Case ID: ohio-st_58/html/0463-01.html
Source: Caselaw Access Project
Author: {"author": "Williams, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

City of Greenville v. Anderson et al.
    
      City Clerk — Drawing warrant for larger amount than council allowed — Violation of official duty — Negligent payment by treasurer does not relieve clerk's sureties.
    
    I. It is a violation of the official duties of a city clerk to draw his warrant on the treasury for the payment of any’ claim that has not been allowed by the council, or for a larger amount than has been so allowed, obtain the money thereon and appropriate it, or part of it, to his own use; or to drawhis warrant for a valid claim that has been allowed, payable to the creditor or bearer, and then, instead of delivering it to the creditor, present it himself for payment, obtain the money and convert it to his own use; and for any loss sustained by the city in consequence of such malfeasance of the clerk, the sureties on his official bond are liable.
    
      ‘¿. Negligence on the part of the treasurer in paying such warrants does not excuse the official misconduct of the clerk, nor relieve his sureties from liability.
    (Decided June 7, 1898.)
    Error to the Circuit Court of Darke county.
    Suit was brought by the city of Greenville on the official bond of Charles B. Elliott as clerk of that city, to recover damages for alleged breaches of the bond. The amended petition contains thirteen causes of action, each of which charges the clerk with a misappropriation of the funds of the city, and a violation of his official duty in obtaining the same.
    Elliott failed to plead, and judgment was rendered against him for the amount claimed. His sureties, L. C. Anderson and Thomas E. Teal, filed general demurrers to the several causes of action, but afterwards withdrew those to the third, twelfth and thirteenth, and allowed judgment to be taken thereon against them. The demurrers to the other causes of action were sustained, and final judgment rendered in favor of the sureties. That judgment having been affirmed by the circuit court, error is prosecuted by the city to this court. The breaches of the bond alleged in the first, second, fifth, and seventh causes of action, relate to transactions of the same nature, and are charged in substantially the same way; so that a decision upon the sufficiency of anyone of them will determine the questions arising upon the others.
    The first cause of action is as follows: “The said plaintiff, the city of Greenville, is a municipal corporation, duly organized under the laws of the state of Ohio, and is situate in the county of Darke in said state. The said Charles B. Elliott, one of the defendants above named, was duly elected clerk of said city of Greenville, Ohio, on the 17th day of April, A. D. 1893, and as such clerk said Charles B. Elliott did on the 20th day of April, A. D. 1893, enter into a bond to the said plaintiff, the city of Greenville, Ohio, in the sum of one thousand dollars, with said defendants, Thomas E. Teal and L. C. Anderson, as sureties, which bond and the sureties thereon were duly approved by the mayor of said city of Greenville, Ohio, on the 20th day of April, A. D. 1893, and was duly filed and recorded as required by law. And the defendant, Charles B. Elliott, took the oath of office as such clerk of said city, and entered upon the discharge of the duties of said office on said 20th day of April, A. D. 1893, and continued in the occupancy of said office from said date, until the 21st day of May, A. D. 1894. A copy of said bond is filed in this case, and marked “Exhibit A.” Said bond was conditioned, that: “Whereas, the said Charles B. Elliott was, on the 17th day of April, A. D. 1893, duly elected and qualified as clerk of said city of Greenville, Ohio, for the period of two years, and until his successor is duly elected and qualified. Now, if the said Charles B. Elliott shall well and faithfully perform the duties of the office of said clerk of the said The City of Greenville, Ohio, during his continuance in said office for said term, then this obligation will be void, otherwise it will be and remain in full force and effect.” The said plaintiff says that the said defendant, Charles B. Elliott, while acting as such clerk, failed, neglected and refused to do and perform the duties of his said office, in this: That on or about the 28th day of August, A. D. 1893, he, the said C. B. Elliott, as said city clerk, without any authority, knowingly and willfully issued a warrant or order upon the city treasurer of said city of Greenville, being warrant No. 4045, payable to The Variety Iron Co. or bearer, out of the Water Works Fund, in the sum of $1,696.27. That said order or warrant was endorsed “C. B. Elliott.” That said C. B. Elliott presented said warrant or order, so indorsed, and received from the treasurer of said city the said sum of $1,696.27. And that of said amount he sent to the said Variety Iron Company the sum of $1,476.27, and appropriated to his own use the sum of $220. The council of said city of Greenville, Ohio, had, shortly before said August 28th, A. D. 1893, passed an ordinance ordering the payment to said The Variety Iron Company, of the sum of $1,476.27, and had directed said city clerk to issue a warrant on the city treasurer for said sum, payable to said The Varietjr Iron Company, which sum of $1,476.27 was the amount then due and owing from said city of Greenville to said The Variety Iron Company, upon a contract theretofore made by said city and said The Variety Iron Company. That said city council did not order the" said. clerk to issue an order or warrant on the city treasurer of said city payable to said The Variety Iron Company for any other sum at said date than said $1,476.27. That said C. B. Elliott did not deliver said warrant so drawn in favor of The Variety Iron Company, to it or to any one else for it, and did not deliver any warrant for the payment of said sum of $1,476.-27 to said The Variety Iron Company, as it was his duty to do. That by reason of the failure and neglect of the said Charles B. Elliott, as such city clerk, faithfully and properly to perform his said duties as such clerk, the said city of Greenville suffered loss and damage in the sum of $220.00.”
    In the fourth cause of action it is alleged that the clerk, in his official character, drew an order on the city treasurer, for an amount actually due to a creditor of the city, payable to the creditor or bearer, but instead of delivering it to the creditor, presented it for payment, received the money on it, and appropriated it to his own use; and the sixth cause of action charges him with having made the same use of an order which he drew payable to a company, or bearer, to which the city was not indebted.
    The eighth, ninth, tenth and eleventh causes of action, charge the clerk with having wrongfully inserted various claims in ordinances passed by the city council, making appropriations for the payment of claims, after the ordinances were passed, and fraudulently concealing his action by omitting to read over the claims so inserted, and thereafter drawing warrants on the treasurer for such claims, payable to bearer, receiving payment himself and converting the money to his own use. These various transactions are set forth in detail, but it is not deemed necessary to state them here with more particularity.
    
      II. G. Dershem; George A. Jobes and A. G. Robeson,, for plaintiff in error.
    The demurrer of- the defendants below, L. C. Anderson and T. E. Teal, to the several causes of action contained in the amended petition should not have been sustained.
    The condition of the bond is in strict compliance with the terms of the statutes in reference to the form of official bonds. Revised Statutes, sections 1707, 1738 and 1739.
    The allegation of the petition is, that the bond was duly approved by the mayor of the city, and was duly filed and recorded as required by law.
    The management and control of the finances of the city of Greenville are in charge of its council. Revised Statutes, section 1678. The duties of the clerk are designated in sections 1755-1764.
    The condition of the bond in the case at bar is broad and sweeping. It is that the said Elliott “shall well and faithfully perform the duties of the office of city clerk.” The terms of the bond except nothing-; they include everything. They include every duty which was prescribed for the officer by the statute in force at the time the bond was given, as well as every duty which might have been added to the office after the execution of the bond.
    The liability of an officer and the sureties upon his official bond is fixed by the terms of the bond taken in connection with the statute imposing liability. State v. Harper, 6 Ohio St., 607.
    And where the condition of the official bond is that the officer shall faithfully perform the duties of his office, any official misconduct of the officer is a breach of the condition of such bond, for ■which an action lies against the officer and his sureties.' Ohio v. Jennings, 4 Ohio St., 418.
    An official act does not mean that which was lawfully done, but whatever was done under color or by virtue of the office. WilKamston v. Willisi 15 Gray, 427.
    The object of a bond is to make sureties responsible for the due performance of his official acts. Turner v. Sisson, 137 Mass., 191; Cflancy v. Kenworthy et al., 74 la., 740; Lammon v. Feusier, 111 U. S., 17; People v. Treadway, 17 Mich., 480; Van Valkenbergh v. Paterson, 47 N. J. L., 146; Commonwealth v. Stambaugh et al., 164 Pa. St., 437; Marquette County v. Ward, 50 Mich., 174-176; Lowell v. Parker, 10 Metf., 309; Tieman v. ILaio, 49 la., 312; State v. Flinn, 3Blackf.,72; Warrens-burg v. Miller, 77 Mo., 56; Bank v. Birch, 130 N. Y., 221; Purcell v. Bear Creek, 138 111., 524; People v. Bartell, 138 111., 323; State v. Wright, 50 Conn., 580; Wilkesbarre v. Rockafelloio, 171 Pa. 177.
    It was further contended by the defendants’ counsel that all of the matters complained of as acts of the city clerk in the improper discharge of his duty were not the occasion of the loss of the money to the city, but that they were only the remote, not the immediate, causes of such losses. That the immediate cause of the losses were the payments by the treasurer of the city of these warrants to a person other than the payee named therein. And that, therefore, the damage was caused by the negligence of the treasurer, which the plaintiff was asking these sureties of the clerk to make good.
    
      It has been suggested above that such is not the case. The prime, efficient cause of the loss and damage suffered by the city was the unlawful and improper issuing of warrants for the payment of money by the city clerk upon the treasurer. The treasurer paid out no money of the city, except upon the warrant of its clerk. Revised Statutes, section 2690. What the treasurer did may have been negligent and careless.
    But the carelessness, negligence and misfeasance of one are not available as a defense for the sureties on the official bond of another, if their principle has been guilty of a violation of the duties of his office. This is surely the weight of authority in this country. The Bocvrd of Supervisors v.' Otis, 62 N. Y., 88; Hart v. The United States, 95 U. S., 318; Minor v. Bank, 1 Peters, 69; Waseca v. Shehan, etal., 42 Minn., 57. The negligence of one state officer will not release the sureties of another. Commonwealth v. Tate, 89 Ky., 587.
    A concealment of previous defalcations of the cashier of a bank by its directors is, in the absence of fraud, no defense to the sureties on the bond of the cashier. Bostwiek, Receiver, v. Van Voorhis, 91 N. Y. 353.
    Knowledge of the misapplication of funds of a society by its treasurer, re-electing him, and failing to notify the sureties on his bond, does not avoid their liability thereon. Roper v. Trustees, 91 111., 518.
    A case that ought to be decisive of the present case is Campbell v. The People, 154 111., 595.
    An action on the official bond of a treasurer can not be defeated by the settlements at stated periods with the county commissioners. Bush v. Johnson County, 32 L. R. A., 223,'(Neb.)
    It may be that the city treasurer of Greenville was not bound to pay any of the orders so presented to him, as alleged in this ease. It may have been gross carelessness in the management of the public business so to carry it on. But in view of all the cases above cited, and many others, his acts and methods can not excuse the improper official acts of the city clerk.
    Had it not been for the improper issuing of the warrants, it is difficult to see how the public would have lost its money. These things are derelictions of duty, not of the city treasurer, but of the city clerk. All of these things are clearly within the terms of the condition of his bond, “well and faithfully to perform the duties of the office of clerk.” Tapley v. Ma/rtin, 116 Mass., 275; United States v. Xirlcpatrich, 9 Wh., 720 ; Manley v. Atchison, 9 Kan., 358; Detroit v. IFe&er, 26 Mich., 284.
    It was argued that the warrants being made payable to a payee “or bearer,” while it gave them the appearance of negotiable papers, yet they were not negotiable, and that therefore the treasurer should not have paid them to any person except the payee or his order. That he must have known that Charles B. Elliott was not such payee, and had no orders from the payee. And that having so redeemed these orders, the plaintiff in error should have alleged that it had made a settlement with the treasurer, and that it had allowed him credit for the full amount of each and all of the orders.
    To say the least of this argument it is going a long way round to find an excuse for the benefit of the defendants. It is not the business of a petition to set out matters that may be pleaded in an answer as a defense. The element of defense in such a statement is that the city has been saved free and harmless from any loss. This is as much a part of a defense to the causes of action contained in the amended petition as would be the plea of payment in a suit upon a promissory note.
    In an action on an official bond, non-payment need not be averred in the petition. As against a demurrer, it is sufficient to allege the giving of the bond, its condition, and a breach of the condition. Mason v. Montgomery, Wright, 722; Bush v. Critchfield, 4 Ohio St., 103 ; State v. Caffee, 6 Ohio, 150; Building Association v. Gummings, 45 Ohio, St., 664; Martin v. Bolenbaugh, 42 Ohio St., 508; Cutridge v. Yanatta, 27 Ohio St., 366; Slagle v. Entrekin, 44 Ohio St., 640; State v. McClane, 2 Blackf., 292; Clark v. Russell, .2 Day, Conn., 112; State v. Cross, 6 Ind., 387; Ventura County v. Clay, 114 Cal., 242; 1 Kinkead PL, 45; Fox v. By. Co., 86 la., 368; Hansen v. Anderson, 90 Wis., 195, Feuchter v. Keyl, 48 Ohio St., 369.
    
      Anderson á¡ Bowman, for defendants in error.
    Whether a cause of action was stated 'against defendants in error as such sureties on the bond in controversy depends upon the condition thereof. The bond, as plead, is conditioned that Elliott “shall well and faithfully perform the duties of said clerk of the city of Greenville, O.”
    The bond was executed under section 1738 of the Revised Statutes.
    The general duties of a city clerk are defined by sections 1755 to 1764, inclusive.
    As section 2690 provides that no claim against a municipal corporation shall be paid by the treasurer except upon the warrant of the clerk, it would follow that the issuing of warrants in favor of 'claimants against the city was one of his duties prescribed by law.
    
      The several causes of action are substantially alike so far as the legal phases of the case are involved. The first cause of action contained in amended petition will suffice.
    In one or two causes of action he collected without indorsing his name on the back thereof.
    Th & failure of Elliott to account for the $200 is the basis of the recovery against the sureties on his official bond. This failure to account constitutes his alleged liability to the plaintiff in error. While a personal liability may be stated against Elliott for his failure to account for and turn over this money, we insist that no liability is stated against the defendants in error, because (1) the money sued for did not come into the hands of Elliott as such city clerk.
    The payees named in the warrants were the owners of the claims against the city and in whose favor the same were directed to be drawn by the city council. The loss was occasioned by their illegal payment. Elliott’s connection with the warrants as city clerk ceased when he drew the same in favor of the payee as directed by the ordinance.
    He undertook, however, to be the disbursing officer of the corporation or representative of the payee. He indorsed his name — individually, not officially- — on the back of the warrant, presented the same as such individual to the city treasurer for payment collected the amount called for thereon, and as such disbursing officer of the city, or agent of the payee, failed to remit or account for all the moneys thus coming into his possession. The city in thus permitting him to act as its paymaster and share the duties of the city treasurer, made him its agent or official 'in that capacity, and can not now complain if he did not account faithfully for the money it thus placed in his hands. This» however, was no part of his duty as city clerk. 1Vo statute enjoined upon him any such duty.
    
    There is no provision of the statute that a single dollar of the city funds shall come into his hands as such city clerk. It was not therefore, one of the duties of his office which the defendants in error as sureties on his bond undertook that he should faithfully perform. They are responsible only for his official misconduct or neglect; not for his general good behavior. His duties were statutory, and it cannot be supposed that the sureties contemplated any other than the statutory duties connected with his office, especially in view of the fact that the penalty of the bond was fixed by the city council at $1,000, and that one of its own members without bond could discharge his duties in his absence. The law, we think, in this connection is well settled. Dawson v. The State, 38 Ohio St., 3 ; The Detroit Savings Bank v. Zeigler, 49 Mich., 157; Hawkins et al. v. Thomas, 28 N. E. Rep., 157 ; Carpenters. Sloan, 20 Ohio, 327; State v. Newton, 26 Ohio St., 265; Heidt v. Minor, 89 Cal., 115; Fritch Bros. v. Douglass, 12 C. C. Rep., 359 ; s. c. 5 Circ. Dec., 695; San Bernardino County v. Davidson, 112 Cal., 503; The Peoples. Pennock, 60 N. Y., 421; Ortons. City of Lincoln, 156 111., 499; State s. Medary, 17 Ohio, 564 ; Wilkesbarre s. Bockafellow et al., 171 Pa., 177, 188; City of Lafayette s. James et al., 92 Ind., 240; Carey et al. v. State, 34 Ind., 105; Jenkins, Adm., s. Lemonds, 29 Ind., 294; Scott s. The State ex rel., 46 Ind., 203; McLendon s. The State, 92 Tenn., 520; Gerber s. Ackley, 37 Wis., 44; Brandt on Suretyship, section 451.
    
      The sureties are not liable because the money sought to be recovered was paid by the city to a person without authority to receive the same. Sections 1768, 1767, 1793, 1769.
    This holding of the circuit court was upon the ground that, in view of the law prescribing his duties, the payment to Elliott, under the circumstances disclosed in the amended petition, constituted not only gross carelessness upon the part of the city treasurer, but the same was at his peril. Armstrong v. The National Bank, 46 Ohio St., 512 ; State ex rel. v. Lewis, 6 Ohio, 221; Dodge v. National Exchange Bank, 30 Ohio St., 2.
    With the exception, probably of the case of Campbell v. The People, 154 111., 595, in all of the cases cited by counsel for plaintiff in error, the principal had failed to account for moneys that had come into his hands in his official capacity and as a part of the duties of his office, and which his sureties had guaranteed he should faithfully pay over and account for. Crickets. The State, 18.Ohio St., 9. The same may be said oE the case of Lewis v. State ex rel., 57 Ohio St., 189.
    We insist however, that it should not be forgotten that these defendants in error are defending as sureties, and as such are entitled to the application in their favor of the very familiar and firmly established rule, that sureties are always favorite subjects of legal protection ; that all doubts should be resolved in their favor; that there is no construction, no equities against sureties; that sureties cannot be held to do what the bond did not require them to do, and that sureties cannot be held unless their liability is clearly shown. Raymond et al. v. Whitney et al., 5 Ohio St., 201; The State v. Medary et al., 17 Ohio, 554; Hall v. Williams, Executor, 9 Ohio St., 17; Lang v. Pike, 27 Ohio St., 498; The Board of Education v. Thompson, 33 Ohio St., 321; Thompson v. Massee, 41 Ohio St., 307; Railway Co. et al. v. Burke et al., 54 Ohio St., 98; The Ordina/ry v. Cooley, 1 Vroom, (N. J. L.) 179.
   Williams, J.

The condition of the bond sued on is, as required by statute, that the clerk shall faithfully perform the duties of his office during the term for which he was chosen; and, in order to ascertain whether there has been a breach of. that condition, rendering the sureties liable for the damages claimed, it is necessary to inquire into the duties of the officer, and determine whether a violation of them, resulting in such damages, is shown in either of the causes of action in question. These duties, which are prescribed in various provisions of the statutes, may, so far as they are relevant to the case, be summarized as follows: In cities having no auditor, (and there appears to be no provision for such an officer in cities of the grade and class to which the plaintiff belongs), the duties of that officer are devolved on the clerk, who is thus required to keep separate accounts of the several funds of the municipality, the amounts belonging to each, the unpaid claims against each fund, and the balance standing to its credit, and not to allow any fund' to be overdrawn, or drawn upon except for the specific use for which it is appropriated. He is moreover required to examine all vouchers presented for the purpose of obtaining warrants on the treasury, and in case there is no fund out of which a voucher can be lawfully paid, or if, for any cause it should not be approved, it is made his duty to give immediate notice of" the fact to the proper authority for the allowance of claims against the city ; and, if he shall approve any voucher which should not be paid, the statute provides that “he and his sureties shall be individually liable.” Revised Statutes, sections 1762, 1765. By section 1768, the city treasurer is made the custodian of the municipal funds, and he is required to disburse the same on the order of such officer as may be authorized by law or ordinance to issue orders therefor; and, by a provision of section 2690, no claim against the corporation can be paid by the treasurer except upon the warrant of the clerk or auditor. Appropriations of the municipal funds can only be made by ordinance, which must contain an explicit statement of the purpose for which the ‘appropriation is made; and the clerk is charged with the duty of making and keeping accurate records of the proceedings of the council, and of all resolutions and ordinances passed by it. He is given the custody of the books, records and ordinances,and required to keep and preserve them in his office. Revised Statutes, sections 1693, 1755, 1762.

It will thus be seen that the law designed to make the office of city clerk a substantial safeguard against encroachments on the treasury of the city, and any misappropriation of the public moneys. No claim can properly reach the treasury for payment except through the city clerk, and with his official sanction; and he is charged with the important duty of protecting the city from the payment, out of its public funds, of any but just and valid claims for whose payment the council has made the necessary appropriation and allowance. It is a palpable violation of his official trust to aid in the procurement of those funds in any other way, or for any other use. His sureties stand for his official integrity in this respect, and are liable for losses resulting from his official dishonesty. When, therefore, the defendant Elliott drew fraudulent warrants on the plaintiff’s treasury for amounts greater than were due to the creditors in whose favor th’ey were drawn, and greater than had been authorized by the council, obtained from the treasury' the whole amount represented by the warrants, and appropriated the excess to his own use, he grossly misused his official position to perpetrate frauds on the city, whose loss so occasioned is within the obligation of his bond. It was manifest unfaithfulness to official duty, against the consequences of which the sureties undertook to indemnify the plaintiff. So, also were the fraudulent alterations of the claim ordinances passed by the council, thus falsifying the records which it was his duty to carefully and accurately keep and preserve, by inserting unauthorized claims, and thereafter drawing warrants therefor on the treasury, receiving the money on them, and converting it to his own use.

It is argued in support of the demurrers, that the grounds of complaint made in the petition are the alleged failures of Elliott to properly account for and pay over the moneys he wrongfully obtained from the treasury, which, it is urged, were his individual delinquencies, and not official defaults for which his sureties are answerable, because neither the receipt nor disbursement of the moneys pertained to his office. And cases are cited which hold that sureties on official bonds, conditioned that the principal should faithfully account for and pay over all moneys received by him, are not liable for any misappropriation of money which came to his hands otherwise than by virtue of his office. The principle is elementary. The obligation of sureties must be found in the instrument by which they are bound, and cannot be enlarged beyond its terms. But there was no. failure of Elliott to account for and pay over the moneys he wrongfully received, except his failure to cover them back into the treasury. His wrong was in the means employed to obtain the money ; and while these were violations of law, they were nevertheless official acts. If the acts of an officer are to be regarded as unofficial whenever they are illegal, an official bond could serve no useful purpose, for there can be no breach so long as he performs his duties according to law. It is only when some duty has been omitted, or disregarded, or improperly or illegally performed, that a liability can arise. The drawing of warrants on the treasury for the payment of claims out of the public funds was in the line of Elliott’s duties as city clerk. His authority and duty was to draw only such warrants as were for valid claims which had been allowed by the city council; and, as has already been seen, it was equally his duty to withhold his official approval from all other classes of claims. These duties he violated when he drew and signed, in his official character, the unauthorized and fictitious warrants upon which he received the money. These warrants were issued under color of his office, bore his official authentication, purported to be legal and valid vouchers, and were presented and paid as such. They were the means by which he obtained the money; and the object of his bond was to afford indemnity against such official misconduct.

It is said, however, that the treasurer was at fault in paying the warrants to Elliott; that, though payable to bearer, they were non-negotiable except by endorsement of the payee; and, that the treasurer was negligent in not requiring such indorsement. Conceding that the treasurer was misled by the form of the warrants, they were so drawn by the clerk to enable him to obtain the money on them ; and thefaultwas none thelesshis because the device succeeded. And if the treasurer was negligent in paying them in that form, his negligence was but a contributing cause of the loss suffered by the city, the primary wrong which brought it about being their fraudulent issue by the clerk. No excuse can be found in the negligence of the treasurer for the malfeasance of the clérk, nor can it affect the liability of the sureties on his official bond. Cricket v. State, 18 Ohio St., 9; Campbell v. People, 154 Ill., 595; People v. Treadway, 17 Mich., 480.

We are of opinion that the plaintiff is entitled to recover upon each of the causes of action stated in the amended petition, not exceeding in the aggregate the penalty of the bond; and the courts below erred in sustaining the demurrers.

Judgment reversed.