Mayor, Etc., of Brunswick v. Harvey

• Decision Date: 06 February 1902
• Citation: 40 S.E. 754,114 Ga. 733
• Parties: MAYOR, ETC., OF BRUNSWICK v. HARVEY et al.
• Court: Georgia Supreme Court

40 S.E. 754

114 Ga. 733

MAYOR, ETC., OF BRUNSWICK v. HARVEY et al.

Supreme Court of Georgia

February 6, 1902

Syllabus by the Court.

1. Where a fidelity and guaranty company enters into a bond with the authorities of a municipal corporation to guaranty the city against the fraud and dishonesty of the city treasurer the obligation thus given is not a statutory, but a voluntary, bond. To it, for this reason, if for no other section 263 of the Political Code is not applicable.

2. Where in such bond the treasurer joins merely to enter into an obligation to save the company harmless, and makes no promise or covenant to the city, the company and the treasurer are not jointly liable on such bond.

3. Where a suit is brought upon such bond, and the allegations of the petition clearly show that the action is predicated upon the original bond only, an amendment seeking to recover upon two other bonds, given subsequently for a like amount and purpose, and adopting by reference the terms of the original bond, was not allowable, although the petition alleged that the bond sued on had been renewed from time to time. The renewals being separate and distinct contracts, the amendment sought to add a new and distinct cause of action.

4. Where in such bond it was stipulated that the liability of the company should be limited to such losses as should occur during the continuance of the bond or any renewal thereof and be "discovered during said continuance, or within six months thereafter, or within six months from the death or dismissal or retirement" of the treasurer from the service of the city, and that, upon the issuance by the company of any subsequent bond guarantying the fidelity of the treasurer, the liability under the original bond should cease and determine, so that no two bonds should be operative at the same time, the company is not liable under the original bond for any loss not discovered until more than six months after the expiration of such bond, although such loss was discovered within six months from the dismissal of the employé, and during the continuance of one of the subsequent bonds.

Error from city court of Brunswick; J. Bishop, Jr., Judge.

Action by the mayor and council of Brunswick against H. H. Harvey and the United States Fidelity & Guaranty Company. Judgment for defendants, and plaintiffs bring error. Affirmed.

F. E. Twitty and W. E. Kay, for plaintiffs in error.

Crovatt & Whitfield, Atkinson & Dunwoody, A. L. Franklin, and W. G. Brantley, for defendants in error.

SIMMONS C.J.

The mayor and council of the city of Brunswick brought suit against Harvey and the United States Fidelity & Guaranty Company. From the allegations of the petition the following facts appear: In January, 1898, Harvey was elected city treasurer by the mayor and aldermen of Brunswick. The charter of that city required that the treasurer give bond, with security, for the faithful performance of his duties. On January 24, 1898, a bond was accepted by the mayor and council from the fidelity and guaranty company. This bond was in the sum of $15,000, and guarantied the city against the fraud and dishonesty of Harvey as treasurer. The bond was signed by Harvey and by the president and the secretary of the company, and sealed with the seal of the company. It contained no promise or covenant by Harvey to the municipality. The only promise or covenant on his part was that he would save the company harmless from loss on the bond. The bond contained many stipulations and conditions limiting the liability of the company. Some of these will be mentioned in the opinion below. The bond was to be of force from February 1, 1898, to February 1, 1899.

In August, 1900, the city authorities discovered that Harvey was a defaulter. On September 15th thereafter, in compliance with one of the conditions of the bond, notice of the defalcation was given the company. The company sent an agent to the city of Brunswick, who made an investigation of Harvey's accounts. The company thereupon refused to pay anything on the bond. Suit was brought by the city against Harvey and the company for $15,000,--the amount of the bond. To this action Harvey and the company severally demurred. The only ground of Harvey's demurrer necessary to mention here urged that there was a misjoinder of parties, and that the petition did not set forth a cause of action; he claiming that the city had no right to recover against him on the bond, because in it he had made no promise or covenant whatever to the city authorities. Harvey also filed a plea in abatement, which, under the view we take of the case, it is unnecessary to set out here. The company demurred on several grounds. One of these was that there was no cause of action set out against it, because it appeared from the petition and the bond attached thereto that the liability of the company on the bond had ceased and determined on account of the failure of the city authorities to discover the defalcation of Harvey and to give notice thereof within six months after the expiration of the bond. The plaintiff offered several amendments to the petition, most of them being of a formal nature to meet special demurrers. The principal amendment was to the effect that the company had twice renewed the original bond, and was liable on these renewals for $15,000 each, in addition to an amount claimed on the original bond. This amendment alleged that Harvey had defaulted for an amount much larger than that set out in the original petition. It was claimed that this amendment was allowable, for the reason that the original petition had alleged that the company had given the bond then sued on, and such bond had been continued from time to time, and renewed from year to year. This amendment was objected to by the company on the ground that it sought to introduce a new and distinct cause of action. The demurrers of Harvey and the company were sustained by the trial judge, who refused to allow the amendment and dismissed the petition. The plaintiffs sued out a bill of exceptions, and brought the case here, assigning error on each of the rulings of the trial judge.

1. It was claimed here in the argument of the learned counsel for the plaintiff in error that although the bond given by the defendants was defective, and did not contain the provisions required by the statute, still, under the Political Code (section 256), it was a statutory bond, and under the Political Code (section 263) the court would "read into it" all the conditions prescribed for statutory bonds. We have carefully examined the bond and the authorities relied upon by counsel, and, after such examination, we cannot concur with counsel in this contention. The charter of Brunswick (Acts 1889, p. 1041, § 39) requires that the treasurer of the city give bond and security for the faithful performance of his duties. In order to comply with this requirement, the officer himself should be one of the obligors in the bond. Instead of giving the bond required by the charter, Harvey gave one signed by the fidelity and guaranty company, which was in the nature of a policy of fidelity insurance, insuring the city against his fraud...