It is found as a fact in this case that on the effective date of the bond sued upon (February 8, 1927) there was county money in the bank to the extent of $8,000 which had been placed in the bank by virtue of a previous designation thereof as depositary, for which previous designation the bank had also furnished a bond with other than the present sureties. It would hardly be questioned but that on February 8, 1927, the prior bond was responsible for this $8,000, which responsibility did not vanish by virtue of the new designation and new bond. I am not aware of any contemplation of law or intention of the parties that this $8,000 should be doubly bonded, and the language of the present bond is certainly not explicit to that effect. Both the attendant circumstances shown by the record and the language of the bond are distinguishable in the present case from the situations presented in Hughes County v. Security State Bank (1929) 55 S.D. 167, 225 N.W. 298, and Davison County v. Western National Bank (1931) 58 S.D. 141, 235 N.W. 370, and I am extremely doubtful whether the rule of those cases should have application here.
However, I do not believe we need to determine in this case whether or not the bond sued upon became liable for the $8,000 already on deposit when it was given. Appellants have predicated their case, both in the court below and in this court, on one single contention; namely, that the judgment rendered against them is excessive by the amount of $2,000. If they are unable to establish that the judgment appealed from is excessive to that extent, then upon this record it must be affirmed.
Appellants bottom their contention upon two legal propositions: First, that their bond is not liable for the deposit of $8,000 already existing when it was given; and, second, that the doctrine of "first in first out" is not applicable to the case of an open bank account embodying deposits, some of which are bonded by one surety and others by a separate surety.
An analysis of the bank account in question taken from the findings of fact, covering the period from the giving of appellants' *Page 653 bond (February 8, 1927) to the closing of the bank (December 24, 1927), discloses the following summarized information:
On deposit February 8, 1927 ................. $ 8,000.00 Withdrawals up to March 8 ................... 4,000.00 ------------ Balance on March 8, 1927 .................... 4,000.00 Deposits March 17 to May 17 ................. 19,991.67 ------------ Balance on May 17, 1927 ..................... 23,991.67 Withdrawals May 17 to September 27 .......... 21,991.67 ------------ Balance September 27, 1927 .................. 2,000.00 Deposits October 24 to November 9 ........... 21,756.77 ------------ Balance November 9, 1927 .................... 23,756.77 Withdrawals thereafter ...................... 13,131.91 ------------ Balance when bank closed .................... $10,624.86
Let us assume that the prior bond was liable for the deposit of $8,000 which was in the bank on February 8, and that appellants' bond never became liable therefor, and let us for convenience designate the $8,000 as old money and the subsequent deposits for which appellant's bond was concededly liable as new money.
It will be observed that after February 8, before any new money was deposited, $4,000 was withdrawn, leaving the balance on March 8, $4,000, which of course was old money. Before any more withdrawals were made there were deposited $19,991.67, which was new money, so that the balance of $23,991.67 on May 17 consisted of $4,000 old money and $19,991.67 new money. Before any further deposits were made there were withdrawals to the amount of $21,991.67, reducing the balance on September 27 to $2,000.
If the rule of "first in first out" were applied, the withdrawals of $21,991.67 between May 17 and September 27 would first exhaust the old money of $4,000 and then apply on the new money of $19,991.67 to the extent of $17,991.67, and the balance of $2,000 which was left on September 27 would be deemed new money. Appellants contend, and I believe rightly, that if the *Page 654 balance of $23,991.67 on May 17 consisted of $4,000 old money for which the prior surety was liable and $19,991.67 new money for which appellants were liable, the subsequent withdrawals of $21,991.67 should not be applied first to take up the $4,000 of old money; citing particularly the decision of Mr. Justice Lurton in the case of first National Bank v. National Surety Co. (C.C.A. 1904) 130 F. 401, 66 L.R.A. 777. Appellants then invoke the decision of Mr. Justice Lurton as justification for applying what amounts in substance to a rule of "last in first out." The facts in the National Surety Case are quite different from the instant facts, and I do not believe that that case is any authority for what appellants undertake to do here. There being no designation of any particular deposit against which the checks were drawn, it seems to me just as inequitable, so far as concerns the two sureties, to apply a rule of "last in first out" as to apply a rule of "first in first out," and if an effort is to be made to deal equitably with the two sureties it seems to me it can only be done by charging the withdrawals ratably against the respective deposits in proportion to their amounts, and therefore the withdrawals of $21,991.67 between May 17 and September 27 should be charged 4,000 parts against the old money and 19,991.67 equal parts against the new money. This would reduce the old money by $3,664 and the new money by $18,327.67, and the $2,000 balance on September 27 would not be deemed either old money or new money in its entirety, but would be deemed to consist of $336 old money and $1,664 new money. Thereafter, between October 24 and November 9, deposits were made to the amount of $21,756.77, leaving a balance on November 9 of $23,756.77, which balance would be deemed to consist of $336 of old money and $1,664 plus $21,756.77, or $23,420.77 of new money.
Thereafter withdrawals occurred in the amount of $13,131.91. Applying these withdrawals ratably in the same fashion, $171.36 would be charged against the old money and the balance, or $12,960.55, against the new money, whereby the balance on hand when the bank closed in the sum of $10,624.86 would be deemed to consist of $164.64 of old money remaining from the money already in the bank on February 8, 1927, and $10,460.22 of the new money deposited in the bank between February 8 and its closing.
Therefore, conceding that the prior bond was liable for the *Page 655 initial $8,000, and that appellants' bond never became liable therefor, and conceding that since the rights of two sureties were involved, withdrawals should be charged against the respective deposits, not on the principle of "first in first out," but in such a manner as to do equity between the sureties, nevertheless the judgment rendered herein is not in any event excessive by more than $164.64, together with a little interest.
In other words, assuming nonliability of appellants for the initial $8,000 and assuming equitable application of withdrawals against deposits rather than the adoption of the rule "first in first out," nevertheless appellants have failed to establish their contention (and it was their sole contention on this record) that the judgment against them was excessive by $2,000. Upon these grounds, I concur in the affirmance of the judgment and order appealed from.
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