Minshull v. American Sur. Co. of New York

• Decision Date: 04 January 1927
• Docket Number: 20070.
• Citation: 252 P. 147,141 Wash. 440
• Parties: MINSHULL, State Supervisor of Banking, v. AMERICAN SURETY CO. OF NEW YORK et al.
• Court: Washington Supreme Court

252 P. 147

141 Wash. 440

MINSHULL, State Supervisor of Banking, v. AMERICAN SURETY CO. OF NEW YORK et al.

No. 20070.

Supreme Court of Washington

January 4, 1927

Department 2.

Appeal from Superior Court, King County; Findley, Judge.

Action by J. C. Minshull, as Supervisor of Banking in and for the State of Washington, liquidating the business, assets, and affairs of the Citizens's State Bank of Prosser, against the American Surety Company of New York and another, to determine the rights of the defendants to a dividend from the Citizens' State Bank of Prosser. The judgment divided the dividend between the defendants, and the named defendant appeals on an agreed statement of facts. Affirmed.

Hastings & Stedman, of Seattle, for appellant.

Williams & Cornelius, of Spokane, Hugh M. Caldwell and John P Lycette, both of Seattle, for respondents.

MACKINTOSH J.

This action is here upon an agreed statement of facts, from which it appears that the plaintiff is the state supervisor of banking, who is liquidating the business of the Citizens' State Bank of Prosser, Benton county Wash., which went into liquidation on June 21, 1924; that prior to that date one Macy was the county treasurer of Benton county and had deposited money coming into his hands as treasurer in the Citizens' State Bank, and on that day the bank was indebted to him, as treasurer, on account of money deposited as public funds, $129,952.44; that to secure this indebtedness Macy, as county treasurer, had, in addition to surety bonds hereafter mentioned, collateral security of said bank from which Benton county has since realized the sum of $25,828. That the penalty of all depository bonds was $60,000, these bonds being executed by the bank, as principal, and by the surety companies who here appear as respondents, as sureties. That after the failure of the bank Macy made demand upon the surety companies furnishing the depository bonds, and each of them paid the full amount of its obligation, and at the time of payment, and in consideration thereof, Macy, as county treasurer, executed an assignment of all his rights and remedies against the bank to the extent of the sums paid. That on December 12, 1922, the appellant executed two certain bonds, for the sum of $50,000 each, to Benton county, Wash., as official surety for Macy as county treasurer; that these bonds were accepted as Macy's official bonds, and Macy entered upon his duties as county treasurer under those bonds on January 8, 1923. That after the application of the $60,000, received from the respondents on their surety depository bonds, and the sum of $25,828.51 realized from other collateral security, there remained unpaid on account of the deposits in the Citizens' State Bank the sum of $43,975.73, which sum, together with interest, was paid by the appellant to Benton county on November 7, 1924, the total amount paid being $45,002.99. That upon such payment Benton county, through its board of county commissioners, by proper resolution, and Macy, as county treasurer, executed an assignment to the appellant of the claims of Enton county against the Citizens' State Bank. That on August 21, 1924, Macy, as county treasurer, presented to the plaintiff a verified claim for the sum of $114,729.24, and on September 3, 1924, Macy, as treasurer, offered proof of a preferred claim for $15,075. Both of these claims were rejected as preferred claims, but were allowed as general claims.

The plaintiff, having in his possession a sufficient amount to declare a first dividend on the claims against the Citizens' State Bank, paid the amount of such dividend on the county treasurer's deposit into the registry of the court, and began this action for the purpose of having determined the rights of the depository surety companies and the appellant, leaving to the court to determine how the dividends should be apportioned among the two classes of sureties. The appellant claimed the right to be reimbursed in full for the $45,002.99, with interest, out of the dividends of the insolvent Citizens' State Bank, before the payment of any dividends to the respondent depository sureties on account of their payments to the county treasurer of the penalties on their respective bonds. The respondent depository sureties claim the right to prorate with the appellant, the surety on the treasurer's official bond, according to their respective payments, in the dividends declared out of the assets of the Citizens' State Bank. Each of the bonds furnished by the respondents contained the following provisions:

'Whereas, the amount of such funds upon deposit and to be deposited with said principal is subject to withdrawal, increase, or decrease, as said county treasurer may determine; and

'Whereas, said bank has contracted to pay said county interest upon the average daily balance: * * *

'Now, therefore, the condition of this obligation is such that if said principal shall, at the beginning of each month, render the said treasurer a statement showing the daily balance of such county moneys held by it during the month next preceding and the interest thereon and how the same has been credited, and shall well and truly keep all such sums of money so deposited or to be deposited, and the interest thereon subject at all times to the check and order of said treasurer, and shall make prompt and faithful payment thereof on checks drawn by such treasurer to the extent of all moneys on deposit by said treasurer with said principal and shall promptly and faithfully calculate, credit, and pay such interest aforesaid, and in all respects save and keep said county and said treasurer harmless and indemnified for and by reason of making the said deposit or deposits, then this obligation shall be void; otherwise, to remain in full force and effect.'

It was also provided in each of these bonds that the surety should be liable for such proportion of the moneys deposited with the bank by the treasurer for which payment was refused upon demand of the treasurer, as the penalty of the bond bears to the total amount of depository bonds and other securities for deposits furnished by the principal to the county treasurer:

'Provided, however, that if such other bonds or securities are insufficient for any reason to fully make together with the aforesaid proportion under this bond the full amount of principal and interest demanded and refused and interest thereafter accruing to time of actual payment to the county treasurer of said county, or if the surety on any other such bond shall have been adjudged to be or be insolvent, then and in that event the surety hereunder shall be liable to the county treasurer of said county to the full amount of loss sustained by reason of such insufficiency.'

The bonds furnished by the appellant were conditioned as follows:

'Now, therefore, if the said principal shall well, truly, and faithfully execute and perform the duties of said office according to all laws now in force, and shall well, truly, and faithfully perform the duties of said office according to any law that may be enacted subsequent to the execution of this bond, and shall pay all moneys received by him for the use of the county as the commissioners shall from time to time direct, except where special provision is made by law for the payment of such moneys, by order of any the court, or otherwise, then this obligation shall be void; otherwise, to remain in full force and effect.'

The question for determination is whether the appellant is entitled to be paid in full before the respondents are permitted to participate in the dividend declared out of the assets of the Citizens' State Bank, or whether the appellant and the respondents should participate in such dividends in proportion to the several amounts paid by them to make good the loss to Benton county by reason of the deposit by the county treasurer of county funds in the Citizens' State Bank. In the trial court, it was held that the respondents should participate pro rata with the appellant in the dividends, and from this decree an appeal has been taken.

Section 5562, Rem. Comp. Stat., provides that each county treasurer shall designate banks as depositories for public funds kept by him as such treasurer, 'and no county treasurer shall deposit any public money in banks, except as herein provided.' The following section (5563) provides that, before the designation of any bank shall become effectual and entitle the county treasurer to make deposits therein, such bank shall file with the county clerk surety bonds to such county treasurer 'in the maximum amount of deposits designated by said treasurer to be carried in such bank.' Section 5566 provides that these requirements in regard to county depositories shall not in any way relieve the county treasurer from liability upon his official bond as such treasurer or any surety upon such bond.

The question...