Hough v. the Ætna Life Ins. Co..
| Citation | 57 Ill. 318,1870 WL 6633,11 Am.Rep. 18 |
| Parties | ROSELL M. HOUGHv.THE ÆTNA LIFE INSURANCE COMPANY. |
| Decision Date | 30 September 1870 |
| Court | Supreme Court of Illinois |
OPINION TEXT STARTS HERE
APPEAL from the Superior Court of Chicago; the Hon. WILLIAM A. PORTER, Judge, presiding.
Messrs. WILSON & VALLETTE, for the appellant.
Messrs. BRACKETT, WAITE & DRISCOLL, for the appellee.
Wallis, as principal, and appellant, as his surety, executed the bond sued on, with the condition annexed, that Wallis, as a local agent of the company, would pay over all moneys received by him, less his commissions.
Raymond, for whose benefit the suit was brought, was the general agent of the insurance company, and, by his contract, was bound to pay over all moneys received in the general management of the affairs of the company; and had paid, before suit, the amount of the defalcation of Wallis, who was bound to make monthly returns; and when he failed to pay the money, he gave to Raymond promissory notes to be paid within a few days. These notes had not been surrendered at the time of the trial.
Three questions arise:
First. Was the settlement of the delinquencies of the local agent, by the general agent, a payment and discharge of the bond, so as to prevent subrogation.
Second. Is the security released because no notice was given to him of the defalcation of the principal.
Third. Should the notes have been surrendered before judgment?
Raymond was not co-surety, and it can not properly be assumed that he paid the defalcation as such. Suretyship is an accessory agreement, by which one person binds himself for another already bound. Whereas the liability of the general agent was distinct from, and anterior to the liability of the obligors to the bond.
The principle of subrogation has special application to the facts of this case.
The rule is, that if the person who pays the debt, is compelled to pay, for the protection of his own interests and rights, then the substitution should be made. A mere stranger or volunteer can not thus be subrogated to the creditor's rights.
By the terms of the agency, the principal agent was responsible for all premiums. This liability arose, not only by contract, but from his relation to the company, and to the local agents, and his right to appoint them. His reputation was involved, and his position could alone be maintained by the regular monthly payment of all sums received by the local agents. He was compelled to pay, not only by agreement prior to the date of the bond, but for the protection of his own rights.
The obligation, then, of the general agent to the company, was wholly independent of the obligation of the local agents. In the payment of the defalcations of the local agent, the general agent only discharged his own liability. He only complied with his own agreement, for the purpose of maintaining his position.
He had the general management of the affairs of the company; upon him rested the entire responsibility; to him alone did the company look for the payment of premiums, and the local agent was his appointee. He, therefore, acted under compulsion, in the payment of the premiums.
Such payment was the mere performance of a duty, the fulfillment of an agreement on the part of the general agent, and should not be regarded as an absolute payment of the bond. There was nothing voluntary about it, and we can not presume that it was intended by the one party, or accepted by the other, as a satisfaction of the bond.
We think the payment should only be considered as a discharge of the general agent, and not a discharge of the bond. Such, evidently, was the intention. The contrary construction would make the act of the party operate directly opposite to the intention of the general agent, and to justice. The acceptance too, was not in satisfaction of the bond. This never could have entered into the minds of the parties. Looking at all the facts, the duty and contract of the principal agent to make regular monthly settlements, the fact that no allusion was made to the defalcation, and the strong probability that nothing was ever known by the company of the bond of the local agent, we must presume the payment of the...
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