Case Name: STATE OF SOUTH CAROLINA v. LAKE
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1888-12-07
Citations: 30 S.C. 43
Docket Number: 
Parties: STATE OF SOUTH CAROLINA v. LAKE.
Judges: 
Reporter: South Carolina Reports
Volume: 30
Pages: 43–60

Head Matter:
STATE OF SOUTH CAROLINA v. LAKE.
1. In action against a clerk of court and his sureties to recover moneys received by this clerk officially during his term of office, the records of the causes in which the money was received and the record in a cause between his successor in office and such clerk to recover these moneys, are admissible in evidence to show the amounts received.
2. In action brought upon the official bond of a clerk of court 13 years after he went out of office, alleging as breaches, (1) the failure of the clerk to report to court the moneys in his hands; (2) his failure to deposit in bank; (3) his failure to pay over to his successor; (4) his failure to pay over to the parties entitled: held, that the action on the bond was barred by the statute of limitations, both as to the clerk and as to his sureties, more than six years having elapsed since the alleged breaches of the covenants of the bond occurred. Mr. Justice McGowan dissented as to the liability of the principal obligor for the fourth breach alleged, he never having thrown off his trust by a denial of indebtedness.
3. Whether the clerk, the principal obligor, could shield himself from liability for moneys officially received by him until after six years from disavowal, if sued without regard to his official bond, not decided ; but in action on the bond, recovery can be had only by showing breaches of its covenants, and that such breaches occurred within six years.
4. A failure by the clerk to pay out moneys to the parties in interest, constitutes a breach of the bond only where there were both an order to pay out and a demand under that order during the clerk’s term of office.
Before Kershaw, J., Newberry, July, 1886.
The case is thus fully stated by Mr. Justice McGowan in his dissenting opinion :
This appeal was heard at the November term of this court, 1887, when a re-argument was ordered upon the following questions, to wit: “Whether the statute of limitations applies as a matter of defence by the defendants, principal and sureties, and especially whether it can be set up in action on bond, like that in this case. 2nd. And if so, whether the conditions warranting its interposition are present, either in behalf of the principal or the sureties, or both.” This re-argument was had at the April term, 1888.
It appears that the defendant, Lake, was elected clerk of the Court of Common Pleas for Newberry County in 1868, with defendant Wicker, D. Hughey, Henry Koon, and others as sureties. He went into office in July, 1868, and out of office November 21, 1872, being succeeded by one Jesse C. Smith. The action below was brought in October, 1885, nearly thirteen years after Lake went out of office. The complaint alleged various breaches of the bond: 1st. That said Lake, as clerk, received large sums of money belonging to different parties in the case of Hill v. Watson and Thompson v. Thompson, which money, then in his hands officially, he did not, as required by law, from time to time report to the court. 2nd. That said money was not deposited in bank as required by latv. 3rd. That he failed to pay it to his successor in office according to law. 4th. That said Lake failed, and still refuses, to pay over the money in question to the parties respectively entitled thereto.
Both defendants answered. Lake denied the material allegations as to the breaches, and made defence: 1st. That the attorneys for the parties in interest prevented him, by their advice, from paying over the money in question to his successor, Smith. 2nd. That the causes of action did not accrue within six years before commencement of the action. 3rd. That the causes of action did not accrue within ten years before suit brought. 4th. That there is another action pending on the same subject-matter. Wicker, the surviving surety, for himself and the other sureties, made the same defence as Lake, and in addition thereto the following : That the plaintiff, on October 27,1868, accepted a bond from Lake as clerk, with one Crooks as surety, and thereby caused the release of the sureties on the first bond.
The cause came on for trial before Judge Kershaw and a jury. The execution of the bond was proved, and the receipt of the money by Lake during his term of office as clerk, but there was no evidence that it had been regularly reported to the court, or deposited in bank, or turned over to his successor, Smith. On the contrary, as to turning it over to his successor, it appeared from a record of proceedings — Smith v. Lake — that his successor demanded the money, but that Lake refused to turn it over to him, and the court did not order him so to do. It appeared that in both the cases of Hill v. Watson and Thompson v. Thompson, there were orders of court directing the money to be paid out to the parties — that in the first case named made during Lake’s term of office, requiring the money to be paid to the parties in interest, and that in the second case made after the expiration of Lake’s term, and requiring the money paid to Silas Johnstone, Esq., master. It also appeared that B. J. Ramage, one of the parties entitled to the money, a few days before the action was brought, demanded payment of it from Lake, who refused to pay it, for the reason assigned, that “he could not do it just then.”
The defendants offered no evidence. Both parties made numerous requests to charge, which, as far as necessary, will be noticed hereafter. Under a very full and clear charge, the jury found for the sureties; but against Lake, the principal obligor, they found for the plaintiff the penalty of the bond. Both sides appeal — Lake, because he was held liable, and the plaintiff, because the sureties were not also included in the verdict against the principal.
Lake’s G-ROüNds oe Appeal. — “I. Because his honor erred in admitting as evidence the orders for the payment of money to the parties in the cases named, passed in said cases after the expiration of Lake’s term of office as clerk, and to which said actions Lake was not a party.
“II. Because his honor refused to charge, as requested by the defendant, as follows : First. That the duty of Lake to deposit the funds in his hands as clerk terminated when he went out of office on November 21, 1872. Second. That if the jury find that the parties who obtained those orders allowed six years to elapse before this action whs brought, they are barred through the present plaintiff. Third. That the said orders were demands by the parties, and the statute of limitations began to run in favor of Lake and his sureties from the respective dates of said orders. Fourth. That the statute of limitations began to run at the time he retired from office as to the funds held as clerk. Fifth. That Lake, as clerk, did not hold his office as trustee. Sixth. That if he did hold as trustee, said trust could be terminated by law; and the trust, if any there was, terminated at the expiration of his term of office. Fighth. That the trust, if any there was, terminated when Lake refused to turn over to his successor, or to pay over to the parties, as required by said orders. Tenth. That the bond of Lake was conditioned solely for the performance of his duties while he was in office, and anything he may have done, or failed to do, after he went out of office, is no breach of the bond.
“III. Because his honor erred in charging the jury that Lake, after the expiration of his term of office, and after he had gone out of office, still held the funds as trustee, and that the statute of limitations did not begin to run in his favor until personal demand made upon him by the parties entitled thereto.
‘TV. Because his honor erred in charging the jury, that the said orders passed in cases above referred to were not demands upon Lake for the funds in his hands as clerk.”
Plaintiff’s G-ROüNds of Appeal. — “1. Because his honor refused to charge the jury that the statute of limitations cannot begin to run in this case until demand made by the parties entitled to said money, or until Lake did something which showed that he intended to put an end to the trust.
“2. Because his honor charged the jury that it was the duty of the defendant, Lake, to turn over to Smith, his successor, all the funds in his hands as clerk of the court at the expiration of his term of office.
“3. Because his honor charged the jury that the statute of limitations began to run in favor of the sureties on the official bond from the expiration of his term of office.
“4. Because his honor charged the jury that the statute of limitations began to run in favor of Lake and his sureties from the expiration of his term of office, so as to protect them from suit on account of Lake’s breach in failing to deposit the funds of the office in some bank, as required by law.
“5. Because his honor should have charged, as requested, ‘That the duty to deposit said funds in bank is a continuing one, and the default continuous so long as the performance of such duty is neglected, and, therefore, the statute of limitations cannot bar this action under the evidence in this case, which not only shows that said money was not deposited according to law, but was not kept deposited in any way.’
“6. Because his honor should have charged, as requested, ‘That even if Smith, as successor, was entitled to demand and receive from Lake the funds in his hands as clerk, such a demand and refusal to comply with it would not enable Lake or his sureties to plead the statute of limitations against the parties ultimately entitled to the fund.’
“7. Because his honor should have charged, as requested, ‘That the statute of limitations cannot begin to run against Lake’s official bond as clerk, he being a receiving officer, or trustee, until 20 years after its date, unless he has done something which shows his intention to put an end to the trust imposed on him.’
8. [Not applicable.]
“9. Because his honor erred in charging the jury that the statute of limitations barred the breaches, both as to Lake and his sureties, to wit, not making regular reports to each term of the court, and not paying over to his successor within six years from the expiration of his term of office.”
Messrs. Jones Jones and Súber Caldwell, for plaintiffs.
Messrs. Moorman ‡ Simkins, for T. M. Lake.
Mr. Y. J. Pope, for the sureties.
December 7, 1888.

Opinion:
The opinion of the court was delivered by
Mit. Chief Justice Simpsoh.
Adopting the statement of this case found in the opinion prepared by Mr. Justice McGrowan, and concurring in that opinion down to the matter of the statute of limitations, but differing somewhat upon that question from said opinion, I beg leave to present the following as my views thereon.
The vital question in this case is the statute of limitations. His honor held that as to all of the alleged breaches of the bond, except the failure to pay to the parties the amounts collected for them, the statute was a bar, but as to this last alleged breach, while Lake, the clerk, could not be protected, the sureties were. Hence the verdict was against Lake for the penalty of the bond, but in favor of the sureties. The discussion of this question requires at this point a statement of some of the general principles governing the statute of limitations, as applicable to the different classes of cases in which it may be interposed. And, first, we may say, that in a contest between a cestui que trust and his trustee, the statute has no application until the trustee has done some act throwing off the trust, or indicative of his purpose to throw it off. The trustee, however, is not precluded from interposing the doctrine of laches in a proper case. Second. Before the adoption of the code, the statute had no application to a sealed obligation creating a debt; such obligations, however, were subject to the presumption of payment by lapse of time, which became conclusive after the lapse of 20 years or more. Third. The statute has application to unsealed contracts creating a debt. And fourth. Also to sealed obligations or contracts amounting to covenants, &c., &c.
Now, to which class does the bond sued on below belong ? or, rather, what was the purpose of the action below ? Was it to enforce a trust, to collect a debt, or to recover a penalty for a breach of covenant ? The action below' is in the name of the State as plaintiff, the payee of the bond of the clerk, and is against the said clerk and his sureties for certain alleged breaches of duty on the part of the clerk, for the performance of which the said bond bound the said clerk while he remained in office. It is conceded that as to all of the said -breaches, except the last, the clerk committed them. As to these, his honor ruled that the statute could be interposed as a defence by all of the defendants. This must have been upon the ground that the bond sued on was substantially a covenant for the performance of certain duties by the clerk, and therefore belonged to the last class of cases mentioned above, and subject to the statute. We concur in this conclusion. And this being so, an action would accrue upon any breach by the clerk during the time he remained in office, to be commenced at least within the statutory period after the expiration of the office — according to the nature of the breach — or be barred. Thirteen years, then, having elapsed after Lake went out of office before the action below was commenced for these breaches, the conclusion is inevitable, that as to these, the action, being on a covenant, was subject to the statute and was barred, and that his honor was correct in so ruling.
As stated above, however, his honor held that as to the last alleged breach, to wit, the failure of the clerk to pay over the money collected by him to the parties entitled thereto, the sureties were discharged, but that the clerk could not be, and this ruling forms the main subject of appeal upon exceptions both by the State and the clerk, Lake. We do not understand upon what distinct ground his honor held that the sureties should be discharged, whether because there was really no breach as to this matter during the term of office of the clerk, as there was no proof that he had refused a demand during said term, which was necessary for a breach (Wright v. Hamilton, 2 Bail., 51; Lever v. Lever, 1 Hill Ch., *62; Vaughan v. Evans, Ibid., *414); or whether, there being a breach during said term, a right of action accrued on the bond, which gave currency to the statute, and more than the statutory period having elapsed since, the statute was a good defence. But in either point of view, we concur in his honor's ruling as to this branch of the case.
The liability of the obligors on the bond must be ascertained from the terms of the bond itself, and they cannot be held responsible beyond said terms as properly construed. The bond is their contract, and they have a right to stand on that. Now, the condition and obligation of the bond here was, "That Thomas M. Lake shall well and truly perform the duties of the. said office, as now or hereafter required by law, during the whole period he may continue in said office." This condition clearly made the obligors liable only for failure of duty during the term of office, but not for any failure after the expiration of said term.
As to the alleged failure of the clerk to pay the money collected to the parties entitled. He was not required, under the lawr, to pay except upon demand (see Hamilton v. Wright, Lever v. Lever, Vaughan v. Evans, supra); and if there was no demand during his continuance in office, there was no breach, in this respect, of the bond, and, therefore, no right of action on the bond for said alleged breach. But if there was a demand during the term, such as required by the law to give rise to a right of action, then, as we have stated above, the statute began to run, and more than the statutory period having elapsed since, his honor was correct in holding the plea good as to the sureties. But why was it not held good also as to the principal on the bond — Lake ? His honor ruled that Lake occupied a fiduciary, relation to the parties entitled to the money collected by him, and that to pay it over, or to account for it on demand, was a continuing duty as trustee, commencing when he received it, and continuing until he either paid it or on demand refused to do so, or did some other act throwing off the trust before the currency of the statute could begin. No doubt, this was sound doctrine, if the action below had been against Lake himself by the parties entitled to the money, not on breaches of the bond, but for so much money had and received for their benefit collected and held by him as a public officer. In such case, the clerk could not shield himself on the ground that the breach had not occurred during his term of office, because he would be liable individually to the parties, whether he failed to pay over the money on demand as well after his office expired as before.
But the action below was not by the parties themselves, claiming the money against Lake alone as their trustee, but it was an action on the covenant or bond by the State, and such action could only be maintained for a failure of duty by the clerk during bis term of office, because there could be no breach of the bond after the termination of the office, the bond itself specifying that the obligors should be held liable only for such failure during the term ; and this, it seems to us, applied as well to the principal, Lake, as to his sureties. We mean to say, that Lake, as clerk, occupied two distinct positions in regard to his responsibility for failure to discharge his duties. First, he gave bond to the State, with the other defendants as his sureties, that he would discharge all the duties of his office during the time that he held it, which subjected him and his sureties to the penalty of said bond for any failure made during the term of the office, but not for any subsequent failure. Second, he was liable individually as a receiving public officer, independent of the bond, to the parties for whom he may have collected money, on demand made, whether during his term of office or afterwards. But as no action could accrue to the parties until demand in an action by the parties, he could not plead the statute until six years after said demand. But in an action by the State on the bond for a breach alleged to have occurred during the existence of the office, we do not see why he should not stand with his sureties, with precisely the same liabilities and the same defence, in so far as the statute is involved.
Now, the action below, as we have already stated, was upon the bond for alleged breaches, of course made, if at all, during the term of the office, and if the sureties were entitled to relief, as has been held, why not the principal on the bond? We can see no reason for the distinction. If there was no breach for nonpayment, because no demand was made while Lake held the office, then no action could arise on the bond against any of the obligors. If there was a breach, then a right of action accrued to the State against all, and the statute was given currency as to all. Without adjudicating the question, whether Lake, the clerk, could interpose the statute if the parties entitled to the money had sued him alone for money had and received, which is not the case before us, yet we think it was error in the Circuit Judge to apply in this action by the State, on the bond, a different rule to the principal on said bond from that which he applied to the sureties. If there was a cause of action at all, it was the same as to all of the obligors; and if the statute protected one, it protected all. We think, therefore, that the judgment below against Lake should be reversed.
It may be urged that these views are in conflict with Langston v. Shands (23 Shand, 149), in which Judge Fraser, in delivering the opinion of the court, said: "The bond is conditioned that the guardian shall faithfully account for, and pay over, whatever may come into his hands as guardian. To secure the performance of this duty, the bond runs for full twenty years from the time at which the ward attains majority, or, as in this case, from the time when, by her marriage, there was a person sui juris and competent, as her husband, to receive and receipt for the fund." I think not. In that case, the relation of trustee and cestui que trust — guardian and ward — existed. It was, therefore, clearly a case in which the statute had no application, and a right of action as between them did not give currency to the statute. In addition, in that case there was no time fixed in the bond, as in the case before the court, for the failure of duty by the guardian to occur in order to attach liability to the bondsmen. A failure on the part of the guardian to account at any time after the majority of the ward, during the 20 years, as I suppose, breached the bond, and gave a right of action thereon ; while here the breach giving a right of action had to occur within the four years of Lake's clerkship, from which occurrence the statute began to run in favor of the obligors.
Judgment below, as to the sureties, affirmed; but reversed as to the principal, Lake.