State ex rel. Bell v. United States Fidelity And Guaranty Co.
| Decision Date | 06 July 1911 |
| Citation | 139 S.W. 163,236 Mo. 352 |
| Parties | THE STATE ex rel. JOHN P. BELL v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. James E. Goodrich, Judge.
Affirmed.
Ball & Ryland for appellant.
(1) The State cannot maintain an action on this bond at the relation and to the use of John P. Bell as treasurer of State Hospital Number 1. Connor v. Zackry, 117 S.W. 177; State v. Moody, 202 Mo. 120. (2) The bond has no retroactive application. The defendant in no case could be answerable for any misconduct of Thomas, except such as occurred after the execution and delivery of the bond, to-wit, May 9, 1903. Todd v. County, 8 Mo. 431; State v. Jones, 89 Mo. 470; State ex rel. v. Finn, 98 Mo. 537. (3) The burden in such case is on the plaintiff to show with definiteness the defalcation, if any, of Thomas during the period when defendant's bond was in force. Draffen v Boonville, 8 Mo. 395; State v. Atherton, 40 Mo 209; Pundmann v. Schoenich, 144 Mo. 149. (4) It was error to strike out pars. 2 and 3 of the answer. The law is the same when the state is a party as it is in case of individuals, except that the Statute of Limitations in law suits and the doctrine of laches in equity cases do not apply. (5) If Thomas used any of the moneys sued for to pay warrants instead of sending those moneys to the State Treasurer and having the State Treasurer send them back to him to pay the warrants, it was merely a technical breach damnum absque injuria. State v. Atherton, 40 Mo. 209. The State does not charge in its petition that prior to the collection of the items sued for Thomas had embezzled other moneys and had used the collections in question to make good such prior defalcations. No such issue is presented by the petition. (6) The undisputed evidence shows that none of the collections made subsequent to Jan. 1, 1905, and up to Feb. 16, 1905, were used by Thomas, excepting in making remittances to the State Treasurer; and that subsequent to Feb. 16, 1905, he never collected or disbursed in any way or for any purpose any moneys of the institution, or drew any checks for any purpose on his account as treasurer, kept in the Calloway Bank. (7) The evidence shows without dispute that when he left he gave no authority to anybody to do anything except he told his bookkeeper, Miss Howe, to make the February remittance to the State Treasurer. (8) There is no showing whatever that if Thomas used any money between Jan. 1, 1905, and Feb. 16, 1905, to pay warrants, what they were or how much they were. There is no proof whatever as to how much money he had on hand in the bank at the time he left. There is no proof whatever that he left any authority with Miss Howe or anybody else to draw any checks on his account in payment of outstanding warrants. There is no proof whatever as to what warrants or the amount of them were paid after he left. If the bookkeeper or the officers of the institution or the bank in any way misapplied any moneys which Thomas had on hand at the date of his absconding or which were thereafter received, this defendant is not responsible for it.
Elliott W. Major, Attorney-General, and W. M. Williams for respondent.
(1) The error assigned that the treasurer of State Hospital No. 1 is not the proper relator is not well taken. a. It is made the duty by statute of the treasurer of State Hospital No. 1 to sue for and collect "all debts and demands whatsoever due the asylum, and all damages for failure of contract and for trespass and other wrongs to the asylum, or any property thereof, real or personal." R. S. 1899, secs. 4853-4852. b. It is only the treasurer, i. e., the person holding the office, who is required to make official reports to the State Auditor and transmit the money of the hospital to the State Treasurer. Where money belonging to the hospital is in the hands of any other person, it must be paid to the treasurer of the hospital and by him remitted to the State Treasurer. R. S. 1899, secs. 7883-7884-7885. c. The objection in any event comes too late. There was no demurrer to the petition, and any objection to a defect of parties or to want of capacity to maintain the suit was waived. State v. Sappington, 68 Mo. 454; State v. Bonner, 5 Mo.App. 13; Bank v. Gilpin, 105 Mo. 17; Spillane v. Railroad, 111 Mo. 555. (2) Where a bond is given for the faithful performance of the duties of an agent or employee of an individual or private corporation who, at the time, is a defaulter, it is no defense to the surety in the bond that the fact of the previous embezzlement could have been discovered by the obligee in the bond by reasonable care and diligence. The surety in private contracts is only discharged where the person for whose benefit the bond is given had knowledge of the wrongdoing and fraudulently concealed it. Bank v. Owen, 101 Mo. 583; Tapley v. Martin, 116 Mass. 275. (3) The surety upon an official bond is not released on account of the negligent failure of other officers of the State to discover previous defalcations of the principal; nor is such surety discharged because the auditing or accounting officers representing the State had actual knowledge of the wrong-doing and failed to disclose it. A different rule prevails in regard to official bonds from that applicable to private contracts. Throop on Public Officers, sec. 286; Meecham on Public Officers, sec. 389; Hogue v. State, 62 N.E. 656; Hallettsville v. Long, 32 S.W. 567; Wade v. Mt. Sterling, 33 S.W. 1113; Palmer v. Woods, 39 N.W. 668; F. & D. Co. v. Commonwealth, 47 S.W. 579; Detroit v. Weber, 26 Mich. 284. (4) The reports of the legislative committees were made for the benefit of the General Assembly and the record of the board of managers for the benefit of the State and the hospital. They cannot be treated as representations or statements made to the defendant and upon which it had the right to rely in the execution of the bond sued upon. Utley v. Hill, 155 Mo. 271. (5) While it might properly be contended that the bond sued on, although not executed until the 9th day of May, 1903, shows by its recitals that it was intended to cover the entire term for which Thomas was elected and authorities might be cited in support of that position, still the referee only held the defendant for the defalcations expressly shown to have occurred subsequent to the execution of the bond. Therefore, whether or not the bond is retroactive is immaterial upon this record. (6) "Findings of fact by a referee in a law cause are in the nature of a special verdict, and an appellate court will not weigh the evidence on which they are based if such evidence is of a substantial nature." McGregor v. Construction Co., 188 Mo. 621; Vogt v. Butler, 105 Mo. 479; Bissell v. Ward, 129 Mo. 439.
This is a suit on the official bond of W. D. Thomas, treasurer of State Hospital No. 1, located at Fulton, Missouri. A trial was had which resulted in a judgment for the State, and the defendant duly appealed the cause to this court.
Thomas was elected treasurer of that institution on March 10, 1903, for a term of two years and qualified as such on May 9th, the same year, by executing the bond in suit with defendant as surety. Between February 14th and 16th, 1905, he absconded from Fulton, ostensibly for a visit to Washington City, leaving his clerk in charge of the office. He has never returned and has never been heard of but once since his departure.
The relator John P. Bell was duly elected treasurer of that institution on March 14, 1905, to succeed said Thomas, and duly qualified and gave bond on April 11th, of that year. Thereupon, this suit, in the name of the State, at the relation of Bell, as such treasurer, was brought against the appellant, as such surety in the said bond of Thomas, for his alleged default in failing to account for and pay over money collected by him for said hospital during the term for which said bond was given. Thomas had been treasurer of that institution some two or three terms, just prior to the one covered by the bond in suit.
In brief the petition charged, as a breach of the bond, that Thomas, in violation of his duties as treasurer, received for said institution, during said term, the sum of $ 14,429.28, which he failed to report to the State Auditor, or to pay to the State Treasurer, as required by statute, but converted the same to his own use. The prayer of the petition was for $ 30,000, the penalty of the bond, with execution for the sum sued for, with six per cent interest per annum. The items sued for are not set out in the body of the petition, but it refers to "Exhibit A" attached thereto and made a part thereof, which does show those items, aggregating some forty odd in number, amounting to $ 21,813.80.
The answer admitted the execution of the bond, and then denied each and every other allegation contained therein.
And for further defense the answer in paragraphs two and three set up that Thomas had served as treasurer of said institution for three terms prior to the term for which he was appointed beginning March 10, 1903; that during said preceding terms he had made his regular monthly reports to the board and that monthly during those six years the board entered of record a certification to the effect that his accounts as treasurer had been audited and examined and found in all respects correct; that such certification and records of the board were entirely false; that if any examination had been made of the treasurer's books and accounts, or auditing had of the same, at any time after two months from the date of his first election as treasurer, it would have been manifest by the most cursory and inexpert examination that he had continually,...
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