McCollister v. Bishop

• Decision Date: 04 December 1899
• Docket Number: Nos. 11,783 - (102).,s. 11,783 - (102).
• Citation: 78 Minn. 228
• Parties: SULLIVAN H. McCOLLISTER and Others v. JAMES H. BISHOP and Others.
• Court: Minnesota Supreme Court

Page 228

78 Minn. 228

SULLIVAN H. McCOLLISTER and Others v. JAMES H. BISHOP and Others.

Nos. 11,783 - (102).

Supreme Court of Minnesota.

December 4, 1899.

Appeal by defendants Bishop and Fidelity & Deposit Company of Maryland from an order of the district court for Hennepin county, Brooks, J., overruling demurrers to replies. Affirmed as to the company, and reversed as to Bishop.

Carman N. Smith, for appellants.

Smith & Smith and Byron Sutherland, for respondents.

MITCHELL, J.¹

This action was brought by the plaintiffs, as creditors of the People's Savings & Loan Association, an insolvent corporation, against defendant Bishop, former assignee of that association, and the Fidelity & Deposit Company of Maryland, the surety on Bishop's bond as assignee. The defendant Sutherland is the present receiver of the association, appointed in place of Bishop.

It is difficult to tell from the complaint whether this action was intended to be on the bond, or one for fraud and deceit. After alleging the insolvency of the People's Savings & Loan Association, its assignment of all its assets under the insolvency law to Bishop and the execution by him as principal, and by the Fidelity & Deposit Company as surety, of a bond conditioned for his faithful performance of all his duties, the complaint further alleges that, when Bishop applied to the Fidelity & Deposit Company to become surety on his bond, it made it a condition precedent to doing so that he should agree that all the moneys and funds belonging to the People's Savings & Loan Association which should come into his hands as assignee should be deposited with the Northern Trust Company, to which Bishop assented, and inserted it as one of the conditions of his written application to the Fidelity & Deposit Company to become his surety; that at this time the Fidelity & Deposit Company had full notice that the Northern Trust Company was insolvent, and was not a secure and safe place to deposit money, and that money deposited in it by Bishop would not and could not be repaid to him when wanted, but that the Fidelity & Deposit Company then and there represented to Bishop that the Northern Trust Company was a solvent and reliable institution, and that all moneys deposited with it would be promptly repaid to him; that Bishop, believing these representations as to the solvency of the Northern Trust Company, and in reliance upon them, afterwards deposited with the Northern Trust Company trust funds to the amount of $11,000; that in fact the Northern Trust Company was not solvent, or a safe and secure place to deposit money, as represented by the Fidelity & Deposit Company; that part of this money, to wit, $5,763.91, never was repaid, and that in December, 1896, the trust company failed, and on its own application was declared insolvent by the district court; that, upon the appointment of Sutherland as Bishop's successor, the court made an order requiring the latter to pay over to the former all property and money in his hands as assignee; that Sutherland demanded payment of this $5,763.91 from both Bishop and the Northern Trust Company, but both of them have wholly failed to pay. The Northern Trust Company was a corporation organized under the act for the organization of annuity, safe-deposit, and trust companies (G. S. 1894, § 2841 et seq.). It is also alleged that the deposit of the money with the Northern Trust Company was not made under or in pursuance of any order of court.

To the replies to their answers each of the defendants, Bishop and the Fidelity & Deposit Company, interposed a separate general demurrer, both of which the court overruled. Under a familiar rule, these demurrers reach back to the complaint.

1. The first point made by the defendants is that, treating this as a suit on the bond, the complaint did not state a cause of action, because it did not allege that the court had given the plaintiffs permission to sue on the bond. This court has repeatedly held that this is no part of the cause of action, and cannot be reached by general demurrer. Leuthold v. Young, 32 Minn. 122, 19 N. W. 652; Litchfield v. McDonald, 35 Minn. 167, 28 N. W. 191. Counsel for defendants seeks to distinguish these cases from the present one, but we do not think that the attempted distinction is well taken.

2. We are satisfied that the complaint states a cause of action against the Fidelity...