Etna Cas. & Sur. Co. Of Hartford v. Bd. Of Sup'rs Of Warren County

• Decision Date: 30 March 1933
• Citation: Etna Cas. & Sur. Co. Of Hartford v. Bd. Of Sup'rs Of Warren County, 160 Va. 11, 168 S.E. 617 (1933)
• Court: Virginia Supreme Court
• Parties: ETNA CASUALTY & SURETY CO. OF HARTFORD, CONN., v. BOARD OF SUP'RS OF WARREN COUNTY et al.

168 S.E. 617

ETNA CASUALTY & SURETY CO. OF HARTFORD, CONN.,

v.BOARD OF SUP'RS OF WARREN COUNTY et al.

Supreme Court of Appeals of Virginia.

March 30, 1933.

[COPYRIGHT MATERIAL OMITTED]

Appeal from Circuit Court, Warren County.

Suit by the Board of Supervisors of Warren County and another against the JEtna Casualty & Surety Company of Hartford.Connecticut, and others, in which defendant named filed a cross-bill.From the decree, defendant named appeals, and complainants and certain codefendants assign cross-error.

Affirmed in part, modified in part, and in part reversed and remanded, with directions.

Argued before CAMPBELL, C. J., and HOLT, EPES, HUDGINS, GREGORY, and BROWNING, JJ.

W. B. Dew, of Hartford, Conn., for appellant.

John H. Downing, of Front Royal, Harrison & Harrison and Harry R. Kern, all of Winchester, Joseph F. Moore, of Berryville, Walter Olmstead, of Front Royal, R. Gray Williams, of Winchester, and Weaver & Armstrong and E. H. Jackson, all of Front Royal, for appellees.

EPES, Justice.

A. L. Warthen served continuously as treasurer of Warren county from November 3, 1915, to his death on November 9, 1928.At the time of his death he was insolvent and was heavily indebted, as treasurer, to the commonwealth of Virginia, to Warren county, and to the county school board; but there is no evidence which tends to show that any part of this indebtedness arose prior to January 1, 1920.

When Warthen qualified for the four-year term beginning January 1, 1920, he gave bond in the penalty of.$60,000, with ten persons as his surety.When he qualified for the four-year term beginning January 1, 1924. he gave bond in the penalty of $43,000, with the Etna Casualty & Surety Company as his surety.Upon his qualification for the four-year term beginning January 1, 1928, he gave bond in the penalty of $60,000 with the National Surety Company as surety.Each of these three bonds is conditioned for the faithful discharge of his office or trust as treasurer of Warren county.

In September, 1927, the.Etna Casualty & Surety Company instituted proceedings under section 5771, Code Va. 1919, to require Warthen to give a new bond, and thereby relieve it from future liability as his surety.Though Warthen did not give a new bond.the court entered an order on October 13, 1927, adjudging that the Etna Casualty & Surety Company be and was relieved from future liability as surety on Warthen's official bond after noon of that day, but did not remove him from office.On October 24,

1927, however, it entered an order removing Warthen from office for failure to give a new bond as treasurer in the penalty of $60,-000, as had been required by the court in a second order entered by the court on October 13.Warthen moved the court to suspend the order of removal of October 24 to permit him to apply for a writ of error; and on October 31the court suspended the order of removal » upon his giving a suspending bond, dated October 31, 1927, in the penalty of $63,000, with forty-six persons as his sureties.Warthen applied for and was granted a writ of error and supersedeas, and on November 19, 1927, gave a supersedeas bond in the penalty of $63,000, with thirty-eight persons as his sureties.On September 12,

1928, this writ of error and supersedeas was "dismissed agreed."

After Warthen's death the "board of supervisors of Warren county and S. P>.Downing, treasurer of Warren county, at the relation of the board of supervisors of Warren county, and the county school board of Warren county, " instituted this suit against the administrators and heirs of A. L. Warthen and the sureties on the five bonds above mentioned.In addition to the parties above mentioned, the bill also made partiesdefendant the sureties on the official bond given by Warthen for his four-year term of office beginning January 1, 1916.On September 16, 1926, certain persons had entered into an agreement with.Etna Casualty & Surety Company to indemnify it against all liability which it might incur on or after that date as surety on Warthen's bond; and in its answer and cross-bill.(Etna Casualty & Surety Company made these persons partiesdefendant.

The purposes of the bill are: (1) To have the court determine the amount due by Warthen, as treasurer, to the commonwealth of Virginia, (2) to procure an adjudication as to the portions of such indebtedness for which the sureties on his several bonds are liable, respectively, and (3) to recover from the sureties on his several bonds the amounts for which they, respectively, are liable to Warren county and the county school board of Warren county.

It is, in effect, admitted that at his death Warthen, as treasurer, was indebted to the commonwealth in the sum of $2,424.74, and to Warren county in the sum of $81,142.12 (which includes the amount due by him to Page 621

which amount, with interest from November 13, 1928, the National Surety Company is liable to account to Warren county.

(6) The ^Etna Casualty & Surety Company paid to Warren county on February 18, 1931, $17,121.74 on account of its liability as surety on Warthen's bond, and the balance due by it is $35,302.26 with interest from February 18, 1931.

(7) Since Warthen's death a net amount of $2,286.41 has been collected on tax tickets for years prior to 1927 which were in his hands at the time of his death, and a net amount of $4,096.16 has been collected on tax tickets for the year 1927 which were in his hands at the time of his death, which sums were paid over to S. B. Downing, treasurer of Warren county, on April 22, 1930.The sum of $2,286.41 is to be applied to that part of Warthen's indebtedness which arose prior to October 13, 1927, which is not recoverable under the bond of the.(Etna Casualty & Surety Company.The sum of $4,096.16 is to be applied pro rata to the reduction of the indebtedness for which the sureties on the supersedeas bond and the National Surety Company are liable--$835.24--to the amount for which the sureties on the supersedeas bond are liable, and $3,260.94 to the amount for which the National Surety Company is liable.

(8) The sum for which the sureties on the supersedeas bond are liable is $5,581.80 with interest from January 1, 1928, subject to a credit of $835.24 as of April 22, 1930.

(9) The total amount of the defalcations of Warthen for which National Surety Company is liable to Warren county is $22,126.51 with interest from November 13, 1928, on which it is entitled to a credit as of April 22, 1930, of $3,260.94.National Surety Company paid to Warren county on February 18, 1921, $23,991.90, which has resulted in an overpayment of its liability by National Surety Company to the amount of $2,352.83, which amount it is entitled to be reimbursed by Warren county.

(10) The cross-bill of.Etna Casualty & Surety Company is dismissed against the indemnitors of that company as surety on Warthen's official bond for the term beginning January 1, 1924.

(11)The bill is dismissed as to the sureties on Warthen's official bonds for the terms beginning January 1, 1916, and January 1, 1920.

The decree also makes a number of specific rulings upon which its final determinations above mentioned are based, and in so far as may be necessary these will be mentioned later.

From this decree an appeal has been allowed to-Etna Casualty & Surety Company; and both the complainants below and the sureties on the supersedeas bond have as signed cross-error.We shall not set out the several assignments of error and cross-error, but shall refer to them as we take up the consideration of the several questions which they raise.

It will tend to clarity of treatment to dispose at this time of several questions which arise as to the effect of the orders entered and bonds given in the proceeding had in 1927 relative to the release of.Etna Casualty & Surety Company from liability on Warthen's official bond and the removal of him from office; and we shall consider these questions before taking up the other questions raised by the several assignments of error and cross-error.To do this with clarity it will be necessary to restate more fully some of the facts to which we have made reference above.

Prior to September 12, 1927,.Etna Casualty & Surety Company filed a petition in the circuit court of Warren county, in which it prayed that Warthen be required to relieve it from further liability as surety on his official bond by giving a new bond, and that if he failed to give a new bond that he be removed from office.Warthen requested.Etna Casualty & Surety Company to dismiss this petition, and in a writing dated September 12, 1928, requesting the dismissal of this petition, he agreed as follows: "It is distinctly understood that this petition is dismissed without prejudice and may be reinstated and filed again at any time that the.(Etna sees fit upon giving me seven days' notice and I hereby agree that seven days shall be deemed a reasonable notice."Pursuant to this request the petition was dismissed.

The state accountant made an audit of Warthen's account as treasurer as of September 8, 1927; and on September 12, 1927, addressed a letter to the board of supervisors of Warren county in which he reported what this audit showed.This report was that Warthen was indebted to the county in the sum of $55,601.84, which amount, however, was subject to a credit for such 1926 tax tickets as should thereafter be allowed to him as delinquent taxes; that at this time the delinquent list for 1926 had not been presented for allowance by Warthen to the proper authorities, but the tax tickets for which he claimed allowance amounted to $375.30, and that the amount on deposit in bank to Warthen's order as treasurer was $10, S95.44.In short, that he owed the county $44,331.40 more than he had on hand or on deposit in bank to his order as treasurer.

After this report had been made, the.Etna Casualty & Surety Company again filed its petition in the circuit court of Warren county in accordance with ...