American Surety Co. v. Tarbutton

• Decision Date: 28 February 1923
• Docket Number: (No. 2677.)
• Citation: 248 S.W. 435
• Parties: AMERICAN SURETY CO. OF NEW YORK v. TARBUTTON.
• Court: Texas Court of Appeals

248 S.W. 435

AMERICAN SURETY CO. OF NEW YORK v. TARBUTTON.

(No. 2677.)

Court of Civil Appeals of Texas. Texarkana.

February 28, 1923.

Rehearing Denied March 8, 1923.

Appeal from District Court, Smith County; J. R. Warren, Judge.

Action by A. B. Tarbutton, President of the Board of Trustees of the Troup Independent School District, against the American Surety Company of New York and another. Judgment for plaintiff, and defendant named appeals. Affirmed.

The Troup Guaranty State Bank was duly selected as treasurer of the Troup independent school district for the scholastic year beginning September 1, 1920, and ending August 31, 1921, and on August 31, 1920, made a bond (which was duly approved) as such treasurer, with appellant (a corporation) as surety. The bond was for $35,000 and was payable to appellee, then the president of the board of trustees of said district, and his successors in office. It was otherwise as follows:

"The condition of the above obligation is such that whereas the above-bounded Guaranty State Bank of Troup, Tex., offered the best bid of interest on average daily balances of school funds, and was on August 31, 1920, chosen by board of trustees as depository of the Troup independent school district for the scholastic year beginning September 1, 1920, and ending August 31, 1921:

"Now, therefore, if the said Guaranty State Bank of Troup, Tex., shall faithfully discharge its duties and pay the said funds received by it upon draft of the president, drawn upon order, duly entered by the board of trustees, and shall faithfully keep said funds and account for them, together with the interest thereon, at the rate of five per cent. per annum, calculated on average daily balances, to the school board of said district and to the state superintendent of public instruction according to law, then this obligation shall be void, but otherwise it shall remain in full force and effect."

At the end of the scholastic year mentioned in the bond, to wit, August 31, 1921, the school district had $5,489.85 on deposit with said bank as treasurer. On the day last mentioned the bank was reappointed treasurer, but did not then or thereafter make a bond as such. October 21, 1921, the bank was closed by order of the Commissioner of Insurance and Banking, who took charge of same for the purpose of winding up its affairs as provided by law. At that time, to wit, October 21, 1921, the school district had $7,559.15 on deposit with the bank as treasurer. At some time not stated in the record, but after said October 21, 1921, the board of trustees of the district "drew a draft or voucher" on the bank for said $7,559.15, which was not paid. This suit was by said district and appellee as the president of said board of trustees against the bank as the principal and appellant as the surety on the bond referred to, and was to recover said $7,559.15 and interest thereon. The trial was to the court without a jury, and resulted in a judgment in appellee's favor against the bank and appellant jointly for $7,607.05, and against appellant alone for the further sum of $300 as the interest at 5 per cent. per annum on said $7,607.05 from October 20, 1921, to June 29, 1922, the date of said judgment. The appeal is by the surety company alone.

T. N. Jones, of Tyler, and Fiset & Shelley, of Austin, for appellant.

Simpson, Lasseter & Simpson, of Tyler, for appellee.

WILLSON, C. J. (after stating the facts as above).

The contentions presented in appellant's brief are: (1) That the obligation sued on was not valid as a statutory bond because it was not conditioned as required by the statute; and, therefore, that appellant's liability was determinable with reference alone to rules applicable to common law bonds. (2) That it did not appear from the testimony that there had been a breach of the condition of the bond. (3) That appellant was not in any event liable for money deposited with the bank after August 31, 1921, nor for interest which accrued after October 21, 1921, the date when the bank was closed by order of the Commissioner of Insurance and Banking.

The first one of the contentions is predicated upon the view that the condition of the bond was materially different from the condition prescribed by the statute applicable, to wit, article 2771, Vernon's Statutes, as amended by Act March 30, 1917, General Laws, c. 160 (Vernon's Ann. Civ. St. Supp. 1918, art. 2771). The statute referred to required the bank, when it was selected as treasurer of the school district, to give a bond "conditioned for the faithful discharge of the treasurer's duties and the payment of the funds received by him upon the draft of the president of the school board drawn upon order duly entered of the board of trustees. Said bond shall be further conditioned that the treasurer shall safely keep and faithfully disburse all funds coming into his hands as treasurer, and shall faithfully pay over to his successor all balances remaining in his hands."

It will be seen on reference to the statement above that the bond contained a recital that the bank had been chosen depository for "the scholastic year beginning September 1, 1920, and ending August 31, 1921." Appellant insists that the recital was a part of the condition of the bond and operated to limit "the term of the appointment" in a way not authorized by the statute. But plainly, we think, the recital was not a part of the condition of the bond and is of no importance in determining the contention. The difference between the condition in the bond and the condition prescribed by the statute lies alone in the fact that that in the statute required the treasurer, or depository of such funds "to safely keep and faithfully disburse same," and to "faithfully pay over to his successor all balances remaining in his hands," while that in the bond required the bank to "faithfully keep said funds and account for them," with interest on the average daily balances, "to the school board of said district and to the state superintendent of public instruction according to law."

The rule applicable has been stated as follows:

"Except where the statute, either expressly or impliedly, declares all bonds void which do not strictly comply with the requirements therein prescribed, a bond need not be in the exact words of the statute, and the fact that it slightly varies from the form prescribed will not invalidate it, provided it includes substantially all that the statute requires, that is such obligations as are imposed by the statute, and allows every defense given by law, as where it is more specific than the statute requires, but imposes no additional obligation." 9 C. J. 24; and see 4 R. C. L. 54; Johnson v. Erskine, 9 Tex. 1; Ward v. Hubbard, 62 Tex. 559; King v. Frazer, 2 Willson, Civ. Cas. Ct. App. § 788; Bank v. Parrish (Tex. Civ. App.) 207 S. W. 939; State v. Harper, 99 Tex. 19, 86 S. W. 920.

We think the bond is within the rule stated, unless it should be said that the provision requiring the bank to account for interest on average daily balances rendered it more onerous than was authorized by the statute; and in that event that it would be...