City of Ann Arbor v. Mass. Bonding & Ins. Co.

• Decision Date: 14 December 1937
• Docket Number: No. 48.,48.
• Citation: 276 N.W. 486,282 Mich. 378
• Court: Michigan Supreme Court
• Parties: CITY OF ANN ARBOR v. MASSACHUSETTS BONDING & INS. CO.

282 Mich. 378

276 N.W. 486

CITY OF ANN ARBOR

v.MASSACHUSETTS BONDING & INS. CO.

No. 48.

Supreme Court of Michigan.

Dec. 14, 1937.

Action by the City of Ann Arbor against the Massachusetts Bonding & Insurance Company. From a judgment for defendant, plaintiff appeals.

Affirmed by a divided court.

Appeal from Circuit Court, Washtenaw County; Allan campbell, judge.

Argued before the Entire Bench.

William M. Laird, of Ann Arbor, for appellant.

Monaghan, Crowley, Clark & Kellogg, of Detroit, for appellee.

POTTER, Justice.

Defendant was surety on the official bond of Theodore Schmidt, city treasurer of Ann Arbor, for the year from May 3, 1927, to May 3, 1928. Schmidt died May 1, 1928. This suit was instituted by the plaintiff city against the surety to recover taxes alleged to have been uncollected by Schmidt. From judgment for defendant, plaintiff appeals.

The trial court held ‘that where death intervenes during a term of office of one charged with the duty of collecting taxes, he cannot be charged with nonfeasance, because he did not have the full period of his term within which to discharge his duty. This seems to be held in Montgomery v. Governor, 7 How.(Miss.) 68, where the bondsman offered to show that the county treasurer died during his term.'

There is no question the treasurer made his return in March and received a warrant authorizing him to collect the unpaid taxes. 1 Comp.Laws 1929, § 3447, provides: ‘The county treasurer shall give the township or city treasurer a statement of all the personal taxes which remain uncollected, taken from the return of the latter, with a warrant authorizing him or his successor to collect them according to law, and thereafter such treasurer or his successor shall have the same power to collect such taxes as under the original warrant.'

The undertaking of a surety is to receive a strict interpretation. The surety has a right to stand on the very terms of the contract. To the extent and in the manner and under the circumstances pointed out in his obligation, the surety is bound, and no further. The liability of the surety is not to be extended by implication beyond the terms of his contract. Miller v. Stewart, 9 Wheat.(U.S.) 680, 6 L.Ed. 189. A surety cannot be held beyond the precise terms of his agreement. Walsh v. Bailie, 10 Johns.(N.Y.) 180. As said by Chancellor Kent: ‘The claim against a surety is strictissimi juris.’ 3 Kent's commentaries (14th Ed.) p. 124. See, also, Fellows v. Prentiss, 3 Denio (N.Y.) 512, 45 Am.Dec. 484.

There is no question the death of the principal terminates the liability of the surety and the surety cannot be held liable for any defaults which may have occurred after the death of the principal. 50 C.J. p. 96.

The principal in this case had the full time fixed by his term of office within which to collect the delinquent taxes covered by his warrant. The surety's liability terminated at his death, and it could not be charged with any liability which had not accrued prior thereto. It is entirely immaterial what the length of time may have been between the death of Schmidt and the expiration of his term of office. The length of time makes no kind of difference. Wilson v. Lloyd, Law Rep. 16 Eq.Cas. 60; Smith v. Shelden, 35 Mich. 42, 24 Am.Rep. 529. The liability of the principal did not accrue during his lifetime. He was entitled to the benefit of his full term within which to carry out the terms and conditions of the warrant in his hands. Had he lived, he might have caused a levy to be made under and by virtue of the terms of the warrant in his hands, under which a sale could subsequently be made, and he cannot be held guilty of nonfeasance because death deprived him of part of the time allotted to him by law for the performance of his duty.

Judgment of the trial court affirmed, with costs.

BUTZEL, BUSHNELL, and CHANDLER, JJ., concurred with POTTER, J.

FEAD, Chief Justice.

Defendant was surety on the official bond of Theodore Schmidt as city treasurer of the City of Ann Arbor for the year from May 3, 1927, to May 3, 1928. Schmidt died May 1, 1928.

In July, 1927, Schmidt received the city tax roll for 1927 with warrant for collection. The city charter provides that the warrant shall authorize the treasurer, in case any person named in the roll shall neglect to pay his tax, to levy the same by distress and sell his goods and chattles as provided in the general tax law of the State.

The general tax law, 1 Comp.Laws 1929, § 3437, provides that the treasurer shall call personally upon each resident taxpayer and demand payment of the taxes. Section 3438 provides that if any person shall neglect or refuse to pay his tax the treasurer ‘shall collect the same by seizing the personal property of such person,’ etc.

In accordance with the charter, Schmidt made return to the city assessor about August 15th. In November the city assessor delivered to him tax rolls and warrant for the collection of state, county, school, and uncollected city taxes. Under statute, charter, and extension of time by the common council it was Schmidt's duty to make settlement with the county treasurer and return all unpaid taxes on March 1st. He made settlement and return on March 26th. In the return he made affidavit that, upon diligent inquiry, he had not been able to discover any goods or chattels belonging to the persons liable to pay the unpaid personal taxes whereupon he could levy the same.

Upon making his return, the county treasurer gave him a statement of the uncollected personal taxes with a warrant authorizing him or his successor to collect...