Court Opinion

ID: 8037396
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:22:30.924766+00
Date Added: 2024-06-11T16:37:11.343324
License: Public Domain

Paine, J.,
dissenting.
I have been unable to reach the same conclusion that is set out in the opinion adopted by the majority of the members of this court, and therefore file this dissent.
*561This was a rather unusual case in several particulars, and after the first argument to our court, made November 9, 1938, no opinion was agreed upon, and a reargument was ordered February 20, .1939.
As I understand it from an examination of the record before us, the facts may be briefly stated as follows: This is an action brought by the village of Hampton upon the official bond of the village treasurer for loss of village funds deposited in a bank. Judgment was entered by the district court for $2,500, with interest at 6 per cent, from May 5, 1932, against A. L. Gausman, village treasurer, and the Hartford Accident and Indemnity Company, surety upon his bond.
The bond sued upon appears in the bill of exceptions as exhibit No. 27, and was not signed by the principal, A. L. Gausman, village treasurer, but only by the Hartford Accident and Indemnity Company, being executed by William H. Wallace, its attorney-in-fact, of Chicago, Illinois. This bond was given to cover the specific term beginning May 5, 1931, and ending May 5, 1932, and was approved and accepted by the village board at its meeting held July 6, 1931. In the third paragraph it provided that the surety should not be liable for any loss of public money by reason of the failure of any bank.
The bank’s ledger sheets, exhibits Nos. 1, 2, 3, 4, and 5, show the deposit made to the village treasurer’s account on May 5, 1931, was $5,926.61, and that the balance in said account fluctuated between $5,000 and $8,000 during the year. On July 6, 1931, the plaintiff village duly designated the Farmers State Bank of Hampton as a depository for its funds, and said bank as principal, with six individuals as sureties, executed and gave to the said village a depository bond in the sum of $7,500. This depository bond requirement, being section 17-515, Comp. St. 1929, did not at that time require a state bank to give such a bond, but it was amended, without an emergency clause, by the legislature on April 18, 1931 (Laws 1931, ch. 33), by omitting four words, “other than state banks,” thus thereafter requiring *562state banks to give a depository bond. As the legislature adjourned May 2, 1931, the amendment did not take effect until August 2, 1931, but the village board complied with a law which had been duly passed, but. had not yet become effective.
The record indicates that the bank failed August 15, 1932, with village funds deposited therein of $8,284.55, and the village began an action on the depository bond, and secured a judgment of $9,055. On said judgment the village was paid by the receiver of the bank $3,000, and collected an additional amount on said judgment from two sureties, this being shown in the minutes of the village board meeting of January 29, 1936, on page 41 of the bill of exceptions, and a portion thereof reading as follows: “It was moved by Feelhaver and seconded by Nickels that the clerk be instructed to make the records of this meeting show the receipt of a $2,000 certified check issued to Attorney I. D. Beynon, as trustee and attorney for the Village of Hampton, as payment or settlement in full of Abe Troester and Mike Troester’s liability suit also Whereupon, Attorney I. D. Beynon, issued a personal check to the Village of Hampton, for the sum $1,600 after deducting $400 as his attorney fees as per contract in lieu of the aforesaid $2,000 check dated Jan. 29th, 1936.” This makes a total amount collected on depository bond, as shown by the record, of $5,000.
A. L. Gausman was elected treasurer by the village board for one year on May 5, 1931, by a vote of three for and two against him. On July 6, 1931, the fidelity bond in suit of $2,500 and the depository bond of $7,500 furnished by the bank were each accepted and approved.
On April 29, 1932, at the close of his term of office, the village treasurer’s annual report was received and set out in the minutes of the board meeting in some detail, showing amounts in the various funds, and a balance on hand May 1, 1932, of $6,089.16. At the board meeting July 5, 1932, the auditor’s report was read and accepted. They thereby found the treasurer’s full and final report at the end of his term of office correct.
*563Defendant’s exhibit A is addressed to the Hartford Accident and Indemnity Company, and reads:
“This is to certify that on the 28th day of June 1932 the books and accounts of A. L. Gausman, Village Treasurer of Hampton, Nebraska in the position of Village Treasurer were examined up to the close of business on the 5th day of May 1932, and were found to be correct in every respect, with all funds properly accounted for.
“Dated at Hampton, Nebraska this 2d day of August 1932
(Village Seal) Chas. H. Feelhaver
Chairman, Village Board of Trustees, Hampton, Nebraska.”
This certificate was made after the hired auditors had found the books of the treasurer to be correct and such auditors’ report had been approved by the village board.
The minutes of the village board show, under date of April 29, 1932, that A. L. Gausman was elected as village treasurer for the coming year, but no new official bond is shown to have been given for his second term.
In the case of Thurston County v. Chmelka, 135 Neb. 342, 281 N. W. 628, in an action against a school district treasurer and his surety, this court held that, when such a “treasurer succeeds himself in that office, he changes his official personality, for each term of office is a separate and distinct entity.”
“A surety is not to be held beyond the precise terms of his contract. His liability is strictissimi juris, and cannot be extended by construction. Where the term of the officer is for a definite or fixed period, the surety is only liable for his faithful performance of his duties during that period. This is clearly so where the bond itself specifies the period.” People v. Toomey, 122 Ill. 308, 13 N. E. 521.
In Morley v. Town of Metamora, 78 Ill. 394, 20 Am. Rep. 266, where a supervisor was elected his own successor and gave a new bond, and at the end of his first term made .a report, showing a certain amount in his hands belonging *564to the town, which report was approved, the court was of the opinion that the report should be considered as true.
In another case it was asked: “Can the fact that there was no second bond exacted, and no second sureties given who could be held responsible for the last term, extend the responsibilities of the sureties on the first bond ?” That opinion said: “We think not. They were under no obligation to see to it that the treasurer should furnish a second bond — that was a duty devolving upon the board of administrators of the asylum themselves. They cannot make the responsibility for a failure to have had such bond furnished fall on other parties.” Board of Administrators v. MoKowen, 48 La. Ann. 251, 55 Am. St. Rep. 275. See, also, County of Wapello v. Bigham, 10 Ia. 39, 74 Am. Dec. 370.
In Ida County Savings Bank v. Seidensticker, 128 Ia. 54, 102 N. W. 821, a bank was organized in 1893, and one surety signed the bond of the cashier, who had been elected .for one year. Each year the board of directors reelected him cashier, and he continued until March, 1897, when he absconded, owing $7,959.41. The plaintiff brought action upon the bond, and won a directed verdict in the lower court. This was reversed on the ground that the reelection of the cashier each year was more than a meaningless expression of the pleasure of the directors. It was a filling of a vacancy occasioned by the limitation of their previous appointment.
It is a general rule that, in the absence of special circumstances or provisions, the sureties on the bond of a public officer are not liable for his acts or defaults occurring after the termination of the office, and in 81 A. L. R. 14, many authorities are cited from the United States supreme court and many states in support thereof, and in the same annotation it is stated generally that, when an officer is reelected as his own successor, the sureties upon his bond for the first term are' not liable for his defaults occurring during the second term. It has even .been held, as to money which comes into the hands of an officer on the day immediately following the expiration of his term, that the sureties are not accountable.
*565Was the bank insolvent during all of the year covered by the fidelity bond sued upon in the case at bar? Exhibit No. 29 is a sworn report of the condition of said bank as of April 16, 1932, which was made to the banking department under date of April 21, 1932, and it showed that $8,133.07 was the total cash balance held in other banks subject to check, and $2,671.60 cash on hand, making a total on hand and subject to check of $10,804.67. The cash reserve as of that date was 13.3 per cent., but the average cash reserve for the last 30 days was 14 per cent, of deposits.
It is claimed that the village treasurer could not have made settlement with himself as his successor in the office of treasurer. However, the board did not demand that he produce in cash the balance shown when he turned in his annual report and the auditor approved his report and books. This bank was on that date a going concern, and paid all checks drawn against it until it was closed on August 15, 1932.
If this sworn report of the officers of the bank, made as of date April 16, 1932, had been that of an insolvent bank, as charged by the village, it was the duty of the state banking department to close it up immediately, which was not done, and it was allowed to continue to do business. Evidence indicates that the bank had in its pouch criticized assets as well as frozen assets, and its cash reserve was slightly under the required 15 per cent., but if this condition made a bank insolvent in the spring of 1932, how many Nebraska state banks would have been solvent?
In my opinion this court does not have before it sufficient competent proof upon which to declare that this bank was insolvent, when the state banking department examined it repeatedly, and permitted it to remain open and do business for some months after this fidelity bond had expired.
After such fidelity bond of the treasurer sued upon in this case had expired by its terms, and his accounts had been duly audited and accepted, and the chairman of the board has certified such fact to the bonding company in writing, then some months later a loss does occur by the closing of *566the bank by the banking department, whereupon the village at once brings suit upon its depository bond for its loss, for it had recognized such bank as its legal depository for three months after the fidelity bond had expired.
In State v. Fidelity State Bank, 127 Neb. 529, 255 N. W. 781, it was held that it was not illegal to deposit funds in a bank in which a city officer was a bank officer.
In this connection, section 77-2513, Comp. St. 1929, reads as follows: “No treasurer shall be liable on his bond for money on deposit in bank under and by direction of the proper legal authority if the bank has given bond.”
The balance on hand belonging to the village at the termination of the first year’s term of the village treasurer, and covered by the surety bond in the case at bar, was approximately $6,089.16. What is there in the record to show that treasurer Gausman could not, if it had been required of him by the village board (which it was not), have turned over to the board, with his final report at its meeting that night, checks and drafts for the balance shown to be due the village ? If such requirement was not made, how can it be argued that he could not have complied with such a demand? If such a demand had been made that night and complied with, would not the surety on his bond for the first year have been released?
In my opinion, the principles of law involved in the case at bar could well be stated in three paragraphs, as follows:
1. Where the term of an officer is for a definite period set out in a bond, a surety thereon is only liable for the faithful performance of his duties during that period.
2. The fact that an officer was reelected for a second term, but failed to give a bond for such additional term, does not extend the responsibility of the surety furnishing the bond for the first term.
3. A surety on the bond of a public officer is not liable for his acts or defaults occurring after the termination of said bond.