Montgomery v. Ward, 4 Div. 712.

• Decision Date: 21 December 1933
• Docket Number: 4 Div. 712.
• Citation: 227 Ala. 641,151 So. 583
• Parties: MONTGOMERY, Superintendent of Banks, et al. v. WARD.
• Court: Alabama Supreme Court

151 So. 583

227 Ala. 641

MONTGOMERY, Superintendent of Banks, et al. v. WARD.

4 Div. 712.

Supreme Court of Alabama

December 21, 1933

Appeal from Circuit Court, Geneva County; Emmet S. Thigpen, Judge.

Bill for subrogation by F. J. Ward against the Farmers' &amp Merchants' Bank of Samson and H. H. Montgomery, as Superintendent of Banks, in charge of the liquidation of said bank. From a decree overruling a demurrer to the bill respondents appeal.

Reversed rendered, and remanded.

B. W Smith, of Samson, for appellants.

Carmichael & Tiller, of Geneva, for appellee.

KNIGHT Justice.

Bill by F. J. Ward, appellee here, against the Farmers' & Merchants' Bank of Samson, and H. H. Montgomery, as superintendent of banks of the state of Alabama, in charge of the liquidation of the said Farmers' & Merchants' Bank, seeking subrogation to the right, claim, and lien of the state and the county of Geneva against the properties of said bank, on account of certain tax moneys of the state and county deposited in said bank by the appellee, while acting as tax collector of Geneva county.

The material facts averred in the bill may be stated as follows: the appellee, during the month of November, 1929, was the tax collector of Geneva county; that on the 15th day of said month he collected taxes from the taxpayers of said county to the amount of $468.44,-$144.99 of which amount belonged to the state, and the balance, $323.45, was tax money of the county. This money, state and county, the said Ward deposited in said bank on the 16th day of November 1929, in a "separate and special account in the name of F. J. Ward, as Tax Collector"; that said bank was not a designated depository for either state or county funds, and had not executed to the said tax collector "any bond to indemnify him, as such Tax Collector, against any loss which he, as such Tax Collector of the State of Alabama and the County of Geneva might sustain as a result of said State and County funds being deposited in said bank." The bill also contains the following specific averment: "* * * That said officers of said bank knew at the time the said deposit was made that said sums belonged to the State and Geneva County and received them as such; that the action of the said bank in receiving said sums of money was in violation of the law and constituted an unauthorized acceptance of a deposit, in that no bond had been executed by said bank as provided by law and as hereinabove averred," etc.

It is further averred that on November 29, 1929, the said bank closed its doors, and went into the hands of the superintendent of banks for liquidation, and that it is now in process of liquidation. It is further averred that the said Ward, before the filing of the bill, recognizing his liability, had paid, out of his individual funds, to the state and county, the amount of tax money so deposited by him in said bank; that he had made demand on the said superintendent of banks for said money, but that his demand had been refused, and that he was forced to pay the money to the state and county. It is also averred that the bank had in "its till and in solvent banks cash to the amount of, to-wit, $5,000.00, and that the said bank had in its till and in solvent banks at the time it closed its doors on November 29th, 1929, upwards of, to-wit, $6,000.00." It is also averred that, in said sum of $6,000 in cash so on hand and turned over to the said superintendent of banks as assets of the said Farmers' & Merchants' Bank of Samson, there was included the sum of $468.44 so deposited by the complainant, as tax collector aforesaid; that said bank was to hold said funds for him as tax collector in trust, said bank knowing full well that said funds belonged to the state of Alabama and the county of Geneva. Notwithstanding the last stated averment, that the bank was to hold said funds in trust for complainant as tax collector, the bill further specifically averred: "That on November 16th, 1929, the complainant went to Samson to collect state and county taxes; that J. B. Pinckard and W. M. Wise, who were President and Vice President respectively of the Farmers & Merchants Bank of Samson, the said W. M. Wise also acting as Cashier, prepared for the complainant an office in the Farmers & Merchants Bank of Samson, which said office was to be used and which was used by the complainant in and about the collection of State and County taxes; that said officers of said bank, prior to that time, prepared said office and invited your complainant to use it whenever he was in Samson on official business and in and about the collection by him of State and County taxes; that the complainant, in appreciation of the courtesy of the officers of said bank, and by way of compensating the bank for its trouble in his behalf as hereinabove averred, agreed with the officers of said bank that he would deposit in said bank to his credit as such Tax Collector the State and County taxes which he collected during the days he used the office in said bank as hereinabove averred." (Italics supplied.)

Having paid to the state and county the amount of tax money deposited with said bank, the complainant prayed to be subrogated to the lien of the state and county against the properties of said bank, and for the enforcement of said lien by proper decree of the court.

The respondent Montgomery demurred to the bill, and, from the decree of the court overruling his demurrers, prosecutes this appeal.

As we see it, the complainant, in the statement of his case, has stated himself out of court, under one of plainest principles of equity jurisprudence.

The demurrer of the respondent takes the point, and aptly so, that the complainant, in seeking equitable subrogation to the right and lien of the state and county, shows upon the face of his bill that a wrong was perpetrated upon both the state and county when, under the circumstances disclosed by the bill, the funds of the state and county were deposited by the complainant in the Farmers' & Merchants' Bank of Samson; that the act was in violation of law, a conversion of public revenue, and that the complainant participated in this wrongful and unauthorized act.

The demurrer aptly points out that the complainant, under the facts averred in the bill, does not come into court with clean hands.

Equity will not lend its aid to one in his effort to extricate himself from the hurtful consequences of an act, deliberately committed, in violation of law, and in disregard of a duty solemnly enjoined by statute. The equitable maxim that he who comes into equity must come with clean hands has been rigidly applied in all such cases, and relief uniformly denied. While we deem it unnecessary to review, or to collate, the authorities sustaining this proposition, yet we will refer to a few of them.

In 21 Corpus Juris, § 163, the principle is thus stated in the text: "The maxim that he who comes into equity must come with clean hands, or, as it is frequently expressed, that he who has done iniquity shall not have equity, or that he who has done inequity, or has not done equity, cannot have equity, is of ancient origin, and broad application. It is the expression of the elementary and fundamental conception of equity...