153 Va. 484 | Va. | 1929
delivered the opinion of the court.
This is an appeal from a decree dismissing the petition of The National Valley Bank of Staunton against the United States Fidelity and Guaranty Company, surety upon the official bond of John A. Alexander, special commissioner in the cause of Cook v. Byers, the object of the petition being to recover of the surety $3,000.00 shown to have been advanced by the bank to Alexander.
The original suit of Cook v. Byers was for the parti
We observe in passing that he at that time had collected the cash payment of $1,687.50, and that exclusive of the proceeds from the discount of his note for the payment of which he pledged the second and third bonds, his credit balance in the bank was more than sufficient to make these payments to these distributees.
Thereafter, from June, 1918, to October 22, 1919, he paid to all the distributees sums aggregating about $3,012.34. It is also observed in passing that in the meantime he had also collected the first of the purchase money bonds andinterest, $1,788.75, and $101.25, interest on the second bond which had been pledged to the bank. Just what disposition he made of these collections does not appear from the record, but in the interval, from time to time, he had deposited large sums in the bank to the credit of the same account, and drawn numerous checks thereon to his own order, and to pay his grocery bills, taxes, stenographer’s salary, farm and orchard expenses. During the nine months, June, 1918, to March, 1919, his credit balances on this account in the bank greatly varied from time to time. By July, 1918, it had been reduced to $581.28 and in November to $271.43, while in March, 1919, it was $88.75.
Hussey, the purchaser, failed to pay the second and third bonds so held by the bank, though in the meantime he had paid Alexander $600.00 interest thereon, and on March 25, 1922, a rule was issued against him. On June 12, 1922, a decree was entered directing Special Commissioner Alexander to resell the land. No sale, however, was made for two years thereafter. On June 14, 1924, the commissioner was authorized to
There having been no appeal from any of these decrees, these proceedings would, of course, be held, under the general rule, to conclude the case.
Much is now made of the fact that the bank was not then a party to the suit, and therefore not bound by these proceedings. It was not until April 16, 1927, that the bank asked leave tó file its petition in this ease. That petition recites the proceedings in the original cause; shows that Alexander has become totally insolvent; has been convicted of felony, and claims that the surety company is liable to it, notwithstanding the circumstances which we have stated because of the fact that it still held these two bonds of Hussey, so pledged to it nearly nine years before by Alexander, as collateral security for his personal note, and that it should be subrogated to the original rights of the distributees of the fund for the amount which it had advanced to Alexander.
Treating the questions raised in the same order as they are presented in the brief for the appellant, we come first to the contention.—
1. That the transaction between Alexander, bonded commissioner, and the National Valley Bank, in which the bonded commissioner assigned the second and third Hussey purchase money bonds to the bank for the purposes of the case, was valid, and the bonded commissioner and his surety are liable for the $3,000.00 advanced by the bank.
This claim, so earnestly argued by the learned counsel for the appellant, appears to us to be so obviously unsound as to require no discussion. The special commissioner only had the authority of the court to assign the bonds, as we construe the decree, at not less than principal and interest, for the specific purpose of raising funds to pay off the distributees promptly. Instead of doing so, he pledged them as collateral security for his personal note for less than the face value of the bonds, principal and interest, and used most if not all of the fund thus obtained from the bank to pay his own debts. That this pledge of the bonds was a plain violation of his duty and done without authority seems to us to be perfectly apparent. Had the matter been called to the attention of the trial court at any time before the resale, the bank would have been required to surrender the bonds, for it had no right to their possession and no legal interest in them.. The commissioner grossly exceeded his authority. The bank had notice of his limited authority, that these bonds were in the custody of the court, and that Alexander had no personal interest in them. His attempted assignment of them as
“Mere authority to sell does not justify a pledge, even on the principal’s account, and a fortiori (not) on the agent’s account.” 1 Mechera on Agency (2d ed.), section 897, 898; Green v. Claiborne, 83 Va. 391, 5 S. E. 376; Wheeler Co. v. Hite, 119 Va. 346, 89 S. E. 101; Harrison on Wills and Administration, Vol. 1, section 285, page 574.
2. It is also urged, however, that conceding that the bonded commissioner’s assignment Of the two Hussey bonds was void, because it was not within the authority “to assign at interest” conferred by the decree of April 22,1918, nevertheless the fund received, $3,000.00, from the bank, having been by the bonded commissioner paid out to distributees in the cause, therefore, under the circumstances, the bank should be subrogated to the rights of the distributees paid, as it is claimed, with this money, and hence that neither Alexander nor his surety should be permitted to profit at the bank’s cost.
The doctrine of subrogation is a favorite with courts of equity. This court has frequently enforced and perhaps extended it. Morgan v. Gollehon, ante, page-246, 149 S. E. 485 (decided September 19, 1929). Had the bank promprtly appeared in the case of Cook v. Buyers, and shown the state of facts upon which it now relies, and no other rights had then supervened, this would have presented a persuasive, perhaps a convincing, claim for the application of this doctrine. It is said by way of explanation of its failure to appear that it was not a party to the suit and had no notice of the proceedings. It cannot be allowed, however, that one who becomes the holder of or claimant under
The doctrine of subrogation being an equitable doctrine, he who invokes it must show that he has the better equity. One of the most familiar rules is that where one of two innocent parties must suffer because of the fraudulent conduct of a third party, that one of the innocent parties who, because of his own negligence, or failure to do what a prudent man should have done under the circumstances, has made the fraud possible, must suffer the consequent loss.
It is unnecessary in this case for us to determine whether or not, under other circumstances, and had the bank asserted its claim promptly, it might be entitled to invoke the doctrine of subrogation, and this for the reason which we have already indicated.
3. The bank was guilty of such gross laches that it would be inequitable to apply the doctrine of subrogation under the circumstances of this case. It appears that Alexander, in 1918, at the time he pledged these bonds and for some time thereafter, was reputed by many to be a man of wealth, and had extensive credit in the community. The bank, instead of advising the court of its holding of these bonds, permitted Alexander to renew his note for $3,000.00 and pledge
The Supreme Court of the United States, in O’Brien v. Wheelock, 184 U. S. 450, 493, 22 S. Ct. 354, 370, 46 L. Ed. 656, has this expression which seems to be so apposive in view of the facts of this case: “The doctrine of courts of equity to withhold relief from those who have delayed the assertion of their claims for an unreasonable length of time is thoroughly settled. Its application depends on the circumstances of the particular case. It is not a mere lapse of time, but of change of situation during neglectful repose, rendering it inequitable to afford relief.”
In referring to laches, Mr. Justice Campbell, in Milligan v. Milligan, 145 Va. 188, 133 S. E. 672, 673, says this: “To constitute laches there must be a delay that works a disadvantage to another.”
“Laches, in legal significance, is not delay, but delay that works a disadvantage to another. * * * When a court sees negligence on one side and injury therefrom on the other, it is ground for denial of relief.” Chase v. Chase, 20 R. I. 202, 37 Atl. 804, 805, 5 Pomeroy
In Michie’s Ency. Digest Va. & W. Va. Reports, Vol. 4, Cum. Supp., page 211, this is said: “As to what delay will constitute laches must depend upon the circumstances of each suit. But whenever the delay fairly justified the inference of acquiescence in the adverse claim, or whenever it has been of such a character as to induce other persons to alter their circumstances or conduct, so that the element of estoppel is introduced, a court of equity will commonly hold the delay to operate as an absolute bar.” Inge v. Inge, 120 Va. 329, 336, 91 S. E. 142; Camp Mfg. Co. v. Green, 129 Va. 360, 106 S. E. 394; Selden v. Kennedy, 104 Va. 830, 52 S. E. 635, 4 L. R. A. (N. S.) 944, 113 Am. St. Rep. 1076, 7 Ann. Cas. 879; Hale v. Hale, 62 W. Va. 609, 59 S. E. 1056, 14 L. R. A. (N. S.) 221; Depue v. Miller, 65 W. Va. 120, 64 S. E. 740, 23 L. R. A. (N. S.) 775.
It has been said: “The cases all proceed upon the theory that laches is not like limitation, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced — an inequity founded upon some change in the condition or relations of the property or the parties.” 18 Am. & Eng. Ency. Law (2d ed.) 119.
The brief of the learned counsel for the appellant fully recognizes this rule, containing this clear statement: “The rule in Virginia is that where there is a
If anything more should be needed to convince the impartial mind that the decree of the trial court is right, it may be found in the report of the commissioner, who marshals all the facts (some of which for the sake of brevity we have omitted) in a striking and convincing way.
Affirmed.