Hecox v. Citizens' Ins. Co. of St. Louis

• Decision Date: 01 January 1880
• Court: U.S. District Court — Northern District of Illinois
• Parties: HECOX and others v. THE CITIZENS' INS. CO. OF ST. LOUIS and another, U.S. Marshal.

2 F. 535

HECOX and others v. THE CITIZENS' INS. CO. OF ST. LOUIS and another, U.S. Marshal.

United States Circuit Court, N.D. Illinois.

1880

Mr Kales, for complainants.

Mr Whiton, for defendants.

DYER D.J.

On the sixth day of April, 1877, and for several years prior thereto, one Pottle was the agent at Chicago of the defendant insurance company, whose principal place of business was at St. Louis, in the state of Missouri. On the day mentioned, by requirement of the defendant company, Pottle executed a bond in the sum of $5,000, conditioned that as the agent of the insurance company, authorized to receive sums of money for premiums, payment of losses, salvages and collections, he would pay over such moneys correctly, and in every way faithfully perform his duties as agent, in compliance with the instructions of the company, through its proper officers. Complainants in the present bill, Hecox and Briggs, joined in the execution of this bond as sureties for Pottle.

In 1878 the insurance company sued complainants, impleaded with Pottle in this court upon said bond in a plea of debt, and recovered judgment against complainants for the sum of $5,000. At the time of the execution of this bond Pottle was indebted to the insurance company, on account of past transactions for the company, in the sum of $5,223.80 and between the date of the execution of the bond and September 19, 1877, there became due to the company from Pottle, on account of business done by him between those periods, $4,114.70. From April 6, 1877, the date of the bond, to September 19th of the same year, Pottle remitted to the company $3,370, all of which was, by his direction, applied upon his indebtedness to the company which accrued prior to the execution of the bond. The purpose of the present bill is to obtain an injunction restraining proceedings for the collection of the judgment at law against complainants, for an accounting to ascertain what is justly due to the defendant company on account of the defalcations of Pottle, and to avoid the legal effect of the judgment recovered against complainants as Pottle's sureties on the bond.

The material allegations of the bill are that at the time of and prior to the making of the bond Pottle was informed by the company that if he would give a bond, with good sureties, he should be at liberty to deposit the moneys of the company in bank with his other moneys, to his own credit and in his own name; that all of Pottle's remittances, after the execution of the bond, should be applied upon his old accounts, on which he was in arrears to the insurance company, and that Pottle then understood from the company that if he would give such a bond, and apply his collections afterwards made to the payment of his former deficits, he would be allowed to go on as previously, and act as the agent of the company; that Pottle, at the time of making the bond, understood from the insurance company that by giving the same he would be allowed to continue in business as agent, and to deposit moneys collected for the company in bank with his own funds and in his own name, and would be required out of such account to make remittances and to allow the same to be applied on account of his prior defalcations, and that he acted upon this understanding with the company in remitting and directing the application of the moneys afterwards collected by him, supposing that in so doing he was carrying out the understanding between himself and the insurance company.

It further alleged that complainants did not, until after the recovery of the judgment at law, become cognizant of the agreement and understanding between Pottle and the insurance company, nor of the mode in which business was transacted between them, but were advised by Pottle of the facts after the recovery of the judgment, and when execution was in the hands of the defendant marshal, and that they executed the bond in ignorance of the fact that Pottle was, at the time, a defaulter to the company.

The answer of the defendant company denies the material allegations of the bill, and it is unnecessary, for disposition of the case, to state in detail the denials and affirmative allegations contained in the answer.

The contention on the part of complainants is that for a long time previous to the execution of the bond Pottle had been in the habit of depositing moneys, which he received as agent of the insurance company, in bank in his own name, and to the credit of his individual account, thereby converting the same to his own use; that remittances to the company were made by his individual checks upon such account,...