Larson v. Engebretson

• Decision Date: 13 June 1936
• Docket Number: 6407
• Citation: 267 N.W. 660,66 N.D. 549
• Court: North Dakota Supreme Court

267 N.W. 660

66 N.D. 549

E. B. LARSON, Martin C. Christianson, Mrs. Albert Ellingrud, Bloomfield Township, a Public Corporation, Respondents, v. OLE ENGEBRETSON, et al., and CARL ARNEGARD, Ben Berkas, and Theodore Halvorson, Appellants

No. 6407

Supreme Court of North Dakota

June 13, 1936

Appeal from District Court, Traill County; Daniel B. Holt, Judge.

Action by E. B. Larson and others against Ole Engebretson and others. From a judgment, Carl Arnegard and others appeal.

Affirmed.

Syllabus by the Court.

1. Following School District v. Stomberg, 61 N.D. 6 236 N.W. 728, it is held that under section 714a7, 1925 Supplement to the Compiled Laws of 1913, the duration of a statutory depository bond, unless renewed as provided in said section, is limited to 4 years from the date of its execution and delivery.

2. It is the duty of township supervisors to designate a public depository for township funds, to require of the depository the statutory depository bond, and, before the expiration of 4 years from the date of the execution and delivery of the said bond, to require a new or a different bond, and a failure to require a new or a different bond, as provided in section 714a7, 1925 Supplement to the Compiled Laws of 1913 is negligence on the part of the said township supervisors, and they are liable for any loss of public funds occasioned thereby.

Acker & Shafer, for appellants.

Delivery of a bond is essential, but filing or depositing with the county auditor is not necessary to bind the sureties. 18 C.J. 586; 4 R.C.L. 54.

Statutes requiring bonds to be approved by certain officials are not for the purpose of protecting the obligors on the bond, but are aimed to protect the public, to insure solvency, and to create evidence of an unimpeachable character of the fact of their execution. American Book Co. v. Wells, 83 S.W. 622; Board of Comrs. v. State Bank, 66 N.W. 143; Board of Comrs. v. Gray (Minn.) 63 N.W. 635; State v. Cornwallis State Bank, 84 Mont. 297, 275 P. 265; Davidson County v. Western Nat. Bank (S.D.) 235 N.W. 370.

Provision requiring the official approval of a bond is merely directory, and hence an irregularity or entire failure in this respect does not affect the validity of the bond. 9 C.J. 25.

Obligation of sureties on an official bond is not dissolved by failure of the governor to approve and endorse, although a statute of the state providing for such bonds requires the approval and endorsement to be made. Auditor v. Woodruff, 2 Ark. 73, 33 Am. Dec. 368; Green v. Wardwell, 17 Ill. 278, 63 Am. Dec. 366; Holt County v. Scott (Neb.) 73 N.W. 681; Dickey County v. Gesme, 51 N.D. 272, 199 N.W. 873.

Where parties voluntarily enter into a contract in order that they and others for whom they are sureties may have advantages which come from the contractual relations, and thereafter reap these very same advantages, they cannot be heard to deny the validity of the undertaking into which they entered. School Dist. v. Stomberg, 61 N.D. 6, 236 N.W. 728; Emmons County v. Pleppe, 61 N.D. 536, 238 N.W. 651; Gardner v. Donnelly (Cal.) 24 P. 1072.

Bond given by state bank to secure school district deposit constitutes a valid obligation of sureties, notwithstanding absence of statutory authority. Bayard City School Dist. v. Vanatla (Neb.) 242 N.W. 435; Farmers State Bank v. Bronson (Minn.) 234 N.W. 594; Floyd County v. Ramsay (Iowa) 230 N.W. 404; Lyman County v. Whitbeck, 54 S.D. 317, 223 N.W. 204.

Where the statute required a bond to secure a deposit of public moneys and in effect to comply with the statute an undertaking rather than a bond is given, the same will be enforced as a common-law bond. Farmington v. Reisinger (Minn.) 218 N.W. 444.

Burdick & Burdick, for respondents.

The time limit fixed by statute must be read into the bond. Under a bond of this form the sureties are liable only for funds deposited with the bank during the term for which the bond was given, but they continue liable for such funds until they are paid, although payment may not be demanded till after the term has expired. School Dist. v. Stomberg, 61 N.D. 6, 236 N.W. 728; Divide County v. Baird, 55 N.D. 45, 212 N.W. 236; Emmons County v. Kleppe, 61 N.D. 536, 238 N.W. 651.

An officer who, without legal excuse, failed to perform a ministerial duty, is liable for the proximate results of his failure to any person to whom he owes performance of such duty. State v. Ruth, 9 S.D. 84, 68 N.W. 189; Wilson v. New York, 1 Denio, 595.

A requirement of the law that an officer shall exact a bond from contractors engaged on public works involves a ministerial duty for the neglect of which or the failure to incorporate provisions required by law he is liable in damages at the suit of the party injured. Burton Mach. Co. v. Ruth, 194 Mo.App. 194, 186 S.W. 737; Fogarty v. Davis, 305 Mo. 288, 264 S.W. 879; State v. Title Guaranty Co. 27 Idaho 752, 152 P. 189; Buhl Highway Dist. v. Allerd, 41 Idaho 54, 238 P. 298.

Where the duty is required by law and is of a public nature, the law is a sufficient demand, and an omission to perform is refusal. Chumasero v. Potts, 2 Mont. 252.

Burke, Ch. J. Burr, Morris, Christianson and Nuessle, JJ., concur.

OPINION

BURKE

Plaintiffs bring this action as taxpayers of Bloomfield township, Traill county, North Dakota against the defendants as officers of said Bloomfield township for negligence in the handling of public funds in the Peoples State Bank of Hillsboro, which bank in April 1921 was designated as a public depository. A depository bond, with personal sureties, in the sum of $ 1,500, dated April 29, 1921, was furnished by the depository bank. On September 14, 1926, a second depository bond in the sum of $ 6,000 with personal sureties, who were the directors of the depository bank, was furnished by said bank. This later bond was in the custody of the clerk of the board of Bloomfield Township. Neither bond was ever renewed, and from April 1921 until April 11, 1932 the Peoples State Bank of Hillsboro continued as the sole depository for the funds of that township, which were entirely general funds. On April 11, 1932, the Peoples State Bank became insolvent and passed into the hands of a receiver.

There was a trial of said action to the court without a jury, and findings of fact and conclusions of law favorable to the plaintiffs were made by the trial judge, except as against Ole Engebretson, treasurer, and Andrew Wilson, clerk of said township, and as to them the said action was dismissed. The attorneys for the plaintiffs and defendants stipulated that the amount involved was $ 1,089.15. Judgment was accordingly entered for that amount together with interest, from which judgment the defendants duly appeal and request a trial de novo.

It is the contention of appellants that the bond dated September 14, 1926 is a complete continuing bond binding upon the sureties. The bond is intended as a statutory bond. It states specifically that

"The conditions of this obligation are such that, whereas, the said Peoples State Bank of Hillsboro has been designated as a depository in which may be deposited funds of said obligee, pursuant to the provisions of an Act of the Legislative Assembly of the State of North Dakota, entitled 'An Act Designating the Depositories of Public Funds and fixing the rate of Interest, etc., approved March 8, 1923.'"

This provision in the bond clearly shows it is intended as a statutory bond. It continues as follows:

"Now, therefore, if the said Peoples State Bank of Hillsboro shall well and truly account for and pay over to the said obligee, or to its order, on demand, all funds so deposited with it as such depository, with interest, if any as may be agreed upon, and agreeably to the terms of such deposits as being payable on demand or at any particular time, and shall furnish to said obligee on the first day of each month after the shall furnish to said obligee on the first day of each month after the date of this bond an itemized statement of the amount of such deposits subject to check, verified when required and shall well and truly perform all other obligations and conditions now or hereafter imposed by law on its part to be kept and performed, then and in that event, this obligation to be void; otherwise to be and remain in full force and effect.

"Provided, further, that the liability of said sureties shall commence on the date of the execution of this Bond, and shall continue until this Bond shall be abrogated and cancelled by the written consent of the said obligee, provided, however, that said sureties may limit their liability hereunder to such liability as shall arise out of deposits made by said obligee on or before any certain date, to be fixed by said sureties, by giving written notice to the obligee of said sureties' election so to do at least thirty days prior to such date."

It is the contention of appellants that this last provision makes the bond a continuing liability upon the part of the sureties, subject to the condition in the bond permitting the sureties to limit their liability arising out of deposits by a written notice to the obligee of said sureties' election so to do at least thirty days prior to such date; that the obligors on the bond never exercised or enforced the condition by...