PRINCIPAL AND SURETY - RIGHT OF SURETY TO SUBROGATION TO CLAIM OF CREDITOR AGAINST INSOLVENT NATIONAL BANK

At the closing of defendant bank the commonwealth of Pennsylvania had on deposit $135,000, which was secured by the bond of defendant with plaintiff as surety, and a pledge of bonds of $12,000 par value. The commonwealth received the first dividend, amounting to forty per cent, and plaintiff paid the balance, subtracting $12,441.44 obtained on the intermediate sale of the bonds. Plaintiff contends that it is entitled to subrogation on the basis of the full amount of the original claim of the commonwealth against defendant; and that dividends subsequent to the first should be paid on that claim, although not in excess of the amount actually paid by plaintiff. Held, that conceding the right of plaintiff to subrogation, plaintiff should be compensated with the unsecured depositors only to the extent of an equal proportion of its actual loss.

In accordance therewith plaintiff is entitled to subrogation to the claim by the commonwealth only to the amount which plaintiff actually paid out ($68,588.66), and should receive the second, third and fourth dividends on that sum. American Surety Co. of New York v. Bethlehem National Bank of Bethlehem, Pa., (C. C. A. 3d, 1940) 116 F. (2d) 75.