National Surety Co. v. Conway, Civil 3340

• Decision Date: 01 June 1934
• Docket Number: Civil 3340
• Citation: 43 Ariz. 480,33 P.2d 276
• Parties: NATIONAL SURETY COMPANY, a Corporation, Appellant, v. E. P. CONWAY, Appellee
• Court: Arizona Supreme Court

33 P.2d 276

43 Ariz. 480

NATIONAL SURETY COMPANY, a Corporation, Appellant, v. E. P. CONWAY, Appellee

Civil No. 3340

Supreme Court of Arizona

June 1, 1934

APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Judgment affirmed.

Mr Henderson Stockton and Mr. Emmett M. Barry, for Appellant.

Messrs Kibbey, Bennett, Gust, Smith & Rosenfeld and Mr. Ivan Robinette, for Appellee.

OPINION

LOCKWOOD, J.

E. P Conway, hereinafter called appellee, in 1926 brought suit under chapter 22 of the Session Laws of 1921, against Charles W. Harris, as adjutant-general of the state of Arizona, and the National Surety Company, the latter hereinafter called appellant, which was the surety on the official bond of Harris. The complaint was based upon the alleged consenting to and conniving at by Harris of the auditing of a claim against the state of Arizona which was not authorized by law. Following the requirements of the chapter appellee filed a bond in the sum of $1,000 with appellee, as principal obligor, and with Harris, both individually and as adjutant-general, and the appellant herein as the obligees thereof. Issue was joined, and the case was tried to the court, which on the 27th of July, 1927, rendered the following judgment:

"It is by the court ordered and adjudged, that the plaintiff, E. P. Conway, take nothing by his complaint in said action; and

"It is further ordered and adjudged that the defendant, Charles W. Harris, individually, and Charles W. Harris, as Adjutant General of the State of Arizona, and the National Surety Company, a corporation, do each separately have and recover of and from the plaintiff, E. P. Conway, all damages sustained by said Charles W. Harris, individually, and and by said Charles W. Harris, as Adjutant General of the State of Arizona, and by the National Surety Company, a corporation, by reason of this suit and action of the plaintiff, the amount of which said damages shall be determined in and by an appropriate action or proceeding. . . ."

No further proceedings were taken until February 25, 1929, when the appellant filed a petition to assess damages in accordance with the judgment above referred to. Thereafter Conway moved to dismiss the petition, and nearly three years later, on November 14, 1932, the motion was granted. From such order of the trial court this appeal was taken, and the record in this court was not finally completed so that we could consider the appeal until March 28, 1934. It will be seen that the parties cannot justly be accused of proceeding with undue haste.

The questions involved in this appeal are purely legal in their nature, the facts necessary for their determination being in no manner in dispute. We consider them in what seems to be their logical order.

The first is whether or not the bond given by appellee inures to the benefit of the appellant. It is contended by appellee that the action is statutory in its nature, and that the bond required of appellee, by the terms of the statute, cannot be taken advantage of by appellant. Chapter 22, Session Laws of 1921, reads as follows:

"Section 1. Whenever any public officer, or person holding or discharging the duties of any office or place of trust under the State, a part of whose duty is to audit, allow, or pay, or take part in auditing, allowing or paying, claims or demands upon the State, shall audit, allow or pay, or directly or indirectly, consent to, or in any way connive at, the auditing, allowance or payment of, any claim or demand against the State, which claim or demand is not authorized by law, such public officer or person, and the party or parties in whose favor such claim or demand shall have been made shall be responsible for all such sums of money, and twenty percentum additional thereon, to be recovered as follows:

"The attorney general is hereby empowered and it is hereby made his duty to institute suit in the name of the State against such public officer or officers and person or persons or any number of them to enjoin the payment of such money (or in case the same shall have been paid, then to recover the same), with twenty percent and lawful interests and costs, which shall be paid into the State Treasury to the credit of the fund from which the order of allowance was made, and the court shall give judgment accordingly, and for interest and costs as in other cases.

"Section 2. If the attorney general shall for sixty days after request made by any taxpayer of the State in writing, fail to institute such suit, then any taxpayer of the State may institute such suit in his own name and at his own cost, with the same effect as if such suit had been brought by the attorney general; provided, the person or persons instituting such action or suit shall execute a bond with two or more good and sufficient sureties, made payable to the defendant or defendants in such suit or action, conditioned that if the plaintiff or plaintiffs in such action shall fail to prosecute such suit or action with diligence and to effect, that the plaintiff or plaintiffs will pay all damages sustained by the defendant or defendants by reason of such suit or action and all costs incurred therein. If any such taxpayer shall prevail in such suit the court shall allow such taxpayer costs and reasonable attorney fee not to exceed forty percent of the amount recovered or saved to the State as the case may be."

It is of course true that this action rests solely on the statute, being unknown either to the common law or to equity. It therefore follows that no rights are conferred thereby that cannot reasonably be found in the statute. Willy v. Mulledy, 78 N.Y. 310, 34 Am. Rep. 536. On examining the chapter it appears that the substance may be stated briefly as follows, so far as it applies to the present action: Public officers who, directly or indirectly, in any way consent to, or connive at, the auditing of illegal claims against the state are responsible for all moneys paid on such claims, plus certain penalties. The Attorney General is authorized to bring suit against such public officers, and in such case the penalty is 20 per cent. of the principal sum, plus interest and costs, to be paid into the state treasury. If, however, the Attorney General refuses, after proper request, to bring the suit, any taxpayer may bring it, and if successful, in addition to the original sum, plus the 20 per cent., which the state recovers, the taxpayer is allowed for his trouble his costs and a 40 per cent. attorney's fee. But in order to prevent frivolous suits being brought by taxpayers, when such a suit is filed, the taxpayer must execute a bond "made payable to the defendant or defendants in such suit or action, conditioned that if the plaintiff or plaintiffs in such suit shall fail to prosecute such suit or action with diligence and to effect, that plaintiff or plaintiffs will pay all damages sustained by the defendant or defendants by reason of such suit or action and all costs incurred therein." The question is, What is meant by the phrase "defendant or defendants"? It is contended by appellee that the only defendants specified by statute are the public officer and the parties in whose favor the illegal claim has been allowed, and that therefore the bondsmen of the officer are not proper parties defendant and do not come within the condition of the bond. We think appellee has overlooked the rule of law to the effect that all statutes are to be construed together. At the time chapter 22, supra, was adopted, paragraphs 197, 198 and 199, Revised Statutes of Arizona 1913, were in force and read as follows:

"197. Every official bond executed by an officer pursuant to law is in force and obligatory upon the principal and sureties therein for any and all breaches of the conditions thereof committed during the time such officer continues to discharge any of the duties of or hold the office, and whether such breaches are committed or suffered by the principal officer, his deputy, or clerk.

"198. Every such bond is in force and obligatory upon the principal and sureties therein for the faithful discharge of all duties which may be required of such officer by any law enacted subsequently to the execution of such bond, and such condition must be expressed therein.

"199. Every official bond executed by any officer pursuant to law is in force and obligatory upon the principal and sureties therein to and for the state of Arizona and to and for the use and benefit of all persons who may be injured or aggrieved by the wrongful act or default of such officer in his official capacity; and any person so injured or aggrieved may bring suit on such bond, in his own name, without an assignment thereof."

By virtue of these paragraphs, which were general in their terms, whenever a public officer failed to discharge any of the duties imposed upon him either at the time the bond was filed, or such as were imposed thereafter, his bondsmen were equally liable for such breach, and the bond inured to the benefit of all persons who might be injured or aggrieved by his act. The theory of chapter 22, supra, obviously is that a taxpayer is injured and aggrieved by the auditing and approval of a false claim. We are of the opinion construing the statutes as a whole, that under chapter 22, supra, when the public officer becomes liable for the breach of duty described therein, his bondsmen are automatically liable also and are proper, if not necessary, parties to the action given against the officer. This has been assumed to be true as a matter of course, so far as we know, by all the parties in every suit of a similar nature which has reached this court. Batterton v. Pima County, 34 Ariz. 347, 271 P. 720. Appellee assumed...