Commonwealth v. Tate

• Decision Date: 27 February 1890
• Citation: 89 Ky. 587,13 S.W. 113
• Parties: COMMONWEALTH v. TATE et al.
• Court: Kentucky Court of Appeals

13 S.W. 113

89 Ky. 587

COMMONWEALTH v. TATE et al.

Court of Appeals of Kentucky.

February 27, 1890

Appeal from circuit court, Franklin county.

"To be officially reported."

Action to recover of the sureties on the official bond of James W Tate, treasurer of Kentucky, the amount of his alleged official defalcation. The court instructed the jury to find for the defendants, and the commonwealth appeals.

Thos H. Hines and P. W. Hardin, Atty. Gen., for the Commonwealth. A. Duvall, Wm. Lindsay, D. W. Lindsey, Frank Chinn, J. W Rodman, P. B. Thompson, Sr., and W. A. Sudduth, for appellees.

BENNETT J.

James W. Tate, on the first Monday in August, 1867, was elected treasurer of the appellant for the term of two years beginning on the first Monday in January, 1868. He was elected biennially thereafter until the first Monday in August, 1887, at which time he was again elected for the term of two years, and held the office until the 20th of March, 1888, at which time the governor and secretary of state suspended him from the duties of his office, and in a few days thereafter the legislature impeached him, and he was removed from office. The appellant by this action seeks to recover of the appellees, the sureties of said Tate on his official bond for the term of 1882 and 1883, the sum of $63,948.91, the alleged official defalcation of said Tate during said term. The appellees, as the sureties aforesaid, denied that Tate committed any act of defalcation during said term; alleged that he had committed defalcations for large amounts during his preceding terms, which, by means of false entries, was carried into the term of 1882 and 1883 as so much cash on hand but, in fact, the sum apparently carried forward into said term as so much cash on hand was not cash, but represented said Tate's previous defalcations; and the appellees were not bound on said bond for the same. They also pleaded that Tate, as treasurer, could receive no public money, and did receive none, except by the written permit of the auditor; and could pay out no public money, and did not pay out any, except upon the warrant of the auditor. And as the auditor was required to settle with him once a month, and the auditor and secretary of state were required to make biennial settlements of his accounts, etc., it was impossible for him to make any defalcation, and not be detected in the fact by the auditor, or the auditor and secretary of state, unless these officers were derelict in their duty; that said duties of these officers entered into the contract with the appellees, as the sureties of said Tate, and became a part of it; and as the auditor had monthly settlements with Tate during the years 1882 and 1883, and the auditor and secretary of state made biennial settlement of his accounts, etc., for those years, on the 7th day of January, 1884, and reported his accounts with the appellant as all right, and the appellees in good faith, relying on the same as correct, and therefore taking no steps to indemnify themselves against the alleged defalcation, and, if there was such defalcation, the same could not have happened or remained undiscovered, except by the negligence of the auditor and secretary of state, and as a faithful discharge of their duties in this regard formed a part of the contract with the appellees, and as their neglect to perform them would cause a loss to fall on the appellees which would not have fallen upon them had these officials diligently and efficiently discharged these duties, they, the appellees, are released. They also allege that said auditor and secretary had, previously to 1882 and 1883, reported monthly and biennially that said Tate had kept faith with the state, and his official dealing with it as treasurer was correct; and as it was upon the faith of the truth of these statements that they signed said Tate's bond as sureties, and as it was upon the faith of these monthly and biennial statements, relative to the term of 1882 and 1883, that caused the appellees to rest under the belief that Tate was not in default, and to take no steps for their indemnity, the appellant is estopped to proceed against them.

The bond executed by Tate and the appellees for the term of 1882 and 1883 is as follows: "Whereas, James W. Tate, of the county of Franklin, was at the general election held the first Monday in August, A. D. one thousand eight hundred and eighty-one, duly elected treasurer of the state of Kentucky: now we, James W. Tate, principal, and the other subscribers hereto as his sureties in this official bond of said Tate, do hereby bind ourselves jointly and severally to the commonwealth of Kentucky that the said James W. Tate, as treasurer aforesaid, shall faithfully and diligently discharge all the duties appertaining to said office. In witness whereof the same James W. Tate, and the other subscribers hereto as his sureties, have set their respective hands," etc.

The treasurer's duties are, among others, to "receive and safely keep in the treasury all money due or payable to the commonwealth from collectors of revenue, public officers, and others, when tendered, accompanied by the permit of the auditor of public accounts, stating the amount to be received, on what account, and from whom to be received. He shall immediately make out a receipt for the amount received, and for what and of whom received, and deliver it to the auditor, who shall in like manner give a receipt to the officer or person paying the same. The receipt, besides stating the amount paid, shall also, if it be all that is due from the officer or other person, so state." Section 9, art. 1, c. 108, Gen. St. "The treasurer shall not receive into nor pay out any money from the treasury, except upon the certificate or warrant of the auditor." Section 7, art. 1, c. 108, Gen. St. "If the treasurer willfully misapply any of the public money, or shall loan or use the same for his own purposes, or for the uses or purposes of another, he shall be guilty of felony." Section 10, art. 1, c. 108, Gen. St. According to these statutes, it was the duty of the treasurer to receive and safely keep in the treasury all public money tendered upon the permit of the auditor, and to pay the same out only upon the warrants of the auditor, specifying the amount to be paid, to whom, and for what. It was his duty to safely keep said money, unless paid out as aforesaid; and to appropriate the same to his own use, or that of another, etc., was a plain violation of his official duty,--a breach of official trust,--for which his sureties, by the express terms of the bond, were liable. There are no conditions or provisos in or attached to this bond whatever. The bond is a plain, unqualified, and unconditional undertaking on the part of the appellees, as the sureties of Tate, to be responsible for the faithful and diligent discharge of all the duties appertaining to the office of treasurer, and to answer in damages for any failure of his to discharge any of said duties; and, as we have seen, one of said duties was not to use or appropriate for his own benefit or that of another any of the public money intrusted to his safe-keeping, except to pay the same out upon the warrant of the auditor.

But did the failure of the auditor to do his duty, whereby the treasurer was able to appropriate the state's money to his own use and conceal the fact, and receive from the auditor monthly, and from the auditor and secretary of state biennial, statements that his official duties, in regard to the state's money, were honestly and correctly discharged, release the sureties from the obligation to pay to the state the amount of Tate's defalcation? In other words, did the auditor's and secretary's duty impliedly form a part of the contract with said sureties, or estop the state, so far as the sureties were concerned, from contradicting said settlements? It is contended that Tate could not have stolen from the treasury, and have escaped the detection of the auditor and the secretary of state, had the first named made proper and efficient monthly, and the two together the biennial, settlements with him. Rather, he could not have stolen from the treasury, except after the last monthly settlement, and before the next, without the theft at said next settlement, being detected, if the auditor had performed his official duty in that regard; and the theft, however often committed, would be discovered (beyond a peradventure) at the next biennial settlement, if the auditor and secretary of state had performed their official duty. The treasurer could receive no money due the state, except by the permit of the auditor, stating the amount to be received, on what account, and from whom received. It is the treasurer's duty to immediately receipt the auditor for the same, stating the amount received, for what, and from whom received, and the auditor, in like manner, receipts the officer or person paying the same. Each transaction of this sort is entered, in detail, in the official books of each officer, and the permits and receipts are preserved by each. The treasurer can pay no money out of the treasury, except upon the warrant of the auditor, specifying the amount, to whom, and for what; which amount, to whom, and for what, he must enter in his books. His books must show, in full and in detail, the respective amounts paid into the treasury; when, by whom, and for what. They must also show to whom warrants have been issued, when, and for what amounts, and that same has been receipted for by the treasurer. Also the treasurer must report once per week to the...