Nat'l Sur. Co. v. State
| Decision Date | 05 May 1925 |
| Docket Number | Case Number: 14539 |
| Citation | 239 P. 257,1925 OK 348,111 Okla. 180 |
| Parties | NATIONAL SURETY CO. v. STATE, for Use and Benefit of Board of Com'rs of Comanche County, et al. |
| Court | Oklahoma Supreme Court |
¶0 1. Officers--Liability on Bonds--Penalty for Illegal Disposal of Funds--Party Plaintiff.
It is well settled that sureties on official bonds are not liable for penalties prescribed in section 8590, Comp. St. 1921 ( State ex rel. Schilling v. Oklahoma City et al., 67 Okla. 18, 168 P. 227; State ex rel. Morrison v. City of Muskogee et al., 70 Okla. 19, 172 P. 796); also, that where recovery of a penalty prescribed by said section is sought, the action must be prosecuted in the name of the body politic to which the penalty is made payable by the statutes ( Territory ex rel. Johnston, Co. Atty., et al. v. Woolsey et al., 35 Okla. 545, 130 P. 934; Chicago, R. I. & Ry. Co. v. State ex rel. Gleason, Co. Atty., 52 Okla. 614, 153 P. 625).
2. Counties--Action Against Treasurer for Breach of Bond--Action by State as Use Party.
Where a suit is brought in the name of the state for the use and benefit of the board of county commissioners against the county treasurer and the sureties upon his official bond, alleging, in effect, a breach of official duty by the treasurer amounting to a breach of a condition of his official bond the action is not for penalties prescribed in section 8590, Comp. St. 1921, but is an action for loss to the county because of a breach of official duty and a breach of a condition of the official bond, and is properly brought in the name of the state for the use and benefit of the board of county commissioners.
3. Same--Liability of Treasurer for Securities Unaccounted for--Sufficiency of Petition.
Where, in a case so prosecuted, it is, in effect, alleged that the county treasurer had in his official hands securities purchased with sinking funds belonging to his county, and that such treasurer failed and refused to surrender such securities to his successor in office or account for them in money, the petition states a cause of action in favor of the plaintiff and against the treasurer and the surety on his official bond for the face value of such securities and accrued interest thereon, according to the terms of such securities.
4. Statutes--Sufficiency of Title--Act Providing for Sale of Securities Bought with Sinking Funds.
Section 2 of chapter 207, Session Laws of 1919 (section 8573, Comp. St. 1921), is constitutional.
5. Counties--Powers of County Treasurer as to Investment of Sinking Funds.
Section 1 of chapter 207, Session Laws of 1919 (section 8572, Comp. St. 1921), authorizes the county treasurer to invest sinking funds in his hands in the classes of securities named in the section; but no grant of power is therein given to the county treasurer to invest or exchange the securities so purchased by him.
6. Same--Liability on Treasurer's Bond--Recovery Sustained.
Record examined; and held, that the judgment should be affirmed.
Commissioners' Opinion, Division No. 4.
Error from District Court, Comanche County; A. S. Wells, Judge.
Action by the State of Oklahoma, for the use and benefit of the Board of County Commissioners of Comanche County, against Ben J. McGee and National Surety Company, a corporation. Judgment for plaintiff. Defendant Surety Company appeals. Defendant Ben J. McGee has filed a cross-petition in error. Affirmed.
Wilson, Tomerlin & Threlkeld, for plaintiff in error.
George F. Short, Atty. Gen., M. W. McKenzie and V. P. Crowe, Asst. Attys. Gen., and Fletcher S. Riley, Co. Atty., for defendant in error State of Oklahoma.
¶1 This is a suit prosecuted in the name of the state of Oklahoma, for the use and benefit of the county commissioners of Comanche county, against Ben J. McGee, formerly county treasurer of Comanche county, and National Surety Company, a corporation, as surety on the official bond of Ben J. McGee. The action was tried upon an amended petition. It is charged by the plaintiff that Ben J. McGee was treasurer of Comanche county from in July, 1919, to sometime in July, 1921; that the National Surety Company became surety upon his official bond in the sum of $ 75,000. For a first cause of action it is charged that the said treasurer had in his custody and under his control, $ 5,500 face value in Liberty Bonds of the United States, which the said treasurer had purchased with sinking funds belonging to the county, and which said bonds were the property of the county; that said bonds were unlawfully disposed of and delivered by the said treasurer to some party unknown to the pleader, in violation of the trust reposed in such county treasurer, and he received no money therefor for the benefit of the county; and that the bonds were of the value of $ 5,500. Double liability is alleged and judgment is prayed for double the value of the bonds. The second cause of action is the same, except that the amount of the bonds purchased and disposed of are of face value, the sum of $ 28,200, and of the alleged actual value of said sum. Double liability is alleged and prayed for. A list of the bonds so purchased and disposed of is attached to the petition. The amended petition was attacked by a motion to strike, which was overruled. The defendants separately demurred to the amended petition. The bonding company demurred upon the grounds: (1) That the facts alleged do not state a cause of action in favor of the plaintiff and against the defendant; (2) that the facts stated do not authorize recovery of double the amount of the bonds disposed of as against the surety; and (3) that in no event could a recovery be had against the surety for double the value of the bonds. The defendant Ben J. McGee demurred on the ground that the petition did not state facts sufficient to constitute a cause of action as against him. The demurrers were overruled and exceptions allowed. The defendant National Surety Company answered separately: (1) By general denial except as to matters specifically admitted; (2) the execution of the bond is admitted, but a breach of the conditions of the surety bond is denied; (3) that the treasurer was vested with authority to purchase bonds and also with authority to dispose of them to the best interests of the county; and in disposing of the bonds, acted within the scope of his authority, and his action in so disposing of the bonds was accepted and approved by the county commissioners who ratified his action in making disposition of the bonds, and the plaintiff is estopped from questioning said treasurer's authority; and prays judgment in its favor. The defendant Ben J. McGee answered by general denial.
¶2 The cause was submitted to the court upon an agreed statement of facts to the following effect: (1) That Ben J. McGee was treasurer of Comanche county from the 7th of July, 1919, to the 6th of July, 1921, and that National Surety Company was the surety upon his official bond in the sum of $ 75,000; that prior to the 24th day of February, 1921, said treasurer had in his custody and control $ 5,500 in U.S. bonds which he had purchased with cash belonging to the county sinking fund, and that on said date and without the consent of the county commissioners said treasurer disposed of said bonds by exchanging them for Devol city bonds of the face value of $ 5,500; (2) that prior to the 4th of April, 1921, said treasurer had in his custody and control $ 28,200 in U.S. bonds which had been purchased with cash out of the county sinking fund, and on said date, without the consent of the county commissioners, said treasurer exchanged said bonds for $ 13,200 face value of Devol city bonds, and $ 15,000 face value of Wynona city bonds; (3) that said U.S. bonds were of actual cash value equivalent to the par value, plus accrued interest; (4) that said Devol city and Wynona city bonds were placed in the vaults of the county treasurer, but plaintiff makes no claim to them.
¶3 After the agreed statement of facts had been filed, plaintiff obtained leave of the court to amend its amended petition by striking the claim for double liability, and reduced the relief sought to $ 33,700, the aggregate amounts of the value of the bonds disposed of. The cause was submitted to the court upon the pleadings and agreed statement of facts on April 4, 1923, and the court found the issues in favor of the plaintiff and against the defendants, and entered judgment accordingly for the par value of the bonds disposed of, the aggregate amount of the judgment being $ 33,748.46. The judgment also fixes the rate of interest at which the various sums making up the aggregate should thereafter run according to the tenor of the several classes of bonds. The court ordered that the county treasurer of Comanche county should retain the Devol city and Wynona city bonds and interest collected thereon until further orders of the court, to be delivered to the defendants upon payment of the judgment.
¶4 The defendant National Surety Company prosecutes appeal, and presents the as, assignment of errors under four propositions:
¶5 The Attorney General concedes the correctness of the position taken by the surety company as to the first and second propositions. It is well settled that sureties on official bonds are not liable for penalties prescribed in section 8590, Comp. Stats. 1921 ( State ex rel. Schilling v. Oklahoma City et al., 67 Okla. 18, 168...
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