31 Iowa 119 | Iowa | 1870
— I. The sureties claim that the First National Bank of Keokuk was indebted to their principal, H. K. Love, as city treasurer; this is denied by-the bank. As the whole right of subrogation, as sought, is and must be grounded upon the correctness of this claim, we first turn our attention to this question of fact.
H. K. Love was a large stockholder in, and was the president of, the bank and kept his office' in it. lie deposited in the bank all the money of the city which came to his hands as treasurer, and the same was invariably entered in the accounts and books of the bank to the credit of the “ city treasurer,” with whom two accounts were kept, one called the “ general account ” and the other the “wharf fund.” The money, pursuant to an understanding, was always drawn out on the city warrants or orders in the usual form of such instruments, signed by the clerk and mayor; and without such order or warrant, no person in the bank had any authority to pay out money on account of the city. These warrants were paid, filed, preserved and charged up to the city, like ordinary checks to individual customers of the bank. No money of this account was checked out by Love himself, nor had any other person a right to check the same.
There was also on the books of the bank an account with IL K. Love & Co., of which firm II. K. Love was the sole member. This account was largely overdrawn. But there were credits in it of the following items, among others: Feb. 6,1867, city interest H. K. L. $8,000 ; March 30, city treasurer, $12,000; June 29, city treasurer, $10,-'000; September 20, city treasurer, $6,000; September 20, wharf fund, $2,100. And these sums at their re
The sole question of fact for us to determine is, whether these entries are to stand as valid and authoritative debits to the city treasurer’s accounts. If they are to stand then the sureties do not claim any subrogation. If they are not to so stand then the bank is upon its own books and accounts indebted to the city treasurer in an amount greater than the sureties’ claim in case they shall be allowe.d their subrogation.
We find upon the evidence before us/which is condensed and substantially set out above, that the items of debit were put in the account of the city treasurer without any authority therefor, and that the same should be stricken therefrom, so that the account between the bank and the city treasurer shall stand the same as if said items of debit (except $4,500 of the first) were omitted. In our view the entries were merely colorable and made immediately preceding the times for the bank officers to make their verified quarterly reports, and, doubtless, for the purpose of showing less overdraft and less advances or loans to its own officers. That they were made without any authority to make them, and that no money was drawn by Love from the bank on account of them or on the strength of the city deposits, is directly and satisfactorily proven. It is testified by Love that when he was first elected city treasurer-in April, 1865, he was requested by the mayor and clerk
Having thus ascertained that the city, as against the bank, might reach the money thus on deposit to the credit of the city treasurer, the next question is, whether the sureties, who have paid to the city the amount thus deposited, have a right in equity to be subrogated to the claim of the .city for the deposit or trust fund ? And here the counsel for the appellee, the receiver of the bank, asserts, as a.legal proposition, that the sureties can only be “subrogated to the rights of the creditor as against the principal.” "We do not so understand the rule, and, indeed, think it would be a reproach-to courts of equity if their power of effectuating justice in such cases was thus limited. The equity of sureties to subrogation extends, not only to the rights of the creditor as against the principal, but to all rights of the creditor respecting the debt which the sureties pay. Braught v. Griffith, 16 Iowa, 26, and authorities cited.
In conclusion we need only remark, that, whether the case is treated in this court as triable by the first method or the second, we reach the same conclusion upon the evidence.
The sureties ask that the final judgment be rendered in this court; and they voluntarily here state that the bonds of the city and the claims against it used by them in their defense of set-off, and in payment of the judgment, were purchased by them at about 25 per cent of their face or par value, and that they only ask such a judgment in this court as will indemnify them for the actual expenditure in the discharge of their liability. They submit a statement showing such expenditure, and the judgment will be aecordingly
Reversed.