Rogers v. Nat'l Sur. Co. of N.Y.

• Decision Date: 10 November 1927
• Docket Number: No. 26048.,26048.
• Parties: ROGERS v. NATIONAL SURETY CO. OF NEW YORK.
• Court: Nebraska Supreme Court

116 Neb. 170

216 N.W. 182

ROGERS

v.NATIONAL SURETY CO. OF NEW YORK.

No. 26048.

Supreme Court of Nebraska.

Nov. 10, 1927.

Syllabus by the Court.

Section 8035, Comp. St. 1922, construed, and held to limit by express terms the subrogation therein provided for the benefit of the depositors' guaranty fund upon payment made to creditors, to “all the right of the creditors thus paid, to participate in the assets of such bank.”

The depositors' guaranty fund is a creation of statute, possessing such rights and subject to such liabilities as the Legislature has provided; the liabilities thus imposed thereon are analogous to that of a “guarantor” as distinguished from a “surety.”

As a general rule, a “guarantor” is not in privity with sureties, even on the same obligation, and cannot, when he has paid a debt, claim contribution from a “surety.”

Additional Syllabus by Editorial Staff.

Under Comp. St. 1922, §§ 8024-8035, bank depositors' guaranty fund is liable as guarantor rather than as surety, and where such fund had paid full amount owed county as depositor of public funds, bank receiver was not entitled to recover on behalf of guaranty fund against surety on depositary bond on theory that guaranty fund and such surety were cosureties.

Appeal from District Court, Red Willow County; Eldred, Judge.

Action by J. W. Rogers, Receiver of the State Bank of Gering, in behalf of the Department of Trade and Commerce, for the use and benefit of the depositors' guaranty fund, against the National Surety Company of New York. From a judgment for defendant, plaintiff appeals. Affirmed.Butler & James, of Cambridge, and Edward J. Lambe, of Beaver City, for appellant.

R. C. Clarke, of Scotts Bluff, for appellee.

Heard before GOSS, C. J., and ROSE, DEAN, DAY, GOOD, THOMPSON, and EBERLY, JJ.

EBERLY, J.

This is an appeal by J. W. Rogers, as receiver of the State Bank of Gering, plaintiff, from an adverse judgment in an action brought by such receiver against the National Surety Company of New York as defendant. The controlling facts involved in this litigation are as follows: The State Bank of Gering failed September 28, 1922. In due course of proceedings the plaintiff was appointed and qualified as receiver thereof. From January, 1919, to date of the failure, this bank had a capital of $25,000 and a surplus of $7,500. It had been designated as a depository of public funds by the proper corporate authorities of Scotts Bluff county, and at the time “it closed its doors” there was on deposit therein $49,505.06, and there was owing by it to the county of Scotts Bluff, as interest accrued, an additional sum of $2,414.49. It also appears that on or about January 8, 1921, this bank as principal, and the National Surety Company of New York, as surety, had executed and delivered to the county of Scotts Bluff a bond in the sum of $10,000. Its conditions were:

“Whereas, the said bank, in consideration of said deposit, and for the privilege of keeping the same, has agreed to pay and will pay to Scotts Bluff county the sum of not less than two per cent. (2) per annum on account of said deposit, the same shall be paid quarterly upon the daily average of the sum of such amount as the said bank shall have on deposit for the quarter or any fraction thereof next preceding the payment of said percentum, which shall be computed and credited to the account of Scotts Bluff county and shall become a part thereof.

Now, therefore, if the said State Bank of Gering, of Gering, Nebraska, shall at the end of every month render to the treasurer of said Scotts Bluff county and county board a statement in duplicate showing the daily balance of the county of Scotts Bluff moneys held by it during the month next preceding, and the accretions thereof, and how the same has been credited, and shall well and truly keep all said sums of money so deposited, or to be deposited, as aforesaid, subject to the check and order of county treasurer as aforesaid, and shall pay over the same and each and every part thereof, upon the written demand of the county treasurer, and shall estimate, calculate and pay said percentum as aforesaid, and to his successor in office as shall be by him demanded, and shall in all respects save and keep the county of Scotts Bluff and said county treasurer harmless and indemnified for and by reason of the making of the said deposit or deposits, then this obligation shall be void; otherwise to be and remain in full force and virtue, subject to the limitations and provisions of the rider attached and forming a part hereof.

Attached to and forming a part of depository bond in the sum of $10,000 on behalf of the State Bank of Gering, in favor of Scotts Bluff county, Nebraska.

The liability of the surety hereon shall be limited to the deposits of said county in excess of fifty per cent. of the paid up capital stock of said bank.

Provided further that any right of defense to which the surety may be entitled by reason of the deposits being in excess of the statutory limit is hereby waived.”

This bond had been accepted and approved.

After the bank's failure the surety company, upon demand, paid the county treasurer of Scotts Bluff county the sum of $10,764.02, and received in consideration thereof from that officer an assignment in writing of the “sum of $10,764.02, with interest, and deposit in the State Bank of Gering, Gering, Nebraska, and thereby subrogated the said surety to all its rights and remedies against said bank.”

On this assignment an action was commenced against the receiver of the failed bank, having for its purpose securing a judgment making said claim a charge against the assets of the bank and also against the depositors' guaranty fund. The right of recovery was put in issue by proper pleadings and a trial on the merits was had. After appeal to this court (State v. State Bank of Gering, 114 Neb. 213, 206 N. W. 758), the action was finally determined in favor of the surety company and adversely to the receiver and the depositors' guaranty fund. The final judgment rendered in said cause in favor of the surety company and against the guaranty fund was paid in full by the guaranty fund on or about April 21, 1926.

The present action was commenced June 1, 1926, as an original action by the receiver in behalf of the department of trade and commerce for the use and benefit of the depositors' guaranty fund of the state of Nebraska, and was based solely upon the proposition that the depositors' guaranty fund and the National Surety Company were, in view of the facts narrated, in truth and in fact, cosureties for the public funds deposited in the State Bank of Gering, and that the former having paid the entire sum, to wit, $51,919.55, to Scotts Bluff county was, as a cosurety, entitled to contribution from the latter.

The controlling questions presented by the pleadings upon which the case was tried and determined in the district court, and which are now urged by the plaintiff on appeal, are: (1) Is the defendant a cosurety and liable for a contribution to the depositors' guaranty fund? (2) Is the plaintiff foreclosed by the first adjudication and do the principles of res adjudicata apply? Of course, if the first question be determined against the plaintiff, it would serve no good purpose to determine the second.

It is to be observed that the questions presented by this appeal arise from, and have their inception in, the operation of our state banking law. Comp. St. 1922, pt. 3, tit. 5, art. 17, as amended. They pertain particularly to the provisions thereof creating and regulating the operation of the “depositors' guaranty fund.” Comp. St. 1922, §§ 8024-8035.

This legislation was enacted pursuant to the police power of the state and is sustainable as, and because of, being a proper exercise of that police power. Noble State Bank v. Haskell, 219 U. S. 104, 31 S. Ct. 186, 55 L. Ed. 112, 32 L. R. A. (N. S.) 1062, Ann. Cas. 1912A, 487;Shallenberger v. First State Bank, 219 U. S. 114, 31 S. Ct. 189, 55 L. Ed. 117.

[1] To epitomize briefly, it may be said that section 8024 et seq., Comp. St. 1922, provides for the creation of a guaranty fund for the protection of depositors of a state bank; that when a state bank fails, the claims of depositors for lawful deposits, and the claims of holders of exchange, shall have priority over all other claims, except federal, state, county, and municipal taxes, and shall be a first lien on all of the assets of the failed banking corporation; and the further provision is made that, when a bank has become insolvent and a receiver therefor has been appointed, it appearing that the cash in the hands of the receiver shall be insufficient to pay the claims of such depositors, the same shall be paid in a manner pointed out from the depositors' guaranty fund. The rights and remedies created in favor of the depositors' guaranty fund and for its reimbursement by reason of this transaction are enumerated in section 8035, Comp. St. 1922, in the following language:

“To the extent of the amount paid from said guarantee fund to satisfy the claims of creditors, the department of trade and commerce for the use and benefit of said fund, shall be subrogated to all the rights of the creditors thus paid, to participate in the assets of such bank and the same shall be enforced and collected by the receiver accordingly and when collected shall be placed in said fund and...