DocketNumber: No. 29,816.
Citation Numbers: 254 N.W. 459, 191 Minn. 404
Judges: <italic>I.M. OLSEN, Justice</italic>.
Filed Date: 4/20/1934
Status: Precedential
Modified Date: 1/12/2023
The assignments of error challenge a number of the court's findings of fact and its conclusions of law. There is the further general assignment that the court erred in refusing to grant the motion for a new trial. The facts are not in dispute.
The brief facts are: The Peterson State Bank was designated as a depository of county funds of Fillmore county to the amount of $5,000 for the term of two years from January 7, 1930. The bank, as principal, and the appellants as sureties, gave their bond to the treasurer of Fillmore county, the plaintiff herein, in the sum of $10,000 to secure payment of the funds so to be deposited, and such bond was approved by the county board on March 19, 1930. Moneys were thereafter deposited in and withdrawn from the bank by the county treasurer from time to time. On many occasions the deposits were in excess of $5,000. On October 31, 1931, there *Page 406 was $3,607.80 on deposit. On November 4 the amount was $7,490.99, and on November 10, $8,882.94. No further deposits were made. On November 13, 1931, the county treasurer drew his check for $5,000 on the account, payable to the First National Bank of Preston, Minnesota, and delivered same to that bank. The check passed through a number of banks and reached the defendant bank for payment on November 18 or 19. The bank held the check without payment being made, and on November 21, 1931, the bank closed and was taken over by the commissioner of banks for liquidation. The county treasurer then filed claim, on behalf of the county, for $8,882.94 county funds held by the bank. He claimed that, because of the failure of the defendant bank to pay the $5,000 check on presentation and its holding that check from the time it was received until the bank closed, it had accepted the check and created a trust and preference right in the funds of the bank. He claimed and was allowed such preference in the liquidation proceeding, and the $5,000 was paid to him, for the county, in full out of the assets of the bank, by the commissioner of banks in June, 1932. This left, as the indebtedness of the bank to the county or its treasurer, the sum of $3,882.94. Between that time and the time of the trial of this action, dividends to the amount of $1,164.89 had been paid by the commissioner of banks upon this remaining indebtedness. This left the sum of $2,718.05 as the amount for which the court found appellants were liable; any further dividends on the claim from the liquidation of the bank to go to the appellants.
Appellants' claim and argument, in substance, is as follows: That their liability on the bond was limited to $5,000, which is conceded; that this liability became fixed when the bank failed or refused to pay the check issued by the treasurer on November 13, 1931, on its presentation; that there was on deposit in the bank at that time an overdeposit of $3,882.94, for which these sureties were not liable; that when the commissioner of banks thereafter allowed and paid the $5,000 as a preferred claim on account of the check mentioned these sureties were under no further liability; that such payment paid in full their liability under the bond; that the payment should inure to the benefit of appellants only. *Page 407
1. The important question is what effect, if any, the payment of $5,000 by the commissioner of banks had upon appellants' liability on their bond. They claim that this payment paid their liability in full. They urge the general rule that a payment made on an account, where same is not designated by either party to apply to any specific item or items, is to be applied on the first debit item or items of the account. A number of cases are cited applying this general rule to various fact situations, as, for instance, Radichel v. Federal Surety Co.
The rule as to the application of payments, if here applied, would not seem to aid the appellants. If it be so applied, the $5,000 payment reduced the indebtedness of the bank to $3,882.94, a sum well within the obligation of the bond, and left appellants liable for that amount, subject to such reductions of the indebtedness as might result from the payment to the county or its treasurer of dividends thereon in the liquidation proceeding. Board of Co. Commrs. of Redwood County v. Citizens Bank,
To establish that the payment of the $5,000 preferred claim paid in full their obligation under the bond, appellants would have to show that such payment was specifically applied on their bond liability by some action or conduct of the bank or commissioner, or of the county treasurer or county, or else show that appellants, by some right of subrogation, were entitled to credit for such payment upon their bond. There was here no application or designation by anyone of this payment upon the bond liability of appellants. It was not a payment of any dividend. In effect, it paid the check which the bank had accepted before closing. It left the parties in the same position as if the check had been paid by the bank when accepted, and left a balance of $3,882.94 in the bank, covered by *Page 408
appellants' bond. County of Marshall v. Bakke,
2. Appellants take the position that because, when this payment was made, there was this deposit of $3,882.94 in the bank in excess of the liability limit of the bond and in excess of the amount for which the bank was designated as a depository by the county, such overdeposit was unlawful and could not, by reduction of the deposit below the $5,000 limit, become a liability on the appellants' bond. We are unable so to hold. The bond was conditioned for the payment of any money deposited in the bank by the county treasurer which the bank should fail to pay, up to the limit of the bond. A deposit of public funds in a bank for safe-keeping by the treasurer of a county or municipality, where such bank has not been designated as a depository for such funds, or where the deposit exceeds the amount for which the bank has been designated as a depository, is not unlawful. City of Cloquet v. N.W. State Bank,
3. The question of subrogation is only incidentally involved here. Appellants have paid nothing. The general rule as to subrogation is that a surety is not entitled to subrogation until and unless he has paid the debt upon which he is a surety. 6 Dunnell, Minn. Dig. (2 ed. Supp.) § 9038; 60 C. J. § 28, pp. 719, 720; Wentworth v. Tubbs,
4. Even if appellants had made some payment, their right to any subrogation as to the $5,000 payment made by the commissioner of banks as payment of a preferred claim does not follow. In U.S. v. National Surety Co.
5. A number of decisions, not herein cited, are contained in the brief for each of the parties. We do not find it necessary or useful to analyze or distinguish them. None of them are directly in point on the facts here presented. The case of City of Ortonville v. Hahn,
That decision is well summed up in this sentence [
The distinctions on the facts here from the facts in that case are that these appellants have made no payment so as to be entitled to any subrogation, and the $5,000 payment made on the preferred claim operated the same as a payment made by the bank at the time the check was accepted before the bank closed; that it was a *Page 411 payment of a preferred claim, to no part of which appellants were entitled to a subrogation, and the remaining indebtedness of $3,882.94 became and was a lawful deposit within the limit of the bond.
The order appealed from is affirmed.
County of Traverse v. Veigel , 176 Minn. 594 ( 1929 )
City of Ortonville v. Hahn , 181 Minn. 271 ( 1930 )
Farmers Mer. State Bank v. Con. School Dist. No. 3 , 174 Minn. 286 ( 1928 )
City of Cloquet v. Northwestern State Bank , 172 Minn. 324 ( 1927 )
Radichel v. Federal Surety Co. , 170 Minn. 92 ( 1927 )
United States v. National Surety Co. , 41 S. Ct. 29 ( 1920 )