Nos. 10,520—(103) | Minn. | Jun 7, 1897
Lead Opinion
This is an action upon a bond given to the plaintiff
On April 21, 1893, the defendant Herber was appointed sole agent of the plaintiff for the city of Minneapolis. The appointment in fact took effect on May 1st following, at which time he took sole charge of the agency, with authority to write insurance and collect all premiums for the plaintiff. The bond in question was executed at the date of his appointment, and was conditioned for the faithful discharge of his duties as such agent, and particularly that he would comply with the instructions of the plaintiff, promptly collect all premiums, and remit the same to the plaintiff within the time required by such instructions. The instructions given to the agent directed that the premiums be collected on delivery of the policies, that is, the plaintiff would allow no credit, and, if any were given, it would be at the agent’s own risk; that all accounts for the business of the previous month, with remittance to balance, must be made by the 15th of each month; and, further, that it must be distinctly understood that all money received for premiums was the property of the plaintiff. The agent was, however, allowed to retain 15 per cent, of the premiums for his commissions and certain stipulated charges.
The agency of Herber continued under this appointment to, and was terminated on, November 1, 1894, at which time he was indebted to the plaintiff on account of premiums for policies issued by him for plaintiff in the sum of $891.91, for the recovery of which this action was brought. That Herber is indebted to the plaintiff in this amount, there is no controversy. It is also admitted that he remitted to the plaintiff money from time to time, during the time he was sole agent, which in the aggregate exceeded the amount due to it from Herber on account of policies issued by him during the time covered by the bond in question.
The plaintiff claims that the surety, Wright, is bound by such application of the payments, even if the money remitted, and so applied to the extinguishment of Berber’s indebtedness which existed prior to the taking effect of his appointment as sole agent, was received by him in payment of premiums for the payment of which the surety was holden. The surety, on the other hand, claims that the creditor and his principal, as against him, could not apply money, collected by the principal for premiums due for policies issued by him under the appointment for which the bond was given, to the payment of such prior indebtedness, and that the money so applied was in fact money collected for such premiums. It is apparent that if the money remitted June 19 and August 11,1893, were applied on Berber’s indebtedness for premiums on policies issued after May 1, 1893, there would be no shortage in his account for the time covered by this bond; but, if the application of these payments made by the parties is binding on the surety, he is liable on the bond for the amount claimed. The bond in this case did not secure past defaults of the principal.
There are some general statements made in the case of County v. Willard, 39 Minn. 125" court="Minn." date_filed="1888-08-17" href="https://app.midpage.ai/document/county-of-pine-v-willard-7965733?utm_source=webapp" opinion_id="7965733">39 Minn. 125, 39 N.W. 71, cited and relied upon by the plaintiff, opposed to this conclusion. The case referred to was an action against the sureties on the bond of a county treasurer for his second term. The trial court found that the defalcation for the recovery of which the action was brought occurred during the principal’s second lerm, and the question before this court on appeal was whether this finding was sustained by the evidence, and the court held that it was. It was undisputed that the principal, on surrendering the office at the '< end of his second term, did not account or pay over all funds then chargeable to him; and it was held that the sureties on the second i term bond were prima facie responsible for the deficiency, and, further,
The case was properly decided upon the ground that the evidence sustained the findings of fact made by the trial court. But in the' syllabus and opinion the general statement was made to the effect that, if public money received by the principal during the second term were misapplied to cover a prior delinquency occurring in the first term, the sureties on the second bond would be liable. This holding was not necessary to a decision of the case, and must be regarded as the incidental conclusion of the justice writing the opinion. It cannot be regarded as the law of this state, for it would be inequitable to permit the treasurer to apply public money coming into his hands during his second term to the payment of a defalcation occuring in his first term, and thereby shift the liability rightfully resting upon his sureties on the first bond to those on the second. If such a transaction were sanctioned by the court, then it would be lawful to rob Peter to pay Paul.
The case of Inhabitants v. Bell, 9 Metc. (Mass.) 499, cited in the opinion in the case of County v. Willard does not support the general statement therein to which we have referred. On the contrary, it is in harmony with the views which we have here expressed. The facts in the * Massachusetts case were that the money received by the collector on the tax warrants during his second term, and paid on the arrears of taxes collected during his first term, was his own money, and not that of the town for which he was collector. The decision of the court in that case seems to have been placed on this ground, for the opinion states, at page 503:
“The case discloses no knowledge, on the part of the town, of the source whence the money was derived, which was applied in part payment of the taxes of 1840 [the previous term]'. Neither is it a case ■of misapplication of any specific funds which the collector was bound to pay to the treasurer of the town. The specific money received by a collector, in the collection of taxes, is his money, and not that of the town.”
The respondent also cites in support of his claim the following cases in this court: Hersey v. Bennett,28 Minn. 86" court="Minn." date_filed="1881-06-22" href="https://app.midpage.ai/document/hersey-v-bennett-7963887?utm_source=webapp" opinion_id="7963887">28 Minn. 86, 9 N.W. 590; Tomlinson v. Simpson, 33 Minn. 443" court="Minn." date_filed="1885-06-09" href="https://app.midpage.ai/document/tomlinson-v-simpson-7964741?utm_source=webapp" opinion_id="7964741">33 Minn. 443, 23 N. W. 864; Board v. Citizens, 67 Minn. 236, 69 N. W. 912. None of these cases support his contention. The
Now in this case ■all moneys received by Herber in payment of premiums, less commissions and charges, were the property of the plaintiff, and for their payment the surety, Wright, was bound. He was therefore equitably entitled to have all money received for premiums for which he was liable applied in extinguishment of such liability, notwithstanding the agreeement of the creditor and his principal to apply them on the latter’s prior indebtedness. - ’ But the burden was upon the surety to show that the money which was remitted to the plaintiff and applied on such prior indebtedness during the time covered by his bond was in fact received by Herber for premiums on account of policies issued during such time. The mere fact that money which was remitted during such time was so applied is not sufficient; for if the money so applied was Herber’s, or was received for premiums on insurance antedating the commencement of his sole agency, or was not in fact money received for premiums on policies issued after the execution of the bond, the plaintiff and Herber had the right
It is the contention of the defendant that this question cannot be considered on this appeal, because the record contains no settled case containing all of the evidence on the trial, but only a bill of exceptions, which does not purport to contain all of the evidence. It appears, however, from the bill of exceptions, that it contains all of the evidence on the question suggested; hence the record is sufficient to enable the plaintiff to here raise the question. The only evidence in the case as to the source whence the money was derived which was applied on the principal’s prior indebtedness was the testimony of Herber, who was called on this point by the defendant Wright. On his direct examination he testified generally that the payment made by the check of June 19, 1893, came from moneys collected for the business during the previous month of May, principally; and as to the payment made by the check of August 11, 1893, that the money was derived from the business of the agency during the previous month of July. It appeared, however, from his testimony, that the agency consisted of four companies, including the plaintiff; that he kept no specific account of the money collected for the plaintiff in any month, but that he put all the premiums collected for all of his companies into one fund, and deposited it in the bank in his own name; that all of the money which he received for business done for all of his companies went into this common fund. The checks in question were drawn upon and paid from this common fund. ■
His testimony on the cross-examination leaves it a matter of pure speculation whether the checks in question, or any part thereof, were in fact paid from money collected for premiums for insurance written by him for this plaintiff during the time covered by the bond. We are not to be understood as holding that it was necessary for the surety to show that the identical money received for such premiums was applied in payment of the checks. It would have been sufficient for him to have shown that money was in fact collected for such pre
So ordered.
Concurrence Opinion
I concur in the result, and in the reasons given for that result, except in so far as the opinion fails to confine those reasons to cases between principal and agent, where the money delivered by the agent to the principal always was the money of the latter. As a general rule, money has no ear-marks, and, where merely the relation of debtor and creditor exists, there are few equities which entitle the surety for the debtor to change the application of money paid by the debtor to the creditor, where the latter was ignorant of the equities of the surety when the money was received and applied. But, where the agent is delivering to his principal the principal's own money, the agent cannot make his sureties liable by merely placing a wrong label on the money, unless strong equities have thereby arisen in favor of the principal. Neither the alleged payment nor attempted application of the money gave the principal title to it, but the money was his before either payment or application; and, as against such a surety, neither party has a right to change the character of or title to such money by any such application, but the source from which the money comes must alone determine its application, unless the principal has been so deceived and prejudiced as to raise such an equity in his favor, as, for instance, where, on the faith of the application of the money, he has innocently and in good faith parted with a new consideration, or surrendered up a security, and cannot be placed in statu quo. This is the rule that is usually applied in cases against sureties on the bonds of public officers. See 2 Am. & Eng. Enc. Law (2d Ed.) 465.