Maryland Casualty Co. v. Kansas City, Mo.

• Decision Date: 02 July 1942
• Docket Number: No. 12163.,12163.
• Citation: 128 F.2d 998
• Parties: MARYLAND CASUALTY CO. v. KANSAS CITY, MO.
• Court: U.S. Court of Appeals — Eighth Circuit

128 F.2d 998 (1942)

MARYLAND CASUALTY CO. v. KANSAS CITY, MO.

No. 12163.

Circuit Court of Appeals, Eighth Circuit.

July 2, 1942.

William E. Durham, of Kansas City, Mo. (J. L. Milligan, Clifford B. Kimberly, and Milligan & Kimberly, all of Kansas City, Mo., on the brief), for appellant.

Ilus M. Lee, Asst. City Counselor, of Kansas City, Mo. (William E. Kemp, City Counselor, of Kansas City, Mo., on the brief), for appellee.

Before SANBORN, WOODROUGH, and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

The plaintiff below, Kansas City, Missouri, is a municipal corporation of the State of Missouri, existing under and by virtue of the Constitution and laws of said state. Pursuant to said constitution and laws plaintiff, appellee herein, framed and adopted a charter for its own government, which charter declared to be a public Act, became effective April 10, 1926, and since that date has been in full force and effect. In accordance with the provisions of said charter, one Edward P. Connor was, on May 1, 1930, duly appointed auditor of said city and legally qualified; and during all the period of time from May 1, 1930, to April 17, 1940, was in charge of the duties of said office.

Under provisions of the charter the auditor of the city was required to give a surety bond for the faithful performance of his duties as such officer; and by ordinance the amount of the bond was fixed at $10,000. March 31, 1932, Connor as principal, and appellant Maryland Casualty Company as surety, executed the official bond sued on, conditioned that "if the said Edward P. Connor as aforesaid, shall during the time he shall fill said office or position after this date faithfully discharge and perform all of his duties as Auditor of Kansas City, then this obligation shall be void; otherwise to remain in full force and effect".

Section 13 of the charter provides that the city council shall appoint an auditor who shall serve during its pleasure, and thus describes the duties which he undertakes faithfully to discharge and perform: "His duty shall be to keep the Council informed as to the work performed, methods and financial affairs of the city. He shall not be responsible for the keeping of accounts. He shall carry on a continuous investigation of the work of all departments of the city, and shall report from time to time, and at least once each year, the methods and results of their operations. He shall make such other investigations as the Council may direct. He shall have access to all books and records of all departments of the city. He shall have power to summon before him any officer, agent or employe of any department, or any other person, and examine him upon oath or affirmation, which oath or affirmation he may administer. He shall certify to the correctness of all financial reports before such report shall be regarded as official".

By section 131 of Ordinance No. 52820 of the Administrative Code under the city charter salaries and compensations of employees in the city service are established. The second paragraph of this ordinance expressly provides that: "No officer, appointee or employe in the city service shall be entitled to any additional salary or compensation other than as expressly provided by the charter or this ordinance for any duty performed or service rendered for the city or in or about its business or affairs, and this regardless of the office or position held or work done or service rendered".

The original complaint was filed and summons issued thereon October 12, 1940. The second amended complaint, upon which the case was tried to the court, was filed January 21, 1941. The grounds for recovery are stated in two counts. Under the first count recovery is sought for payments made to and accepted by Connor the auditor, within the period covered by the bond, of additional salary and compensation other than as expressly provided by ordinance. Under the second count recovery is sought for payments made to W. H. McCormick, assistant auditor, in addition to the salary allowed to him by ordinance, and also for similar payments made to other employees in the auditor's office. These payments were made from various bond funds. The auditor was aware of all these transactions, and of the applicable charter provisions, and made no report concerning them to the city council.

The general finding of the trial court is embraced in the following conclusion: "It was the duty of the auditor to keep the city council informed as to the work performed, the methods and financial affairs of the city. It was his duty to refrain from committing any act or failing to report the commission of any act which constituted a violation of the charter or ordinance of the city relative to the city's finances".

On his findings of fact, which are amply supported by the record, in which counsel for appellant concedes that "the evidence was substantially without conflict", the trial judge concludes that recovery should be allowed in the sum of $5,608.49 on the first count, and in the sum of $4,775 on the second count. He entered judgment in the sum of $10,000, the full penalty of the bond, together with interest from and after October 12, 1940, amounting to $366.66.

In contending that the auditor's bondsman is not liable for the items upon which judgment was rendered, the main points relied upon by appellant are:

1. The receipt and retention of moneys by Connor and McCormick were not a breach of the bond.

2. Defendant not liable for moneys received from the City Manager's Emergency Fund prior to three years before the commencement of this action.

3. Connor's approval of requisitions for warrants drawn on the general fund was not a breach.

4. Auditor's failure to report payments in detail did not cause the loss complained of.

5. The rights of the parties have been heretofore adjudicated, and the auditor and his bondsman vindicated of liability for the "Emergency Fund" items.

6. Defendant has been released in whole or in part of all items for which the district court held it responsible.

7. The court erred in entering judgment in excess of the face of the bond.

All substantial assignments of error may be disposed of without strict confinement to these headings. The charge in the complaint to which the first assignment applies was the receipt and retention by the auditor of additional compensation over the salaries and compensation fixed by ordinance and the failure to report such financial conditions to the council. As found by the trial judge the auditor's salary so fixed was $4,000 per annum for all the period from March 31, 1932, until April 17, 1940, except for two short periods when, by ordinance, his salary was fixed at the rate of $2,000 per annum. During the period covered by the bond he received extra compensation, which was not barred by limitations, in the sum of $9,525 not authorized by ordinance. During this period certain salary reductions were made, not by ordinance, but at the direction of the City Manager, who required each employee to sign an application for leave of absence without pay. The leaves were granted but the employees continued with their duties.

The trial judge found that, in the case of the auditor, the salary provided by ordinance would, if paid during these reduction periods, amount to $3,916.51, and found that appellant could be held for only the amount which was in excess of the salary fixed by ordinance. He therefore reduced the said sum of $9,525 by $3,916.51, leaving $5,608.49 as the recovery allowed on Count One, plus interest.

In the case of Assistant Auditor McCormick, the salary as fixed by ordinance was $3,600 per annum except for two short periods when it was reduced, also by ordinance. Salary reductions not made by ordinance reduced his ordinance salary by $3,525. The excess compensation received by McCormick during the period covered by this bond, and within three years next before the filing of this action, and the recovery of which was consequently not barred by the Statute of Limitations, was found to be $8,300. Applying the same principle heretofore noted in the case of the auditor, this $8,300 was reduced by $3,525. Hence the recoverable amount of the excess payments to McCormick was $4,775. No excess payments were found to have been made to the other employees in the auditor's office, hence the recovery on the Second Count was fixed at $4,775 plus interest. The total amount of recovery on both counts, plus interest from October 12, 1940, was $10,764.15. The judgment entry ordered that upon payment to plaintiff of $10,000, the full penalty of the bond, with interest from and after October 12, 1940, amounting to $366.66, or a total of $10,366.66, and all costs, "this judgment as to both counts shall thereupon and simultaneously therewith stand and be satisfied in full".

Connor, as found by the district judge, at all times knew what salary was fixed by ordinance for his own services and the services of the employees in his office. He knew the provisions of the city charter respecting salaries; and the engagement of a surety on such an official bond is entered into with reference to the law which defines the duty of the officer. As held by the Missouri Supreme Court in Smith v. Pettis County, 345 Mo. 839, 136 S.W.2d 282, the right of a public official to compensation must be founded on a statute; and a statute granting a public official compensation should be strictly construed against the officer. Furthermore, the right of a public officer to be compensated by salary for the performance of duties imposed upon him by law, does not rest on any theory of contract, express or implied, but is purely a creature of statute; and "he who accepts public office takes it cum onere." Maxwell et al. v. Andrew County, 347 Mo. 156, 146 S.W.2d 621, 626. In the latter case it was held that the surety on a sheriff's official bond was not liable to the county for the amount of...