Court Opinion

ID: 7969931
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:11.89231+00
Date Added: 2024-06-11T16:34:43.267172
License: Public Domain

CANTY, J.
I concur in the result, and in the reasons given for that result, except in so far as the opinion fails to confine those reasons to cases between principal and agent, where the money delivered by the agent to the principal always was the money of the latter. As a general rule, money has no ear-marks, and, where merely the relation of debtor and creditor exists, there are few equities which entitle the surety for the debtor to change the application of money paid by the debtor to the creditor, where the latter was ignorant of the equities of the surety when the money was received and applied. But, where the agent is delivering to his principal the principal's own money, the agent cannot make his sureties liable by merely placing a wrong label on the money, unless strong equities have thereby arisen in favor of the principal. Neither the alleged payment nor attempted application of the money gave the principal title to it, but the money was his before either payment or application; and, as against such a surety, neither party has a right to change the character of or title to such money by any such application, but the source from which the money comes must alone determine its application, unless the principal has been so deceived and prejudiced as to raise such an equity in his favor, as, for instance, where, on the faith of the application of the money, he has innocently and in good faith parted with a new consideration, or surrendered up a security, and cannot be placed in statu quo. This is the rule that is usually applied in cases against sureties on the bonds of public officers. See 2 Am. & Eng. Enc. Law (2d Ed.) 465.
*429But the law is less favorable to such sureties than it is to sureties on private bonds and contracts. The true distinction is not between cases of public and private bonds and contracts, but between the relation of principal and agent, and the relation of creditor and debtor. In the absence of any countervailing equity in favor of plaintiff, the defendant sureties have a right to insist that the moneys paid to-plaintiff and received for premiums on policies issued by plaintiff during the term covered by the bond shall be applied accordingly. True, it appears that trust funds received by Herber from various sources, together with his commissions, were deposited in one account in the bank, and thereby commingled. Plaintiff would have a right to trace the moneys belonging to it into this commoun fund, and recover them back out of it; and these sureties also have a right to trace into this fund, and out of it, the moneys received by Herber for which these sureties are liable. But the burden of proof was on them to establish this equity in' their favor, and they failed to maintain that burden. It does not appear what part of this common fund was made up of these latter moneys, what part was money received on the prior business done for plaintiff by Herber and Wilson, what part was commission, and what part was other trust funds, or how the common fund was divided up and disposed of. When all these facts appear, it may be that most of the money received by plaintiff out of this common fund should be regarded as coming from other sources than the business done by Herber during the time covered by this bond, and it is'no concern of these sureties how Herber or plaintiff applied the money coming from such other sources.