228 F. 448 | 6th Cir. | 1915
(after stating -the facts as above).
It results that if there are beneficiaries not barred, but who may be treated as surviving the statute, the survivors may receive a larger dividend than otherwise would happen. Manifestly this could not be so if the money of each beneficiary could be identified, or if otherwise his right was wholly several; but we see no reason why distribution of such a fund as we are now considering should not be made
We think the conclusion of exemption is required by considerations both of fairness and of public policy. The primary security held by the state, in the form of a right of action or some other form, may be ample to protect, through subrogation, a secondary surety, and the latter may assume the liability relying upon his own right to resort to the primary security, if he is himself compelled to pay, but he can do nothing by way of such resort until he is himself damnified; and it is manifestly unjust that this secondary surety should find the statute of limitations no defense in his favor when he is required to pay, but a successful defense against him when he exercises his right of subrogation. So, too, it must be true that if a surety under such circumstances is unable to take anything effectively through subrogation, he would make payment to the state only when compelled, and the public interests would suffer.
The case of United States v. Beebe, 127 U. S. 338, 8 Sup. Ct. 1083, 32 L. Ed. 121, is not persuasive to the contrary. The holding was
We conclude, therefore, that to the extent of the $3,000 of the tax money and- interest thereon which it had paid over for the benefit of the state, the guaranty company was not barred by the statute of limitations'and (unless for the matters hereafter mentioned) was entitled to recover from the bank on account of the bank’s appropriation of this official fund to the’ bank’s debt.
It is said that only that creditor a portion of whose debt remains unpaid after the surety has paid all he is bound for can raise the objection that the surety may not be subrogated to the creditor’s securities and remedies until the creditor has been paid in full, and case's are cited supposed to be to this effect. These are probably all distinguishable from the general principle above stated, because the creditor had agreed to the substitution (Motley v. Harris, 1 Tea [Tenn.] 577), or because there was a security common to several distinct debts, and the surety, having paid one of these debts, claimed corresponding rights in the security (Nettleton v. Ramsey, 54 Minn. 395, 56 N. W. 128, 40 Am. St. Rep. 342), or because of some other analogous reason. That the city and county have not objected. to> the subrogation claim of the guaranty company is perhaps explained by the fact that tire record shows no notice to them of any such claim. At any rate, the cause of action existing in favor of the city or of the county was a single, indivisible cause of action, even if it existed separately from the rights of individual beneficiaries, and it could not be split up into two actions, with or without the consent of the city or county.
By the foregoing conclusions, it becomes immaterial whether the rights of the city and county were barred by the statute of limitations, or whether any liability originally accrued on account of the $2,000 payment, or whether the amount wrongfully diverted by the bank was somewhat more than $5,000. The guaranty company can recover only the amount of the state tax claim and interest, and to. cover such a claim the amount which the bank concedes that it applied to its own debt is large enough.
The decree below is reversed, with costs, and the case is remanded for further proceedings consistent herewith.