PARDEE, Circuit Judge
(after stating the facts as above). On general principles, a defaulting tax collector ought not to be entitled to commissions on the amounts he has collected from taxpayers and failed to pay over to the proper authorities. He has not performed the full work for which the commissions were intended to pay, and he is an unfaithful trustee. The sureties on a defaulting tax collector’s bond; who refuse to pay up the defalcation, and compel litigation, ought not to be entitled to credit for the amount of .commissions on any sum the tax collector has collected. The public ought not to be compelled to pay the commissions for collecting the taxes, and at the same time be at the expense of litigating with the sureties on the defaulting tax collector’s bond to recover the same money. This is in accord with adjudged cases, so far as they have been brought to our attention. See Vermilion. Parish v. Brookshier, 81 La. Ann. 730; [855]*855Slate v. Alsup, 91 Mo. 172, 4 S. W. 31. We understand that under the Alabama statutes the commissions allowed the tax collector were intended as compensation for the entire work of his office, which included not only the receipt of the taxes from the taxpayers, hut also the accounting to the proper auditor, and the payment into the treasury. Section 4097, Code Ala. 1896, provides that the collector may retain his commissions when he makes payment into the state treasury. Of course, under this statute, if no payments were made into the treasury, no commissions could he retained. Section 4037 of the same Code provides that the tax collector must also, on or before the 10th day of January and the 10th day of April in each year, account to the auditor, under oath, for the amount of taxes, etc., and upon such accounting shall be allowed by the auditor the amount then due him for commissions, fees, expenses, etc., in ihe discharge of his duties, as provided by law; and we construe this statute practically to mean that the tax collector shall be entitled to commissions only when he has performed not. only the duty of collecting ihe dues from the taxpayers, hut has accounted for and paid over the same.
As to* the claimed credit of. $1,917.48, the undisputed facts appear to be that on April 4, 1898, the tax collector, Davis, returned that amount as collections for the month of March, 1898; that he did not pay said sum into the treasury within five days after making said return, nor at any time prior to April 18, 1898, the date of approval of the bond in suit; nor was the same paid until November 29, 1898, when the tax collector paid over to the county treasurer the sum of §1,917.48, which was applied by the treasurer, with the consent of the tax collector, to the payment of the aforesaid March collection. As to where the tax collector obtained ihe money to make this payment, there is no satisfactory evidence. Under these facts the case is presented in two aspects: First. That, by the failure to pay over within five days the tax collector not only was delinquent in his duty, hut was a defaulter, with no continuing duty as tax collector to pay over the said sum of §1,917.48. The other is that, after collecting the said sum of $1,917.48, and returning the same on April 4 th, although he failed to pay over the amount within five days, it was a continuing obligation and duty resting on him as tax collector to pay the same over; an obligation and duty for the performance of which the sureties on the bond approved April 18th hound themselves. As the case is presented on this record, we are of opinion that under neither aspect are the sureties on the tax collector’s bond eniitled to the credit claimed. If the tax collector took the moneys collected after the 18th of April, 1898. and paid the sums which he had collected prior to that time, but bad failed to pay over, that itself was such a misapplication of the moneys collected by him as rendered the sureties liable. Slate v. Sooy, 39 N. J. Law, 539; People v. Hammond (Cal.) 42 Pac. 86; State v. Hayes, 7 La. Ann: 121; State v. Powell, 40 La. Ann. 284, 4 South. 46; Inhabitants of Colerain v. Bell, 9 Metc. (Mass.) 499; Hecox v. Insurance Co. (C. C.) 2 Fed. 535; Board v. Willard (Minn.) 39 N. W. 71, 1 L. R, A. 118. All these eases fully sustain the above proposition, but the case of State v. Sooy, supra, is so instructive and well considered that we quote from it at length:
[856]*856"The contention of the defendants is that they cannot be prejudiced by the appropriation of these moneys by Sooy to- the payment of taxes received by him before their bond was given, and that, the moneys having in fact gone into the public treasury, they must be applied to the account on which they were received. At the time of the application of moneys received after the 8th of April, 1875, Sooy was indebted to the state in the amounts so applied for taxes and dividends received in December, 1874, and after that date. He became a debtor to the state for taxes and dividends received after the defendants’ contract of suretyship. The appropriation of payments under such circumstances is regulated by a rule of law, which, as a general rule, must be regarded as completely settled. In the first instance, the right to direct to what particular debt the payment shall be applied is with the debtor. If he gives no directions, the creditor may make the appropriation himself; and, in the absence of all indications of the will or intention of the parties, the law will apply the payment according to its own notice of the intrinsic justice of the case. White v. Trumbull, 15 N. J. Daw, 314; Oliver v. Phelps, 20 N. J. Daw, 180; Terhune v. Colton, 12 N. J. Eq. 312; MeGruder v. Bank, 1 Am. Dead. Cas. 339. As a general rule, this right of appropriation by the parties is unlimited and unqualified. It is not taken away or impaired by the effect of the appropriation on the rights of third persons. Edwards v. Derrickson, 28 N. J. Law, 39-67. It is only when the court is called upon to make the appropriation, in the absence of an appropriation by the parties, that the equities of third persons will be allowed any influence. Highly favored as sureties are in the law, their equities are subordinated to the legal rights of the debtor to direct how his payments shall be applied. As was said by Best, C. J., in Williams v. Bawlinson, 10 Moore, 371: ‘If the principal consented to such an appropriation, there is an end of the question, for he had clearly an option as to which account the payment should be applied to, and he alone had an unfettered right in this respect, and over which the defendant, as surety, could have no control, unless there were an express or distinct agreement entered into at the time of the execution of the bond.’ It is insisted that sureties on an official bond are excepted *>ut of the operation of this rule of law; that in such cases neither the principal nor the government enjoys this right of application of payments, and that the duty of making such application devolves upon the court; and that in the performance of that duty receipts will be credited on the accounts on which they were received by the officer. If such an exception exists, the reasons on which it is founded are not apparent, especially if it be so far-reaching in its operation as to impose a loss on the government, arising from the misappropriation of public moneys by the officer for whose fidelity the sureties have undertaken. It further imposes a duty on the government of inquiring, at its peril, from what source moneys remitted by its officers were derived, — a duty which does not devolve upon a private individual holding the obligation of a surety.”
And, after an exhaustive review of the authorities, the court held:
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PARDEE, Circuit Judge
(after stating the facts as above). On general principles, a defaulting tax collector ought not to be entitled to commissions on the amounts he has collected from taxpayers and failed to pay over to the proper authorities. He has not performed the full work for which the commissions were intended to pay, and he is an unfaithful trustee. The sureties on a defaulting tax collector’s bond; who refuse to pay up the defalcation, and compel litigation, ought not to be entitled to credit for the amount of .commissions on any sum the tax collector has collected. The public ought not to be compelled to pay the commissions for collecting the taxes, and at the same time be at the expense of litigating with the sureties on the defaulting tax collector’s bond to recover the same money. This is in accord with adjudged cases, so far as they have been brought to our attention. See Vermilion. Parish v. Brookshier, 81 La. Ann. 730; [855]*855Slate v. Alsup, 91 Mo. 172, 4 S. W. 31. We understand that under the Alabama statutes the commissions allowed the tax collector were intended as compensation for the entire work of his office, which included not only the receipt of the taxes from the taxpayers, hut also the accounting to the proper auditor, and the payment into the treasury. Section 4097, Code Ala. 1896, provides that the collector may retain his commissions when he makes payment into the state treasury. Of course, under this statute, if no payments were made into the treasury, no commissions could he retained. Section 4037 of the same Code provides that the tax collector must also, on or before the 10th day of January and the 10th day of April in each year, account to the auditor, under oath, for the amount of taxes, etc., and upon such accounting shall be allowed by the auditor the amount then due him for commissions, fees, expenses, etc., in ihe discharge of his duties, as provided by law; and we construe this statute practically to mean that the tax collector shall be entitled to commissions only when he has performed not. only the duty of collecting ihe dues from the taxpayers, hut has accounted for and paid over the same.
As to* the claimed credit of. $1,917.48, the undisputed facts appear to be that on April 4, 1898, the tax collector, Davis, returned that amount as collections for the month of March, 1898; that he did not pay said sum into the treasury within five days after making said return, nor at any time prior to April 18, 1898, the date of approval of the bond in suit; nor was the same paid until November 29, 1898, when the tax collector paid over to the county treasurer the sum of §1,917.48, which was applied by the treasurer, with the consent of the tax collector, to the payment of the aforesaid March collection. As to where the tax collector obtained ihe money to make this payment, there is no satisfactory evidence. Under these facts the case is presented in two aspects: First. That, by the failure to pay over within five days the tax collector not only was delinquent in his duty, hut was a defaulter, with no continuing duty as tax collector to pay over the said sum of §1,917.48. The other is that, after collecting the said sum of $1,917.48, and returning the same on April 4 th, although he failed to pay over the amount within five days, it was a continuing obligation and duty resting on him as tax collector to pay the same over; an obligation and duty for the performance of which the sureties on the bond approved April 18th hound themselves. As the case is presented on this record, we are of opinion that under neither aspect are the sureties on the tax collector’s bond eniitled to the credit claimed. If the tax collector took the moneys collected after the 18th of April, 1898. and paid the sums which he had collected prior to that time, but bad failed to pay over, that itself was such a misapplication of the moneys collected by him as rendered the sureties liable. Slate v. Sooy, 39 N. J. Law, 539; People v. Hammond (Cal.) 42 Pac. 86; State v. Hayes, 7 La. Ann: 121; State v. Powell, 40 La. Ann. 284, 4 South. 46; Inhabitants of Colerain v. Bell, 9 Metc. (Mass.) 499; Hecox v. Insurance Co. (C. C.) 2 Fed. 535; Board v. Willard (Minn.) 39 N. W. 71, 1 L. R, A. 118. All these eases fully sustain the above proposition, but the case of State v. Sooy, supra, is so instructive and well considered that we quote from it at length:
[856]*856"The contention of the defendants is that they cannot be prejudiced by the appropriation of these moneys by Sooy to- the payment of taxes received by him before their bond was given, and that, the moneys having in fact gone into the public treasury, they must be applied to the account on which they were received. At the time of the application of moneys received after the 8th of April, 1875, Sooy was indebted to the state in the amounts so applied for taxes and dividends received in December, 1874, and after that date. He became a debtor to the state for taxes and dividends received after the defendants’ contract of suretyship. The appropriation of payments under such circumstances is regulated by a rule of law, which, as a general rule, must be regarded as completely settled. In the first instance, the right to direct to what particular debt the payment shall be applied is with the debtor. If he gives no directions, the creditor may make the appropriation himself; and, in the absence of all indications of the will or intention of the parties, the law will apply the payment according to its own notice of the intrinsic justice of the case. White v. Trumbull, 15 N. J. Daw, 314; Oliver v. Phelps, 20 N. J. Daw, 180; Terhune v. Colton, 12 N. J. Eq. 312; MeGruder v. Bank, 1 Am. Dead. Cas. 339. As a general rule, this right of appropriation by the parties is unlimited and unqualified. It is not taken away or impaired by the effect of the appropriation on the rights of third persons. Edwards v. Derrickson, 28 N. J. Law, 39-67. It is only when the court is called upon to make the appropriation, in the absence of an appropriation by the parties, that the equities of third persons will be allowed any influence. Highly favored as sureties are in the law, their equities are subordinated to the legal rights of the debtor to direct how his payments shall be applied. As was said by Best, C. J., in Williams v. Bawlinson, 10 Moore, 371: ‘If the principal consented to such an appropriation, there is an end of the question, for he had clearly an option as to which account the payment should be applied to, and he alone had an unfettered right in this respect, and over which the defendant, as surety, could have no control, unless there were an express or distinct agreement entered into at the time of the execution of the bond.’ It is insisted that sureties on an official bond are excepted *>ut of the operation of this rule of law; that in such cases neither the principal nor the government enjoys this right of application of payments, and that the duty of making such application devolves upon the court; and that in the performance of that duty receipts will be credited on the accounts on which they were received by the officer. If such an exception exists, the reasons on which it is founded are not apparent, especially if it be so far-reaching in its operation as to impose a loss on the government, arising from the misappropriation of public moneys by the officer for whose fidelity the sureties have undertaken. It further imposes a duty on the government of inquiring, at its peril, from what source moneys remitted by its officers were derived, — a duty which does not devolve upon a private individual holding the obligation of a surety.”
And, after an exhaustive review of the authorities, the court held:
"We think that the defendants, as sureties, are liable for all the moneys received after their bond was given, and that they cannot relieve themselves from this liability by showing that their principal used such moneys, or a portion thereof, to satisfy past delinquencies to the state. To permit the acts of the treasurer in that respect to have the effect of an exoneration of his sureties from responsibility would, under the circumstances of this case, be to allow them to make a shield and defense of the fraudulent conduct of an officer whose honest and faithful discharge of the duties of his office they had guarantied.”
Considering the other suggested aspect of the case, it seems that if, on April 18, 1898, it was an active duty of the tax collector, as such, to pay into the county treasury the amount returned by him as previously collected for the month of March, then it was one of the duties or obligations of the tax collector for which the surety bound itself; and whether the sum paid in on the 29th of November, 1898, was applied to the payment of the March collection or of collections [857]*857subsequent to April 18th., is wholly immaterial. Conover v. Inhabitants of Middletown Tp., 42 N. J. Law, 382; Bales v. State, 15 Ind. 321; Corprew v. Boyle, 24 Grat. 284; City of Hartford v. Franey, 47 Conn. 76; Fox Tp. v. McCord (Iowa) 6 N. W. 536; Bockenstedt v. Perkins, 73 Iowa, 23, 34 N. W. 488; Bernhard v. City of Wyandotte, 33 Kan. 465, 6 Pac. 617. The statutes of Alabama given above indicate that it was the duty of the tax collector to have paid over the amount of the March collection within five days after the return of the same; but they also indicate very clearly that, if he failed to pay it over at that time, it was his duty thereafter to pay it over, particularly on his final return in the month of July. In other words, while he became in a certain sense delinquent for the failure to pay the money over within five days, he did not become an absolute defaulter for the same by the failure so to do, and there was a continuing incumbent duty on him as tax collector to pay it over. This view of the statutes of Alabama is in accord with the opinion of the supreme court of the state as clearly laid down in Fidelity & Deposit Co. v. Mobile County, 124 Ala. 144, 150, 27 South. 386:
“As against the county or state there is no presumption that a tax collector has misappropriated, converted to his own use, or embezzled taxes collected by him from the mere fact that he has failed to pay over such taxes at the time he was required by law to pay them over. To the contrary, if he carries such sums past one day of settlement (if he fails to pay them over on January 1st, for instance), the presumption is that he still has the money, and will pay it over on the next day of settlement (the 1st day of July, for instance); and if he has such money in hand at any such subsequent time when an additional bond is required of him, given, and approved, his failure thereafter to account for and pay over the same as required by law is a default occurring subsequent to the execution of such bon’d, for which the sureties thereon are liable.”
It is argued that this is obiter, and it may be, but it is notwithstanding sound reason, and, we think, sound law.
The instructions given by the trial court to the jury, duly excepted to at the time, warranted the jury in allowing the surety a credit for ihe tax collector’s commissions and for the said item of $1,917.48, and to that extent were erroneous, and constitute reversible error. The judgment of the circuit court is reversed, and the cause is remanded, with instructions to award a new trial, and thereafter proceed accord ing to law and the views herein expressed.