Court Opinion

ID: 3394242
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:58:55.047583+00
Date Added: 2024-06-11T13:42:22.837824
License: Public Domain

This is a suit in equity for an accounting and for recovery against bond trustees and their sureties.
The suit was brought by W. V. Knott, as Treasurer of the State of Florida; Citrus County, Florida; J. K. Kelley as Chairman and J. A. Perryman, L. C. Yeomans, W. R. Levins and Burton Gilbert, as the remaining members of, and together constituting the Board of County Commissioners *Page 1497 
of Citrus County, Florida; against G. I. Singleton, W. H. Edwards and I. O. Fender, individually and as trustees; also against Royal Indemnity Company, a corporation, certain named banks and bank receivers and against Ernest Amos, as Comptroller of the State of Florida.
The bill of complaint as amended among other things in substance sets forth that Under and by virtue of Chapter 11451, Extraordinary Session, Laws of Florida, 1925, Citrus County, Florida, on or about November, 1926, issued and sold its negotiable bonds in the principal amount of $771,000.00, for the purpose of constructing hard-surfaced highways and bridges in Citrus County; that after the issuance by Citrus County of its bonds, its County Commissioners appointed G. I. Singleton, W. H. Edwards, and I. O. Fender, Trustees for such bonds; that each of said Trustees executed a bond, in the sum of $25,000.00; that Royal Indemnity Company executed each of said bonds as surety; that the bonds executed by the trustees and Royal Indemnity Company were approved by the Board of County Commissioners of Citrus County; that each of the bonds executed by the Trustees and the surety were conditioned as follows:
  "NOW, THEREFORE, if the said Principal shall well and faithfully perform all and singular the duties incumbent upon him by reason of his election or appointment as said BOND TRUSTEE except as hereinafter limited, and honestly account for all moneys coming into his hands as said BOND TRUSTEE according to law, then this obligation shall be null and void; it is otherwise to be and remain in full force and virtue;"
and contained the following limitation:
  "The Surety shall not be liable to said BOARD *Page 1498 
OF COUNTY COMMISSIONERS, CITRUS County FLORIDA, by reason of any public moneys being now on general or special deposit or hereafter placed on general or special deposit by or on behalf of said Principal with any bank, depository or depositories, or by reason of the allowance to or acceptance by said Principal of any interest thereon, any Law, Decision or Statute of the State of Florida or Ordinance of the said City of Inverness to the contrary notwithstanding."
It is alleged that part of the proceeds from the sale of bonds, and moneys furnished to provide for payment of interest and a sinking fund, which were received by trustees are unaccounted for, have not been lawfully paid out and have been lost, in part by conversion by some one or more trustees, in part by being misappropriated by the trustees and in part by the negligence of defendant trustees in handling of said fund.
The bill prays for an accounting of the moneys received and disbursed by the said trustees and for a decree against the surety for so much of the moneys found due upon accounting as the Royal Indemnity Company, the surety, may be liable for upon the bonds executed by it.
The Royal Indemnity Company demurred to the bill as amended and urged in support thereof that it was not a proper party to this proceeding; that the complainants have a full, adequate and complete remedy at law against it; and that it is entitled to a jury trial as to its liability on the surety bonds.
The demurrer of Royal Indemnity Company was overruled, and from that order this appeal was taken.
Section 5, Chapter 11451, Laws of Florida, Extraordinary Session, 1925, provided:
  "Trustees shall be appointed for said bonds and they *Page 1499 
shall exercise the powers and perform the duties in regard thereto as are prescribed in Sections 1544 to 1549, both inclusive, of the General Statutes of Florida."
Section 1544, Revised General Statutes of Florida, 1920, now Section 2322, Compiled General Laws of Florida, 1927, provides:
  "When the county commissioners shall have issued bonds * * * they shall appoint by resolution of their board to be recorded in the minutes, a financial committee of three persons, who shall be resident free holders of the county, to be styled trustees of county bonds, who shall each give bond running to the chairman of the board of county commissioners and his successors in office, with sufficient securities, in such sums as may be required by the county commissioners, conditioned that the said trustee shall faithfully discharge the trust confided to him, and shall pay over and duly account for all such sums of money as may come into his hands by virtue of such trust, which said bonds shall be approved as to the form and the sufficiency of sureties by the board of county commissioners * * *.
The practice of this State strictly preserves the demarcation between courts of equity and of law and the respective fields of operation of such courts. Fidelity and Casualty Co. v. Morrison Construction Co., 99 Fla. 309, 126 So. 151.
A bond conditioned:
  "Now Therefore, if the said Principal shall well and faithfully perform all and singular the duties incumbent upon him by reason of his election or appointment as said Bond Trustee * * * and honestly account for all monies coming into his hands as said Bond Trustee, according to law, then this obligation shall be null and void; it is otherwise to be and remain in full force and virtue"
 *Page 1500 
is an indemnity bond. American Surety Co. v. Smith, 100 Fla. 1012,  130 So. 440; Wolthausen v. Trimpert, 93 Conn. 260,105 A. 687; Fidelity and Casualty Co. v. Morrison Construction Co., supra; Phillips v. Gilbert, 101 U.S. 721, 25 L. Ed. 833,
A court of equity cannot enforce the penalty of an indemnity bond unless the bond is accompanied by some extraneous circumstance which would inject into the cause a matter of equitable cognizance to which the recovery upon the bond would be incidental. Fidelity  Casualty Co. v. Morrison Construction Co., supra; First Nat. Bk. v. Perkins, 81 Fla. 341, 87 So. 912; Union Indemnity v. Worthingstun, 98 Fla. 242, 123 So. 759; King v. Ramsey, 66 Fla. 257, 63 So. 439; Phillips v. Gilbert, supra; 9 C. J. 83.
It is contended by appellees that the equity court having acquired jurisdiction for purposes of accounting has therefore also acquired jurisdiction to enter judgment against the surety upon the indemnity bonds, and appellees further insist that if the court has not jurisdiction to render a decree against the surety upon the indemnity bonds, the surety is nevertheless a proper party defendant, as distinguished from a necessary party, in order that it may be concluded by the accounting.
In First Nat. Bk. v. Perkins, supra, bill was filed on a contractor's bond by materialmen against the principal and against the surety. The bill prayed for an accounting and a decree against the surety for the balance due. The bond among other things was conditioned to "pay for all labor performed or furnished and for all materials used in carrying out of said contract" and was sufficient as a contract entered into between the formal parties thereto for the benefit of the materialmen (American Surety Co. v. Smith, supra), but it was held that the bill did not show an equity to proceed in that cause against the bond. *Page 1501 
In Fidelity  Casualty Co. v. Morrison Construction Co., supra, suit in equity was brought to enforce a statutory lien against real property and for recovery therein against the surety upon a bond given pursuant to Section 5396, Compiled General Laws of Florida, 1927, conditioned to pay "any judgment which may be recovered on said lien with costs." It was held that there was not sufficient equity shown for recovery therein against the bond.
In Labell v. Campbell, 99 Fla. 1125, 128 So. 422, a supersedeas bond was given conditioned "* * * that in the event said final decree appealed from shall be * * * dismissed, that all damages sustained thereby, or occasioned thereby, may be assessed and determined by the chancery court in the same cause from which the is appeal is taken." The appeal was dismissed and it was therein sought to have the chancery court assess damages against the principal and surety by virtue of the stipulation contained in the bond, and it was held that in the absence of a statute providing for entry of a summary judgment upon such bond, the parties are limited to their remedy at law to recover such damages as they may show they have sustained by reason of the taking of the appeal.
We have held that in a suit against a guardian for an accounting, the sureties upon his bond are proper, but not necessary parties, as they are interested in the taking of the account, and ought to be made parties, but the rule is not imperative that they must be. Pace v. Pace, 19 Fla. 438.
In the case of official bonds when the sureties undertake in general terms that the principal will perform his official duties and account, they do not agree to be absolutely bound to the extent of any judgment obtained against the principal. They cannot be precluded as to the extent of their liability without an opportunity to be heard. In such *Page 1502 
cases, the sureties may properly be made parties for the purposes of the accounting so that the extent of their liability may be fixed. Pico v. Webster, 14 Cal. 202, 73 Am. Dec. 647; Annotation, Ann. Cas. 1915D, 400, et seq. Where a court of equity has jurisdiction of a bill for an accounting against the principal on a bond, the sureties can properly be made parties for the purpose of the accounting so that the extent of their liability may be fixed, but no decree for payment may be made against them. 1 C. J. 632; Rutherford v. Alyea, 53 N.J. Eq., 580, 32 A. 70; Dorsheimer v. Rorabeck,23 N.J. Eq. 46.
The order of the court below overruling the demurrer of the surety company is affirmed and this cause is remanded for further proceedings not inconsistent herewith.
For appeal herein by two of the defendant trustees, see Singleton  Edwards v. W. V. Knott, as Treasurer, this day decided.
Affirmed.