Southern Federal Savings & Loan Ass'n v. Firemen's Benevolent Ass'n , 72 Ga. App. 663 ( 1945 )

1. Where a depositor of a bank sues one of the depositor's officers to recover as the depositor's own the money which the officer has withdrawn from the bank in the depositor's name without authority, the depositor can not thereafter sue the bank to recover the deposit on the inconsistent theory that the money stolen by the officer belonged to the bank.

2, 3. In view of the foregoing ruling it is not necessary to pass on grounds 2 and 3 of the exception to the judgment.

4. The point made in ground 4 is not involved in this case under the pleadings.

DECIDED JUNE 21, 1945. REHEARING DENIED JULY 12, 1945. Firemen's Benevolent Association, hereinafter called the Association, filed a suit at law to recover $5000 from Southern Federal Savings Loan Association, hereinafter called Southern Federal. The only facts alleged on which recovery was sought were that on September 10, 1938, the Association deposited $5000 with Southern Federal, and that on November 17, 1943, demanded payment of the deposit which was refused. The only prayers were for process and for judgment for $5000, with interest and costs of suit. The undisputed evidence showed: Albert V. Dodd, secretary-treasurer of the Association, made a series of three loans in the name of the Association from Southern Federal on the security of the $5000 deposit of the Association. In each instance Dodd gave a note containing the forged signature of the president of the Association and his signature as secretary-treasurer. In making these loans Southern Federal did not disburse any cash, but in each instance gave its checks payable to the Association, drawn upon Southern Federal's account in the Citizen Southern National Bank. On each renewal Southern Federal gave two checks, one to pay the balance of the previous loan which Dodd endorsed and returned to Southern Federal, and the other for the difference which was delivered to Dodd and retained by him. In each instance Dodd took the checks he retained, endorsed them in the name of the Association "by A. V. Dodd, secretary-treasurer," and cashed them at the First National Bank of Atlanta, depositing a part of the proceeds to the credit of the Association and retaining the balance. A total of $1850.50 of the proceeds of these checks was deposited to the credit of the Association and received by it. As stated before, the loans were made with the $5000 deposit as security. In October, 1942, the deposit was applied to the outstanding loan of $4000 and accrued interest, and the balance of $839.33 was disbursed by Southern Federal by a check payable to the Association which was delivered to Dodd and cashed by him at the First National Bank, he depositing a part to the credit of the Association and retaining the balance. In making the loans Southern Federal acted in good faith. As stated, the Association's president's signatures on the loan notes were forged by Dodd and were not authorized by the Association, and Dodd misappropriated all of the money so borrowed except the $1850.50 which he deposited to the credit of the Association. On November 2, 1943, the Association filed an action against Dodd and asked for a money judgment and a receiver. The petition in that case alleged that Dodd had appropriated to his own use $16,209.50 which belonged to the Association and that such sum included the proceeds of the deposit with Southern Federal which Dodd had withdrawn in the manner stated. There was no recovery from this action, no property of Dodd's being found, and it was dismissed by the Association. Dodd was under bond to the Association as principal with the U.S. Fidelity Guaranty Company as surety. The bond was a personal fidelity bond which was executed by the surety for compensation upon an application filed by Dodd in which he gave information as to his trustworthiness and agreed to indemnify the surety against loss. The bond was conditioned to indemnify the Association for any loss up to $5000 sustained by reason of Dodd's dishonesty "amounting to larceny or embezzlement." The surety company paid the $5000 claim filed under the bond by the Association and it and the surety company entered into a contract whereby they agreed that any salvage or recovery in this case was to be divided between them, 32 per cent. to the surety company and 68 per cent. to the Association. The bylaws of the Association authorized the treasurer "to collect money due and to receive all money belonging to" the Association. The contract (signature card) between the parties required the signature of the president and the treasurer on any withdrawal of the Association's deposit. Judge A. L. Etheridge, a judge of Fulton superior court, trying the case without a jury, rendered judgment in favor of the Association in the sum of $3149.50, plus interest, to which Southern Federal excepted on four grounds: "1. Plaintiff by instituting suit No. 144,449 in the superior court of Fulton County, Georgia, against Albert V. Dodd elected a remedy inconsistent with that asserted herein. 2. Under the undisputed facts Albert V. Dodd, as secretary and treasurer of plaintiff, was authorized to receive and did receive full payment of the debt of defendant to plaintiff arising as a result of the deposit by plaintiff with defendant of the $5000, the subject-matter of the suit instituted herein. 3. The plaintiff ratified Albert V. Dodd's endorsement of the checks drawn by the defendant payable to it and his receipt of the proceeds on its behalf by asserting that the said Dodd in misappropriating the same had embezzled its funds, and by stipulating in this case that the funds misappropriated by Dodd were the proceeds of said checks and were its funds. 4. Under the undisputed facts the equity of United States Fidelity Guaranty Company is subordinate to that of defendant and judgment entered herein should have been reduced in proportion to the benefit accruing to said United States Fidelity Guaranty Company as a result of said judgment." 1. Under the allegations of Southern Federal's answer and the evidence, which is undisputed, the Association is estopped to bring the present action because it had previously instituted an action against Dodd which is wholly inconsistent with the present one. When the unauthorized loans were made the Association was not bound by them. The loans were not legally made to it. Southern Federal therefore had no authority to charge the loans against the deposit and give an illegal check for the difference, and the Association was at liberty to stand on its contract with Southern Federal and demand the deposit in full. However, the Association did not pursue this course. It instituted a suit against Dodd in which it claimed that Dodd had misappropriated its money. The only basis on which such an action could have been predicated was on the theory that the Association ratified the making of the loans and the charging of the loans against the deposit and the giving of the check for the balance of the deposit, thereby treating the money misappropriated as its own. This action was inconsistent with a repudiation of the loans, the charging of the loans against the deposit, and the giving of the check to Dodd for the balance of the deposit. The Association could have refused to ratify all these acts and could have said to Southern Federal: "We deposited $5000 with you. You have without authority charged illegal loans against it and have given Dodd an illegal check for a part of it. We do not affirm such action and demand that you pay back to us the deposit as you agreed to do." Without ratifying the actions of Southern Federal and Dodd the Association would have had no case against Dodd because Dodd's only liability would have been to Southern Federal, and it would have been idle for the Association to bring an action to try to collect from Dodd on a claim held by Southern Federal alone. In bringing suit against Dodd the Association made an irrevocable election to ratify the unauthorized acts and to contend that when Dodd borrowed the money and accepted the last check he held the Association's money and thereafter misappropriated it, rather than that Dodd misappropriated the money of Southern Federal, which would have been the case in the absence of the Association's election to treat the money as its own. When one purports to act as the agent of another, even by forgery, the principal for whom he purports to act may ratify the act. Groover v. Savannah Bank TrustCo., 60 Ga. App. 357 (3 S.E.2d 745). The courts of this state are virtually unanimous in holding that the election of such an inconsistent remedy is a bar to another inconsistent remedy. It is idle for us to go over the ground again. EquitableLife Assurance Society v. May, 82 Ga. 646 (9 S.E. 597); Crane v.Atlanta Lowry National Bank, 40 Ga. App. 83 (149 S.E. 58);U.S. Fidelity Guaranty Co. v. Richmond Co., 174 Ga. 599 (163 S.E. 482); U.S. Fidelity Guaranty Co. v. Clarke,182 Ga. 755 (187 S.E. 420); Ilardeman v. Ellis, 162 Ga. 664 (135 S.E. 195); Board of Education v. Day, 128 Ga. 156 (57 S.E. 359); Beard v. Beard, 197 Ga. 487 (29 S.E.2d 595).

The Association contends that the remedies pursued by it were consistent, with which contention we are unable to agree. It contends that the decision in Equitable Life Assurance Society v. May, supra, is based on the satisfaction of a consistent remedy. The decision in that case, to our minds, is clearly based on the idea that the two remedies were inconsistent, and not because there was satisfaction of a consistent remedy. In that case the lower court held that the first action was not a bar because satisfaction had not been obtained. The Supreme Court nowhere stated that the bar of the second action was based on satisfaction of the first. The court plainly stated that the obtaining of the decree against the executors, treating the policy as extinguished, ratified the action of the executors. The court held that the obtaining of the decree, not the satisfaction of it, barred the second action. The following quotation from the opinion seems to remove all doubt as to the correctness of our interpretation: "A plaintiff may pursue any number of concurrent remedies against different individuals until he obtains satisfaction from some of them. But this rule does not hold touching inconsistent remedies; and remedies are inconsistent when the right to any of them necessarily yields or concedes the right to another, and such is the case here." Herrington v.Hamilton, 51 Ga. App. 741 (181 S.E. 592), does not involve inconsistent remedies. In both actions the plaintiff contended that the money belonged to him. Nor is Sparks v. Fort,29 Ga. App. 531 (116 S.E. 227), authority to the contrary of what we hold, because the rule against inconsistent remedies does not apply to a mistaken remedy, not involving the merits of a controversy, which is in fact no remedy at all. 20 C. J. 18, § 12; Id. 21, § 17; Board of Education v. Day, supra;Hawthorne v. Pope, 51 Ga. App. 498, 500 (180 S.E. 920);Kennedy v. Manry, 6 Ga. App. 816 (66 S.E. 29); Puett v.Edwards, 17 Ga. App. 645 (88 S.E. 36); Rowland Co. v.Kell, 27 Ga. App. 107, 114 (107 S.E. 602); Curry v.Washington National Insurance Co., 56 Ga. App. 809, 811 (194 S.E. 825);First National Bank of Atlanta v. American Surety Co.,71 Ga. App. 112, 120 (30 S.E.2d 402), is not in conflict with what is held here. There was no election of an inconsistent remedy in that case. In First National Bank of Ocilla v.Harris, 25 Ga. App. 667 (104 S.E. 574), there was no plea of estoppel based on election of an inconsistent remedy. The question was in a manner raised under an allegation of negligence, but the court did not pass on the question of election of remedies. If the case can be construed as the Association insists, it must yield to contrary holdings by the Supreme Court on the principle involved.

2, 3. In view of the ruling on the question of election of remedies it is unnecessary to pass on grounds 2 and 3.

4. This action is a plain legal suit with a prayer for a money judgment. It is not an equitable action with a prayer for the enforcement of legal as distinguished from conventional subrogation based on a statute; nor is it an action by the Association for the use of Dodd's surety based on any kind of subrogation. The agreement between the parties as to the distribution of the Association's recovery does not affect the nature of the action brought. The question raised in ground "d" [enumerated "4" herein] is not before us for consideration.

The judge erred in rendering judgment against Southern Federal.

Judgment reversed. Sutton, P. J., and Parker, J., concur.

ON MOTION FOR REHEARING. The Association now makes the contention that the record does not show that it knew all of the facts connected with Dodd's misappropriations at the time it instituted the action against him. Even if this is true, a different judgment would not be demanded, because the burden of proving that the election of the remedy was made in ignorance of the facts concerning the right to adopt another remedy was on the Association (Land v. Hall,46 Ga. App. 404 (3), 407, 167 S.E. 711), and the evidence does not show ignorance of such facts when the action was brought against Dodd. The contention that the filing of the equitable petition against Dodd was merely a collateral proceeding and not an inconsistent remedy is without merit, for the reason that it was not merely an attempt to have a receiver appointed but was also an action to recover a money judgment against Dodd. We find nothing in BelleIsle v. Moore, 190 Ga. 881 (10 S.E.2d 923), in conflict with what is ruled in this case.

Rehearing denied.