2 Ed.), secs. 15, 93, and 347. (4) The right of subrogation is recognized in other classes of cases where the person whose debt or liability was paid had no contractual relation with the person who paid the debt. Smith v. Stephens, 164 Mo. 415; Ins. Co. v. Wabash, 74 Mo.App. 106; Hall v. Railroad, 13 Wall. 367.

GOODE, J. Bland, P. J., and Reyburn, J., concur.

OPINION

GOODE, J. (after stating the facts as above).

The judgment in this case is assailed from the premises that the agreed facts show the respondent was a volunteer in becoming surety and in making good to the insurance company any defalcation that occurred during Levy's agency.

The agreed statement of facts says respondent was appointed agent for the insurance company prior to the accrual of Levy's indebtedness; that he contracted to become surety for the latter and the appellants, and to pay whatever premiums they failed to pay; but that appellant Noel and Cohn had no knowledge of the arrangement. It is not stated whether Levy knew or was ignorant of it. Neither is it stated that the insurance company asked respondent to become surety or made his appointment as agent dependent on his doing so.

Choses in action are now assignable and respondent could have purchased the demand of the insurance company against Levy and the appellants. That fact is pressed on us; but in appraising its force we must remember that choses have always been assignable in equity, and that the pale of the right of subrogation was fixed by chancery courts with their assignability and all the implications which flow from that equity rule in mind. No strength is lent to respondent's case by the change in the law rendering choses assignable and permitting assignees to sue on them. But the argument is persuasive that, as equity tolerates the assignment of a debt, it should also accord the full benefit of all securities held by a creditor to a party who, instead of buying the demand and taking an assignment of it, voluntarily binds himself as surety for the demand and afterwards pays it. The barrier against the right of subrogation in such instances is technical but firmly established. Subrogation is a remedy made use of by courts of equity as an efficient aid to justice, and in the main does not depend on a...