53 F.2d 22 | 5th Cir. | 1931
American Surety Company, as surety for the treasurer of a- Georgia county, was required to pay his defalcation, and brought a bill in equity for subrogation to the right of the county to hold its county commissioners individually liable for the loss. Motions to dismiss the bill were granted, and the surety company appeals.
The bill sets up that it was the duty of the commissioners under the law to audit each claim presented against the county, and, if allowed, to register it and issue an order on the county treasurer payable to. the claimant. This the commissioners neglected to do, but signed a number of orders,, blank as to payee and amount, for the treasurer to fill in for the claimants. The treasurer from time to time filled out some of' the orders to fictitious persons for sums aggregating several thousand dollars, forging the indorsements of the payees, took the money himself, and used the false orders as-vouchers to balance his account. When detected, the surety company, as surety on his bond, paid the execution issued against him and it. It is not charged that the commissioners knew of or- connived at the thefts, or got any of the money, but only that they were grossly neglectful in giving opportunity for dishonesty.-
It is denied by the appellees that, the county had any cause of action against any of them individually, it being asserted that
Substantially identical with the case at bar is American Bonding Co. v. Welts (C. C. A.) 193 F. 978, 980. Subrogation was there denied the surety who was appellant, the court saying: “From the averments of the bills in these cases it is clear that the proximate cause of the county’s loss and of the resultant loss to the appellant was the malfeasance of the auditor, for whose official honesty and faithfulness the appellant had bound itself. To permit it to recoup a loss so sustained by means of subrogation out of those for whose benefit, in part, the surety company assumed the obligation, would be to put that doctrine to a use wholly foreign to its nature.” National Surety Co. v. Savings Bank (C. C. A.) 156 F. 21, 14 L. R. A. (N. S.) 155, 13 Ann. Cas. 421, is to the contrary, the court taking a shadowy distinction between the acts of the county auditor there involved in forging the orders as being official acts, but his acts in using them to the detriment of the county as being nonofficial and personal. There was a strong dissent, and in the same ease
Judgment affirmed.