Fidelity & Cas. Co. of New York v. Breathitt County

• Decision Date: 02 December 1938
• Citation: 123 S.W.2d 250,276 Ky. 173
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. BREATHITT COUNTY et al.
• Court: Kentucky Court of Appeals

123 S.W.2d 250

276 Ky. 173

FIDELITY & CASUALTY CO. OF NEW YORK v. BREATHITT COUNTY et al.

Court of Appeals of Kentucky

December 2, 1938

Appeal from Circuit Court, Breathitt County.

Consolidated actions by Breathitt County against Lee Combs, sheriff, and his surety, the Fidelity & Casualty Company of New York, to recover taxes, interest, and penalties, which Lee Combs sheriff, allegedly had failed to account for to Breathitt County, wherein Lee Combs and the Fidelity & Casualty Company of New York filed a counterclaim and set-off, and wherein the Fidelity & Casualty Company of New York filed a cross-petition against Ervine Turner and others, sureties on the official bond of Lee Combs, sheriff. From an adverse judgment as to Breathitt County and as to Ervine Turner and others on its cross-petition, the Fidelity & Casualty Company of New York appeals, and Breathitt County cross-appeals.

Judgment reversed in part and affirmed in part on appeal against county, affirmed on appeal against Ervine Turner and others and reversed in part and affirmed in part on the cross-appeal with directions.

In suits by county against former sheriff and his surety to recover money collected as taxes by sheriff, evidence sustained chancellor's finding that sheriff had improperly received credit in his settlement for certain sum on land sold for taxes recorded.

O. H Pollard, of Jackson, and Richard Priest Dietzman, of Louisville, for appellants.

Grannis Bach and Ervine Turner, both of Jackson, and Bruce & Bullitt and D. L. Street, all of Louisville, for appellees.

FULTON Justice.

This is an appeal from a judgment of the Breathitt circuit court in favor of Breathitt county in a suit brought by the county against Lee Combs and his surety, the Fidelity and Casualty Company of New York, to recover taxes, interest and penalties which the county claimed Combs owed by reason of money collected during his term as sheriff and which he had failed to account for and pay over to the county.

Combs qualified as sheriff and began the discharge of his duties on the first Monday in January, 1930. The sureties on his official bond were the appellees, S. L. Combs, Ervine Turner, Lewis Combs, and J. S. Hollon. Later, Combs executed his revenue bond for the year 1930, with appellant as surety, and each year thereafter during his term of office renewed his revenue bond, as required by statute, with appellant as surety. In April, 1931, Combs made his sheriff's settlement with the fiscal court of his tax collections for the year 1930. At the April term 1932, he made a like settlement for the year 1931, and in July, 1933, a like settlement for the fiscal year, 1932.

All of the above settlements were approved by the fiscal court, but no one of them was ever filed or recorded in the county clerk's office in accordance with the provisions of Section 4146, Kentucky Statutes; nor were any exceptions filed to any of them.

While we stated above that this was an action, there were really two actions filed, Nos. 2063 and 2122, which were consolidated and tried together.

Action No. 2063 sought to surcharge the three settlements above mentioned. After alleging that Combs, during the years in question, duly filed his settlements for the respective years with the fiscal court, which were accepted and approved, the petition attacks the settlements in certain particulars (hereinafter stated) and concludes with a prayer, "that the settlements made by Combs for 1930, 1931 and 1932 be surcharged in the particulars herein set forth."

Combs' term of office came to an end with the close of the term 1933. He was appointed, in January, 1934, collector of unpaid taxes for the fiscal year 1933 and executed bond with appellant as surety. In July, 1934, he settled with the fiscal court for his tax collections for the fiscal year 1933. This settlement was approved by the fiscal court, filed with the county court, duly recorded, and, no exceptions having been filed, was approved by the county court.

The petition in action No. 2122, after setting out the settlement of Combs as tax collector of unpaid taxes for the fiscal year, 1933, concludes with a prayer for judgment for amounts shown to be due the county by the settlement. To this petition Combs and appellant filed demurrer, answer, counterclaim and set-off. In the answer, counterclaim and set-off Combs and his surety denied that Combs made the settlement and sought to surcharge and correct the alleged settlement made.

In action No. 2063, which had been consolidated with No. 2122, the appellant filed a cross-petition against S. L. Combs, Ervine Turner, Lewis Combs and J. S. Hollon, sureties on the official bond of Combs, sheriff, setting out the execution of the official bond by these sureties and alleging that they were co-sureties with appellant and as such liable for any defalcation committed by Combs as sheriff and that they were obligated to pay the county ratably for all sums of the county revenue Combs had collected and failed to account for. It further alleged that the county should be required to assert against these co-sureties its claim on account of the alleged liability of Combs as set out in the petitions in these two actions, the prayer being that these sureties on the official bond be made parties-defendant and required to pay one-half of any sum adjudged to the county in the action.

The demurrer filed to this cross-petition by sureties on the official bond was sustained and, the Fidelity and Casualty Company declining to plead further on their cross-petition, it was, by the final judgment herein, dismissed, from which final judgment also appellant prosecutes this appeal.

After the general and special demurrers of Combs and appellant to the petitions as amended in the two actions had been overruled, subsequent pleadings made up the issues and the case was referred to the master commissioner who made a report of findings. Exceptions were filed to the report by both sides. The court overruled these exceptions and confirmed the report and the judgment entered by the court followed the findings of the commissioner.

In addition to the appeal prosecuted by appellant from this judgment, the county also files a cross-appeal complaining of a number of errors therein and this cross-appeal, together with the original appeal, present a large number of questions of law and fact which we will here list in order and, without stating in advance the facts applying to each question, we will take up each question separately and in considering the questions one by one will state the facts in connection therewith, where a discussion of facts is necessary. The following questions are raised by the appellant on its appeal from the judgment in favor of the county against it.

(1) The court erred in overruling the demurrer to the petition in action No. 206.

(2) The court erred in entering judgment for the county against Combs and/or his surety for the alleged failure of Combs to account for taxes collected for the Library Fund.

(3) The court erred in failing to give Combs credits to which he was entitled for the years involved in this litigation:

(a) Error in refusing to allow credit on the 1930 general fund county warrants aggregating $5,215.75 which the court adjudged were not owned by Combs, but had been used by Cockrell, a former sheriff, in his settlement.

(b) Error in giving judgment for balance due on 1930 road sinking fund of $1,234. as petition only claimed $885.29.

(c) Error in refusing to allow Combs a credit of $2,241, which had been allowed him on purported settlement and rejected by judgment in this action.

(d) Error in disallowing the following credits on the 1932 general fund:

(1) A credit of $995.89 in county warrants disallowed by court because the warrants were not due and owing by the county, but had been used as credit in former sheriff's settlement.

(2) Credit of $1,657.28, interest on warrants turned in on purported settlement.

(3) Credit of $986.34 in warrants turned over by sheriff, being an overpayment, because sheriff was illegally trafficking in warrants.

(4) Credit of $3,498.53 which was deducted from amount by which Combs was given credit for exonerations on 1932 settlement.

(4) The court erred in failing to give appellant credit on the judgment for certain county warrants turned in by Combs in his settlement for the years 1932 and 1933 in excess of his liability for those particular years.

(5) The county is estopped from suing the surety on the sheriff's bonds for the taxable years 1930, 1931, and 1932, because the settlements were not recorded, as is required by law, and not preserved intact by the fiscal court, and because it accepted payment in full satisfaction of Combs' liability.

(6) In action No. 2122, covering the year 1933, the petition is demurrable because not containing necessary allegations to surcharge the settlement; also, because no allegation that the fiscal court directed any person to bring this suit.

(7) The court erred in failing to give Combs proper credits for the year 1933, in the following particulars:

(a) A credit of $654.41 allowed Combs by order of the fiscal court payable out of the general levy for 1933 was denied.

(b) Combs overpaid by county warrants allowed by the fiscal court in the settlement for which the judgment denied credit.

(c) The judgment denied Combs credit for $266 for building voting houses for which claim was presented to the fiscal court and not allowed.

(d) The judgment denied Combs credit for $701 for advertising land sales for taxes.

(e) Error in disallowance of credit of $1,000 for interest coupons on county funding bonds claimed by Combs.

(8) The County is not entitled to recover penalties in this...