United States Fidelity & Guaranty Co. v. Adoue & Lobit

• Decision Date: 24 May 1911
• Citation: United States Fidelity & Guaranty Co. v. Adoue & Lobit, 137 S.W. 648, 104 Tex. 379 (Tex. 1911)
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. ADOUE & LOBIT.
• Court: Texas Supreme Court

Page 648

137 S.W. 648

UNITED STATES FIDELITY & GUARANTY CO. v. ADOUE & LOBIT.

Supreme Court of Texas.

May 24, 1911.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by the United States Fidelity & Guaranty Company against Adoue & Lobit. Judgment for defendants was affirmed by the Court of Civil Appeals (128 S. W. 636), and plaintiff brings error. Reversed and remanded.

Hunt, Myer & Townes, Geo. G. Clough, and Hunt, Myer & Teagle, for plaintiff in error. Jas. B. & Chas. J. Stubbs, for defendants in error.

RAMSEY, J.

For the purposes of this opinion, we adopt the statement of the case made by the Court of Civil Appeals. While quite lengthy, it cannot be well abbreviated. It is as follows:

"This suit was brought by the appellant against the appellees, Adoue & Lobit, a banking firm composed of B. Adoue and Joseph Lobit, to recover of said firm and of the individual members thereof the sum of $11,939.83, with interest thereon at the rate of 6 per cent. per annum from March 7, 1903, together with the court costs paid by appellant in a suit brought in the district court of Galveston county by S. S. Hanscom, guardian, against appellant and other sureties upon the bond of A. J. Compton, guardian of the estate of Menard James. The petition alleges, in substance, that on March 3, 1903, the appellant became surety upon the bond of A. J. Compton, guardian of the estate of Menard James, a lunatic, said guardianship being then pending in the county court of Galveston county; that prior to the time appellant became such surety the said guardian had deposited with the appellee bank the sum of $11,913.83, which was all of the cash assets of said estate, and as evidence of such deposit appellee bank on October 20, 1902, executed and delivered a certificate of deposit in said amount in favor of A. J. Compton, guardian, and payable to his order; that, after appellant became surety for said guardian, he indorsed and delivered said certificate to appellees on or about March 7, 1903, and they canceled same and appropriated the proceeds thereof to the payment and satisfaction of an individual indebtedness due them by said Compton; `that appellees at the time of the deposit of said money and the issuance of said certificate to A. J. Compton, guardian, and at all times thereafter, had full knowledge and notice that the said deposit and said money represented by the certificate was not the individual property of A. J. Compton, but that it was, and continued to be, the property of said estate, of which A. J. Compton was the duly qualified and acting guardian, and that, by reason of the premises, Adoue & Lobit, when they knowingly applied said sum as before stated, knowingly misapplied, misappropriated, and converted the same to their own uses, and thereby became indebted, liable to, and bound to pay said estate the said sum so converted, together with 6 per cent. interest from date of conversion, and that, upon the death of said Menard James, they became liable and bound to pay the temporary administrator as aforesaid, but they have failed and refused to pay same that said sum of money was never restored to or repaid said estate by the said Compton, and after the death of said guardian and of said lunatic, in a suit against appellant and other sureties of said guardian, judgment was rendered against appellant for said sum, and in satisfaction of said judgment appellant has paid to the administrator of said estate said sum of $11,913.85, with legal interest thereon from the date of its conversion by appellees, as aforesaid, and that by reason of such payment appellant has become and is subrogated to the rights of said estate against appellees.' The defendants answered by a general exception, various special exceptions (which were overruled), a general denial, and special pleas, in substance, as follows:

"`(1) That said certificate and the money or credit it represented were not the assets of said estate, nor were same deposited with defendants as such, nor were they deposited by A. J. Compton as guardian of said estate, or in his capacity as such, nor were defendants ever notified by any person, or in any manner, that Compton made such deposit or any deposit as guardian of said estate, nor that the certificate or what it represented belonged to said estate, or was claimed to belong thereto, and that they deny that they ever had any knowledge or notice, actual or constructive, that such certificate, or what it represented, was the money or property of said ward's estate, or was claimed to be such, or in any manner concerned therewith, until about March, 1905, or later. That said certificate was issued under the following circumstances: A. J. Compton placed with, or caused to be sent to, defendants $5,000, loaned him by his brother, and arranged with defendants for a credit of about $6,913.85, to secure which he deposited collaterals and securities sufficient in amount and value to protect them in said loan, and, based upon said two transactions, defendants issued the certificate described in plaintiff's petition. That upon the return, surrender, and cancellation of said certificate, about March 7, 1903, defendants delivered to said Compton said securities, and shortly after paid his check for $5,000, without any knowledge or notice, actual or constructive, that either said certificate or the money or credit represented by it or the $5,000 deposited by or for said Compton and paid out as above stated, and the credit or loan advanced by defendants, were the property and assets of any person or estate other than of the defendants or A. J. Compton, as the case may be. That they did not know that he was guardian of an estate, or that he was a guardian of any kind, or in any capacity, nor did they know actually or constructively that any claim other than by or through Compton individually was, or would be, asserted to said certificate, or said funds and credit, and that said certificate issued by them was reacquired by them for a valuable consideration, without notice of any adverse claim thereto, or to that which it represented, and that they were innocent purchasers thereof at or before maturity and entitled to protection as such. That, so far as the certificate or the money which it represented being the property of said estate, that same was or represented in law and equity defendants' property, or that of Compton, or person other than James, as none of it ever came from said estate directly or indirectly, or was ever owned by it, but that, if same was in legal contemplation the property of said estate, then they say that they had no intimation, knowledge, or information of such fact, and were not put upon inquiry, and were not only justified, but required, by law to redeem said certificate and pay out said $5,000, as was done, and return to said Compton that which they had received from him, and that they cannot and should not be required to pay the same a second time, as Compton's estate is insolvent, and that they would have lost their debt and securities if they had pursued any other course.

"`(2) That, if said Compton was ever short in his account with said estate, the same occurred long before any of the transactions before described, and that they never knew, actually or constructively, that the same was claimed or was the fact until several years after they had redeemed said certificate and paid out the money and returned said securities, and that it would be unjust and inequitable, after they had parted with a valuable consideration in the redemption of same, to require them, without the return of such cash and collaterals, to again pay the amount of said certificate, and that they are entitled to be restored to the position they occupied prior to the redemption or payment of said certificate.

"`(3) That they deny they ever knew or were informed, directly or indirectly, that said Compton had represented to plaintiff or its agent that the certificate or fund represented by it was the property of said estate, or was ever held by him in his capacity as guardian thereof, and they deny that Compton as guardian of said estate ever had any account with them, or any credit extended to him in such capacity, and that the word "Guardian" following his name upon said certificate and upon any entry in their books was a mere description personæ, and did not and could not advise them of any of the matters alleged as constituting knowledge or notice that the money or certificate or both belonged to said estate, or were assets thereof.

"`(4) That the plaintiff in the former suit described in its petition asserted that the shortage occurred long prior to the issuance of said certificate, and that no restitution was ever made by Compton, and that plaintiff should not now be allowed to assume an inconsistent and contrary position, but held to such assertion.

"`(5) They plead the two-year and four-year statutes of limitation against plaintiff's demand.

"`(6) That plaintiff is a bonding and guaranty company for compensation.'

"The plaintiff replied to the foregoing answer by a general exception, special exceptions, general denial, and specially, in substance, as follows:

"`(1) That on October 20, 1902, said Compton was short in his guardianship accounts to the amount of $11,913.83, and that said certificate was obtained for the purpose of replacing the funds theretofore embezzled by him, and that said certificate, together with other assets of said estate, were thereupon delivered to said Marx and Moore to be held by them while sureties upon the guardianship bond of said Compton, and on said same day, after being indorsed to them by said Compton as guardian of said estate, said certificate, together with all the assets of said estate, were delivered to Adoue & Lobit as trustees, who held same as such until about March 7, 1903. That by the issuance of said certificate Adoue & Lobit placed it in the power of...