171 Pa. 177 | Pa. | 1895
Lead Opinion
Opinion by
This is an action upon an official bond. The principal obligor allowed judgment to go by default. The sureties made defense and raised on the trial some questions that, so far as we have been able to discover, have not been passed upon in the form in which they now appear. It seems that F. V. Rockafellow was elected treasurer of the city of Wilkes-Barre for twenty-one years consecutively. His last election took place in April, 1892, and he gave the bond now sued on soon after. During all this time he was a banker, in good financial standing, doing business in Wilkes-Barre. In February, 1893, his bank suddenly closed its doors. Its liabilities proved to be large and its assets practically nothing. He made a general assignment for the benefit of his creditors, but his assigned estate realized less than seven per cent on his liabilities. His indebtedness to the city as treasurer was ascertained to be $51,743.01. It was made up of four items, viz: the sinking fund of the city, and between four thousand and five thousand dollars of interest thereon; the ordinary or current funds of the city and a considerable sum allowed as interest on the balance due upon this account.
The position of the sureties is that their undertaking is to be responsible for their principal as an officer and not as a banker or borrower; the condition of the official bond being that their
The treasurer as such held the security. The individual borrower held the money, not as an officer, but as a debtor to the city. The sureties would in that case be liable for the care of the security held by their principal or city treasurer. They would not be liable for the payment of the money borrowed by him from the sinking fund commissioners, because that was a personal debt for the collection of which the creditors would be compelled to look, as in the ease of any other loan, to the solvency of the borrower, and the securities given at the time the loan was made. When asked to pay the personal debts of their principal the sureties may well reply, it was the official conduct, not the personal solvency of the treasurer for which we engaged to be responsible. If he has been guilty of a breach of official'duty, for that we are liable as sureties upon his official bond, but we have no concern with his personal debts. Now the defendants offered to prove at the trial that Rockafellow borrowed the money in the sinking fund from the sinking fund commissioners at four per cent per annum; that he held it under this arrangement for eight j'ears before the bond sued on was given, and paid the interest regularly at the rate agreed upon. They also offered to prove in connection with this offer that each year the commissioners reported the receipt of the interest from him to the city council, and their reports were approved. The learned judge rejected this offer for the reason that it did not undertake to set forth “ what action was taken either by the council or the sinking fund commissioners before the loaning of the money.” But if the fact was as alleged that without the knowledge of the sureties their principal had been turned from a mere custodian of public moneys into a borrower of them by the action of the municipal officers, and the money subjected to all the risks of loss incident to its being mingled with the funds of the borrower and used in his private business, the sureties had a right to show it; and if they did show it, then on the commonest principles of justice
The interest on the sinking fund stands on quite different ground. If Rockafellow as a banker had borrowed of the sinking fund commissioners the money which Rockafellow as city treasurer had in his custody, and had paid interest on it regularly as alleged, for eight years, the interest having been paid by him as borrower to himself as city treasurer, was as to himself and his sureties in the treasury. For this he was liable to account. His failure to pay it over to his successor was a breach of his official duty and for such breach of official duty his sureties were liable on their bond. They were liable not because it was interest due from him to the city, but because it was interest received by him as city treasurer from a borrower from the sinking fund commissioners. It was income
The remaining question relates to the general funds of the city and the effect of the agreement by Rockafellow to pay interest at the rate of three per cent on balances in favor of the city. It does not appear that there was, as to this money, any agreement entered into. Some member of the city counsel in naming another candidate stated that the person named by him would if elected city treasurer pay interest at the rate of three per centón the balance in favor of the city. Another member said if Mr. Rockafellow was re-elected he would do as well by the city as any one else. The election then took place and resulted in the choice of Mr. Rockafellow by a decided majority. The relation of borrower and lender was not created by these statements. It does not seem to have been contemplated. The balance would be constantly shifting in amount. The treasurer was to be prepared at all times to honor the warrants of the proper officers. And upon the surplus of receipts over disbursements, as balances were struck from time to time, interest was to be allowed. This agreement if made did not amount to a loan of any particular sum of money by the city council to the treasurer, but was in the nature of a premium demanded from him as the price of the office. It was a premium for which he was not liable, which he could not be compelled to pay if he had taken defense to it, and for which the sureties are not liable.
The agreement, if made, was against public policy, and is
Dissenting Opinion
dissents from so much of this opinion as holds that plaintiff cannot recover interest on balances of general account.