Citizens State Bank v. Rosenberger ( 1918 )

McCOY, J.

Plaintiff’9 'complaint iis in substance as follows: That one Rosenbergeir amid one Charles entered) into a written cootra'ct whereby said' Rosenberger agreed to sell to said Charles certain lands owned and held by Indian wards of the United States government; that the regulation© of -the Department of the Interior required that one-fourth of the purchase price of said lands be paid ini clash and remitted to the authorized! agent of th‘e Department of the Interior; that by ithe terms of said contract for the ©ale of ©aid land it was agreed that, if title ito said Hands and itlhie approval loif s'uiclr ©alies by Ithe Department of the Interior could not be mlade good within ©ix months from the date of said agreement, said agreement should be void, and' that moneys deposited by ©aid Charles for the purpose -off making the first payment on said Hands should1 be refunded toi him; that under and by virtue otf slaid Contract the Said Charles deposited with plaintiff bank $1,100, as the advance .payment of one-fourth of the purchase price of said lands; that thereafter (the said Rosenberger requested) ith'e plaintiff to transfer the said - deposit of $1,100 so made by Charles to the checking account of Rosenberger; that plaintiff before transferring itihe said deposit to .libe 'checking 'credit oif Rosenberger required) him to furnish indemnity indemnifying plaintiff from any loss or damage on account of the transfer of said funds so deposited to 'tire general checking account of Rosenberger that thereafter, pursuant tioi said requirement of plaintiff, 'the said Rosenberger, as principal, and the defendant Interstate Surety Company, as surety,. executed to plaintiff their indemnity contract whereby they agreed to- save and hold harmless the plaintiff from any loss or damage on, aoaoiunt of the transfer of said deposit to- the general 'Checking aocount of Rosenberger; that the said Rosenberger defaulted in the terms of said real estate 'contract with isaliid! Charles by failing within six months, or :any other time, tci, procure good title to any of said lands, and by reason thereof said Charles became entitled to have said $i,ioo so deposited refunded to him; that after tre expiration of said six months and the failure of salid Rosenberger, the said Charles reciciveied a judgment against plaintiff for the ■amount of s’aidf deposit, together with costs and interest, and (that plaintiff expended the further sum of $ioo for attorney’s fees in dlefense of said action; and that by reason of the said facts plaintiff has lost and been damaged in (the 'amount of said deposit together with s'aid interest, Posts, and attorney's fees. To this complaint .the defendant Interstate Surety Company interposed a demurrer on (the ground that said! complaint failed to state facts sufficient to constitute a cause of action against said surety company. From an order overruling said demurrer said defendant appeals.

[i] It is the domitentiicln Of appellant 'that salid contract of indemnity is void 'as being against public policy for the reason that it induced a breach of trust or confidence on the part of said bank; ¡that the funds referred to: Ft tibe compiaiint were delivered in escrow to the bank to hold for the benefit of innocent person's contracting with Rosenberger, and were to be 'turned over to Rosenberger only upon delivery of proper title to' the iandls. We aire of tíie icipini-ocn .that this contention of appellant is not tenable. There is nothing in this complaint from which it cam be inferred that plaintiff had any wrongful intention or in any manner whatever entered into any fraudulent collusion with Rosenberger in- relation to the entering into of said indemnity contract. While it does appear that Rosenberger had nia right whatever to receive-any part of said deposit credited to- his general checking account, still, the plaintiff protected the rights of Charles, or others who miight have been .entitled to said deposit, by requiring Rosenberg-er to furnish security indemnifying plaintiff from loss by reason (olf the .transfer of Said .deposit to. the account of Rosenberger, and ■while -it is true that Rosenberger and the plaintiff might have conspired to defraud the appellant of the amount of said deposit by means of such indemnity contract, still that is a matter not appearing from the fact of -the complaint in question, buit might be proper matter to be .pleaded by way of 'answer and be tried out on the trial of the Cause.

There is, idlw-ays in every contract .of indemnity or suretyship transaction an 'Opportunity for the principal debtor and the person for whose benefit the indemnity contract is made to enter into a conspiracy to defraud1 the surety; but there is nothing in the itnansalctiom set out in the complaint that discloses any such fraudulent conspiracy, oir that the plaintiff bank acted otherwise Khan in goold faith. All the principal circumstances of the making of said deposit with plaintiff are recited in the indemnity contract signed by the Interstate Surety Company, which gave said defendant full land complete notice of what it was doing' when it. entered into saiid .contract olf indemnity. The defendant surety company, no dloiuibt -received1 its premium, with its eyes wide -open (to (the flalcts, add by ireason thereof is not now in a position to repudiate the yalMdity of the indemnity, ¡in the .absence of any showing tending to shclw fraud or collusion between plaintiff and Rosenberger. When this- $1,100 wlas so deposited, by Charles with plaintiff, ¡the -adtu'al money went into the general- and business funds Of ¡the bank, and Charles and the Department of the interior, as guardian of the Indian wards, had! :a contingent banking credit flor s'aid $i,too, according -as to who -should be eventually enltiitfad 'thereto under the dcinitraict between Quarles and Rosenberger. UipOn tine giving of the security by Rosenberger ■to indemnify the bank from loss by reason of transferring sai'id ■credit; -the said credit was transferred to Ros'enbiergar, and he thereafter drew his checks and caused the s'ame to be paid .'to him.

[2] The faiclt ttoait the 'contract sued upon and the ¡parties thereto had in contemplation ¡that these advance part payments toad been deposited with tine bank should at all times be kept in miinid in considering this case. If ittoe specific money representing these advance payments had in fact been specifically ¡deposited' • in escrow to have been kept intact separate and apart from all other moneys of the bank, 'and the parties to this action had been dealing with' ¡respect to money so held in escrow, then there would ■have been a different proposition confronting tihe panties and this court, as a diffenemit obligation would then have been resting upon the bank; but in ¡this Case tine •money'' wa's deposited1 in the bank ¡the same 'as any other general ¡deposit and became intermingled with all other moneys of the bank, and there was no obligation nesting on the bank to return tibe specific money deposited, bitti the only obligation resting on the bank wlas that of debtor agreeing to pay a like sum of money to whomsoever eventually might be entitled thereto under the eoWtir&et for the s'ale -of 'lauds. This is ¡the construction that the parties to this .action placed upon the deposit of the money with Ittoe bank. The money in. question never, as a matter of "fact, bec’aime 'an escrow, ■although so denominated. Thie contracts set out in ¡the complaint indicate a general, and not a special, deposit. A general deposit of money such as was contemplated by the parties to this suit was not in fact an escrow of money, bult was nothing moire than a general deposit. 5 Cyc. 515; 13 Cyc. 796; Anderson v. Bank, 112 Cal. 598, 32 L. R. A. 479; Mutual Acc. Ass’n v. Jacobs, 141 Ill. 261, 31 N. E. 414, 16 L. R. A. 516, 33 Am. St. Rep. 302. We fail to discover any principle of public policy in relation' to the giving o'f the indemnity' which permitted Rosenberger to procure the amount of the deposit from the bank. It might as well be said, for all this court knows, that Rosenberger and the surety company conspired to fleece the bank.

The order appealedl from is affirmed.