Court Opinion

ID: 3506501
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:16:45.136878+00
Date Added: 2024-06-11T13:10:13.321181
License: Public Domain

I concur in the result. The Federal Surety Company, on paying the $20,000 bond to the county, was entitled to subrogation to the claim of the county against the bank. It properly received an assignment of the claim of the county against the bank, and was entitled to dividends thereon to the extent necessary to repay what it had paid out. It appears however that there was another bond, given by personal sureties, covering the same county money in the bank, and the surety company demanded and received contribution from these personal sureties; also that at the time the bond was given certain notes were transferred by the bank through its president to the surety company as collateral security for its giving the bond. On those notes the surety company has collected $5,900. My view is that the county, the bank, the personal sureties on the other bond, and the surety company were all parties in interest in all these matters, and that the surety company should not be and is not entitled to collect or receive from any or all these sources any greater amount than what it has actually expended. It should not be permitted to make a profit out of these transactions.
I concur in the result on the ground that it is not shown that the surety company, by receipt of the dividend in question, will receive more than sufficient to repay what it has paid out including legitimate *Page 161 
expenses. The judgment in the federal court in the action for conversion, as I understand it, goes no further than to establish that the notes there in question were transferred by the bank through its president to the surety company as security or collateral to its bond, and that the surety company had the right to collect the notes and apply their proceeds repayment of what it had expended. The surety company held legal title to the notes, but only as security. The surety company had but the one single claim for repayment of what it had paid out on its bond and necessary expenses. It was not entitled to any more, and whatever it collected from the notes or from the cosureties on the other bond should go to reduce its claim as against the bank. But it was entitled to receive the dividends on the full amount of the bank's claim until it was repaid in full.