Court Opinion

ID: 6414062
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:54:48.403071+00
Date Added: 2024-06-11T15:51:28.560385
License: Public Domain

Dewey, J.
The question in this case arises upon the bond given by William Stevens, and certain other persons as his sureties, for the faithful performance of his duties as treasurer of the Lexington and West Cambridge Railroad Company; and the particular inquiry is as to the period of time during which the responsibilities of the sureties attached.
Several cases bearing upon the general question of liability upon this bond have heretofore been before this court. No one of them is, however, precisely like the present. The case of Chelmsford Co. v. Demarest, 7 Gray, 1, has decided that a bond given by a treasurer of a manufacturing company, although in general terms, and with the condition “ if during his continuance in office he shall faithfully perform,” &c., does not bind the sureties beyond the period of his first election, and such further time as is reasonably sufficient for the election and qualification of his successor, the office being by statute an annual one. It was also held that his reelection from time to time does not charge the sureties, and also that the statute provision, that the treasurers when elected “ shall hold their offices until others are chosen and qualified in their stead,” does not extend their liability to subsequent elections of the same person.
The case of Middlesex Manuf. Co. v. Lawrence, 1 Allen, 339, was also a suit upon a bond given by a treasurer of a manufacturing corporation, but the bond in that case contained a provision binding the sureties for his fidelity “ for and during such further time as he may continue therein by any re election or otherwise.” It was conceded that the sureties might be thus bound, if it was distinctly recited in the bond that they should be; but even this provision could not extend then liability beyond the period of the treasurer’s continuous holding of his office, and did not include time during which he held the office *376by virtue of a new election after be had left the same, and another person had been the treasurer for a few months.
The office of treasurer in the present case, unlike those just cited, is not by statute limited to one year, and we are therefore to look to some other source for its limitation. That is supposed to be found in the recital in the bond. It was to secure the faithful discharge of the duties of the office during his continuance in office, “during the present year, and for such further periods as he may from time to time be elected to said office.” This recital that the office was one for the present year, if nothing further had been added, would clearly have limited the liability to that year, as it seems well settled that the limitation may be shown, either by a statute limiting the office, or by a recital of the term of office in the bond. That the bond may be limited by a recital of the term of office in the bond itself was early settled in the cases of Arlington v. Merricke, 2 Saund. 411, and Liverpool Water Works v. Atkinson, 6 East, 507. It was affirmed and somewhat extended by the opinion of this court in Dedham Bank v. Chickering, 3 Pick. 341. It was conceded by the court in the case of Amherst Bank v. Root, 2 Met. 522, that a recital in a bond that one has been appointed to an office for a limited time would restrict the liability of his sureties.
But the additional provision in this bond as to the further periods during which the treasurer may hold his office by reelection from time to time creates the doubt in the present case. This provision we suppose to be legal and binding on the sureties, if expressed in apt and proper words. In the present case, had the plaintiffs duly discharged the duty of making regular annual elections of their treasurer, we perceive no ground for exempting the sureties from liability upon their bond for defaults in the office while he thus held it under successive annual elections. For nine successive years after the date of this bond such elections were regularly made, and the party thus elected continuously held the office and performed the duties of the same, and for that period this bond would clearly attach.
We see no ground of objection to this view of the case arising from the fact that the time of holding the annual meeting was *377changed in 1849 from the last Wednesday of June to the first Wednesday of August. This postponement of the time of the annual meeting was by the enactment of a by-law to that effect. The office of treasurer was to be holden for the official year, as established by the corporation. This point seems to have been fully met in the opinion of the court in Chelmsford Co. v. Demarest, 7 Gray, 1. The election having been made on the first Wednesday of August 1849, that was the annual election contemplated by the parties, and was all that was required to keep the bond in force.
The case in relation to the year I860 presents more serious difficulties. The company wholly neglected to elect a treasurer for the year succeeding their annual meeting in 1860. They voted at that time “to postpone the election of treasurer to the next meeting; ” and in fact no election was made until the 12th of August 1861.
Assuming that this office is, by the recital in this bond, to be treated as an annual one, the liability of the sureties would be limited, as we have seen, by the case of' Chelmsford Co. v. Demarest, to the year for which the party was elected, and for such further time as was reasonably sufficient for the election and qualification of his successor, and no longer, although the corporation failed to elect at their next annual meeting. This would be decisive against the right of the plaintiffs to recover for subsequent defaults, had there been only the general stipulation that the party should, during his continuance in office, faithfully perform the duties of the same. What then is the effect of the further provision in the bond, “ and for such further period as he may from time to time be elected to said office ” ? Does this render the sureties liable during the period of a year in which there was no election, and does it embrace the case of an election or elections made after the expiration of a year in which there is no election ?
If the plaintiffs would treat this as a continuing guaranty, op. plicable to future appointments, must not those appointments be continuous and regularly made ? We have already seen that in the case of a surety to one holding an annual office, the *378fact of his principal continuing to perform the duties of the office for a subsequent year has no effect, even if the bond was “ if during his continuance in office he shall faithfully perform,” &c. The bond only extended to a reasonable time beyond the year, sufficient to elect and qualify a new treasurer. So here, where this bond provided for the liability of the surety, not only for “ the present year,” but also “ for such further periods as he may from time to time be elected to said office,” was it not implied that those elections were to be continuous and at the expiration of each year?
Had there been no election in 1861 and 1862, we suppose it would be quite clear that the election to the office of treasurer in 1859 for one year would not have charged the sureties for defaults of the principal occurring in those latter years. The election of 1859 charged the sureties for the faithful services of the principal to the time of the annual meeting in 1860, and for such further reasonable time as was necessary to elect and qualify a successor. That period was exhausted long before the election in 1861. To charge the defendants for defaults in 1861 and 1862, it must be held that upon any future election, however remote from the previous one, this bond would attach if no third person had been placed in the office in the meantime. The practical effect of such a decision would be, that the sureties would become responsible by the terms of their bond for any defaults at any future time, although the corporation wholly neglected its duty to make an election at the expiration of the appointed term of office. This is not, we think, the proper construction of this bond. The sureties had a right to all the benefits that might arise from a non-election. In making such election, the directors may be said to affirm their confidence in the incumbent. Permitting him to discharge the duties of an incumbent in office was a different thing. The effect of the omission to elect on the first Wednesday of August 1860, and until August 1861, was to limit the liability of the sureties to the time preceding the annual meeting in August 1860, with such further reasonable time as was necessary for electing and qualifying a successor. This limitation .having once attached, *379the liability was not one to be revived by an election in August 1861. The bond contemplated continuous elections, and a continuous liability. The case of Middlesex Manuf. Co. v. Lawrence, 1 Allen, 339, presented this ground of defence under facts somewhat stronger for the sureties, as there had been an actual withdrawal from the office, and the appointment of another for a few months, after which the former treasurer was reappointed and assumed the office again. The general language of the bond in that case was equally comprehensive with that used in this bond. The facts were different in the point specified. The continuing in office “by any reelection or otherwise,” was in that case, notwithstanding the subsequent election, held to be effectually interrupted by the appointment of a new incumbent and the withdrawal of the old one for a few months.
The continuance in office was here interrupted, as to the sureties, by the omission of the directors, after the expiration of the period for which he was elected, for twelve months to make an election. The obligation of the sureties, as to such further periods as he may from time to time be elected to said office, implies continuous reelections. The result is, therefore, that the sureties upon this bond are only liable for the defaults of the principal while he held office under the election of 1859, and the previous years, being those defaults reported by the assessor as having occurred prior to the 1st of July 1860.
An objection was taken to the right of the plaintiffs to maintain any action upon this bond, upon the ground that the same had not been approved and accepted by the directors. Under the decisions of this court, and the cases cited in Amherst Bank v. Root, 2 Met. 533, the evidence upon that point was sufficient. The Gen. Sts. c. 63, § 2, do not seem in form to require a specific act of approval of the bond of the treasurer by the directors.
Nor is there any ground for avoiding liability upon the bond, by reason of the change in the mode of conducting the business of the road after the termination of the lease of the road, which occurred in 1857.
Nor do the various reports of the committees of the corporation appointed to audit the accounts of the treasurer estop the *380plaintiffs from enforcing a claim for unfaithfulness and misappropriation of the funds intrusted to him, against the sureties in the bond.
The sureties are properly chargeable with the sums indorsed as interest paid upon the notes of said Stevens to the plaintiffs. The indorsements thus made furnish sufficient evidence to create such liability, without any further evidence of actual payments of money.
The only remaining subject of inquiry is that of the application of a sum of $265, entered upon the books of the corporation by Stevens as a credit to the passenger department, in these words: “ Cash received of I. N. Damon, Aug. 9, 1862, omitted, $265.” The assessor, in the absence of any satisfactory evidence as to the time or circumstances of this entry or the payment of this sum, has allowed the same generally in reduction of sums charged to Stevens for moneys received of Damon, and not wholly in reduction of the specific sum of $400 charged as a default before July 1st 1860. For the reasons assigned by the assessor, we are of opinion that the defendants cannot properly object to the disposition of this item thus made.