Lundeen v. Schumacher

• Decision Date: 20 December 1927
• Docket Number: 6415
• Citation: 52 S.D. 149,216 N.W. 883
• Parties: F. A. LUNDEEN, Respondent, v. A. W. SCHUMACHER et al, Appellants.
• Court: South Dakota Supreme Court

52 S.D. 149

216 N.W. 883

F. A. LUNDEEN, Respondent,

v.

A. W. SCHUMACHER et al, Appellants. South Dakota Supreme Court Appeal from Circuit Court, Edmunds County, SD Hon. J. H. Bottum, Judge File No. 6415—Affirmed Buell P. Jones, Attorney General Benj. D. Mintener, Assistant Attorney General, Pierre, SD Bruell & Henderson, Redfield, SD Attorneys for Appellants. J. M. Berry, Ipswich, SD F. E. Snider, Faulkton, SD Attorneys for Respondent. Opinion filed December 20, 1927

CAMPBELL, P. J.

This is an appeal from an order overruling a demurrer to plaintiff’s complaint upon the ground that the same did not state facts sufficient to constitute a cause of action as against the defendant and appellant the state bonding department of the state of South Dakota.

We adopt the statement of appellant’s brief as to the substance of plaintiff’s complaint as follows:

“This action was instituted by the plaintiff for the purpose of recovering judgment against A. W. Schumacher, as sheriff of Edmunds county, S. D., for an alleged conversion, and seeking to hold the defendant the state bonding department liable for the amount of said judgment and interest, and to bind the state bonding department with the defendant A. W. Schumacher for the payment thereof.

“It appears from the complaint of the plaintiff that A. W. Schumacher was, prior to the 18th day of September, 1925, the duly elected, qualified, and acting sheriff of Edmunds county, S. D., and that he had filed his official bond with the county auditor of said county, said bond having been executed by the said Schumacher as principal and the state bonding department of the state of South Dakota. It further appears that the plaintiff was the sole owner of a certain stock of merchandise located in the town of Loyalton, in Edmunds county, S. D., and that the defendant Schumacher, as sheriff of Edmunds county, under and by virtue of a warrant of attachment issued out of the office of the clerk of the circuit court of Edmunds county, in an action wherein the First State Bank of Loyalton was plaintiff and P. A. Lundeen was defendant, wrongfully and unlawfully took and seized the stock of merchandise, and converted the said property to his Own use. The complaint further alleges that, after said conversion, an action was instituted by the plaintiff against the defendant A. W. Schumacher, as sheriff of Edmunds county, S. D., and a judgment was duly entered in favor of the plaintiff and against the defendant Schumacher for the wrongful conversion of said property, said judgment having been entered on the 24th day of March, 1926, in the sum of $1,224.30, and that, after the entry of said judgment, an execution was duly issued, and that, after diligent search and inquiry, the levying officer Was unable to find any property belonging to the defendant A. W. Schumacher upon which to levy, and that the said execution was returned wholly unsatisfied.

“The plaintiff by this action now seeks to recover another judgment against the defendant A. W. Schumacher for the amount of the former judgment, and to hold the defendant and appellant state bonding department liable for the amount of such judgment.”

The official bond of the sheriff referred to in the complaint was in the following form:

“Know, all men by these presents that we, A. W. Schumacher, of Ipswich, S. D., as principal, and the state of South Dakota, as surety, are held and firmly bound unto the county of Edmunds, state of South Dakota, in the penal sum of three thousand and no/100 ($3,000.00) dollars, lawful money of the United States of America, the payment of which, well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, by these presents. Sealed with our seals and dated this 6th day of January, 1925.

“Whereas the said A. W. Schumacher has been duly elected to the office of sheriff within and for the county of Edmunds, in the state of South Dakota:

“Now, therefore, if the said A. W. Schumacher shall faithfully and impartially discharge the duties of his office as sheriff, and render a true account of all moneys, accounts, and property of any kind that shall come into his hands as such officer, and pay over and deliver the same according to law, then the above obligation shall be null and void, otherwise to be in full force and effect. The payment of any loss by the surety shall be made out of the state bonding fund. This bond becomes effective after January 6, 1925.

“In witness whereof said principal has hereunto set his hand and seal, and the state of South Dakota has caused this bond to be sealed with the seal of the commissioner of insurance, and signed by its duly authorized officer, the day and year first above written.”

Appellant presents two propositions in support of its demurrer.

The state bonding department was created by chapter 318, Laws 1919, and section 12 of that act reads as follows:

“In the event of any default in the condition of any bond or of any loss by the state or by any department or institution or by any county, immediate notice thereof in writing shall be given to the commissioner of insurance, who shall immediately notify the executive accountant, and it shall be his duty to examine the accounts of the defaulting officer or employee and to make full disclosure to the commissioner of insurance of the results of such examination, and the commissioner of insurance shall thereupon make such adjustment and settlement with the injured party as may be equitable and just.”

Appellant maintains that the complaint is fatally defective, because it fails to state that this immediate notice in writing of the officer’s default was given to the commissioner of insurance, as required by the statute, advancing the contention that the giving of such notice is a condition precedent to any liability, and that it was essential for respondent to plead either the giving of such notice or facts excusing the same.

In considering this question, we have first to observe that, generally speaking, a contract of fidelity insurance is subject to the same general rules of construction that apply to other insurance contracts, and guaranteeing the fidelity of an employee or officer is a form of insurance rather than suretyship, as the terms are ordinarily used. It follows that, if such a contract, looking at all its...