Harrison v. Phillips

Bliss, Judge,

delivered the opinion of the court.

The right of the plaintiff to a proportionate share of the money recovered by the defendant depends entirely upon the relation held to it by the State. If it had become the property of the State and not before credited to Shands, or if the State had any specific claim to or lien upon it, as security for his debt, then the sureties of Shands, by the payment of his defalcation, became subrogated to the rights of the State; they are each entitled to a share of the fund, and the defendant has collected what belongs to them all. (W. & T. Lead. Cas. 3d Am. ed., 144-6, notes and cases cited; Furnold v. Bank of the State of Missouri, 44 Mo. 336 ; Sarpy’s Adm’x v. Berthold, post, p. 557.) But if the' money deposited was simply the private property of Shands,.if the Savings Association held it for him personally, and could at any time have been exonerated by paying it to.him, and had no right to pay it to any one else, then the State had no specific *525 interest in it, nor did tbe sureties therein derive any, and the interest they or any of them might subsequently acquire possesses the same character and attaches the same obligation as though acquired in any other property.

We will, then, first inquire whether, if one of several sureties, after the settlement and liquidation of the claim, and the payment of his proportionate share, shall, upon his own motion and without the aid or co-operation of his co-sureties, procure by attachment or otherwise- a reimbursement out of the property of the principal, he is bound to share such reimbursement with the co-sureties.

After the default is satisfied by the payment by each surety of his proportionate share, it is well settled that their claims upon the principal become thereby several and not joint ones. (Gould v. Gould, 8 Cow. 168 .) After the debt is thus paid, each surety becomes an independent creditor, and stands in the same relation to the principal and to his co-securities as any other independent creditor would stand in to a common debtor and other creditors, if their equities were equal. It is not pretended that in the latter case, if the creditor should succeed in collecting his debt, the other creditors would have any claim whatever upon the fund; and if not, upon what principle can co-sureties, whose claim has thus become several, demand an interest in what one of them may he able to collect of his debtor?

Upon this subject the Supreme Court of New Hampshire uses the following language: “It is a well-settled general rule that the demands of sureties against the principal, for money paid by them severally, are in their nature several, and that they can not join in a suit against the principal. (Brand v. Boalcott, 3 B. & P. 235; Pearson v. Parker, 3 N.H. 366 .) On what ground, then, can a surety claim any portion of what a co-surety has received in satisfaction of his separate claim? We think there is no ground on which such a claim can be sustained.” (Messer v. Swan, 4 N. H. 488.)

As to the separate rights of general creditors, it was held in Bruce v. Vogel, 38 Mo. 100 , and such is th© settled law, that even when they had judgment liens of even date upon the same *526 property, thus giving them a specific claim upon it, the creditor who first sued out execution and levied upon the property was entitled to the preference.

The question now under consideration has nothing to do with the admitted obligation of each surety to apply to the benefit of' all any security or fund belonging to the principal', which he may hold or have hold previous to the payment of the obligation, but only concerns subsequent individual'recoveries.

The plaintiff, then, has no claim upon defendant merely because of their relation as co-sureties, and we have only to inquire whether the State had any such interest.in the mouey garnished as would give the sureties any equitable rights under the doctrine of subrogation.

The deposit account was kept in the name of “E. W. Shands, collector.” It embraced his official collections only, no private funds being mixed with it. If the money, as fast as collected, belonged to the 'State and county, no difficulty arises in consequence of its deposit and from the fact that the specific currency became mixed with that of the institution. The claim of the State and county follows the fund and fastens upon the account created by it. There might, in some eases, be a difficulty in determining the relative rights of the State and county, but it seems to be implied, in the agreed statement of facts, that this deposit consisted of State funds only. There was but one bond. No defalcation to the county is spoken of, and I assume that none existed. The share, then, of the collections belonging to the county had been paid over, leaving the money in dispute as collected for the State alone.

I can not entertain a doubt as to the main proposition, that collections by a public officer, from the moment they come into his hands, become the property of the public authority for whose use they are collected. The collector is a public agent, and becomes a trustee of the fund. If it is to be considered his private property until paid over, what is to hinder a levy upon it by his private creditors ? How can his sureties feel assured that he will not be forced into a forfeiture of the bond, be he ever so faithful, unless saved by his solvency or the forbearance of his *527 creditors ? They may thus be forced to become guarantors to his general creditors instead of to his fidelity as collector.

It was the duty of Shands, under the act of March 27, 1861 (Sess. Acts 1868, p. 76, § 49), to make monthly deposits of his collections for the State in the Bank of the State of Missouri, to the credit of the treasurer, under penalty; and when he did this his agency ceased as to the amount deposited, and his liability would be so far canceled; yet his failure could in no manner operate to divest the State of its specific interest, and the fund could have been followed by suitable action wherever it could be found. Nor can the requirement of a bond, with the summary remedy upon default, be considered as having that effect. I can not see even its tendency in that direction. The demand of security for the faithful collection of the assessment and paying over its proceeds can in'no legitimate way be construed as a yielding up by the State of its title to what is collected for its own use. It as not a sale of revenue, like a species of oriental farming, transferring it for a consideration, but simply the employment of the necessary agent, who is required to give the necessary security.

The deposit of the property of the State in the Savings Association created a l-ight in the State to follow.it up and compel the association to account for it. It became a debt to the State, and none the less so because its agent, the collector, might have discharged it by drawing out the money. The State having compelled the sureties to pay a liability which this fund, if collected, would have extinguished in part, it should in equity be treated-as transferred to such sureties. Had the collector paid the State and satisfied his bond, this deposit would'have become his. The same thing done by his sureties would transfer it to them.

If it be claimed that this has been adjudged to have been the property of Shands, and judicially transferred to defendant, it may be replied that this can not affect the equities of his co-sureties, not having been parties. Shands is divested of title by judgment if he had any; the State, if it still owned the fund, would not be ; nor are those to whom in equity it has been transferred. Befendant obtained the fund and the title as against all *528 others, but upon every principle he should be held to hold it for their use as the equitable owners.

The books abound in cases that sustain the equitable assignment under consideration, but most of them arise where the principal has turned over to the creditor some specific security, of which the latter could have availed himself. The equity, however, does not arise from the voluntary act of the principal, but from the possession by the creditor of a security or fund which, in equity, ought to be appropriated to discharge the debt. If he does not so appropriate it, but compels the sureties to pay the obligation, the law turns it over to them, and in proportion to their advances. They become at once, not by contract, but upon the principles of natural justice, the equitable owners of the fund, and no superior diligence in one can despoil the others. If he collects the whole fund, he must, as in other cases, hold it as. trustee for all the owners. (McCune v. Belt, 45 Mo. 176 .) It is not as among equal judgment creditors, where the first levy gives the priority; for in that case there is no ownership, only a right; and the levy and sale became necessary to transfer the property. From a careful consideration of the facts and the law, I can see no principle that would entitle the defendant to the whole of this fund. The costs and expenses of collecting it should be allowed him, and the remainder should be divided equally among those who paid the debt.

The plaintiff was entitled below to a judgment for his proportionate share, and the judgment against him is reversed and the cause remanded for such judgment to be entered, unless some-new facts shall be developed.

The other judges concur.