89 Tenn. 393 | Tenn. | 1890
On December 16, 1882, Will H. Pain was appointed and qualified as Clerk and Master of the Chancery Court at Blountville for
In 1885 the grand jury of the county, after making the examination provided for by Code, § 383, reported that those bonds were insufficient. Whereupon, requisition was made by the Chancellor, under Code, §§ 966, 967, and two sets of additional bonds, of like penalties and conditions as the original bonds, were executed — one set on October 3, 1885, and the other on January 10, 1886.
On April 10, 1884, Fain was appointed special receiver in what is called “the Hopkins case,” and executed a special receiver’s bond in that case in the penalty of $3,000, and conditioned as required by law.
When making his financial reports, under Code, § 386, Fain, on two or three occasions in 1885 and 1886, filed and exhibited certain hank checks in lieu of cash that should have been on hand. These checks were drawn in his favor, as follows: One by George R. Barnes for |500; one by John M. Fain for $1,000, and another by A. H. Bullock for $1,150. After these checks had been so used, and served the purpose of passing Fain’s account from term ' to term, he surrendered them, without consideration, to their respective drawers.
Finally, in October, 1886, Fain vacated his office by resignation, and made default to the extent of $6,010.65. The defalcation embraced funds in vari
Anticipating litigation on account of Eain’s maladministration of his office, several of his sureties made conveyances of their property.
The complainants in this cause are the persons entitled to the various funds converted by Eain. They filed this bill in September, 1887, against the principal and sureties on all the said original, additional,, and special receiver’s bonds, and against Barnes and others (called “check-men”), to recover the misappropriated moneys.
Defense was made; proof taken, account stated, and decree pronounced granting the relief sought in the bill. Several of the defendants have appealed, and assigned errors.
First. — Certain sureties on the additional bonds of October 3, 1885, and of January 10, 1886, submit and earnestly urge the proposition that they can, in no event, be rightfully held liable for any of Eain’s defalcations occurring before they became his sureties.
The language of the decree on this subject is as follows: “ That the sureties, as between the creditors and themselves, are jointly and severally liable for the full amount of the default, the additional bonds being merely cumulative, and covering the entire period of the Clerk and Master’s incumbency.”
The bonds of October 3, 1885, and of January 10, 1886, were executed under that article of the Code entitled: “ Requiring new bonds or additional sureties from public officers.” This title seems to indicate that other, bonds may be given, or that other sureties may be added to the bonds already given, in any of the cases contemplated.
As to the form of the new bond, it is provided : “ Such additional. bond shall be in the same penalty, conditioned, approved, and filed in the same office, as the first official bond, and under like penalties in case of failure.” Code, § 969. The penalty and condition of the additional bond, are to be the same as those of the first bond, and the same liabilities are to follow a breach — the sureties on each are to be “ under like penalties in case of failure.” This means that the bonds are to be alike in form and also in legal effect.
Confessedly. the first bond, in this instance, by its terms and by the statute, covered the full time of Fain’s incumbency. The additional bonds should have the same scope. We think they have, both in fact and in law. In penalty and condition they
With respect to the obligation of the new bond, the statute provides: “Every such additional bond is of like force and obligation on the principal and sureties thereon from the time of approval, and subject to the same remedies, as the first official bond.” Code, § 970. The exact office of the phrase, “from the time of approval/’ is not clear. Two contrary interpretations are suggested by adverse counsel — one that it was intended to limit the liability of such sureties to defalcations occurring after the approval of the additional bond; the other, that it was intended simply to define the date at which the additional bond should become operative,- and nothing more. Both views have the merit of plausibility; the latter is more consonant with the general purpose of the statute at. large concerning additional bonds. This . section may properly be transposed and read as follows: Erom the time of approval, every such additional bond
If “every such additional bond is of like force and obligation, * * * and subject to the same remedies as the first official bond,” it must, of necessity, embrace the same period of time, cover the same defaults, and be subject to the same recoveries.
The correctness of the construction herein placed upon §§ 969 and 970 is rendered the more manifest by the next succeeding section, which defines the effect of the new bond on the old one in these words: “ In no case provided for in any. of the preceding sections of this article are any of the official bonds previously executed discharged, but each remains of the same force and obligation as if the additional bonds had not been given; and any person aggrieved can have his remedy upon either or all of such bonds, in the same or in separate proceedings.” Code, § 971..
Here is a distinct and unqualified provision that any person aggrieved can have his remedy upon either or all of the original and additional bonds. Ho limitation as to time is imposed. Whether the default occurred before or after the execution of the additional bonds is entirely immaterial. In either ease the person aggrieved has his right of action upon either or all of the bonds, at his election. If the officer has misappropriated money, the person entitled to it need not stop to inquire the date of the conversion, but may, in any case,
Such is the meaning of the three sections in detail. Taken together they give emphasis to the conclusion that the additional sureties become bound for the official term as an- entirety. It may be added that the object of the additional bond is to give further indemnity to those affected by the past' conduct of the officer, as well as to afford greater protection to _ those who may be interested in the future administration of his office; and that the liability of the sureties on the additional bond is the same as if they had simply added their names to the original bond.
¥e do not hold, nor did the Chancellor, that the sureties on the several bonds were equally liable between themselves. Provision is made for the sureties as to each other' in another section, as follows: “ The sureties in either bond who have been compelled to make any payments thereon for the principal obligor, have the same remedies against the sureties in all the bonds executed at the time of the default as co-sureties on the same bond have against each other, the damages being properly proportioned according to the penalty of the several bonds.” Code, § 972. Application of the remedies of this section is not sought in the present proceeding.
The case of the State v. M. T. Polk et al., 14
That case was in no sense like this one. That suit was on an original and not an additional bond; hence, the law relating to additional bonds was not applicable, and was not applied. There was no other bond, in that case, covering the entire official term to which the statute or the Court could refer the bond in suit for its scope as to time and measure of liability. That bond mentioned but one date, and that was (the date of its execution. It did not state when the official term began nor when it shall end. There was
In this case there are- original bonds, which, in terms, cover the full period of six years, beginning December 16', 1882; and there are also additional bonds in the same penalty and condition, naming the same period, and, by the statute, declared to be of like force and obligation, and subject to the same penalties and remedies as the original bonds. Besides the statutory relation of these additional bonds, they contain words of a retrospective character, viz.: “Whereas, the above bound Will H. Fain, has heretofore been appointed Clerk and Master * * * for the term of six years from the sixteenth day of December, 1882,” etc.
The case of Bramley v. Wilds, 9 Lea, 674, is no more an adverse authority. It is true that the surety on the new bond was there held liable only for defaults occurring after its execution; but that bond was not executed for the same purpose and under the same statute as wei’e the additional bonds in the present case. In that case certain sureties on the first official bond had been discharged, and the bond sued on was given in lieu under the article of the Code embracing Sections. 973 to 984 inclusive. There had been no report by the grand jury that the original bond was insufficient, no requisition by the Chancellor that additional bond be given, as in the present case. The original bond was presumably sufficient, and
Second. — The Chancellor decreed “that the receiver’s bond in the case of - Hopkins was cumulative, and that the sureties on Fain’s general receiver’s bond are equally liable with the sureties on said special receiver’s bond to the creditors for the funds in said cause.”
It has already been stated that Fain executed a special commissioner’s bond, under Code, § 370, at the beginning of his term, and that he afterward executed additional bonds for the same ' purpose. All these bonds the decree properly refers to (there being no difference between commissioner and receiver as used in Code, § 370), as “ Eain’s general receiver’s bond” as contradistinguished from the “special receiver’s bond” in the Hopkins case.
Certain sureties on these additional bonds, and one of the sureties on this original bond, assign error on that portion of the decree just quoted; the former contending that they are not liable for the funds in the Hopkins case: (1) Because the default occurred before the execution of the additional bonds; and (2) because those funds were covered by the special receiver’s bond, and none other; and the latter joining in the contention
That the special receiver’s bond in “the Hopkins case” was executed, and the funds misappropriated, before the execution of the additional bonds, can make no difference as to the liability of the latter bonds to the beneficiaries of those funds. So far as concerns the beneficiaries, the sureties on the additional bonds stand in the same attitude before the law as do the sureties on the first bond. The reasons for this conclusion have been given in a former part of this opinion, and need not be repeated here.
What that attitude is remains to be' considered. The Chancellor held it to be the same as that of the sureties on the special receiver’s bond in “the Hopkins case.” This is an erroneous view. The first bond was intended “to cover property or funds ” that might come to Fain’s hands as special commissioner or receiver in any case (Code, § 370), and the additional bonds were given for the same purpose. The special receiver’s. bond executed in “the Hopkins case” was more limited in its scope, and different in penalty and condition. It was intended “to cover property or funds” in a particular case, did not relate to the first bond, and cannot properly be construed as an “ additional bond ” in the statutory sense. Code, § 966 et seq. This special bond was executed under a different provision, in these words: “ The Coru’t may also require special bonds to meet particular exigencies,
Beyond that ease the sureties on that bond are liable for no default of their principal; in that ease they are liable primarily for every default to the extent of $3,000. The other bonds having been given to cover property and funds in every case, the sureties thereon would have been liable for the default in “the Hopkins case” if the special bond had not been executed. The special bond did not discharge the other bonds in the particular case, but operated simply as a transfer of primary liability to the special bondsmen. After the exhaustion of that bond the other bonds are liable.
Third. — Several conveyances by certain of Fain’s sureties were impeached in the bill for fraud, and wére set aside by the Chancellor. His action in this behalf is. by some assigned as error. We have examined the proof on this Branch of the case, and are content to simply state the fact of our concurrence in the decree. A statement and discussion of the facts would be unprofitable.
Fourth. — Decree was pronounced against each of the “check-men” for the amount of his check with
Under such a state of facts, we hold without hesitation that each of the “ check-men ” became indebted to the office for the amount represented by his check. That the law (Code, § 386) did not authorize Fain to exhibit cheeks, . but required him
Of no more advantage to the “check-men” is the other fact that the cheeks were drawn in favor of "Will H. Eain individually, and not in his official capacity. They were drawn with the understanding that they were to be used as representing
We concede that the use of these checks by Fain indicates that he had already misappropriated the funds represented by them; hut that fact gives the “check-men” no protection, for they by their checks voluntarily bound themselves to make good the default, and they cannot now throw off the responsibility then assumed.
By receiving back their checks without consideration, and after final default for a much greater sum, the “ check-men ” made themselves debtors to the office to the same extent as if they had borrowed so much money under the orders of the Court. Therefore, they are each primarily liable for the amount of his check with interest.
Fifth. — Some of the sureties on Fain’s bonds assign error on the decree as to the “check-men,” and insist that they should be held liable for more than the amount of their respective checks with interest, on the ground that more damage was done by the use of the checks.
There are several conclusive answers to this
Sixth. — An exception was hied to the report of the Clerk and Master made in this cause, on the alleged ground that it was prepared by hi. J. Phillips, a party to the suit, as one of the sureties on the special receiver’s bond in the “ Ilopkins case.” The ground of this exception was disclosed by affidavit filed in its support. The Chancellor’ overruled the exception, and on his action in so doing several assignments of error are made. His action was right. The record shows the report as made and filed to have been the report of A. E. Martin, the Clerk and Master of the Court. If it be true that he employed Phillips, a party to the suit, as his amanuensis in the preparation of the report, that is a matter of no consequence as touching the validity of the report. Ho improper conduct on the part of Phillips is shown or claimed. Moreover, this exception, being upon the validity of the report as a whole, was waived by a failure to bring it to the attention of the Chancellor until after his “judgment had been invoked on all other questions and
Seventh. — The other assignments of error are not well taken.
The decree will be modified as herein indicated, and otherwise affirmed.