46 S.E. 496 | N.C. | 1904
This action was brought by the plaintiff in the court (237) below for the recovery of $197.86, and was tried upon demurrer to the complaint. The plaintiff, a corporation, alleged that, at the request of John F. Newsome, Clerk of the Superior Court of Hertford County, it became surety on his official bond, as it was authorized by law to do, in the sum of $15,000, with the usual conditions; that said Newsome, as clerk and receiver, by virtue of his office, received large sums of money to be held by him for several parties, and a large part thereof he deposited in bank to his credit as "clerk and receiver."That he defaulted and misapplied the trust funds so held by him to the amount of nearly $18,000, and thereafter, he having died, a judgment *174 was recovered against his administratrix and the plaintiff, his surety, for $909.80, which amount and the further sum of $507.75, which he had also converted or misapplied, the plaintiff was compelled to pay as surety. That prior to his death the said Newsome, being individually indebted to the defendants, gave them a check, drawn by him as "clerk and receiver." to their order, on the bank in which the trust funds had been deposited, for the sum of $197.86 in payment of said indebtedness, and the check was afterwards paid to them out of the trust funds. The defendants had no claim upon the said funds, and knew at the time they received the check and the money paid thereon that the giving of the check was a misappropriation of the trust funds by Newsome. It is then alleged "that the plaintiff is advised and believes, and so avers, that it is subrogated to the rights of those whose debts against the said clerk and receiver it has paid, and is entitled to recover in this action of the defendants the sum received by them as aforesaid of John F. Newsome, deceased." The plaintiff demands judgment for the sum of $197.86 and the costs.
(238) The defendants demurred substantially upon the following grounds:
1. That the court has no jurisdiction of the action.
2. It appears from the complaint that the plaintiff paid the alleged fiduciary claims for money wrongfully converted by his principal, without having the same assigned to it, and thereby discharged the same, and for this reason it has no legal or equitable demand against the defendant, by subrogation or otherwise.
3. That the plaintiff, in its complaint, does not state a cause of action, because, first, it does not appear that plaintiff is subrogated to the rights of any person or persons having any cause of action against the defendants; second, it is not stated to whom the plaintiff paid the said money or how much he paid to any one person, nor does it appear by proper averment to whose right the plaintiff seeks to be subrogated.
The demurrer was overruled and judgment rendered for the plaintiff, to which the defendants excepted and appealed.
The objection to the jurisdiction was waived in the court below, but the defendants counsel insisted upon it in this Court, as he had the right to do. We think, however, that it is without any merit. The cause of action attempted to be set up by the plaintiff is equitable in its nature, and can be enforced only in the Superior Court. The court of a justice of the peace has no jurisdiction by which it can affirmatively administer an equity. This has been repeatedly decided. Berry v. Henderson, *175
The defendants next contend that the plaintiff, having paid the judgment recovered against it, and the other part of the debt due by its principal, without having taken an (239) assignment to itself for the same from the creditors, has hereby discharged the indebtedness and deprived itself not only of the right to enforce payment of the particular judgment and claim thus discharged by it, but has also lost all right to be substituted in the creditors' place to all collateral rights and securities to which the creditors were entitled or which they held at the time of the payment, and that by the payment it became merely a simple contract creditor of its principal, without any security for its debt, and its only remedy is by personal action against the administrator to recover the amount so paid by it. It is very true that, in order to enforce the payment of a judgment obtained upon the debt, or to recover upon a debt in its original form, if it has not been reduced to judgment, it is necessary that the surety, when he pays the debt, however it may be evidenced, should have it assigned to a third person in trust for his benefit, and if such an assignment is taken, the debt is kept on foot, although the money be paid to the creditor by the surety, and its vitality is preserved, even at law, and much more in equity, and he may enforce payment of it, just as the creditor could have done before the payment was made. Hanner v. Douglass,
In conformity to this established doctrine it has been held that the sureties of an insolvent clerk of the court, upon a breach of trust by their principal, will in equity be entitled to all the remedies and securities that belong to a cestui que trust, or creditor, against one who co-operated in the breach of trust. Bunting v. *177 Ricks,
Fox v. Alexander,
The plaintiff alleges that Newsome received large sums of money as clerk, "a large part of which he deposited in the bank, and that he misappropriated the trust funds so received by him to the amount of nearly eighteen hundred dollars, which has been paid by the plaintiff as surety, and that the defendants received a check from Newsome for $197.86 on the bank, and that amount out of the trust funds in the bank was paid to him on the check." It does not appear from this allegation with sufficient distinctness, even under the liberal provisions of the Code, that the money which the defendants received was any part of that which was converted or misappropriated by Newsome, and which plaintiff was compelled to pay. It will be observed that the plaintiff does not allege that the trust fund misapplied by Newsome, the amount of which it was required to pay, was the same which had been deposited in the bank. The fund in the bank did not constitute all of the trust funds which had been received by Newsome as clerk. It is alleged that he had received large sums of money, a part of which he placed in the bank. It appears, therefore, that the fund converted by Newsome, and for which plaintiff was held liable, and the amount of which it afterwards paid, may have been that part of the "large sum of money" alleged to have been held by Newsome, which was not deposited in the bank by him. Thus the matter is involved in the greatest doubt and uncertainly, and we are left entirely to conjecture as to what are the real facts. If the fund, for the conversion of which by Newsome the plaintiff (244) was made liable, was not deposited in the bank, then it is very clear that the plaintiff is not entitled to recover in this action, as he seeks to recover upon the theory that the defendants have received a part of the trust fund which was deposited in the bank. The defect in the pleadings is to be found in the fifth section of the complaint, where it is alleged that Newsome misapplied the trust fund so received by him, not the fund so received by him and deposited in the bank. Newsome having received other funds than those which he placed in the bank, we must assume, in the *179
absence of more specific allegation, that they were the funds misapplied by him, and for which misapplication or conversion the plaintiff was held liable. If this be true, the defendants cannot be liable to the plaintiff, as they received no part of the fund which was not deposited in the bank. The rule of pleading is, that every intendment is to be made against the pleader. In Wright v. McCormick,
The demurrer in this respect must be sustained; but, as the plaintiff may have a good cause of action which is defectively stated in the complaint, the court below may, upon proper application, and in the exercise of its discretion, allow the pleading to be amended. The code, sec. 273; Proctor v. Ins. Co.,
Reversed. (245)