FARMERS'BANK OF ALAMO, GA., v. United States Fidelity & Guaranty Co.

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: WALKER and BRYAN, Circuit , and DAWKINS
• Citation: FARMERS'BANK OF ALAMO, GA., v. United States Fidelity & Guaranty Co., 28 F.2d 676 (5th Cir. 1928)
• Decision Date: 25 October 1928
• Docket Number: No. 5277.,5277.
• Parties: FARMERS' BANK OF ALAMO, GA., v. UNITED STATES FIDELITY & GUARANTY CO.

28 F.2d 676 (1928)

FARMERS' BANK OF ALAMO, GA., v. UNITED STATES FIDELITY & GUARANTY CO.

No. 5277.

Circuit Court of Appeals, Fifth Circuit.

October 25, 1928.

C. C. Crockett, of Dublin, Ga. (W. W. Larsen, of Dublin, Ga., and I. H. Corbett, on the brief), for appellant.

T. E. Ryals, R. L. Anderson, and R. L. Anderson, Jr., all of Macon, Ga., for appellee.

Before WALKER and BRYAN, Circuit Judges, and DAWKINS, District Judge.

BRYAN, Circuit Judge.

This is an appeal from a decree for $3,346.45 in favor of the commissioner of roads and revenues of Wheeler county, Ga., against J. F. Wright, sheriff of that county, as principal, the United States Fidelity & Guaranty Company, as surety on the sheriff's bond, and the Farmers' Bank of Alamo, Ga. The decree provides that, upon payment of the amount adjudged, the surety shall be subrogated to the rights of the commissioner as against the sheriff and the bank. It was shown without dispute that the amount of the decree represented the sheriff's shortage in tax moneys collected by him. All of this money was deposited by the sheriff in the bank to the credit of "J. F. Wright Tax Account," and he had drawn it out upon checks signed by himself as sheriff, on a separate account which he kept at the bank. The bank defended on the ground that it paid out the money deposited in the tax account in pursuance of instructions from Wright to pay checks out of it whenever there were not sufficient funds in his account as sheriff. In the tax account were included small amounts which the sheriff was entitled to as commissions upon collections. The bank was aware of this, as its cashier usually calculated the amount of commissions that were mingled with public funds. But there is no contention that officials of the bank believed that the withdrawals from the tax account were, or were intended to be, only for commissions.

Both the special master and the District Judge held that the bank had actual knowledge of the trust character of the funds in the tax account, and notwithstanding this knowledge honored checks in the aggregate amount of the decree, which were not made to an official entitled to receive tax money, but which showed on their face that they were given to discharge personal obligations of the sheriff. The evidence amply sustains these conclusions.

The bank appeals, and contends that, as it did not receive any of the money on a debt due to it, or otherwise participate in the misappropriation, it cannot be held...