Maryland Casualty Co. v. Holt's Adm'X.

• Decision Date: 10 December 1940
• Citation: 285 Ky. 66
• Parties: Maryland Casualty Co. v. Holt's Adm'x et al.
• Court: United States State Supreme Court — District of Kentucky

285 Ky. 66

Maryland Casualty Co. v. Holt's Adm'x et al.

Court of Appeals of Kentucky.

December 10, 1940.

1. Appeal and Error. — In county's action against former sheriff and his surety to surcharge his settlements and recover amount of alleged shortages, where bank asked in its intervening petition that mortgage, given it for amount loaned mortgagor to purchase

mortgaged realty, acuired by sheriff during his term, be adjudged a lien thereon, superior to surety's lien by subrogation for amount due county from sheriff as revenue collector, and stated in motion to dismiss as to bank appeal from judgment dismissing surety's cross-petition for subrogation and sale of property to satisfy any judgment against surety that mortgage lien was satisfied in full and that bank had no further interest in land, such motion must be sustained (Ky. Stats., sec. 4130).

2. Taxation. — Where reports of sheriff's annual settlements of his accounts as revenue collector were not filed in county clerk's office or approved by county court, but sheriff merely settled with commissioner appointed by fiscal court, which accepted such settlements, they were not legally settlements (Ky. Stats., secs. 1884, 4146).

3. Taxation. — A sheriff's settlement of his account as collector of revenues may be attacked on ground of fraud or mistake in suit to surcharge settlement, even if it was made in strict compliance with statutes, filed in county court, and approved thereby (Ky. Stats., secs. 1884, 4146).

4. Taxation. — A county was not "estopped" to claim lien on land, purchased from sheriff by another after expiration of such officer's term, for amount due county from sheriff as collector of revenues, because fiscal court accepted his annual settlements, granted him quietus for each year of his term, and voluntarily refunded amount claimed by him to be overpayment of revenues due county for certain years, so that there was a right to which sheriff's surety could be subrogated (Ky. Stats., sec. 4130).

5. Taxation. — One purchasing realty, owned by sheriff during his term of office, acts at purchaser's peril and with notice that county's lien for any shortage in sheriff's accounts as revenue collector will be superior to purchaser's rights, regardless of any settlement made by sheriff or quietus granted him by fiscal court (Ky. Stats., sec. 4130).

6. Subrogation. — While one purchasing land from former sheriff was not bound by agreed judgment, to which purchaser was not party, in favor of county against administratrix of deceased vendor's estate and decedent's surety for amount of alleged shortages in decedent's settlements as collector of revenues, and was entitled to show that decedent was not indebted to county when judgment was entered, so that no lien on such land existed in county's favor, dismissal of surety's cross-petition for subrogation to county's lien was erroneous, in absence of such showing (Ky. Stats., sec. 4130).

Appeal from McCracken Circuit Court.

Wheeler & Shelbourne for appellant.

Boyd & Boyd for appellees.

Before Joe L. Price, Judge.

OPINION OF THE COURT BY JUDGE REES.

Reversing.

Emmett L. Holt served as sheriff of McCracken county during the years 1926 to 1929, inclusive. On February 16, 1932, McCracken county and the Commonwealth of Kentucky, suing for the use and benefit of McCracken county, brought this action against Holt and his surety, Maryland Casualty Company, to surcharge Holt's settlements and to recover the sum of $15,234.47. It was alleged that on account of errors and mistakes in the various settlements this sum was due and owing to the county. The alleged shortages were set out in separate paragraphs. Holt filed a separate answer in which he traversed the averments of the petition and pleaded affirmatively that during his term of office he made a settlement each year with the agent selected by McCracken county, which became final upon its acceptance by him and the county and could not thereafter be attacked or surcharged. On May 17, 1932, the Maryland Casualty Company filed its separate answer which, on its motion, was made a cross-petition against its codefendant Emmett L. Holt and against Charles E. Nicholson and Hettie Irene Holt, wife of Emmett L. Holt. It was alleged that Emmett L. Holt conveyed to Charles E. Nicholson on September 23, 1931, a certain tract of land which he had acquired November 26, 1927, while he was the duly elected, qualified, and acting sheriff of McCracken county and the collector of revenue thereof, and that by virtue of Section 4130 of the Kentucky Statutes McCracken county had a lien upon said property to satisfy any amount due by Emmett L. Holt as collector of revenue for the county, and that the Maryland Casualty Company was entitled to be subrogated to such lien and to have said property sold to satisfy any judgment that might be rendered against it as surety on Holt's revenue bonds. Holt died during the pendency of the action, and it was revived in the names of his personal representative and heirs. Summons on the cross-petition was not issued until January 18, 1934, and was served on Charles E. Nicholson January 19, 1934. In the meantime, the issues between the other parties to the litigation had been completed and depositions had been taken. On February 17, 1934, the case was submitted upon the pleadings, exhibits, and proof, and a judgment was entered which reads in part:

"By agreement it is ordered and adjudged that the plaintiff, Commonwealth of Kentucky, for the use and benefit of McCracken County, Kentucky, recover of the defendants, Hettie Irene Holt, as Administratix of the estate of Emmett L. Holt, and the Maryland Casualty Company, the sum of Five Thousand Five Hundred ($5,500.00) Dollars, with interest at the rate of six per cent from this date until paid, and the cost in this action expended, for which an execution is awarded and may issue."

It was also adjudged that the Maryland Casualty Company, upon payment and satisfaction of the judgment, "is entitled to be and is subrogated to all the rights, liens, claims and judgment of the plaintiff against the estate of Emmett L. Holt, arising out of laws or statutes in such cases made and provided." On the same day the Maryland Casualty Company paid into court the sum of $5,500 in full satisfaction of the judgment.

On February 21, 1934, four days after the foregoing judgment was entered, Charles E. Nicholson filed a demurrer to the answer and cross-petition of the Maryland Casualty Company, and on March 12, 1934, he filed an answer to the cross-petition. On the same day the Peoples National Bank of Paducah, Kentucky, filed its intervening petition. The Maryland Casualty Company filed a reply to the answer of Charles E. Nicholson and on June 22, 1938, an agreed stipulation of facts was filed by the defendant and cross-petitioner, Maryland Casualty Company, the intervening petitioner, Peoples National Bank, and the defendant Charles E. Nicholson. The stipulation states, in substance, that Charles E. Nicholson did on the 23rd day of September, 1931, purchase from Emmett L. Holt, for a consideration of $2,500, the real estate described in his answer to the cross-petition of the Maryland Casualty Company, and that he applied to the Peoples National Bank for a loan on the property in order to enable him to purchase same and that he and the bank had the title to the property examined, and that the records of the settlements made by Emmett L. Holt, as sheriff of McCracken county, were all carefully checked. All records kept by McCracken county showing settlements or orders accepting, approving or rejecting said settlements were copied and attached to the stipulation as exhibits. These records are orders of the McCracken county fiscal court approving the report of the special commissioner appointed each year to make the settlement with the sheriff and granting the sheriff his quietus. There is one of these orders for each of the four years. There is also an order of the McCracken county fiscal court entered November 27, 1929, refunding to Emmett L. Holt, sheriff, the sum of $4,796.94, the same being the alleged amount...