237 F. 314 | 8th Cir. | 1916
Lead Opinion
(after stating the facts as above).
The result is that the facts were that the bank had more than $5,000 of the county funds when the county board met and Dickerson asked for more deposits; that the board then knew this fact, and that it had met to make the order that Dickerson should give more bond; that these facts were stated to the county attorney; that the county attorney drew the bond, and the personal sureties signed it without reading it. The bond was signed March 2, 1902, and it was approved March 3, 1902. If it had been given to secure only addi
It is true that Dickerson told the personal sureties before the'bond was signed that it secured only the deposits in excess of $5,000, that they signed it in reliance upon that statement, and did not intend thereby to become liable to pay the $5,000 for which the Fidelity Company had become liable. But Dickerson was neither the agent nor representative of the county nor of the Fidelity Company. The personal sureties were charged.with the duty as against the county and as against the Fidelity Company to read the bond before they signed it, and if it did not accord with their intentions to modify it so that it did before they executed it. Insurance Co. v. Mowry, 96 U. S. 544, 547, 24 L. Ed. 674; Chicago, St. P., M. & O. Ry. Co. v. Belliwith, 28 C. C. A. 358, 362, 83 Fed. 437, 441. It is conceded that by an agreement between themselves and the county, or by a contract between themselves and the Fidelity Company, they might have limited their liability to the repayment of deposits in excess of $5,000; but they did not do so. And the question here is, not what they might have done, but what they did, and there is nothing in the testimony in this case to overcome the incontrovertible fact, which the two bonds conclusively establish, that each surety on each bond covenanted to pay, up to the amount of the penalty of the bond he or it signed, the entire deposits in the Toronto Bank of the funds of the county between January, 1902, and February, 1903. The bond of the personal .sureties was given to secure the same debt as the bond of the Fidelity Company.
This conclusion has not been reached without notice of other contentions of counsel for the personal sureties which have not yet been discussed. They call attention to minor differences in the verbiage of the two bonds, such as that the Fidelity Company’s bonds secured the deposits of the county, while the personal sureties’ bond secured these deposits and also 2 per cent, interest on daily balances, guaranteed that the bank would do all business of exchange on checks and drafts
Counsel argued that the principals in the bond were not the same, because “the body corporate, the Toronto Bank,” was specified as principal in the Fidelity Company’s bond, and that bond was signed by “The Toronto Bank, W. P. Dickerson, Cashier,” while “The Toronto Bank, W. P. Dickerson and C. H. Starrett, as owners of said bank,” is named as principal in the personal sureties’ bond, and it is signed as principal by W. P. Dickerson, who, at the date of his signature on March 2, 1902, had purchased and become the owner of the interest of Starrett in that bank. But the contention is baseless, for the personal sureties in their answer and in the stipulation of facts admitted that the Toronto Bank was owned by W. P. Dickerson and C. H. Starrett, doing business as partners under its name in the year 1902, until on March 1st in that year Dickerson purchased the interest of Starrett therein, and the condition of the bonds was that the respective sureties thereon would pay over on demand the eounty funds deposited in that bank between January, 1902, and February, 1903, and the bank continued in operation and received deposits until.its defalcation in January, 1903.
They invoke the rule that sureties for joint principals are not liable for one of them -acting independently, or after subsequent changes are made in the members of the firm, or by the dissolution thereof, and argue from these propositions that the personal sureties were not liable for the same debt as the Fidelity Company. There are two reasons why this position is untenable: First, the change in the membership of the Toronto Bank by the purchase by Dickerson of Starrett’s interest was made on March 1, 1902, the personal sureties did not sign their bond until March 2, 1902, and by the terms of that bond they covenanted to repay all the deposits of county funds in the bank between January, 1902, and February, 1903, although the bank was owned by Dickerson when they made their bond, and it had been owned by Dickerson ancj Starrett before that date, and they knew it; and, second, prior to the making of the personal sureties’ bond Dickerson and Starrett had contracted with the county to repay to it all deposits of its funds with the Toronto Bank made between January, 1902, and February, 1903, and the personal sureties knew that fact. With knowl
The true answer to this contention of counsel, however, is that the principle and practice of contribution among cosureties are neither founded upon nor do they require absolute equality among the sureties. They do not undertake to investigate, review, reform, or give consideration to the motives, considerations, or inducements -that caused the cosureties to become such, nor do they attempt to equalize tire contracts they made, and for that reason the consideration, or the lack of it, which sureties may have received, except where they receive practical indemnity, is immaterial. The principle and practice of contribution take the cosureties as they find them after their contracts have been made, and they are founded on the proposition that, where some of such cosureties have paid more than their proportion of the common liability, it is just and equitable that those who have paid less than their proportion thereof should contribute to the former sufficient to make the proportion paid by each cosurety just and equitable. Hence, where some of the cosureties for a common debt have been compensated, but not indemnified, for their suretyship, and others became cosureties for the accommodation of their principals, that fact is immaterial, and the compensated cosureties, who have paid more than their proportion of the common liability, are entitled to contribution from the accommodation cosureties. United States Fidelity & Guaranty Co. v. McGinnis, 147 Ky. 781, 145 S. W. 1112, 1115; Frost on Guaranty Insurance, § 284; Lewis, Adm’r, v. United States Fidelity & Guaranty Co., 144 Ky. 425, Ann. Cas. 1913A, 564, 138 S. W. 305, 306; Fidelity & Deposit Co. v. Phillips, 235 Pa. 469, 84 Atl. 432, 434. If the rule were otherwise it would necessarily follow that an accommodation cosurety who had paid more than his proportion-could not have contribution from a compensated cosurety, for the inequality suggested inheres in the contracts and exists in one situation as well as in the other. And the conclusion is that the Fidelity Company may have contribution from the personal sureties.
We turn to the facts of the case and the liabilities which they establish and limit. The evidence satisfies that 'C. H. Starrett was a principal and not a surety on the bond of the Fidelity Company, that he never signed and was not a party to the bond of the personal sureties, that any cause of action which any of the parties to this suit ever’ had, or might have had, against Odenia E. Starrett as administratrix of his estate, or against her, Nina E. Hull, Chas. Sidney Starrett, Clyde Horace Starrett, Marion Fedora Starrett, and Hazel Fern Starrett, as the heirs at law of C. H. Starrett, is barred by the statute of limitations, and that as against them this suit should be dismissed on its merits.
The fact that the Fidelity Company did not present and prosecute a claim against the estate of Starrett in the probate court to compel the payment of Starrett’s liability to the county does not constitute such laches as bars its recovery in this suit against its cosureties. The duty of the personal sureties to prosecute such a claim was as imperative as was that of the Fidelity Company, and the latter company had not paid anything on account of its bond, and therefore had no accrued and due cause of action against the estate or the heirs of Starrett prior to the time when the statute of limitations had fun against the claims against the estate.
As between the Fidelity Company and the defendant Josie Braley, the evidence satisfies that the Fidelity Company has the right to a decree for the payment by her of such an amount, not exceeding $700, the value of the estate of the surety, F. C. Braley, deceased, which came to the hands of Josie Braley as his heir, as may be required to complete the payment of his proportion of the common debt of the cosureties on account of which he paid $740.63 on February 3, 1903. But as between Josie Braley' and the defendants G. W. Naylor, E. T. Thompson, J. R. Hoggatt, and Z. Gilroy, the latter agreed with F. C. Braley in his lifetime, and are legally liable, to pay, as against him and Josie Braley, his sole heir, the amount for which F. C. Braley was, or Josie Braley is, or may be, liable to the Fidelity Company, or any other party, on account of the bond of the personal sureties.
The record establishes the fact that the common debt of the co-sureties to the county has been paid in part out of the assets of the bank, in part by the principal Starrett, and in part by the co-sureties. The amounts paid by the cosureties were as follows:
’F. O. Braley, on February 3, 1903................................ I 740.62
G. W. Naylor, on December 31, 1904............................... 389.90
E. T. Thompson on December 31, 1904............................ 389.90
Z. Gilroy, on December 31, 1904 .................................. 389.90
J. B. Hoggatt, on December 31, 1904............................. 389.90
The Fidelity Oompány, on June 7, 1906........................... 6,563.30
The date when Naylor, Thompson, Gilroy, and Hoggatt paid appears in their pleading and in the agreed statement of facts to be
F. O. Braley.................................................... $ 851.99
G. W. Naylor................................................... 419.53
E. T. Thompson................................................. 419.53
Z. Gilroy....................'..................................... 419.53
J. K. Hoggatt.......'............................................ 419.53
Aggregate ............................................... $2,530.11
The Fidelity Company paid................................ 6,563.30
All the sureties paid....................................... $9,093.41
The personal sureties should have paid two-thirds of the amount which all the sureties were required to pay, or $6,062.27, and the Fidelity Company should have paid one-third of the amount that all the sureties were required to pay, or $3,031.14. 'The Fidelity Company, therefore, paid on June 7, 1906, $3,532.16 more than its just and equitable proportion of the common debt, and the personal sureties had paid as of that date $3,532.16 less than their proportion thereof, and the Fidelity Company is consequently entitled to a decree for the recovery of $3,532.16, interest thereon from June 7, 1906, to the date of the entry of the decree, and the costs of this süit, from the defendants Naylor, Thompson, Gilroy, and Hoggatt, jointly and separately, until the full amount is paid, and to an execution to enforce this recovery. And in case the full amount - decreed to be owing by Naylor, Thompson, Gilroy, and Hoggatt is not and cannot be collected of these four sureties, or either of them, then the Fidelity Company is entitled to a decree against Josie Braley for the sum of $700, or such part of this $700 as 'shall be required to completely satisfy the decree against Naylor, Thompson, Gilroy, and Hoggatt.
Let the decree below be reversed, and let this case be remanded to the District Court, with instructions to enter a decree in favor of the Fidelity Company and to take further proceedings'in this suit in pursuance of the views expressed in this opinion.
Dissenting Opinion
(dissenting). I am constrained to dissent from so much of the majority opinion which holds that the appellees are liable to contribute two-thirds of the amount due from the two bonds, and from that part of the opinion which holds that they are liable for any part of the costs paid out by the appellant in the suit brought by the county. In my opinion each of the bonds must be treated as being for the sum of $5,000, and therefore the sureties on each of the bonds are liable for one-half. The statute of Kansas under which these bonds were executed (section 1704, General Statutes of Kansas 1901) reads as follows:
*326 “Deposit of Money in Other Counties.—That in all counties having a population of less than twenty-five thousand inhabitants, the county treasurer may deposit all public moneys in some responsible bank or banks within the state of Kansas, to be designated by the board of county commissioners, in the name of said treasurer as such officer, which bank or banks shall pay such interest on average daily balances as may be agreed upon by the board of county commissioners: Provided, that in no case the rate of interest shall be less than two per centum per annum on such average daily balances. Before making such deposits, the said board shall take from said bank or banks a good and sufficient bond in a sum double the largest approximate amount that may be on deposit at any one time, or the bond of some surety company empowered to do business in the statel of Kansas, in a sum aggregating the largest sum which may be on deposit at any one time, conditioned that such deposits shall be promptly paid on the check or draft of the treasurer of said county; but in no case shall more than one-half of the amount of said bond be subscribed by the officers of said bank; and such bank or banks shall, on the first Monday of each month, file with the county clerk of such county a statement of the amount of money on hand at the close of business each day during the previous month, and the amount of interest accrued thereon to said date: Provided, that it shall be unlawful for the board of county commissioners of any county to deposit any funds of their county in any bank in which the county treasurer, or any member of the board of county commissioners, shall be the owner of any stock or otherwise pecuniarily interested therein.”
It seems to me that there can be no room for doubt that the liability of the appellees was only for $5,000, although the’ bond being executed by individuals, and not by a surety company empowered to do business in the state of Kansas, it had to be for double the amount of the largest approximate amount that may be on deposit at one time. The deposits by the first order, when appellant executed its bond, were limited to $5,000, and later the deposits were increased by an additional $5,000, making the largest amount which could be deposited with the Toronto Bank $10,000, secured by the two bonds, or $5,000 for each. I can hardly conceive that it was the intention of'the Legislature of the state of Kansas to place a greater burden on its own citizens, who would sign bonds merely for accommodation, than on foreign corporations, engaged in the business of becoming sureties on bonds, for 'compensation. To me the language of the statute is plain that the. sole object of requiring the penalty of the bond to be double the amount of liability which could possibly accrue, when the bond is signed by individuals, was that it would make the bond safer, and thus protect the county from loss, in case of the insolvency of some of the sureties; while, on the other hand, if the bond is .executed by a surety company, which was absolutely safe by reason of. its compliance with the laws of the state of Kansas, there was no likelihood of inability to respond to any loss for which it may becorne liable. Had the second bond been also signed by a surety corporation, the penalty would only have been $5,000, and appellant could in that case have asked for contribution of one-half only. The effect of the majority opinion is as if the Toronto Bank had been required to give a bond for $15,000, and appellant had assumed responsibility for $5,000 and appellees for $10,000. As this was not what either the statute or the orders of the board of commissioners required, my opinion is that appellees are only liable for one-half of the amount paid by appellant on its bopd, less one-half paid by them.
The authorities cited in the majority opinion are clearly distinguishable from the facts in the instant case. In Carter v. Fidelity Deposit Co., 134 Ala. 369, 32 South. 632, 92 Am. St. Rep. 41, the facts were that the surety seeking contribution had resisted the suit, which was to recover $23,063.51, and by reason of the contest the claim was reduced to $13,797.69, a saving of nearly $10,000, of which the cosureties were the beneficiaries, as much as he was.
In Fletcher v. Jackson, 23 Vt. 581, 56 Am. Dec. 98, it was held:
“Whether the costs and attorney’s fees may be recovered depends altogether on the question of whether such defenses were made under circumstances as to be regarded as hopeful and prudent.”
If the suit was needless, neither attorney’s fees nor costs can be recovered. John v. Jones, 16 Ala. 454.
In Gross v. Davis, 87 Tenn. 226, S. W. 92, all the sureties made a common defense, and counsel were employed by the plaintiff for the benéfit of all the sureties, with their knowledge and consent. The defense was for the benefit of all the sureties, and, if successful, would have benefited his cosureties fully as much as him.
Brandt on Suretyship and Guaranty,' § 309, says:
“Whether the surety can recover from his cosureties contribution for costs of a suit from him, for collection of a debt, depends upon the circumstances of each case.”
In Davis v. Emerson, 17 Me. 64, the court found:
“The failure to pay, which occasioned the costs, was imputable to the defendant, as much as to the plaintiff.”
And therefore -it was held that the defendant was liable for half the costs.
In Boutin v. Etsell, 110 Wis. 276, 85 N. W. 964, a surety was permitted to recover attorney’s fees paid by him to make a compromise of the liability assumed by all the sureties. A very favorable compromise was effected and a considerable sum of money saved to all the parties. The court upon these facts held that 'the defendant oughfi to contribute toward the expenses incurred by the plaintiff in good faith, of which they were beneficiaries as much as he was.
“Tiie foundation for tile right of contribution in such cases (employment of counsel and costs of suit) is the fact that the expense was incurred in defending for the common benefit. This will not, therefore, permit him to incur expense in uselessly resisting a legal demand, or in creating needless or unnecessary costs and expenses.”
In Van Winkle v. Johnson, 11 Or. 58, 5 Pac. 922, 50 Am. Rep. 495, the general rule that a surety, who defends in good faith for the benefit of all the sureties, is entitled to contribution from his cosureties is followed.
In Briggs v. Boyd, 37 Vt. 533, there was no question but that the defense, if successful, would have inured to the benefit of all the sureties.
In this case the defense made by tire appellant in the suit of the county against it (United States Fidelity & Guaranty Co. v. Board of Com’rs of Woodson County, 145 Fed. 144, 76 C. C. A. 114) could in no wise have benefited the appellees, if it had succeeded. In fact it would have thrown a greater burden on them, because the appellant would have been relieved of all liability, and the appellees would have been responsible for the entire amount of the bond. The defenses made by the appellant in that case, as shown by the pleadings, which are a part of the record of this case, were:
A demurrer assigning as grounds: (1) That the court had no jurisdiction of its person. (2) That it had no jurisdiction of the subject-matter of the action.
The demurrer having been overruled, it answered, denying all liability upon the following grounds: (1) That the application for the bond by the'bank falsely represented it as a corporation, when in-fact it was a partnership. (2) That the bond by its express terms bonded the bank as a corporation when in fact it was a private bank, and that the board of county commissioners knew of this fraud at the time the, bond was executed. (3) That one of the owners of the bank had sold his interest in the bank to his partner, without the knowledge or consent of the surety company, although that fact was known to the board of county commissioners. (4) That the board of county commissioners, after the execution of the bond by appellant had accepted a new bond in the sum of $10,000; “the bond” referred to being the bond signed by the appellees.
Which of these defenses, if successful, could have benefited the appellees? There can be but one answer to this: None. On the contrary, if the surety company had been successful, it would have been free from all liability, and the entire burden of the failure of the depositary bank would have fallen upon the appellees’.