Maryland Casualty Co. v. Foutz

• Decision Date: 20 June 1928
• Citation: 27 F.2d 423
• Court: U.S. District Court — Middle District of North Carolina
• Parties: MARYLAND CASUALTY CO. v. FOUTZ.

27 F.2d 423 (1928)

MARYLAND CASUALTY CO. v. FOUTZ.

District Court, M. D. North Carolina.

June 20, 1928.

Manning & Manning, of Raleigh, N. C., and Craige & Craige, of Salisbury, N. C., for plaintiff.

Rendleman & Rendleman and Hayden Clement, all of Salisbury, N. C., for defendant.

HAYES, District Judge.

On January 26, 1923, the plaintiff, Maryland Casualty Company, executed a bank depository bond, whereby it obligated itself to pay to Benjamin R. Lacy, treasurer of the state of North Carolina, the sum of $50,000, the condition of the bond being as follows:

"If the above-bound People's National Bank, Salisbury, N. C., shall well and faithfully pay over and upon demand of said Benjamin R. Lacy * * * all moneys belonging to the said Benjamin R. Lacy, personally or as treasurer, * * * all moneys which said Benjamin R. Lacy may, either personally or as treasurer of the state of North Carolina, deposit with said People's National Bank, Salisbury, N. C., which may in any manner come into its custody or possession while acting as said state depository, * * * then this obligation to be void."

The foregoing bond was executed by the surety by reason of a contract entered into between the bank and the surety company, which contract, among other provisions, contains this clause:

"That said applicant shall and will at all times indemnify, and keep indemnified and save harmless, the said company from and against any and all liability asserted against said company, and from and against all loss * * * which said company shall or may for any cause, at any time, sustain, incur, or be put to, for or by reason or in consequence of said company's having executed said bond, and said applicant further covenants and agrees to pay to said company * * * all damages for which said company * * * shall become liable, by reason of said bond, before said company or its representatives shall be compelled to pay the same. * * *"

The bank became insolvent on June 8, 1923, and was closed by the Comptroller of the Currency, and J. E. Foutz was appointed Receiver. At that time Mr. Lacy had on deposit the sum of $89,579.14. Demand was made by Mr. Lacy on the Maryland Casualty Company to pay the penalty of the bond, and it paid him the sum of $50,000. Mr. Lacy filed his claim with the receiver for $89,579.14, the full amount of his deposit, and has received dividends which have entirely satisfied his claim, and the receiver now has in his hands $1,706.53 of dividends on this claim left over; the insolvent paying thus far a dividend of 50 per cent. to the unsecured creditors, and the receiver, in addition to this sum, has approximately $25,000 in his possession undistributed, and for which no dividends have been declared.

After the surety company paid Mr. Lacy the $50,000, it brought a suit against the receiver, asking that it be subrogated to his rights, and that it be permitted to prove its claim for $50,000 on its indemnity contract, and to restrain the receiver from paying any dividends to Mr. Lacy which would deprive it of the relief it sought. Mr. Lacy intervened. A decree was entered, denying the plaintiff the relief prayed for. An appeal was taken to the Circuit Court of Appeals and the decree was affirmed. That case is reported in 11 F. (2d) 71, 46 A. L. R. 852.

In the present case the receiver pleads the judgment roll in the former case as an estoppel, and alleges that all matters in controversy have been adjusted. There is no dispute about the facts. The opinion in the former case is founded on the proposition that the surety company is not entitled, by subrogation or otherwise, to participate in the distribution of...