Court Opinion

ID: 6689540
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:28.681636+00
Date Added: 2024-06-11T16:01:04.199870
License: Public Domain

WHITING, P. J.
(dissenting!. By the express provision •of our Civil Code, § i960, an agreement ¡to indemnify a person *262for an act thereafter to be dloiu.e is void if the ac't be known by such pension at toe time of doing it to be unlaw ful. Respondent savs, "It may be readily conceded that, if toe bond did! in fact induce ,a breach of trust * * * it would be against public policy and therefore void.” Did) not the bond ¡induce a breach of trust? It ¡certainly must be presumed that toe bank wouidi not have fumed the money over to R'osenberger if it had not been for this bond — boto. parties thereto knew that- toe purpose of the giving and receiving of this bonld wias to pave tine, way for toe paying over of this monley. But respondent argues toalb toe transferring of itlhie money to R'oseniberger was not a breach of trust. Respondent says, “The turning over of the money to Ro'senberger did not affect the legal rights or any remedies for enforcing them of toe depositors! in the feast particular, and) it was therefore not a breach of trust.” In the majority opinion it is' said': “When this $i.too was so deposited by Charles with plaintiff, toe actual money went into tole general and business funds olf toe bank.” If this were a ¡correct statement, ¡and such money went into such funds rightfúll-y, then • there is basis for toe conclusion that this undertaking did not induce a breach of trust. Of course it wiais possible for toe parties hereto to have agreed that toe money should be deposited in toe .bank to stand as ¡a deposit payable to such person las should eventually be found entitled thereto, under which deposit toe money would have .properly been commingled with toe other funds of the bank, ¡and toe party who ultimately w'as entitled! thereto would have had the same rights, and none other, as other depositors. But that was not this case, and I am unable toi find ¡anything in the ¡complaint from which it could be Inferred that ©uCh was the agreement.
Respondent in its complaint repeatedly alleges that this money was ¡deposited with it in escrow. The deposit was by Charles. While it is an improper use of the term “escrow” to speak ¡of money being so deposited, yet when we consider v,hat an “escrow” its, it is clear toiaifc to speak of money being deposited in “escrow” means that such money was a special deposit, the title to toe money remaining in Charles, and such money to be delivered! to Rosenbarger ¡only upon toe’ happening of some event —in this case the Itendering of a perfect ¡title to the land. The .bank had-no right to turn, this money over to ¡its own general *263fund. Not rawly does the respondent repeatedly allege that '.¡«is money was :an “escrow,” buit the bond executed by appellant, and which. is the basis of this suit itself, recites that the money was 'deposited in the -bank “to be held in escrow/’ and speaks otB suldh fund as “deposited) in escrow.” It seems clear that, if this bank had lived up to its tnutet and should have happened to have become insolvent before the end oif the six months, this particular fund would have been diere in the bank to have been taken possession of by Charles, who could' have claimed the same as against the general dlepositoirs. The legal right of recovery upon this undertaking does not in any manner depend upon whether the depositors actually suffered as a result of what was done, but depends upon the results that might have flowed from what such- undertaking contemplated should be done. Therefore, when tíre undertalcing expressly provided that a fund which was held by itilue bank as a •special deposit — rendering the bank a trustee thereof — 'should be paid' over' in breach of the trust, the situation is 'exactly the same as though an agent who had money o!f Ms principal in his hands, or 'an administrator or executor or guardian who had! money of an estate in1 his hands, should be approached by some party having no right to such money with a request that be turn such money over to' him with ¡an assurance that he will see flhlat -such trustee suffers no financial liosis therefrom, and the trustee, being willing to commit a breach of hi's trust 'if he feels himself financially protected, steus to the runpier, “If you will procure me an under taking protecting me against loss for breaking my trust, I will then commit a breach of trust and give you the money.” Such an undertaking is promred with the full understanding and knolwledge on the part of the sureties to sudh undertaking that it is given for the purpose of and to induce a breach of trust 'and for the purpose of protecting the wrongdoer from Hass that m'ay flow from ouch breach of trust.
Was the turning over of this money by the bank “lawful”? If it was not, then section 1960, C. C., is controlling. Section 1271, C. C., slays tlilait is not lawful which is:
“(1) 'Contrary to.* * * express * * * law;
o “(2) Contrary to the policy of express law, though not ■expressly .prohibiiited; ior,
“(3) Otherwise contrary to good mortis.
*264Section 1618, C. C., provides that:
“A trustee may not use or deal with the trust properly * * * for any other purpose unconnected! -with the trust.”
See Coventry v. Barton, 17 Johns. (N. Y.) 142, 8 Am. Dec. 376.
Even if this case were not ruled by the provisions of elections 1271 and 1960, C. C., yet it certainly is by decisions that -do not nest upon express statutes, but which announce the tow that was intended It0 be made statutory by section 1960, C. C. An interesting dase is that of Ives v. Jones, 25 N. C. 538, 40 Am. Dec. 421. A reading of that cas'e amid the note following Same would seem Ito di-sldose that tine -controlling distinction recognized, where nci -actually orimina'l means or motive was present, is the absence o-f knowledge by tire wrongdoer, plaintiff in this Case, th-at the act which wta-s to be indemnified against was wrongful to a third party. An instructive decision is that of Rice v. Nat. Bk., 98 Mo. App. 696, 73 S. W. 930, where a bond was h-elcl voiid, and where, ■in speaking of certain -cases where the bonds had been held valid, -the court said:
“But in those cases, and running through all others which we halve examined, i-s the proviso, directly expressed, or else plainly implied, that the -party doing the illegal act -must have been an. innocent party. He must not have been a willful participator in the wrong. In Stone v. Hooker, 9 Cow. [N. Y] 154, the court said tltofc: 'The distinction taken -between -promises of indemnity that iar,e ¡alud -those which are not void is this: If -the act directed or agreed to be dome is known at the -time to be a trespass an express promise to indemnify would be 'illegal and void, -but if it was not known at the time to be a -trespass the promise of indemnity -is a good and valid- promise.’ See, also, Torpy v. Johnson, 43 Neb. 882, 62 N. W. 253.”
An -instinctive nolle, though relating to- “Indemnity to- Sheriff,” will- be found in 86 Am. St. Rep. 554, where will be found quoted -the general doctrine as laid down in 2 Freeman on Executions, § 275a, as follows:
“It must 'be remembered, in considlering all- contracts of indemnity, however expressed, tlhlait the law will not tolerate any agreement having for its object the commission of a known wrong. Hence it is essential to the validity of every bond or -other agree*265ment for indemnity that 'there was no. doubt respecting the validity of itihe act in question, ¡for if the parties knew, or were chargeable with knowledge, that it wias criminal or 'Unlawful; or necessarily constituted1 a trespass' or an invasion of the just rights of another, there can be no contract, whether expressed or implied, that the agent shall by his principal be indemnified for doing such adt.”