National Sur. Co. v. Campbell

• Decision Date: 01 December 1919
• Docket Number: 15491.
• Citation: 108 Wash. 596,185 P. 602
• Court: Washington Supreme Court
• Parties: NATIONAL SURETY CO. v. CAMPBELL et ux.

185 P. 602

108 Wash. 596

NATIONAL SURETY CO. v. CAMPBELL et ux.

No. 15491.

Supreme Court of Washington

December 1, 1919

Department 2.

Appeal from Superior Court, Thurston County; Mitchell, Judge.

Action by the National Surety Company, substituted for the Chicago Bonding & Surety Company, against A. D. Campbell and wife. Judgment of nonsuit and plaintiff appeals. Reversed, with directions.

C. B White and Donworth, Todd & Higgins, all of Seattle (Hyman Zettler, of Seattle, of counsel), for appellant.

Troy &amp Sturdevant and Thomas M. Vance, all of Olympia, and Bates &amp Peterson, of Tacoma, for respondents.

TOLMAN J.

This is an action upon an indemnity bond given by the respondent A D. Campbell to protect the surety on a depositary bond given by the State Bank of Tenino to secure the deposit of public funds of Thurston county under section 5073, Rem. Code. From a judgment of nonsuit in the trial court the case is brought here on appeal.

The State Bank of Tenino, having been designated by the treasurer of Thurston county as a depositary for public funds, caused a bond to secure such deposits, executed by itself as principal and the Chicago Bonding & Surety Company as surety, dated June 15, 1913, to be approved and filed as required by law, and as part of the same transaction the bonding company obtained an indemnity bond from respondent A. D. Campbell, who was a stockholder and director of the bank, the conditions of which are as follows:

'Now, therefore, if the above-bounden A. D. Campbell shall and does pay in advance the premium or charges of fifty dollars ($50), made by the company for executing said bond and continuing the same, and shall hold and keep harmless the company from and against any and all liability, loss, damages, costs, charges, and expenses of whatever nature or kind which the company shall or may at any time sustain, incur, or be put to, or by reason or in consequence of the company having given and executed the said bond, also all costs and expenses which it may incur in investigating any claim made thereunder or in or about prosecuting or defending any action, suit, or other proceedings which may be commenced or prosecuted against the State Bank of Tenino or against the company, upon the said bond or any wise in relation thereto, then this obligation to be void; otherwise it is to be and remain in full force and virtue.'

Deposit of current funds was made by the treasurer in due course, and thereafter, in September, 1914, the bank closed its doors, having upwards of $12,000 of the public funds on deposit. The bonding company paid its proportion of the loss and brought this action against respondents to recover the amount so paid, plus its costs and expenses incurred.

At the close of plaintiff's case in chief a motion for nonsuit was interposed, and the error assigned upon the granting of this motion and the subsequent entry of a judgment for the defendants is the only one we find necessary to discuss.

The motion was granted upon the theory that the designation of the bank as a depositary and the depositary bond given were by law limited to a term of one year, and that therefore the respondents, as indemnitors, contracted in the light of this limitation, and, the loss having occurred more than one year after the giving of the indemnity bond, the indemnitors were not bound to respond. The statute (Rem. Code, § 5072) reads as follows:

'Each county treasurer in this state shall on the first day of July, 1907, and annually on the second Monday in January thereafter, and at such other times as he may deem necessary, designate one or more banks in the state as depositary or depositaries of all public funds held and required to be kept by him as such treasurer, and such designation or designations shall be in writing, and the same shall be filed with the board of county commissioners of his county, and no county treasurer shall deposit any public money in banks except as herein provided.'

It is argued that this statute is mandatory as to the designation being made annually, and that upon such designation being made the depositary becomes such for one year only or until the second Monday of January following when the statute required a new designation and a new bond. If this be the correct interpretation of the statute, then, under the rule laid down in King County v. Ferry, 5 Wash. 536, 32 P. 538, 19 L. R. A. 500, 34 Am. St. Rep. 880, and a long line of decisions of other states, mostly concerning bonds of officials elected or appointed for a definite term, the judgment of the lower court was right. Our first inquiry must then be as to the meaning of the statute. The Supreme Court of Oregon, in construing a similar statute, said:

'However, a graver question arises when we take up the consideration whether the particular provision in thought is to be regarded as directory or mandatory. We think the true rule is expressed in the following language: 'When the particular provision of the statute relates to some immaterial matter, where compliance is a matter of convenience rather than substance, or where the directions of the statute are given with a view to the proper, orderly, and prompt conduct of business merely, the provision may generally be regarded as directory.' Hurford v. City of Omaha, 4 Neb. 350. To the same effect we cite Sedgwick on Constitutional Law, p. 372; 36 Cyc. 1158. In People v. Lake County, 33 Cal. 487, a

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