People's Nat. Bank v. Corse

Decision Date15 February 1916
Citation182 S.W. 917
PartiesPEOPLE'S NAT. BANK v. CORSE.
CourtTennessee Supreme Court

Suit by the People's National Bank against James Corse in which the New England Casualty Company intervened, replevying the property attached. From a decree against the intervener, it appeals. Affirmed.

J. E. Garner, of Springfield, and Smith & Berry, of Nashville, for appellant. True & Dorsey, of Springfield, for appellee.

WILLIAMS, J.

The United States let a contract for the erection of a post office building in Springfield to Corse, who executed a bond to the government, with the New England Casualty Company as surety. This bond guaranteed the performance of the contract, and contained a clause to the effect that the contractor should promptly make payment to all persons supplying labor or materials in the prosecution of the work contemplated by the contract.

Corse borrowed money of complainant bank, which was used to pay for such labor and material. The bank filed a bill of attachment on the ground that Corse was a nonresident of the state, and caused a lot of materials to be attached, which materials were at the time stored near the public building, then in course of construction, and in railway cars, unloaded at the time, as the property of Corse. It had been ordered by and consigned to him.

The surety company in that cause filed its petition of intervention to set up its claims, and executed a replevy bond in a sum equal to the value of the material for the release of the same from the levy of the attachment. The contentions, outlined below, were so far ruled in favor of the bank by the chancellor as that a recovery on the bond for its amount was allowed.

One of the claims of the surety company is that it is entitled to be subrogated to the right of the United States, it having completed the building and complied with the contract of its principal, Corse.

A claim of the appellee bank is that the surety must fail, because the bank was itself entitled to look to the bond and to appellant as surety thereon, on account of the fact that it advanced money to contractor Corse which went to pay for materials wrought into the building. This is not maintainable. Money furnished by a bank for the specific purpose of paying for materials or labor is not thereby placed within the protection of the provisions of such a bond. United States, for use, etc., v. Rundle, 107 Fed. 227, 46 C. C. A. 251, 52 L. R. A. 505; Illinois Surety Co. v. City of Galion (D. C.) 211 Fed. 161. And see Hardaway v. National Surety Co., 211 U. S. 552, 29 Sup. Ct. 202, 53 L. Ed. 321, affirming 150 Fed. 465, 80 C. C. A. 283. These decisions proceed upon principles recognized in our cases. McDonald v. Railroad, 93 Tenn. 281, 290, 24 S. W. 252; Smith v. Neilson, 13 Lea (81 Tenn.) 461.

The equity of the surety company, entitling it to subrogation, is held superior to that of such a volunteer who had advanced money to the contractor. Henningsen v. U. S. Fidelity, etc., Co., 208 U. S. 404, 28 Sup. Ct. 389, 52 L. Ed. 547, affirming 143 Fed. 810, 74 C. C. A. 484.

The main contention of the surety for error in the chancellor's decree is that, under the federal statute, the bank could not by its attachment gain a lien on or title to the property levied on which would be superior to appellant's right of subrogation to the priority of the United States.

This claim is based on sections 3466 and 3468 of the Revised Statutes of the United States (U. S. Comp. St. 1913, §§ 6372, 6374), as follows:

"Sec. 3466. Whenever any person indebted to the United States is insolvent, * * * the debts due to the United States shall be first satisfied; and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed."

"Sec. 3468. Whenever the principal in any bond given to the United States is insolvent, * * * and * * * any surety on the bond * * * pays to the United States the money due upon such bond, such surety * * * shall have the like priority for the recovery and receipt of the moneys out of the estate and effects of such insolvent * * * as is secured to the United States; and may bring and maintain a suit upon the bond, in law or equity, in his own name, for the recovery of all moneys paid thereon."

It is urged that Corse was insolvent, and that the attachment by the bank was based on his nonresidence, which is...

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8 cases
  • State Bank of Wheatland v. Turpen
    • United States
    • Wyoming Supreme Court
    • June 26, 1934
    ... ... Surety ... Co., 211 U.S. 552; Cadenasso v. Anonelle, ... (Cal.) 59 P. 765; Peoples Bank v. Cores, (Tenn.) 182 ... S.W. 917 ... We ... submit, therefore, that the ... essentials a similar situation as here, is Third Nat. Bank v ... Fidelity & Surety Co., supra. In that case, the bank sued on ... labor claims ... ...
  • County of Audrain et al. v. Walker et al., 25296.
    • United States
    • Missouri Court of Appeals
    • October 31, 1941
    ...So. Sur. Co. v. Schlesinger, 114 Ohio St. 323, 151 N.E. 177, 45 A.L.R. 371; Fulghum v. State, 94 Fla. 273, 114 So. 367; Peoples Nat'l Bank v. Corse (Tenn.), 182 S.W. 917; Mass. Bond. and Ins. Co. v. Ripley County Bank et al., 208 Mo. App. 560, 237 S.W. 182; Lincoln County v. Du Pont de Nemo......
  • Audrain County ex rel. and to Use of First Nat. Bank of Mexico v. Walker
    • United States
    • Missouri Court of Appeals
    • October 31, 1941
    ... ... Co. et al., 182 ... Ark. 609, 32 S.W.2d 172; American Bank & Trust Co. v ... Langston et al., 180 Ark. 643, 22 S.W.2d 381; ... Peoples Nat'l Bank v. So. Surety Co., 105 ... Cal.App. 731, 288 P. 827; Cadenasso v. Antonelle, ... 127 Cal. 382, 59 P. 765; State to Use of So ... Schlesinger, 114 Ohio St. 323, 151 N.E. 177, 45 A. L. R ... 371; Fulghum v. State, 94 Fla. 273, 114 So. 367; ... Peoples Nat'l Bank v. Corse (Tenn.), 182 S.W ... 917; Mass. Bond. and Ins. Co. v. Ripley County Bank et ... al., 208 Mo.App. 560, 237 S.W. 182; Lincoln County ... v. Du ... ...
  • State ex rel. Southern Sur. Co. v. Schlesinger
    • United States
    • Ohio Supreme Court
    • April 8, 1926
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