Court Opinion

ID: 8903356
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:27:27.317488+00
Date Added: 2024-06-11T17:08:00.564936
License: Public Domain

Judge Parker
dissenting.
I do not find the opinion of Justice Clarkson in Hood, Com’r of Banks, v. Simpson, 206 N.C. 748, 175 S.E. 193 (1934) either as controlling or so persuasive as do my colleagues. Nor do I agree that Justice Clarkson’s views represent “the better reasoned opinion” when compared with the opinion of our Supreme Court written twelve years later by Justice (later Chief Justice) Barnhill in Indemnity Co. v. Hood, 226 N.C. 706, 40 S.E. 2d 198 (1946).
The majority concedes that “[t]he liability of a surety on an official bond is to be determined by the language of the contract and cannot be enlarged beyond the scope of its definite terms.” With that view I completely agree. My disagreement arises only when the majority proceeds to enlarge the liability of the surety beyond the scope of the definite terms of its agreement.
The contract with which we are here concerned is embodied in a single written instrument, the bond dated 31 August 1971 in the penal sum of $20,000.00. That bond recites that the principal, Boyd, had been appointed to the office of town clerk “for the term beginning the 10th day of September, 1966, and being continuous.” (Emphasis added.) The surety’s obligation under the bond is conditioned upon the faithful performance by the principal of the duties of his office and the honest accounting by him “for all moneys and effects that may come into his hands in his official capacity during the said term.” (Emphasis added.) No other instrument was signed by the defendant Surety Company.
Despite the clear language of the one instrument which defendant did sign, in which the office of the principal is referred *136to as “being continuous,” the majority converts that instrument into seven separate contracts, each to apply anew to each of the years 1971 through 1977. It achieves this result by relying in part on the theory that payment of an annual premium converted the bond into a new bond each year and in part on the theory that statutes, which the majority finds applicable, must somehow be read in conjunction with the bond so as to transform it into seven separate contracts. I find neither theory persuasive.
Payment of annual premiums did not suffice to convert a single bond into a new contract each year in Indemnity Co. v. Hood, supra, and I see no sound reason why such payments should accomplish that result in the present case in which the single bond signed by defendant covers the principal’s faithful performance during a term expressed as “being continuous.”
As to the statutes, the statute relating to the term of office of a town clerk which was in effect on 31 August 1971, the date of the bond here in question, was G.S. 160-273. That statute provided that “[t]he governing body [of a municipality] shall, by a majority vote, elect a city clerk to hold office for the term of two years and until his successor is elected and qualified.” (Emphasis added.) It is in the light of that statute that the bond here in question, which refers to the principal’s term of office as “being continuous,” should be interpreted. Relevant also is the undisputed fact that on the date the bond was executed the principal in this case had continuously occupied the office of town clerk since 10 September 1964 and his last appointment to that office had been made at a meeting of the town commissioners held on 17 August 1966. Thus, on the date the bond was executed the principal had occupied the position of town clerk continuously for a period of more than seven years and his latest appointment to that position had been made more than five years previously. Under these circumstances the reference in the bond to the principal’s term of office as “being continuous” accurately reflected the actual situation which then existed. The parties contracted in the light of that situation, and I see no sound reason why their contract should not be enforced as written.
I recognize that G.S. 160-273 was repealed effective 1 January 1972 and that the Act of the General Assembly by which this was accomplished, Ch. 698 of the 1971 Session Laws, had *137already been enacted when the bond here in question was executed on 31 August 1971. However, even if it be conceded that the parties may have executed the bond in contemplation of the new statute which was to come into effect four months later, plaintiff’s position is no stronger. The new statute, G.S. 160A-171, simply provides that “[t]here shall be a city clerk,” but it does not specify any term of office for that position. The majority construes the statute as authorizing the governing body of the town to fix the term of office of the clerk, and it points to the minutes of the Town Commissioners of the Town of Scotland Neck showing successive annual reappointments of defendant’s principal, Boyd, as establishing that the governing body of the town had in fact and in legal effect fixed the term of office of the town clerk as a one-year period. The majority then reasons from this that the bond which defendant signed, and which referred to the term of office as “being continuous,” had been amended by the unilateral action of the town governing body so as to become in legal effect no longer one bond but a series of bonds, each to cover up to its full penal sum for a new and different term of office. If the Town of Scotland Neck could achieve this result through the unilateral action of its governing board without the consent (and even, so far as this record discloses, without the knowledge) of the defendant Surety Company, then I perceive no reason why the Town Commissioners could not also have, through the simple expedient of making monthly rather than yearly appointments, imposed upon defendant Surety Company without its knowledge or consent separate and successive obligations up to the full amount of the bond for every month of every year. I do not believe that such a result is compatible with sound principles of contract law.
Certainly decision of every case of this type depends upon the language used in the particular bond involved and on the circumstances surrounding its execution. See Annot., 7 A.L.R. 2d 946 (1949). In this case, the defendant’s obligation to plaintiff is based on a single written contract. It is controlled by the clear language of that contract. I do not agree with the majority’s view that the law has given the plaintiff, as the other party to that contract, such carte blanche authority to change its terms. I agree with the trial court that the extent of defendant’s obligation on the bond is exactly what it says, $20,000.00, plus interest. Accordingly, I vote to affirm.