Case ID: wis_39/html/0468-01.html
Source: Caselaw Access Project
Author: {"author": "Cole, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Supervisors of Omro vs. Kaime and others.
    Town Treasurer: Bond: Surety. (1) FaiVure to approve bond does not relieve treasurer or sureties. (2) Liability of surety in case of annual office. (3) Duty of toion supervisors in appointing treasurer on vacancy, (i) When treasurer and sureties liable after expiration of original term. (5) Liability for loss through failure ofbanh.
    
    1. The omission of the chairman of town supervisors to formally approve the town treasurer’s bond as required by law, does not relieve the treasurer or Ms sureties from their liability on the bond.
    2. The liability of a surety cannot be indefinitely extended; and in case of an annual office, the surety is presumed to contract for the faithfulness of the officer only for the year for which he was chosen, and such further time as is reasonably sufficient for the election and qualification of his successor.
    3. The statutory provision (Tay. Stats., 363, § 76), that if a town treasurer shall refuse to serve, or if his office shall become vacant, the town supervisors1 “ shall forthwith appoint a treasurer,” does not require the board to act on the very day when the time for the treasurer elect to qualify expires without his having' done so; especially where he has up to that day manifested an intention to serve.
    4. Under the laws of this state, a town treasurer holds his office for one year and until Ms successor is elected and qualified; and where such a treasurer, being elected his own successor, manifested an intention to hold for the second term, by taking the oath of office and filing Ms bond, but without sureties, and continued to act as such treasurer nearly two months after the time limited by law for qualifying for the second term, and neglected to pay over, to the successor tiren appointed, the moneys of the town in Ms hands: Held, that both he and his sureties were liable on Ms first bond, especially as the moneys for which he was in default came to Ms hands dining Ms first term, and were duiing that term deposited in a bank, and were lost by the failure of such bank within one week after the expiration of the time given him to qualify for the second term.
    5. Where a town treasurer deposits the town money in a bank without authority of law, and it is lost by failure of the bank, he and Ms sureties cannot defend on the ground that he was not guilty of want of care or diligence in making such deposit.
    APPEAL from tbe Circuit Court for Wwvnebago County.
    
      This was an action against Kañme, as town treasurer, and tbe sureties upon bis official bond, to recover funds of tbe town which were lost through the failure of the bank wherein they were deposited by Kavme. Kaime was first elected town treasurer April 7, 1873, and on the 8th of April took the oath of office and filed the bond on which his codefendants in this action were sureties. This bond was never formally approved by the chairman of the board of supervisors, as required by the statute. Kaime entered upon the duties of his office, and received moneys of the town, which he deposited with the private banking firm of Howard & Co., upon their agreement to pay him interest on the deposits. The account of Kaime with the bank, as treasurer, was kept separate from his individual account. On the 7th of April, 1874, Kaime was reelected treasurer, and filed a bond without sureties, which was never approved. He was requested by the supervisors to ' procure sureties, which he failed to do, but continued in possession of the office until June 6, 1874, when the board of supervisors declared the office vacant because of Kaime’s neglect to file a bond with proper sureties, and elected one Bushnell to fill the vacancy. The latter filed his bond, with sureties, approved by the chairman, and took possession of the office June 15, 1874. Kaime received no public moneys after his second election. On the 24th of April, 1874, the banking firm of Howard & Co. failed, and Howard absconded. None of the town funds deposited in the bank were recovered, and the action was brought to recover the deficiency. The referee before whom the cause was heard, held that all the defendants became liable on the first bond for such moneys as came into Kaime’s hands as treasurer after his election in April, 1873, and until his office became vacant by his failure to qualify under his election in 1874; and that plaintiffs were entitled to judgment against all the defendants as prayed for in the complaint.
    
      The court confirmed tbe report, and gave judgment accordingly, from which the defendants appealed.
    
      O. W. Fellcer, for appellants:
    1. The sureties were not liable beyond the term for which Kaime was elected in April, 1873. The obligation of a surety is a matter of strict law, and can never arise by implication. 24 Wis., 521; 9 Wheat., 680. A surety on the official bond of an officer whose term is limited to a year, is not liable beyond the year, though the officer continues by law until his successor is provided. Dover v. Twomlly, 42 N. IT., 59; Ohelmsford Go. v. Demarest, 7 Gray, 1; Hassell v. Long, 2 M. & S., 363; Mayor v. Horn, 2 Harring. (Del.), 190; Oornity of Wapello v. Bvngham, 10 Iowa, 39; Welch v. 8eymowr, 28 Conn., 387; Arlington v. Merrick, 2 Saund., 404; Kitson v. Julian, 30 Eng. L. & E., 326; Peppi/n v. Oooper, 2 B. & Aid., 431. The statute provides that the town treasurer shall take the oath and file his bond within ten days after his election. Tay. Stats., 361, § 67, and 370, § 113. It was the duty of the supervisors, at the expiration of ten days after Kcmne's second election, when they knew that he had not filed a proper bond, to at once declare the office vacant, and appoint a new treasurer. The statute provides that they shall forthwith appoint, etc. Tay. Stats., 363, § 76. Forthwith does not mean from April 18th to June 6th, nor even from April 18th to April 24th. The word has so often received judicial construction, that it cannot be extended, even to accommodate the negligence of town supervisors. Kaime was, therefore, undoubtedly treasurer until June 6, 1874, although he had failed to file a proper bond. Dillon on M. C., 193, § 153. And the defalcation having occurred after the year had expired for which the sureties were bormd, and after the supervisors should, by law, have appointed another treasurer, it seems clear that the sureties were not bound. 2. The moneys having been converted by .Howard, without fault of the treasurer, the latter is not liable. It is ■true that there is a great preponderance of authority against this proposition. But the court will observe that in many of ;the cases great stress is laid upon the words that the officer will “ safely keep ” the money, etc. The condition of the bond in this case is, that he will “ properly and legally disburse or pay all moneys that may come into his hands,” etc. Does this condition bind him to more than reasonable diligence in case of the money of the town? See Boss v. Hatch, •5. Iowa, 159, and cases there cited; Supervisors v. Dorr, 26 Wend., 440, and cases there cited.
    
      H. B. Jaclcson, for respondent:
    I. The power to approve ur disapprove the bond is only for the better security of the public, and the validity of the bond does not in any way depend upon the approval. 7 Mo., 81. 2. The loaning or depositing of the money with Howard during Kaime’s first term, and the fact that it was thereby lost .and never returned to him, constituted' an unlawful conversion of the money during the first term. Defendants would therefore be liable on the bond for the first year, even though Kavme had duly qualified and entered upon the second term, and had not been holding over under his first election. No money came into his hands after the second election, and all had passed out of his hands by such loaning before that time, and the liability of the sureties follows from the rule laid down in Yvuian v. Otis, 24 Wis., 518. But Kaime, not having qualified for the second term, never became his own successor, and continued to hold under the first election, as of the first term. Tay. Stats., p. 362, § 71; State v. WasMnurn, 17 Wis., 658. 8. Even when public money is taken by force and feloniously from the treasurer, without any fault on his part, this is no defense to an action on his bond. Halbert v. State, 22 Ind., 125; Morbech v. State, 28 id., 86; Mtizzy v. Shat-iudh, 1 Denio, 233; XT. S. v. Prescott, 3 How., 578.
    
      Gabs Bouch, on the same side:
    
      1. Tbe statute requiring tbe approval of tbe treasurer’s bond by tbe chairman of tbe supervisors is merely directory, and is for tbe benefit of tbe town, and not for tbe treasurer or bis sureties, nor can tbey take advantage of tbe omission. People v. Johr, 22 Mieb., 461, and cases there cited; People v. Smyth, 28 Cal., 21; Auditor v.Woodruff, 2 Ark., 73; /Stephens v. Orawford, 3 Ga., 499; State v. McAlpim,4z Ired. Law, 140; State v. Hampton, 14 La. An., 725; Stevens v. Treasurer, 2 HcCord (S. C.), 107; Memdocvno Goumty v. Morris, 32 Cal., 145; Taylor v. Auditor, id., 174; U. S. v. Maurice, 2 Brock., 96; State v.Jjynch, 6 Blackf., 395; State v. Bowman, 10 Ohio, 445; Warren v. Phillips, 30 Barb., 646; SJcelUmger v. Yendes, 12 Wend.,. 306. If tbe bond is not good as a statutory bond, it is as a common law bond. Good-rum v. Carroll, 2 Humph., 400; Lord v. Lamcy, 21 He., 468; 1 Ga., 574; 3 id., 499; 9 id., 314. 2. Tbe defense that there was no lack of care and diligence will not avail. A town treasurer is ,an insurer, liable for all losses, even if stolen from him; bis liabilities are not limited to those of bailee. United States v. Prescott, 3 How., 587; Same v. Morgan, 1 id., 160; Same v. Dashiel, 4 Wall., 185; Thompson v. Board of Trustees, 30 Ill., 99; Hamcoclc v. Hazza/rd, 12 Cush., 112; Ohio v. Harper, 6 Ohio St., 607; Oo'imnonwealth v. Oomley, 3 Pa. St., 372. Boss v. Hatch, 5 Iowa, 144, turned on the peculiar condition of tbe bond in that case, and is inapplicable here. Supervisors v. Dorr, 25 Wend., 440, has been overruled. Muzzy v. Shattudc, 1 Denio, 233. See also tbe notes to 7 Hill, 584. 3. Tbe mere delay in appointing a successor, or settling, will not release tbe sureties. People v. JemJcvns, 17 Cal., 300. Tbe sureties in this case are liable for tbe money received by Kaime during tbe first year, until be duly paid it out or over to bis successor, as required by law and bis bond. Tbe courts go further, and bold that where tbe law provides that an officer shall bold until bis successor is elected and qualified, bis bond covers bis acts so long as be bolds. Thompson v. 
      The State, 37 Miss., 518; Freedolders v. Wilson, 16 N. J. Law (4 Harr.), 110
   Cole, J.

The condition of the hond executed "by the defendants is essentially the same as that prescribed in sec. 113, ch. 15, Tay. Stats., p. 370. It was, that the town treasurer would “ faithfully discharge the. duties ” of his office, and properly and legally disburse or pay all moneys ” that might come into his hands. The statute made it the duty of the chairman of the board to approve the bond given, and to indorse his approval thereon. The-chairman failed to formally approve the bond as the law required, but this omission of duty on his part cannot have the effect to release either the treasurer or his sureties from their liability on the obligation. The provision is obviously for the protection of the town, and was intended to secure it agains.t the risk of an insufficient bond.

The first error relied on for a reversal of the judgment is the ruling of the court that the sureties were liable for the defalcation of the treasurer. It is said by the learned counsel for the defendants, that the principle is well settled that the obligation of a surety is a matter of strict law, never arising by implication; and that this principle, when applied to the facts of this case, exonerates the sureties from liability. There is no controversy as to the correctness of this rule of law, but only as to its application to the case at bar. It appears that the defendant Kavme was elected town treasurer on the 7th of April, 1873, and on the 8th took the oath of office, and filed his bond, on which his codefendants were sureties. In April, 1874, Kai/me was reelected, took the oath of office, and filed with the the town clerk a bond in due form, but without sureties. This bond was not approved by the chairman of the board. It is an admitted fact that Kcmne gave no bond with 'sureties for his second term, although requested by the officers of the town so to do. He continued to act, however, as town treasurer, until one Buslmell was appointed treasurer, and entered upon the duties of the office June 15, 1874. During the year 1873, Kavme had deposited the money of the town, together with his own funds, with one Howard, doing business as a banker at Omro, and who failed and ran away about the 24th of April. In consequence of the failure of Howard, the money of the town was lost; and we hare no doubt that under these circumstances the sureties are responsible for it.

Under the statute, Kcmne held his office for one year and until his successor was elected and qualified. Sec. 71, ch. 15, sufra. And, though elected as his own successor, he failed to qualify for the second term by giving a proper bond within the time prescribed by statute. Sec. 67. This amounted to a refusal to serve, and an abandonment of the office. Sec. 68. The sureties contracted for the faithful discharge of the duties of the office by Kaime, and that he would propei’ly and legally disburse and pay over the money of the town which should come to his hands. He has been guilty of a breach of duty, and has certainly failed to pay over to his successor the moneys of the town. The evidence clearly shows that Kavme loaned these moneys to Howard, or deposited them in Howard’s bank, during his first term, and that in fact he received no money of the town after his reélection. Under these circumstances we see no valid reason for holding that the sureties are released from all liability to make good the default of the treasurer. It is said by defendant’s counsel that a surety on the official bond of an officer whose term is limited to a year is not liable beyond the year, though the officer continues to hold until his successor is chosen and qualified. And a number of cases are cited in support of this position. It is not considered necessary to examine these authorities in detail, for we do not intend to lay down any rule really in conflict with them. The liability of a surety cannot be indefinitely extended. "When the office is annual, it may well be presumed that tbe surety contracts for the faithfulness of the officer “ only for the year for which he was chosen, and for such further time ns is reasonably sufficient for the election and qualification of his successor,” as held in Chelmsford Co. v. Demarest, 7 Gray, 1. See also the case of Dover v. Twombly, 42 N. H., 59. Under our system of popular, elections, great inconvenience would arise if the term of one officer were to terminate before another commenced; and the statutes are framed to avoid any interval or vacancy. And as time must necessarily elapse after an election to enable the officer elect to express his acceptance and qualify, it must be presumed that the sureties contracted that the old officer would perform his duty until a reasonable period was allowed for doing these things. It is conceded that Kaáme had until the 18th of April to file a proper bond for the second term. It is said that it was the duty of the supervisors on that day, upon ascertaining that he had not filed his bond with sureties, to have declared the office vacant, and to have appointed his successor. This they might have done, undoubtedly, under sec. 76. But though this provision declares that when a treasurer refuses to serve, the board “ shall forthwith appoint a treasurer,” this language is to have a reasonable construction. It is not to be interpreted as requiring the board to act on the very day the time to qualify expired; more especially when the treasurer elect had manifested an intention to serve, as KaAme had done. Eor it was not until after the failure of the bank on the 24th of April, that he indicated his purpose not to file a bond with sureties.

The other point relied on for a reversal of the judgment is, that as the treasurer had been guilty of no want of care and diligence in depositing the money in bank, the defendants ought not to be held liable for its loss. The counsel frankly admitted that there was a great preponderance of authority against this position; and the concession is in accordance with the fact. Upon this question we cannot do better than quote tbe language of Mr. Justice McLean in pronouncing tbe decision of tbe court in The United States v. Prescott et al., 3 How., 578. He says: “Public policy requires tbat every depositary of tbe public money should be bold to a strict accountability. Not only tbat be should exercise tbe highest degree of vigilance, but tbat ‘ be should keep safely ’ tbe moneys which come to bis bands. Any relaxation of this condition would open a door to frauds, which might be practiced with impunity. A depositary would have nothing more to do than lay bis plans and arrange bis proofs, so as to establish bis loss, without laches on bis part. * * No such principle has been recognized or admitted as a legal defense.” p. 588. And we have certainly no disposition to relax tbe rule of liability on tbe part of treasurers entrusted with public moneys, by recognizing such a principle as a legal defense to an action upon their official bonds.

By the Oov/rt. — Tbe judgment of tbe circuit court is affirmed.