Court Opinion

ID: 9642592
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:03:50.144501+00
Date Added: 2024-06-11T11:52:56.128538
License: Public Domain

Holden, 3.
dissenting. I am unable to concur with that part of the majority opinion which measures the defendant’s total responsibility by the condition imposed against cumulative liability. It is my view that sound principles of law and justice prevent the defendant’s liability to be restricted by this device.
The successive undertakings of the defendant during the period 1942 through 1948 form the basis of this action in contract. Each of the several undertakings were written, furnished, and approved in response to the demand of our statutory law relating to town officers. The issuance of fidelity bonds to protect the town and its citizenry in the performance of the duties of town officers during the period is governed by V. S. 47, §3533.
This section provides: "Before the school directors, constable, road commissioner, collector of taxes, treasurer, clerk and overseer of the poor enter upon the duties of their offices, the selectmen shall require each to give a bond conditioned for the faithful performance of his duties; the school directors, to the town school district; the other officers named to the town. *425The treasurer and collector shall also be required to give a bond to the town school district for like purpose. All such bonds shall be in sufficient sums and with sufficient sureties as prescribed and approved by the selectmen. If the selectmen at any time consider a bond of any such officer to be insufficient, they may require, by written order, such officer to give an additional bond to such town in such sum as they deem necessary.
The duties of town clerk and treasurer are measured in point of time by the period intervening between annual town meetings. This period constitutes the term of office of these town officers. V. S. 47, §3509, I, II.
Under the statutory requirement, the duties of the principal and the obligation of his surety are geared to the principal’s term of office. Phillips, the defaulting official, entered upon the duties of the office to which he was elected with each successive town meeting over the period from 1937 through 1948. The original bond and its several continuation certificates are written in the penal sum of $4000 for the specific term for which the principal was elected, ensuing from the date of his election at the town meeting for that particular year.
The obligations, written by the defendant for each of these years, express no ordinary contractual undertaking between private parties to a private contract. They concern separate undertakings in which the State and the public, generally, had an interest. The contracts were written, and the premiums paid and accepted, to secure a public trust. They were undertaken to fulfill the requirement of the statutory law of the State, and constitute statutory bonds in the legal sense.
The rights and liabilities created by fidelity bonds issued in response to the mandate of the statute are not fixed entirely by the writing of the contract. A statutory undertaking must he considered and given effect according to the wording of the law that requires it. American Surety Company v. Gaskill’s Admr., 85 Vt 358, 365, 82 A 218; United States for use of Hill v. American Surety Co., 200 US 197, 26 S Ct 168, 50 L Ed 437, 440; US Fidelity and Guaranty Co. v. Poetker, 180 Ind 255, 102 NE 372, 375, appeal dismissed, 235 US 683, 35 S Ct 209, 59 L Ed *426423; First State Bank v. Metropolitan Casualty Insurance Co., 125 Tex 113, 79 SW2d 835, 98 ALR 1256, 1263; Charles City v. Rasmussen, 210 Iowa 841, 232 NW 137, 72 ALR 638, 642; Ramsey’s Estate v. People, 197 Ill 572, 64 NE 549, 553; People v. Metropolitan Surety Co., 211 NY 107, 105 NE 99, 101; Williamson v. Williams, 262 Mich 401, 247 NW 704, 89 ALR 442, 443; see also 67 CJS, Officers, §161, a, p. 456; 43 Am Jur, Public Officers, §406, p. 180-181.
V. S. 47, §3533, before and after the 1949 amendment, requires the elected officials designated to furnish a new bond for each term of office, "conditioned for the faithful performance of his duties.” V. S. 47, §10,610, Form 57, prescribes the form and substance of a fidelity bond furnished to protect the trust of a public treasurer. The condition of the bond is specified to be the faithful execution of the office and the faithful account for all moneys and other matters which come into his hands and possession by virtue of his office, during the ensuing term. These statutes require a bond conditioned on the future performance or non-performance during the term he is about to enter. See State v. Baldwin, 116 Vt 112, 114, 70 A2d 242.
The statute looks to the future. The contract is based on the past. The condition upon which the defendant has successfully escaped liability beyond the year 1945 turns on past performance. If the construction and effect adopted by the majority is conceded, the defendant has successfully conditioned its liability for all terms of office held by Phillips after 1945 upon his past defalcations occurring in prior terms of office. The clear purpose and result of this condition is to deprive the public trust of all protection for each term that ensued after Phillips’ election in 1946. Such undertakings are not conditioned upon the treasurer’s faithful performance of his duties during the ensuing term. These agreements are conditioned upon Phillips’ dishonesty in the past, antecedent to the date of the fidelity agreement. All consideration for the premiums paid after 1945 is withdrawn and the very statute upon which these solemn undertakings were made is defeated. I believe such a limitation is unlawful.
It is of course true that the statute entrusts a discretion to the selectmen to fix the penal sum of the bond to be furnished *427for each term. This they purported to do by specifying the penal sum of $4000 in each annual undertaking written by the defendant. Whether the selectmen were then cognizant that the legal effect of the restrictive condition might reduce the bond to a worthless security is not of controlling importance in a statutory bond. The statute gave the defendant no right to offer a bond without a penalty. The statute gives the selectmen no right to approve and accept it.
Since this conditional limitation defeats the purpose for which the statute was written, it should not now be invoked, in good conscience or good law, to destroy the very protection the defendant was compensated to furnish. I regard the limitation to be an impairment of the undertaking the State requires of one who has engaged to secure a public trust. Such a condition should have no legal force or effect. Jones v. Hadfield, 192 Ark 224, 96 SW2d 959, 109 ALR 488, 494; Lawrence v. American Surety Co., 263 Mich 586, 249 NW 3, 88 ALR 535, 540; Limestone County v. Montgomery, 226 Ala 266, 146 So 607, 87 ALR 164, 167.
The power of the State to exact a bond to protect the public in the execution of a trust should not be frustrated by the wording of the indenture which is offered and accepted as the statutory safeguard. This is the underlying principle of American Surety Co. of N. Y. v. Gaskill’s Admr., supra, 85 Vt at 364, 365, 82 A at 220, 221. The facts determined by the trial court require its application here, to maintain the integrity of the defendant’s true obligation.
I am in agreement with the majority on the application of the Statute of Limitations.
I am in accord with the defendant’s position that no liability attaches to its several undertakings for the conversion of tax funds that belonged to the town school district. The town and the town school district are separate corporate entities. Dickerman v. Pittsford, 116 Vt 563, 564, 80 A2d 529; Farmer v. Haley, 100 Vt 75, 78, 135 A 12; North Troy Graded School District v. Troy, 80 Vt 16, 32, 66 A 1033. The statute requires a separate bond from the treasurer to the school district and such a bond is not in suit.
*428Upon these considerations I believe the plaintiff should have judgment in the principal amount of $7934.98, with interest from July 1, 1955.
On Motion For Rearguimemt
Shan^raw, J.
The points presented in plaintiff’s motion for reargument are summarized as follows:
1. Having in mind the purposes of the bond, it is claimed that the court declined to depart from the letter and wording of the bond and thereby failed to carry out the intent of the parties. . To this it is sufficient to say that the language used in the bond and continuation certificates is clear. If clear and unambiguous the provisions are to be given force and effect. Allen v. Berkshire Mutual Fire Ins. Co., 105 Vt 471, 474, 475, 168 A 698, 89 ALR 460. In the absence of fraud, negligence or bad faith, alleged and established, it is not the duty of the court to read into contracts conditions or limitations which the parties have not assumed. Johnson v. Hardware Mutual Casualty Co., 108 Vt 269, 281, 282, 187 A 788.
2. Plaintiff urges that V. S. 47, §3533, as amended by No. 73 of the Acts of 1949, should be construed as part of the bond. This phase was fully discussed in the dissenting opinion of Justice Holden and the views expressed therein fully considered by all members of the court.
3. It is also claimed that the case in question is in a distinct and segregated field, that is, the field of public protection wherein the Legislature passes a law to protect the public, and, further, that the law is paramount to the wording of the bond. We direct attention to V. S. 47, §3533, as amended by No. 73 of the Acts of 1949, which, in part, provides that:
"All such bonds shall be in sufficient sums and with sufficient sureties as prescribed and approved by the selectmen.”
It is the duty of the courts to construe contracts, not to make them for the parties. Johnson v. Hardware Mutual Casualty Co., supra. The rights of the plaintiff must be established, if *429at all, against this defendant under the bonds and continuation certificates on which the latter is surety, and not under some bond which might or ought to have been given. Windsor v. Standard Ins. Co., 112 Vt 426, 431, 26 A2d 83.

The motion contains no new points not heretofore considered. No ground for reargument appears. The motion is denied. Let full entry go down.