Bd. of Com'rs of Renville Cnty. v. Gray

• Decision Date: 03 June 1895
• Citation: 61 Minn. 242,63 N.W. 635
• Parties: BOARD OF COM'RS OF RENVILLE COUNTY v. GRAY ET AL. (THREE CASES).
• Court: Minnesota Supreme Court

61 Minn. 242

63 N.W. 635

BOARD OF COM'RS OF RENVILLE COUNTY

v.GRAY ET AL. (THREE CASES).

Supreme Court of Minnesota.

June 3, 1895.

(Syllabus by the Court.)

1. A firm engaged in banking was designated a depositary of the public funds of the plaintiff county, and gave a bond to secure the county deposits, in which the persons composing the firm were principals, and their codefendants herein sureties. The penal sum named in the bond, when it was signed by the sureties, and intrusted to one of the principals, to be delivered to the county, was $20,000, but before it was delivered the penal sum was changed by him to $21,500, without the knowledge or consent of the sureties, and without fraudulent intent on his part. He delivered the bond, as changed, to the county, and it was accepted and approved by its proper officers, and the funds of the county deposited with the firm, without any knowledge on the part of any officer of the county that it had been so changed. The assessment for taxation of the property of the firm and of the persons composing it, not exempt by law, was in the aggregate amount less than one-half of the penal sum named in the bond before the change therein was made. Held to be a material alteration, which discharged the sureties.

2. Two of such sureties learned of such alteration of the bond shortly after it was made, and before the deposits sought to be recovered in this action upon the bond were made, but they did not repudiate such bond, or give any notice to the county or any of its officers that the bond had been so changed. Held, that they were equitably estopped from asserting such alteration as a defense to this action; and, further, that the evidence was sufficient to sustain the verdict against them on this ground, but not as to two other defendants against whom a similar verdict was returned.

3. The plaintiff did not prove on the trial that the board of auditors duly advertised for proposals for the county deposits, that the proposal made by the depositary was in the form prescribed by the statute, that the depositary possessed the requisite property qualifications, and that the bond was deposited with the county treasurer. Held, that proof of such facts was not essential to the plaintiff's right to recover on the bond, it appearing that the depositary was in fact designated by such board, and the deposits made pursuant to such designation.

Appeal from district court, Renville county; B. F. Webber, Judge.

Action on a bond by the board of county commissioners of Renville county against Finlay A. Gray, Joseph A. Beard, Martin D. Brown, Horatio Werring, Matthew Welter, and one Hanser. From orders denying a new trial after verdict, plaintiff and defendants Brown, Hanser, Werring, and Welter appeal. Affirmed.

H. W. Childs, Atty. Gen., Geo. B. Edgerton, Asst. Atty. Gen., and S. R. Miller, for plaintiff.

McClelland & Tifft, for defendants.

START, C. J.

Action by the county of Renville against Finlay A. Gray and Joseph A. Beard, as principals, and their codefendants, as sureties, upon a bond to the county to secure the payment of public funds deposited with Gray and Beard, who were co-partners under the name of the Bank of Fairfax. This firm was designated by the county board of auditors a depositary of the public funds, but they became insolvent, and refused to pay, on proper demand, a balance of $1,743.30 due to the county on account of public funds and interest thereon, deposited with them. The sureties only answered. They denied the allegations of the complaint, and alleged that they executed a bond to the county in the penal sum of $20,000, and no more; but that, without their knowledge or authority, the penal sum in the bond was changed to $21,500 by Gray and Beard, before it was delivered to the county. It was proved upon the trial, and is practically admitted, that after the bond had been signed by all parties, including the sureties, and intrusted to Gray, to be delivered to the county, he, without the knowledge or consent of the sureties, made the change in the penal sum of the bond by raising it from $20,000 to $21,500, and delivered it to the county commissioners, who, without any knowledge of the change, approved and accepted it. The evidence also tends to show that Gray made the change without any fraudulent intent, and, further, that at least two of the sureties, after they learned of the change, ratified it. A verdict was returned against the principals and the sureties, Brown, Hanser, Werring, and Welter, and in favor of all of the other defendants; and as against the latter the plaintiff made a motion for a new trial, and from an order denying the same it appealed. The defendants against whom there was a verdict, severally made a motion for a new trial, which was granted as to Brown and Hanser, and from this order the plaintiff also appealed. The motion was denied as to Werring and Welter, and from such order they appealed.

1. The plaintiff claims that the alteration of the bond did not change or affect the liability of the sureties, and therefore was not a material alteration. If the premises of this proposition are unassailable, and the identity of the bond was not destroyed by the change, the conclusion is correct, for an alteration of a written contract must either destroy its identity or change the contract in some essential particular, in order to be material and avoid it. Herrick v. Baldwin, 17 Minn. 209 (Gil. 183). The statute (Gen. St. 1894, §§ 729, 730) provides that the amount which shall be deposited in any bank or banking house shall not exceed the assessed capital stock of such bank or banking house, or, in case of private bankers, the assessed value of the property, not exempt, of the individual members of the banking firm, as shall appear on the tax lists of the county; and the treasurer is required from time to time to take notice of any changes in the assessment of the depositary, and limit the amount of the deposits by such changes in accordance with the provisions of the law. The amount of the bond is required to be double the amount of the funds to be deposited. Here are two limitations as to the amount which may be deposited. One is measured by the amount of the assessment, the other by one half of the amount of the bond. The deposit is not to exceed the assessment nor one-half of the amount of the bond. The bond runs for two years, and the board of auditors may change the amount to be deposited with a depositary, and require a further...