State ex rel. Grassie v. Masterson

• Decision Date: 05 March 1977
• Docket Number: No. 48105,48105
• Citation: 561 P.2d 796,221 Kan. 540
• Parties: STATE of Kansas ex rel. Vernon D. GRASSIE, County Attorney of Crawford County, Appellant, v. Gene E. MASTERSON and The Western Surety Company, Sioux Falls, South Dakota, Appellees.
• Court: Kansas Supreme Court

Page 796

561 P.2d 796

221 Kan. 540

STATE of Kansas ex rel. Vernon D. GRASSIE, County Attorney of Crawford County, Appellant, v. Gene E. MASTERSON and The Western Surety Company, Sioux

Falls, South Dakota, Appellees.

No. 48105.

Supreme Court of Kansas.

March 5, 1977.

Syllabus by the Court

1. As a general rule questions of law must be determined by the court, unlimited by agreement of the litigants, and their stipulations as to what is the law are ineffective to bind this court.

2. An action against a county treasurer and the surety on his bond, to recover moneys which are alleged to have been misappropriated by the treasurer, is an action founded on a liability created by statute.

3. Under the provisions of K.S.A. 60-510, a civil action, other than for the recovery of real property, can only be commenced within the period prescribed by the applicable statute of limitations after the cause of action shall have accrued.

4. In general a cause of action accrues, so as to start the running of the applicable statute of limitations, as soon as the right to maintain an action arises. The true test being at what point in time the plaintiff could first have filed and prosecuted his action to successful and final conclusion.

5. Whether attorney fees are to be allowed, under the provisions of K.S.A. 40-256, must depend upon the facts and circumstances of each particular case. It is only where the insurer refuse, without just cause or excuse, to pay the full amount of the loss that an allowance can be made to the claimant for reasonable attorney fees.

6. In an action against a county treasurer and the surety on his bond to recover moneys misappropriated by the treasurer during his several terms of office, the record is examined, and under the facts and circumstances set forth in the opinion, it is Held: (1) A stipulation of the parties, the effect of which was to apply erroneously a rule of law as to when such a cause of action accrues, is not binding upon the court; (2) the applicable statute of limitations (K.S.A. 60-512(2)) commences to run at the end of each term of office during which moneys were misappropriated and not paid over to the treasurer's successor in office; and (3) the plaintiff is not entitled to an allowance of attorney fees.

Fred Spigarelli, Pittsburg, argued the cause and Michael F. McCurdy, Pittsburg, was with him on the brief for the appellant.

Nelson E. Toburen, of Wilbert, Lassman, Toburen & Wachter, Pittsburg, argued the cause and was on the brief for The Western Surety Company, appellee.

KAUL, Justice:

This action was brought by the state for the benefit of Crawford County against Gene E. Masterson, county treasurer, and the corporate surety on his official bond, The Western Surety Company, to recover $59,500.00 which Masterson allegedly embezzled from county funds during his tenure of office.

Masterson is not a party to this appeal. For convenience The Western Surety Company will be referred to hereafter as Western.

The issues on appeal concern the application of the applicable statute of limitations (K.S.A. 60-512(2)) to the stipulated facts of the case and the effect of the stipulation entered into by the parties on the posture of the case.

Masterson was first elected county treasurer in November 1966 and assumed the duties of office on October 10, 1967. He was elected to three additional successive terms at the general elections of 1968; 1970; and 1972.

The terms of office for which Masterson was elected are as follows: October 10, 1967 to October 14, 1969; October 14, 1969 to October 12, 1972; October 12, 1971 to October 9, 1973; and October 9, 1973 to October 14, 1975. Western duly executed and supplied an official bond in the amount of $50,000.00 for each term of office pursuant to the provisions of K.S.A. 19-501, et seq. (now 1976 Supp.).

During the last term, on November 5, 1973, Masterson resigned. As a result of a county audit, Masterson was charged with five counts of grand theft. He was charged in count 1 with theft of $5,626.71 for the year ending December 31, 1969; in count 2 in the sum of $25,714.63 for the year ending December 31, 1970; in count 3 in the sum of $15,640.92 for the year ending December 31, 1971; in count 4 in the sum of $9,757.79 for the year ending December 31, 1972; and in count 5 in the sum of $2,759.95 for the year ending December 31, 1973, the sum total amounted to $59,500.00.

Masterson eventually pled guilty to counts 4 and 5 and the state dismissed the first three counts of the information.

The petition in the instant action was filed May 24, 1974, alleging that Masterson had misappropriated the total sum of $59,500.00 during his terms of office and that Western, on its bond, was responsible for these misappropriations. The petition specifically alleged that Masterson through fraud and deceit withheld, at the end of calendar years 1969 through 1973, the sums for each year as recited in the information filed in the criminal case filed against him as set out above. In its answer to plaintiff's petition Western moved to dismiss plaintiff's action as to all sums not accounted for, not settled for, or misappropriated, more than three years preceding commencement of the action on the grounds that the action for such prior sums was barred by K.S.A. 60-512(2)-the three year statute of limitations applicable to actions upon a liability created by statute. In its reply to Western's answer, plaintiff alleged the cause of action sounded in fraud and that K.S.A. 60-513 was the applicable statute of limitations.

On May 14, 1974, Western tendered the sum of $28,158.66, representing the amounts claimed to have been embezzled during the years 1971; 1972; and 1973. Western offered to confess judgment in this amount. The tender and judgment offered were rejected by plaintiff.

On December 19, 1974, a pretrial conference was held and the parties submitted a stipulation which was accepted and approved by the trial court. The stipulation in part pertinent to the issues herein is recited in the pretrial order as follows:

'The parties stipulate further that the key and only issue for determination at this tim is whether K.S.A. 60-512 or 60-513 is the appropriate statute of limitations and that the same is an issue of law for the court's determination. If K.S.A. 60-513 is the appropriate statute, defendant, Western Surety Company, owes for all alleged shortages; if K.S.A. 60-512 is the appropriate statute, said defendant owes only for the years 1971, 1972 and 1973, the claims for the years 1969 and 1970 being barred by that said statute of liminations.'

On February 20, 1975, the trial court filed its memorandum decision ruling that the action was founded on a liability created by statute; that K.S.A. 60-512 controlled; and that recovery against Western for losses sustained in the years 1969 and 1970 was barred by the statute. The trial court further ruled:

'. . . A civil action accrued to Crawford County each time the Treasurer did not truly and accurately account and settle his accounts as required by K.S.A. 19-507 and 19-520. . . .'

Following the trial court's ruling the plaintiff retained present counsel who filed a motion for rehearing or new trial. In its motion plaintiff took the position that the trial court erred as a matter of law in accepting and approving that portion of the pretrial order which recited that in the event 60-512(2) did apply it was stipulated that 1969 and 1970 were not collectable. Plaintiff contended that, notwithstanding the applicability of 60-512(2), the years 1969 and 1970 were collectable and that the court erred as a matter of law in approving a wrong application of the law rather than merely a stipulation of facts. In its motion for rehearing plaintiff asked that the trial court reverse its decision with respect to the erroneous approval of the stipulation as to when the statute of limitations commenced to run and enter judgment for plaintiff for the shortages in 1970, and further that plaintiff be allowed time to discover when the 1969 shortages occurred. Plaintiff later abandoned any claim for 1969 shortages.

Plaintiff's motion for rehearing was overruled by the trial court. In this ruling the trial court appears to have adopted the theory that the statute commenced to run whenever the county treasurer first took funds. In this connection the trial court stated in its memorandum:

'I do not understand the cases cited by the parties or in the Memorandum Decision to mean that the statute of limitations only commences to run either at the end of the term of the officer who converts county funds to his own use during that term. The delict occurs when he first takes the funds and at such time the county has an absolute cause of action against the surety to recover the amount taken.'

The court further noted the provisions of K.S.A. 19-507 require a county treasurer to meet with the board of commissioners in October of each year and at such other times as they may direct to settle with them his accounts as treasurer and to exhibit his books and accounts. The court also noted K.S.A. 19-212 provides that the board of county commissioners have the power to examine and settle all accounts of the receipts and expenses of the county. Although the court did not specifically say so, reference to the above mentioned statutes indicates that the court believed a cause of action might have accrued each time Masterson violated the provisions of such statute.

In concluding its memorandum, the court stated that it adhered to the position previously taken and overruled plaintiff's motion for a new trial and rehearing.

This appeal followed.

Appellant specifies three points on appeal in these words:

'1. It was improper for the Trial Court to approve the pretrial order with respect to the Stipulation made between the parties concerning the application and interpretation of K.S.A. 60-512, which application and interpretation made by ...