#### UNITED STATES FIDELITY AND GUARANTY COMPANY v. A. F. MESSICK GROCERY COMPANY.

(Filed 20 April, 1908).

Principal and Surety — Default of Principal — Payment by Surety— Justices of the Peace — Jurisdiction.

Upon the payment of a debt by a party secondarily liable therefor, he is substituted in equity to the rights of the creditor, and may sue thereon, as the creditor could have done, without any actual or legal assignment, under the doctrine that equity considers that as done which should have been done. Therefore, when the amount is two hundred dollars or less, a suit by a surety for the recovery of money misappropriated by his principal, which he has paid, is within the jurisdiction of a justice of the peace, certainly where the creditor has made a written assignment of the debt to the surety, mating the latter both the legal and equitable owner of the debt, and the action when brought in the Superior Court should be dismissed.

ActioN tried before Justice, J., and a jury, at March Term, 1908, of Eobsyth.

This action was brought in the Superior Court to recover the sum of $147 alleged to be due by the defendant to the plaintiff by reason of a payment made by the latter to the Southern Cotton Oil Company under a bond of indemnity to secure the faithful performance of the duties of J. W. Mori-sey as agent of the oil company. For the purpose of disposing of this appeal we need only set forth substantially the allegations of the plaintiff as made in his complaint, and the facts which the evidence tended to prove as stated in the brief of its counsel.

The material facts alleged in the complaint are these: The plaintiff is a corporation duly authorized to become surety on fiduciary, judicial and other bonds, and it was during the years 1903 and 1904 and is now engaged in the business of making, such bonds by becoming surety on the same. During the years 1903 and 1904 J. W. Morisey was living in "Winston, N. C., and acting as the agent for the Southern Cotton *511Oil Company in tbe sale of larcl and other products of the said oil company, and Morisey executed a bond for the faithful accounting for all property and the payment of all moneys received by him as the agent of the oil company, and the plaintiff became surety on said bond to the oil company.

The defendant, A. E. Messick Grocery Company, had been dealing for some time prior to 1903 and 1904 and during said years with Morisey as agent of the oil company, and had been buying the lard of the oil company from Morisey as its agent, and the course of dealing between Morisey and the defendant had been that the lard was sold by Morisey for the account of the oil company, and remittances were made direct by A. E. Messick Grocery Company to the oil company at its office in Savannah, Georgia, and Morisey had no authority to receive payment for the sale of the products of the oil company, nor did the defendant have any right to pay him for such sales, as the defendant well knew. During the spring of 1904 the defendant, A. E. Messick Grocery Company, bought from J. W. Morisey, agent of the oil company, thirty-five tubs of lard, containing sixty pounds each, of the value of $141, and paid therefor direct to Morisey the said $141 instead of remitting to the oil company, as had been the custom betiveen the parties and as it knew was required by the oil company. This method of payment was resorted to by Morisey that he might appropriate the said $147 belonging'to the cotton oil company to his own use, which he did, and never accounted for the same to his principal, but converted it to his own use, and during the summer of 1904 was a defaulter in a large amount, and committed suicide.

The defendant well knew that it had no right or authority to pay Morisey the cash instead of remitting to the oil company, and it had notice of Morisey’s fraudulent purposes in thus using the property of his principal for his own purposes, and well knew that Morisey was a inan of no property and was insolvent. At the time of his death Morisey was in-*512clebtecl to tbe oil company for money and property of said company misappropriated by bim in tbe sum of $170.53, in wbicb was included tbe $147, the value of tbe lard sold to tbe defendant, as heretofore set out. On 13 February, 1905, tbe plaintiff, as surety on tbe bond of Morisey to tbe oil company, bad to pay and did pay tbe sum of $770.53 to said company, it being tbe amount for wbicb said Morisey was liable.

Tbe material facts which tbe testimony tended to prove were as follows: Morisey, during tbe years 1903 and 1904, was tbe agent of tbe oil company at Winston, N. C., for tbe sale of commodities consigned to bim by tbe said company, and as such agent entered into a bond for $1,000 for tbe faithful discharge of bis duties, with tbe plaintiff as surety. Morisey bad no right or authority as such agent to collect or receive payment for tbe goods of tbe Southern Cotton Oil Company sold by bim, and this was known to tbe defendant. In tbe month of March, 1904, tbe defendant bought thirty-five tubs of lard consigned by tbe Southern Cotton Oil Company to Morisey and paid bim for said lard $147.

At the time of Morisey’s death “be was short in bis account with tbe oil company 12,760 pounds of lard, equal in value to $770.53,” wbicb amount tbe surety company, on 13 February, 1905, paid to tbe oil company, and in wbicb amount of $770.53 was included tbe $147 paid by A. E. Messiclc Grocery Company to Morisey.

At tbe close of tbe evidence tbe court, on motion of tbe defendant, dismissed tbe action, and tbe plaintiff appealed.

Lindsay Patterson for plaintiff.

L. M. Swinle and Manly & Hendren for defendant.

"Walker, J.,

after stating tbe case: Tbe only question to be considered in this case is whether tbe action was properly brought in tbe Superior Court, or is it one of wbicb a justice of tbe peace has jurisdiction ? Tbe plaintiff contends that it can recover only under tbe equitable doctrine of subrogation, *513as when it paid the amount of Morisey’s defalcation to the oil company it acquired the rights of the latter company as against its agent, Morisey, by subrogation. Even if it did, the cause of action which the oil company had at law against Morisey, and which the plaintiff thus acquired, was not converted into one in equity. The plaintiff has the right to sue Morisey at law in the same manner as the oil company could have done before the payment to it was made, although the right to do so was passed to the plaintiff by virtue of an equitable assignment to it. The rights acquired by subrogation do not depend upon a written assignment of the claim. Upon payment by the party who is secondarily liable for a debt to the creditor he is substituted to all the rights of the latter as against the party primarily liable, and may sue upon the debt as the creditor could have done, without any actual or legal assignment of it. Equity considers that as done which should be done. Insurance Co. v. Railroad, 132 N. C., 75; Cunningham v. Railroad, 139 N. C., 421. This is a familiar principle and has been applied in several cases by this Court. In Markham v. McCown, 124 N. C., at p. 166, the Court said: “It must be admitted that a justice of the peace has no jurisdiction to declare an equity or to enforce an equitable lien, while on the other hand it seems to us that it must be admitted that a-justice of the peace has the jurisdiction to enforce the collection of money which equitably belongs to a party. The distinction between the two is clear to our minds.” So, in Walker v. Miller, 139 N. C., 448, it was held that, while a justice of the peace has no power to administer an equity, the owner of an equitable title may sue in a justice’s court, citing Lutz v. Thompson, 87 N. C., 334. The same distinction between an equitable cause of action and an equitable assignment of a legal cause of action is recognized and enforced in Nimmocks v. Woody, 91 N. C., 1, where it is said that the equitable assignee can maintain an action upon *514tbe implied promise of tbe original debtor to pay back tbe money wbicb tbe plaintiff bad been compelled to pay for bis benefit.

. But in tbis case there was a written assignment to tbe plaintiff of tbe claim of tbe oil company against its agent, Morisey, so that tbe plaintiff bas acquired both tbe legal and equitable title. Why, therefore, should not a justice of tbe peace have jurisdiction of tbe action? Besides, tbe plaintiff is not seeking to be subrogated to tbe rights of tbe oil company in any action against it. Tbe subrogation bas already been effected and bas been followed, as we have said, by an actual assignment of tbe claim.

It was not necessary for tbe plaintiff to charge fraudulent collusion between its agent and tbe defendant, and none was established. It admits that tbe agent bad authority to sell tbe goods, but no authority to collect tbe money, wbicb should have been remitted directly by tbe defendant to tire plaintiff, and that tbe defendant bad knowledge of these facts. Tbe defendant acquired title to tbe goods, as the agent bad authority from tbe plaintiff to sell them, and if tbe defendant wrongfully paid tbe agent it is still liable to tbe plaintiff for tbe price of tbe goods. But if tbe agent bad tbe authority both to sell tbe goods and to collect tbe purchase price, as contended by tbe defendant’s counsel upon tbe evidence, then tbe defendant is not liable. In any view of tbe case we think there was no error in tbe ruling of tbe court.

No Error.