Crane County v. Bates

• Decision Date: 29 January 1936
• Docket Number: No. 1585-6443.,1585-6443.
• Parties: CRANE COUNTY v. BATES et al.
• Court: Texas Supreme Court

Page 243

90 S.W.2d 243

CRANE COUNTY v. BATES et al.

No. 1585-6443.

Commission of Appeals of Texas, Section B.

January 29, 1936.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by Crane County against George F. Bates, administrator of the estate, of W. F. Bates, deceased, and others. Judgment for the plaintiff was reversed and remanded by the Court of Civil Appeals , and plaintiff brings error.

Judgment of Court of Civil Appeals reversed, and judgment of the District Court affirmed.

See, also, 90 S.W.(2d) 246.

J. B. Cotten and E. D. Smith, both of Crane, Turner, Seaberry & Springer, of Eastland, and Ed S. Pritchard, of Ft. Worth, for plaintiff in error.

Chas. Gibbs, J. W. Stovall, and H. O. Williams, all of San Angelo, for defendants in error.

Allen Wight, of Dallas, amicus curiæ.

RYAN, Commissioner.

This is a suit brought by Crane county upon a depository bond for school funds, executed by the Citizens National Bank of Odessa, Tex., as principal, and W. F. Bates, R. N. Henderson, F. A. Henderson, Lula Satterwhite, and Henry Pegues, as sureties. W. F. Bates died before the institution of the suit, and George F. Bates, administrator of his estate, with the principal and other sureties were defendants in the court below.

The bond, dated March 23, 1929, and approved by the commissioners' court on May 29, 1929, was in the sum of $80,000, payable to Ben F. Allen, county judge of Crane county, Tex., and his successors in office, and was conditioned: "Now, therefore, if the said Citizens National Bank of Odessa, Texas, shall safely keep and faithfully disburse the school funds according to law and pay such warrants as may be drawn on said funds by competent authority, and shall account to them, together with interest thereon at the rate of 1½ per cent per annum, calculated on daily balances, to the Commissioners Court of said County and to the State Superintendent of Public Instruction, as is required by law, then this obligation shall be void; but otherwise it shall remain in full force and effect," after reciting that said bank was chosen by the commissioners' court as depository of the funds of Crane county, including the school funds, for the term of two years, beginning January 1st, 1929.

On February 9, 1931, the due and legal time for the designation of a county depository for the ensuing two years, the Citizens National Bank was again chosen as such county depository for county and school funds, but no bond as such was ever executed by the bank or ever presented to or approved by the commissioners' court pursuant to said last designation.

The bank was closed on April 14, 1931, because insolvent, and a receiver appointed by the Comptroller of the Currency. The last deposit of school funds was made therein on April 9, 1931; Saturday, April 11, 1931, was the last day on which the bank retained deposits; those made on Monday, April 13, 1931, were returned to persons so depositing.

When the bank was closed, there was on deposit with it certain divers and sundry school funds of Crane county common school district amounting to $26,950.65, for which, upon a trial before the court, judgment was rendered, including interest, aggregating $27,186.13 in favor of Crane county, for the use and benefit of the school funds of Crane county, against all the defendants, except Mrs. Lula Satterwhite and her husband, Lee Satterwhite; the sureties were awarded judgment over against the bank and subrogated to the rights of the plaintiff as to its claim against the bank's receiver for allowance out of the pro rata payment of dividends accruing to plaintiff.

The Court of Civil Appeals reversed that judgment and remanded the cause as to all defendants. 55 S.W.(2d) 614.

First. It is contended by defendants in error that their obligation ceased and they are not liable for a default of their principal occurring after the expiration of the term for which the bond was given, which the Court of Civil Appeals, in the companion case, Bates v. Crane County, 55 S. W.(2d) 610, states was April 10, 1931, the date arrived at in this manner: On the first day of the February term of the commissioners' court following each general election, it is the court's duty to select a depository (article 2546, Rev.Stat. 1925), having previously received proposals therefor (article 2544, Rev.Stat.1925); within 5 days thereafter the selected depository is required to give bond or other security (article 2547, Rev.Stat.1925), after which the court is required to make and enter an order designating the selected one "as a depository * * * until sixty days after the time fixed for the next selection of a depository" (article 2549, Rev.Stat.1925). Allowing the 60-day period carries it to April 10, 1931, and the bank did not suspend business until 4 days later.

In other words, defendants in error say that no recovery should be had until it is shown that the funds have been misapplied or the depository bank has become insolvent during the life of the bond, and, it having been shown that the depository during that time did pay all checks and drafts drawn against it, the conditions of the bond were complied with, and there was no default of such a nature as to authorize judgment against the sureties; they say, also, that the sureties did not guarantee that said funds would be available to be drawn upon or be paid over to the payee in the bond at any time after two years; furthermore, they argue that, because the commissioners' court had accepted the bid of the same bank as depository for the ensuing biennium (1931-1932), it became its own successor and the sureties upon a pre-existing depository bond were released, if the balance due was permitted to remain in the custody of the bank, as its own successor, notwithstanding the selection of the successor never became effective because it never made bond or furnished security.

The bond in question must be treated as a statutory bond and the statute read into it. New Liberty School Dist. v. Merchants' & Planters' Bank (Tex.Civ.App.) 273 S.W. 330; American Surety Co. v. Tarbutton (Tex.Civ.App.) 248 S.W. 435; Trinity Portland Cement Co. v. Lion Bonding Co. (Tex.Com.App.) 229 S.W. 483.

The contentions above stated were decided adversely to defendants in error in Hale County v. American Indemnity Co. (C.C.A.) 63 F.(2d) 275, certiorari denied 290 U.S. 697, 54 S.Ct. 207, 78 L.Ed. 599. The mere fact that the period contemplated by the bond for making deposits may have expired before the failure of the depository does not relieve the sureties from obligation and liability to pay over all funds deposited during the period contemplated for deposits being made; while the sureties may not be liable for deposits made thereafter they are bound for an account of those theretofore received.

The sureties are not discharged as to the unpaid balance at the end of the term, because there had been no demand and refusal to pay. No relief accrued to the old sureties from the abortive appointment of their principal for a new term. Hale County v. American Indemnity Co., supra; 22 R.C.L. p. 229, § 8; 18 C.J. p. 589, § 63; United States F. & G. Co. v. City of Pensacola, 68 Fla. 357, 67 So. 87, Ann.Cas.1916B, 1236; School Dist. No. 75 v. Farmers' State Bank, 182 Minn. 381, 234 N.W. 594; Board of Commissioners v....