N. Trust Co. v. First Nat. Bank of Buffalo

• Decision Date: 01 April 1913
• Citation: 140 N.W. 705,25 N.D. 74
• Parties: NORTHERN TRUST CO. v. FIRST NAT. BANK OF BUFFALO.
• Court: North Dakota Supreme Court

25 N.D. 74

140 N.W. 705

NORTHERN TRUST CO.

v.FIRST NAT. BANK OF BUFFALO.

Supreme Court of North Dakota.

Feb. 3, 1913.

Rehearing Denied April 1, 1913.

Syllabus by the Court.

The complaint alleges that the said treasurer paid to defendant the said moneys of Cass county upon his private account, and that the defendant knew, or ought to have known, of the ownership of the funds. The complaint further alleges that Cass county recovered judgment against this plaintiff for a shortage of over $7,000. Held, that the allegations relative to the suit by Cass county pertained to the subject of the subrogation of plaintiff to Cass county's interest in the funds. The fact that a judgment was obtained against the Surety Company for a shortage in M.'s account will not be binding upon this defendant, who was not a party to the suit, but this plaintiff will have to prove the fact of the shortage upon the present trial.

Defendant claims that there is no allegation that the wrongful payments made by the treasurer occasioned the shortage in his accounts. Held, that the above allegations necessarily imply a shortage, and that the same was occasioned by the wrongful payments of Cass county's money to defendant.

Defendant claims that the complaint does not allege that the payments were unlawfully made. Held, that the allegation that the said M. paid and the defendant received the funds of Cass county upon the private debt of the said M. sufficiently alleges an unlawful use of the funds.

Defendant contends that Cass county should have sued and recovered from the bank the funds in question before resorting to the bond of the Trust Company. Held, that Cass county was under no obligation to pursue this remedy before resorting to this bond; that section 6110, Rev. Codes 1905, controls; and that the plaintiff is subrogated to all the rights of Cass county.

The fact that defendant received 26 checks drawn in the name of Cass county was sufficient notice to the payee of the checks that the moneys belonged to Cass county, and not to M.

Held, that the demurrer of the defendant was properly overruled.

Appeal from District Court, Cass County; Pollock, Judge.

Action by the Northern Trust Company, a corporation, against the First National Bank of Buffalo, N. D., a corporation. From an order overruling a demurrer to the complaint, defendant appeals. Affirmed.

One M. was treasurer of Cass county during the years 1907-1910, inclusive, and the plaintiff furnished his official bond. Cass county claimed a shortage, and sued and recovered judgment against this plaintiff for something over $7,000 defalcation. During the years 1907, 1908, and 1909 said M. paid to this defendant some $2,564.22 upon his personal debt to defendant. Said payments were made by means of 26 checks upon the funds of Cass county, said checks being signed “Cass County, N. D., per M., Treasurer.” After the Trust Company had paid the defalcation, it brought this suit against the defendant to recover said sums.Ball, Watson, Young & Lawrence and Pollock & Pollock, all of Fargo, for appellant. Pierce, Tenneson & Cupler, of Fargo, for respondent.

BURKE, J.

One M. was county treasurer of Cass county, N. D., for the years 1907-10, inclusive, and the plaintiff Trust Company was his official bondsman. At the close of his term of office, the county of Cass claimed that he was short in his accounts something over $7,000, and judgment was recovered against the surety for such defalcation. Having paid the judgment, the Trust Company in its turn brought this action against the National Bank of Buffalo, N. D., to recover the sum of $2,564.22, the moneys which it is alleged belonged to said Cass county, but were wrongfully paid by said treasurer to said bank upon a private indebtedness. The complaint, after alleging the formal matters of the election of the treasurer and the giving of the bond, further alleges: “That on the said 2d day of January, 1911, the said M. was short in his accounts as treasurer of said Cass county of public moneys in his hands belonging to said Cass county, and failed to pay over and deliver, according to law, to his successor in office the sum of $7,258.28, and wholly failed and neglected to pay said sum or any part thereof; that thereafter said Cass county duly demanded of this plaintiff (the Trust Company), as surety upon the official bond of said M., as aforesaid, that said shortage be paid into the treasury of said Cass county, and that this plaintiff make good the sum of money aforesaid, and, upon the failure of the plaintiff so to do, an action was duly and regularly commenced in the district court of Cass county by the county of Cass, as plaintiff, against this plaintiff, as defendant, in which such proceedings were duly and regularly had, that on the 5th day of April, 1911, a judgment was duly and regularly entered against this plaintiff and in favor of Cass county, N. D., for the sum of $7,258.28 for principal, $84.66 interest, and $7 costs, making a total judgment against this plaintiff, by reason of the defalcation of said M., as treasurer of Cass county, in the sum of $7,349.94; that thereafter, and on the 6th day of April, 1911, this plaintiff was compelled to and did pay said judgment; that during the years 1907, 1908, and 1909 the said M., as treasurer of said Cass county, deposited the money of said Cass county in the Commercial Bank of Fargo, Merchants' National Bank of Fargo, and the First National Bank of Fargo, in the name of, and to the credit of, said Cass county, N. D.; that between the 10th day of April, 1907, and the 21st day of September, 1909, both dates, inclusive, said M. issued checks upon said banks, payable to the defendant herein, the First National Bank of Buffalo, N. D., in the aggregate sum of 2,564.22; that said checks were signed in the name of Cass county, N. D., and were issued and delivered by said M. and received by defendant in payment of the individual obligation of said M., and that defendant knew, or ought to have known, that the funds on which the same were drawn were the moneys of the said Cass county, and not the moneys of said M.; that defendant collected the respective amounts for which said checks were drawn from the funds of said Cass county standing to the credit of said Cass county in such banks, with a knowledge aforesaid, and now holds and retains said sum of $2,564.22 to and for the use and benefit of the plaintiff herein, the said sum being a part of the amount for which judgment was recovered by said Cass county and paid by this plaintiff.” Then follows an itemized statement of the checks, 26 in number, and the banks on which they were drawn, with the date of payment, and a demand for judgment.

To this complaint the defendant demurred upon the ground that the complaint does not state facts sufficient to constitute a cause of action. This demurrer being overruled, the defendant has appealed to this court, and argues the...