Padgett v. Young County

• Decision Date: 19 January 1918
• Docket Number: (No. 8748.)
• Parties: PADGETT et al. v. YOUNG COUNTY et al.
• Court: Texas Court of Appeals

204 S.W. 1046

PADGETT et al. v. YOUNG COUNTY et al.

(No. 8748.)

Court of Civil Appeals of Texas. Ft. Worth.

January 19, 1918.

On Rehearing, May 18, 1918.

Appeal from District Court, Clay County.

Suit by Young County, Tex., against I. B. Padgett and others, in which the Graham National Bank and its sureties were also made defendants. From a judgment for plaintiff against the original defendants, and denying the latter recovery against the bank and its sureties for the amount of such judgment, the original defendants appeal. Affirmed.

Taylor, Allen & Taylor, of Henrietta, and I. W. Stephens and Miller & Miller, all of Ft. Worth, for appellants. P. A. Martin, John C. Kay, J. W. Akin, and Carrigan, Montgomery & Britain, all of Wichita Falls, for appellees.

DUNKLIN, J.

In November, 1910, I. B. Padgett was duly elected county treasurer of Young county for a term of two years; and having filed with the commissioners' court of the county a bond as such officer, in compliance with statutory requirements, he entered upon the duties of his office, and held the same under that election for the period of two years, and all the transactions hereinafter mentioned occurred during that term of his office. The Graham National Bank was the county depository, having been duly selected as such by the commissioners' court of the county and having given a bond for the faithful discharge of the duties as such, all in compliance with chapter 2, tit. 44, of Vernon's Sayles' Texas Civil Statutes of 1914.

The county instituted this suit against Padgett and the sureties upon his official bond to recover the amounts paid out by the bank upon 143 checks drawn upon it by Padgett as county treasurer. The checks were issued upon warrants, drawn upon the treasurer by the county clerk, and in plaintiff's petition it was alleged that both warrants and checks were fraudulently issued without any consideration therefor, and without lawful authority, and that Padgett was guilty of negligence in issuing said checks, which was the proximate cause of the loss of the money paid thereon, and that he and his bondsmen were liable to the county for the amounts paid out by the bank upon those checks.

In addition to their plea of general denial and special answers in reply to plaintiff's suit, Padgett and his bondsmen filed a plea over against the bank, and prayed for judgment against it for whatever judgment that might be rendered against them, basing such prayer upon allegations that the bank negligently, and in violation of its statutory obligation to the county, paid said checks upon forged indorsements, without exercising any care to ascertain the rightful owners of such checks, and that such negligence was the sole proximate cause of the loss to the county, if the county sustained any loss at all by the payment of the checks. From a judgment in favor of the county against Padgett and his bondsmen, and denying them a recovery over against the bank, they have prosecuted this appeal.

The trial was before the court without the aid of a jury, and the trial judge filed findings of facts and conclusions of law. We shall not undertake to set out those findings in full, as they cover some 20 pages in the transcript, but we shall confine ourselves to a statement of the substance only of those which are material to the assignments hereinafter discussed.

In addition to the facts already stated, the findings show that D. D. Cusenbary was the duly elected and qualified county clerk of Young county during the term of office of Padgett. During the years 1911 and 1912 all the funds belonging to Young county were deposited in the Graham National Bank of Graham as county depository. On divers dates, beginning February 16, 1911, and ending on October 30, 1912, Cusenbary, as county clerk, issued 143 county warrants upon fictitious claims in favor of fictitious and three real persons, and drawn upon Padgett as county treasurer. Upon those warrants the 143 checks were drawn by Padgett as treasurer upon the Graham National Bank as the county depository. The checks were drawn payable to the order of the persons named in the warrants, and each for the same amount named in the warrants corresponding thereto. The warrants were drawn by the clerk upon the order of E. W. Fry, as county judge of Young county, and they recited upon their face that they were drawn upon his order instead of by order of the commissioners' court. The warrants recited that they were to be paid out of the road and bridge fund of the county and were duly signed by the county clerk. The purported claims represented by the warrants were never presented to nor audited by the commissioners' court, but Cusenbary in issuing them acted in good faith, believing that the county judge had the authority to audit and approve the claims. He further believed, in good faith, that the accounts were for services rendered Young county by persons in whose names the warrants were drawn. The warrants so drawn aggregate the sum of $7,317.90, and all were in favor of fictitious persons or bearer, except three, which were in favor of real persons or bearer, but without their knowledge; but the county clerk, in issuing the warrants, in good faith, believed that the payees in such warrants were all real persons and entitled to receive them. The warrants were issued upon request of E. W. Fry, the county judge, and upon fictitious claims filed by him, and were delivered to him, and he receipted for them in his own name, and wrote the name of "Fry" on the back of most of them, but the names of the payees therein were not indorsed on them by any one.

After so doing, he, in person, presented them to the county treasurer and obtained from him the corresponding checks. When the treasurer issued the checks and delivered them to Fry, he did not require a receipt therefor to be written across the face of the warrants, as was done when 1,647 other warrants, not in issue in this suit, were honored by him. He believed in good faith that the warrants were valid, and that Fry was acting for accommodation of the payees named in them, and was sending the checks to them, but never made any inquiry to discover whether he did so. He did not require Fry to show any authority from the payees named in the warrants to receive checks therefor, nor any receipt from him therefor as their agent or attorney in fact; nor did Fry claim to be their agent or attorney in fact, but merely claimed to be sending out the checks to the payees for their accommodation. Padgett did not claim any acquaintance with such persons as those named in the warrants, neither did he make any inquiry as to their identity nor as to Fry's authority to represent them at the time he issued the checks. Some of the checks were presented to the bank by Fry and collected by him, while others were negotiated by him to merchants and other persons residing in Graham, who later presented the same to the bank, with their indorsements added, and collected them. When presented to the bank all the checks had indorsed thereon, in Fry's handwriting, the names of the payees, said indorsements all being fraudulently made by Fry for the purpose thereafter accomplished of collecting them, and he also indorsed his own name thereon.

When Fry procured the warrants from the clerk and the checks issued thereon from the county treasurer, and when he collected those presented by him to the bank, he represented to each of those officials that he was attending to the collection of the claims for the accommodation of the purported owners, and the county clerk, county treasurer, and the officials of the bank paying those checks presented by Fry believed in good faith that said representations were true, and, in paying all the checks, the officials of the bank believed they were genuine, and that the indorsements of the names thereon were genuine. The officials of the bank, before paying the checks, made no investigation whatever to discover whether or not the indorsements of the names of the payees were genuine, but relied solely upon the indorsements of the last indorsers who collected them.

On April 1, 1908, and during the incumbency in office of a former county judge, the commissioners' court of the county, by order duly entered upon its minutes, employed one Sam Copeland as foreman of certain public road work, and agreed to pay him for his services a salary of $60 per month. It was further stipulated in the order that the county clerk should pay Copeland $60 per month, as called for in his contract, and also the men that might be employed by him to assist in the work of grading the public roads, whenever such accounts should be approved by the county judge of Young county. In compliance with that order the warrants were issued for the work done under and by virtue of that contract, without any audit of such claims by the commissioners' court, but solely upon the approval of the county judge. Thereafter it became the custom for the county clerk to issue warrants upon the approval of similar claims for work done generally upon the county roads, the warrants being issued solely upon the approval and order of the county judge, and without any audit or approval thereof by the commissioners' court; and in issuing the warrants in controversy Cusenbary followed that custom, in good faith, believing that the county judge had lawful authority to approve such claims and to order the issuance of the warrants without previous investigation or approval of the claims by the commissioners' court. During Fry's incumbency in office the county clerk, county treasurer, and county commissioners, and officials of the Graham National Bank, all had implicit confidence in his honesty and integrity, and his general reputation in that respect in Young county was good. Many other checks not questioned in this suit were issued upon warrants drawn at the instance of Fry as county judge without any audit of the claims by the...