Gallatin County v. United States Fidelity & Guaranty Co.

Dec 3, 1914
No. 3,415
Versions:144 P. 1085
1914 Mont. LEXIS 122
50 Mont. 55

Lead Opinion

MR. CHIEF JUSTICE BRANTLY

delivered the opinion of the court.

Jacob B. Weaver was county treasurer of Gallatin county for the term of two years beginning on the first Monday in March, 1907, and ending on the same day in March, 1909. The defendant was surety on his official bond. Subsequent investigations of the accounts of the office disclosed that there was a shortage in the cash paid over by Weaver to his successor of $2,000. This discovery was made a short time previous to the bringing of this action on February 21, 1913'. The purpose of the action is to recover the amount of the shortage, with interest. The defendant in its answer pleaded as defenses two provisions of the *60statute of limitations, viz., subdivision 3 of section 6447, and subdivision 1 of section 6449 of tbe Revised Codes. A reply was filed denying that the action was barred by either of these provisions. The cause was submitted to the court without a jury upon an agreed statement of facts, showing that Weaver had failed to account for, and pay over to his successor, the sum of $2,000, as alleged, and that his successor’s term of office began on the first Monday in March, 1909. The only question submitted for decision was whether, upon the admitted facts, the plaintiff’s right of action was barred by either of the provisions of the statute pleaded. The court decided in favor of the plaintiff, and rendered judgment accordingly. The defendant has appealed.

1. The theory of the trial court was that, in so far as the surety on an official bond is concerned, his liability is created by [1] the written contract of suretyship, and hence that his liability for the default of his principal in the performance of any of his official duties is subject to the limitation of eight years, as prescribed by section 6445 of the Revised Codes. It is said by the attorney general in his brief: “The only relation existing between the bondsmen and the state (the obligee) is by virtue of this written instrument. It is this instrument, rather than the implied duty of the officer, that is looked to to. determine the liability of the bondsmen. If the fact that the officer has defaulted is established, the written instrument is then called in evidence to establish the liability of the bondsmen.” Starting with this general statement, he argues that, the liability of the surety being determined exclusively upon the written obligation, it is different from that incurred by the principal by his assumption of the office, and is based upon contract. The same contention was made in the ease of City of Butte v. Goodwin, 47 Mont. 155, Ann. Cas. 1914C, 1012, 134 Pac. 670. It was expressly overruled; the court holding that the liability of the surety is concurrent with that of his principal, and is not extended or enlarged by the fact that the principal himself signed the obligation. The court said: “Goodwin’s failure to sign the *61bond would not have vitiated it or lessened his liability, and, if he had not signed the bond, there cannot be any question that the , action against him would have been barred in three years, and, if barred as to the principal, it would have been barred as to the sureties, notwithstanding they had signed the bond (State v. Kelly, 32 Ohio St. 421; Ryus v. Gruble [31 Kan. 767, 3 Pac. 518], above; State v. Conway [18 Ohio, 234], above); for the' bond is not a contract in the strict sense of the term. It is a sort of vicarious undertaking — a collateral security for the faithful performance of official duty. (County of Sonoma v. Hall, 132 Cal. 589, 62 Pac. 257 [65 Pac. 12, 459]; State v. Davis, 42 Or. 34, 71 Pac. 68 [72 Pac. 317]; Walton v. United States, 9 Wheat. (U. S.) 651, 6 L. Ed. 182.” The court also said: “The obligation sued on is not founded upon any instrument in writing, but rests altogether upon the rule of law which makes the promise for the trustee that he will account for and pay over all the earnings of the trust fund while in his possession, and the cause of action arises upon a breach of the duty thus imposed by law.” The result of this case, therefore, is that, in order to determine which provision of the statute applies, attention must be given to the nature of the obligation of the principal which lies back of the bond, for the performance of which the bond is security. Being satisfied, after further consideration, that the conclusion reached in that case that the liability assumed by the sureties is not founded upon the written instrument, in the sense in which this expression is used in section 6445, supra, we follow it as a determination adversely to the contention made by the attorney general in this behalf.

2. It remains to inquire whether the action is upon “an [2] obligation or liability, not founded upon an instrument in writing, other than a contract, account, or promise,” which is barred in three years by subdivision 3 of section 6447, supra, or apon “a liability created by statute other than a penalty or forfeiture, ’ ’ which is barred in two years by subdivision 1 of section 6449.

*62If it be assumed that Weaver’s duty to account for the moneys coming into his hands rested merely upon a promise implied by law, the ease of City of Butte v. Goodwin directly sustains the conclusion that the limitation of three years applies. On the other hand, if the duty to account is an express statutory requirement, then the shorter limitation applies. The general duties of a county treasurer are prescribed by section 2986 of the Revised Codes. Among them is to receive and keep safely all moneys of the county, and all others .directed by law to be paid to him, and to apply and pay them out, rendering an account therefor as required by law. By section 2976 he is required to give an official bond. One condition of this bond must be “that he will account for and pay over and deliver to the person or officer entitled to receive the same, all moneys or other property that may come into his hands as such officer.” (Rev. Codes, sec. 384.) The bond must be signed by the principal and sureties. It will be noted that the treasurer is the fiscal agent of the county, made such by the Constitution. His duties are specifically defined and declared by the statute. The obligation to account for all moneys coming into his hands by virtue of his office is imposed upon him by the express,provision of the statute and his official bond, as is also the duty to give his official bond. Whatever contrariety of opinion may exist upon the question whether his duty to account for interest he may receive upon moneys put to profitable use by him during his term of office is statutory or not, we think that the duty to account for and pay over the moneys paid directly to him by members of the public as revenue due the county, or directed by a court or by statute to be deposited with him for safekeeping, is clearly so, and that his liability for dereliction in this respect is a liability created by statute. And so it has generally • been held by the courts.

In People v. Van Ness, 76 Cal. 121, 18 Pac. 139, was presented the question whether the liability of the commissioner of immigration for the state of California for fees provided for by the statute and unlawfully retained by him for his own use was a *63liability created by statute. The court held that it was, and that a provision of the statute identical with ours supra, except that it prescribed a limitation of three years (Cal. Code Civ. Proc., sec. 338), was a bar to an action commenced after the expiration of the period of limitation prescribed therein.

In County of Sonoma v. Hall, 132 Cal. 589, 62 Pac. 257, 312, 65 Pac. 12, 459, it was sought to charge a county recorder, and the sureties upon his official bond, for fees which he was required by statute to collect for services performed by him in his official capacity and pay over to the county. The defendants having pleaded the statute, supra, it was held that the action was barred. The court said: ‘ ‘ The fees that ought to have been collected are the legal fees, at the rate prescribed by statute. The duty of the defendant Hall to collect the fees with which it is sought to charge him being fixed by statute, the rate or amount of such fees being fixed by statute, * * * and the office which he held being the creation of the statute, we think this cause of action is upon a liability created by statute.”

State v. Davis, 42 Or. 34, 71 Pac. 68, 72 Pac. 317, was an action against the defendant Davis, as clerk of the board of commissioners for the sale of school and university lands and the investment of funds arising therefrom, and the sureties upon his official bond, to recover moneys embezzled by Davis. The action was brought more than six years after the cause of action had accrued. Under a statute containing the same provision as that of California, except that the period of limitation was six years, it was held that the action was barred. After reference to cases decided by that court and by the court of California, the supreme court of Oregon said: “The theory upon which the adjudications proceed is the obvious fact that a bond or undertaking of a public officer creates no obligation in itself, but is in the nature of a collateral contract, simply furnishing a security against the neglect of duty or the dishonesty of the officer, and that an action thereon is for the breach of such duty, and therefore, in effect, although not in form, an action against the officer for misfeasance or nonfeasance in office, which, when barred as to him, is barred as to his sureties.” To the same *64effect is the case of Multnomah County v. Kelly, Sheriff, 37 Or. 1, 60 Pac. 202.

In Colorado it is held that an action against a sheriff for failure to account for fees above the amount of his salary is a breach of his statutory duty; that his liability, therefore, is created by statute; and that the provision of the Code of that state fixing the limitation for an action for such a breach of duty applies to an action against the sheriff and his sureties, the liability of the latter being concurrent with, and not greater than, that of the former. (People v. Putnam, 52 Colo. 517, Ann. Cas. 1913E, 1264, 122 Pac. 796.)

We content ourselves by i '•tice of these eases which are directly in point. The following are cited as supporting, in principle, the rule, either directly or by clear analogy: Ryus v. Gruble, 31 Kan. 767, 3 Pac. 518; McClaine v. Rankin, 197 U. S. 154, 3 Ann. Cas. 500, 49 L. Ed. 702, 25 Sup. Ct. Rep. 410; United States v. Axman (C. C.), 152 Fed. 816; Ada County v. Ellis, 5 Idaho, 333, 48 Pac. 1071; Board etc. v. Van Slyck, 52 Kan. 622, 35 Pac. 299; Ware v. State, 74 Ind. 181; Spokane County v. Prescott, 19 Wash. 418, 67 Am. St. Rep. 733, 53 Pac. 661; State v. Conway, 18 Ohio St. 234.

Our attention has not been called to any case announcing a different rule. We therefore hold that the default of Weaver was a breach of duty imposed upon him directly by statute, and that his liability was created by statute. An action thereon was therefore barred both as to him and the defendant surety, by the lapse of two years, under subdivision 1 of section 6449, supra.

The judgment is reversed, with direction to the district court to dismiss the action.

Reversed.

MR. Justice Holloway concurs.



Dissenting Opinion

Mr. Justice Sanner :

I dissent. There cannot, in my opinion, be any doubt that the instant case is within the precedent established by the majority of this court in City of Butte v. Goodwin, 47 Mont. 155, Ann. Cas. 1914C, 1012, 134 Pac. 670. I was unable, however, to assent to that decision, and I am unable to assent to this.