Clark County v. Bergstresser

• Decision Date: 08 November 1934
• Docket Number: 7384,7392.
• Citation: 257 N.W. 44,63 S.D. 121
• Parties: CLARK COUNTY v. BERGSTRESSER et al.
• Court: South Dakota Supreme Court

257 N.W. 44

63 S.D. 121

CLARK COUNTY v. BERGSTRESSER et al.

Nos. 7384, 7392.

Supreme Court of South Dakota

November 8, 1934

Appeal from Circuit Court, Clark County; W. W. Knight, Judge.

Action by Clark County, South Dakota, against Walter S Bergstresser, and Arthur Moriarity, as receiver of the Interstate Surety Company of Redfield, South Dakota, a defunct corporation, and the State Bonding Department of the State of South Dakota. From a judgment for plaintiff defendants second and last named appeal.

Affirmed.

Walter Conway, Atty. Gen., and Benj. D. Mintener, Asst. Atty. Gen for appellants.

Sterling H. Clark, of Clark, for respondent.

RUDOLPH Judge.

Clark county brought this action against its former treasurer Walter Bergstresser, and his bondsmen, the Interstate Surety Company and the State Bonding Department, to recover money embezzled by Bergstresser while county treasurer of Clark county. The action was commenced on the 2d day of May, 1929. Bergstresser's first term of office as treasurer expired January 7, 1919; his second term expired January 1, 1923. A part of the money was embezzled during the first term of office, and the balance during his second term of office. Bergstresser was served with process in North Dakota; he made no appearance, but a personal judgment was entered against him by default for the whole amount. The defendants the Interstate Surety Company and the State Bonding Department answered and pleaded the statute of limitations. The trial court concluded, as a matter of law, that the official bonds furnished by the defendants were instruments under seal, that the action was one based upon sealed instruments, and that recovery was not barred by the six-year statute of limitations. Judgment was entered against the Interstate Surety Company and the State Bonding Department in the amount covered by their respective bonds. That Bergstresser actually embezzled the amounts claimed is not questioned. The question presented is whether the statute of limitations prevents a recovery. It will be noted that the action was not commenced until more than six years and four months had elapsed after Bergstresser's last term of office ended. The Interstate Surety Company and the State Bonding Department have appealed.

It is the contention of appellants that the six-year statute of limitations is the applicable statute. Appellants contend that the action as against them is an action upon a liability created by statute, and therefore falls within the provisions of section 2298, which provides that "an action upon a liability created by statute, other than a penalty or forfeiture," must be commenced within six years. Respondent contends that the action, in so far as these appellants are concerned, is one based upon a sealed instrument, and under the terms of section 2295 may be commenced at any time within twenty years. Bergstresser has not appealed and, of course, it is not necessary for us to determine which of the above two statutes could be taken advantage of by him. The appellants are the sureties upon Bergstresser's bond, and it is their liability only that is in question at this time. Appellants find much support in the authorities for their contention. See State v. Davis, 42 Or. 34, 71 P. 68, 72 P. 317; Ryus v. Gruble, 31 Kan. 767, 3 P. 518; Davis v. Clark, 58 Kan. 454, 49 P. 665; Spokane County v. Prescott, 19 Wash. 418, 53 P. 661, 67 Am. St. Rep. 733; Hurst v. Charron, 267 Mich. 210, 255 N.W. 419; Sonoma County v. Hall, 132 Cal. 589, 62 P. 257, 312, 65 P. 12, 459; Gaffigan v. Lawton et al. (Cal. App.) 28 P.2d 375; State v. Blake, 2 Ohio St. 147; State v. Conway, 18 Ohio, 234. It is said by the Oregon court in the case of State v. Davis, supra: "The theory upon which the adjudications proceed is the obvious fact that a bond or undertaking of a public officer creates no obligation in itself, but is in the nature of a collateral contract, simply furnishing a security against the neglect of duty or the dishonesty of the officer, and that an action thereon is for the breach of such duty, and therefore, in effect, although not in form, an action against the officer for misfeasance or nonfeasance in office. * * *" It is difficult for us to follow the reasoning of these cases. After a careful consideration of the opinions above cited, we are still of the view stated by this court in the case of Independent School District of Brookings v. Flittie, 54 S.D. 526, 223 N.W. 728, 729: "For breach of his official duty, the treasurer is liable upon common-law principles and under the statute, and the surety is liable by virtue of its contract."

It might be that the result reached in some of the above cases could be justified upon the theory that an applicable statute of limitations had, in fact, run against the principal, and that the surety is entitled to take advantage of this defense which could be, but in fact has not been, raised by the principal. However, in view of the case of Rathgaber v. Horton, 52 S.D. 436, 218 N.W. 148, 150, in which it is stated that it is the rule that "defenses personal to the principal are available only to the principal and do not pass to the surety," we doubt whether this court could at this time, without overturning that rule, hold that a surety is entitled to raise in its own behalf the statute of limitations which is available to the principal when the principal has not availed himself of that defense. But we need not speculate, for the record in this case quite clearly shows that Bergstresser had been out of the state of South Dakota a part of the time since his term of office as treasurer in Clark county ended (section 2265, R. C. 1919), and it does not appear that even the six-year statute had run as against Bergstresser. In those states which hold that the lapse of the statutory time not only bars the remedy but also extinguishes the right, the result reached in the above cases could, perhaps, be justified, had an applicable statute actually run as against the principal, upon the theory that the obligation itself was discharged. But in this state the rule is that a statute of limitations creates only a bar to the remedy and does not destroy the right. Powell Co. v. Larkin, 52 S.D. 245, 217 N.W. 200.

...