General Ins. Co. of America v. Dyer
| Decision Date | 24 July 1972 |
| Docket Number | No. 946--I,946--I |
| Parties | GENERAL INSURANCE COMPANY OF AMERICA, Respondent, v. Elspeth S. DYER, Appellant. |
| Court | Washington Court of Appeals |
Alfred McBee, Mount Vernon, for appellant.
Slade Gorton, Atty. Gen., Donald Foss, Jr., Asst. Atty. Gen., Olympia, amicus curiae.
Zylstra & Pitt, Ted D. Zylstra, Oak Harbor, for respondent.
This action was brought by a surety against its principal to recover for payments made on the surety bond. The trial was to the court, without a jury, and resulted in a judgment in favor of the surety. The principal has appealed.
The facts essential to be stated are these: Elspeth S. Dyer was elected treasurer of the town of Oak Harbor. Her fiduciary bond was written by General Insurance Company of America. During her tenure in office, she embezzled from the town. The defalcation was discovered during the course of an audit conducted by the state auditor as required by RCW 43.09.260. Ms. Dyer promptly admitted that she had taken $12,153.64, repaid that sum, and thereafter pleaded guilty to the criminal charge brought against her.
The state auditor then conducted an additional audit, which verified that the admitted amount was correct. Pursuant to RCW 43.09.280, he then billed the town of Oak Harbor for $1,068.34, which was the expense of the additional audit. After the city paid this sum to the state, General Insurance Company of America, upon demand, reimbursed the town and sued Ms. Dyer. The court entered judgment against Ms. Dyer in this amount, $400 as a reasonable attorney's expense, and $54 for a reasonable fee for the examiner for his appearance at the trial--a total of $1,522.34.
Ms. Dyer's assignments of error, in essence, challenge the findings of the trial court that the embezzlement made the additional audit necessary and that as a direct and proximate result of this embezzlement the town sustained damages for the cost of the additional audit and for the expenses of trial. She contends the damage to the town was the loss of the amount taken, only, and that when reimbursement was made, her obligation and that of her surety was discharged. The payment by the surety was therefore a voluntary payment for which she is not responsible.
If the only damage which the town sustained by the tortious act of Ms. Dyer was the loss of the money taken, its return would satisfy her obligation and that of her surety. Costs attributable to the investigation, verification and prosecution of a tort claim are not recoverable. Armstrong Construction Co. v. Thomson, 64 Wash.2d 191, 390 P.2d 976 (1964); State ex rel. Macri v. Bremerton, 8 Wash.2d 93, 111 P.2d 612 (1941).
There was other damage, however; the integrity of the financial records of the town was destroyed by the embezzlement. According to the evidence, even though Ms. Dyer...
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State v. Taylor
...loss" recoverable under the Restatement rule. See Restatement (Second) of Torts § 927(2)(b) (1977). In General Insurance Co. v. Dyer, 7 Wash.App. 411, 412, 499 P.2d 910, 911 (1972), a town treasurer was sued for conversion. In connection with the expense of an audit, the court If the only d......