State ex rel. Pink v. Cockley
| Decision Date | 14 November 1941 |
| Docket Number | 16543. |
| Citation | 37 N.E.2d 284,110 Ind.App. 417 |
| Parties | STATE ex rel. PINK v. COCKLEY et al. |
| Court | Indiana Appellate Court |
As Amended on Rehearing December 23, 1941.
Appeal from Allen Circuit Court; Harry H. Hilgeman, Judge.
Browne Campbell, Gemmill & Browne, of Marion, for appellant.
Arthur W. Parry and Merl Barnes, both of Fort Wayne, for appellees.
This was an action by the State of Indiana, on the relation of Louis H. Pink, Superintendent of Insurance of the State of New York, as Liquidator of Southern Surety Company of New York, against J. Herbert Cockley, former Treasurer of Noble County, Indiana, and United States Fidelity and Guaranty Company, surety on his official bond, to recover upon said official bond for alleged default of such Treasurer in allegedly converting to his own use or to the use of others certain funds which belonged to said Southern Surety Company.
The amended complaint upon which said recovery is sought is in one paragraph and alleges, among other things: that said Southern Surety Company's predecessor, the Southern Surety Company, an Iowa corporation, became surety on a contractor's bond to secure the performance by said contractor of contracts for the construction of two highways in Noble County, Indiana; that said contractor defaulted in the performance of said contracts owing claims and judgments amounting to approximately $30,000 to several sub-contractors, laborers and materialmen, and that said defalcations were paid in January, 1926, by said Southern Surety Company of Iowa, as said surety; that said surety on said bonds brought a suit against said Treasurer and the other officials of said County having to do with the construction of said highways, and also against the Merchants and Farmers Bank of Avilla, Indiana, an assignee of the contractor's estimates on said highways, to determine the priority rights of said surety company, said sub-contractors laborers, materialmen and said Bank in and to $29,743.71 of said highway funds in controversy then in the hands of said Treasurer, which action was filed in May, 1924, tried in 1925, and decided by the lower court in January, 1926 adversely to said surety company--the judgment of the trial court being that said surety company did not own and had no interest in said funds, and that the same were owned by said Bank and the Treasurer was ordered to pay the same to the said Bank; that a term-time appeal from said judgment was prosecuted by said surety company against said Treasurer, said Bank, and said other County officials, to the Appellate Court of Indiana, which court reversed said judgment on April 20, 1928, Southern Surety Co. v. Merchants' & Farmers' Bank, 159 N.E. 3, 161 N.E. 842; that upon a petition for transfer granted by the Supreme Court, said latter court again reversed said judgment on the 24th day of June, 1931, 203 Ind. 173, 176 N.E. 846, and it was ordered by the Supreme Court that if the Southern Surety Company had paid said claims and judgments, which fact had not been judicially determined, the said funds in the hands of said Treasurer should be paid to the Clerk of said Court to be paid by said Clerk to said Southern Surety Company; that the Supreme Court also held that proof might be offered to determine the question as to whether or not said surety company had paid said claims and judgments; that pending said appeal, said Treasurer paid the said funds to the said Bank, and that pending said appeal said Bank became insolvent and its affairs have been fully liquidated by a receiver.
It is also alleged that said Southern Surety Company of Iowa had assigned its claim to the said highway funds to the Southern Surety Company of New York, of which the relator is liquidator, while said appeal was pending; that said opinion of the Supreme Court was certified to the Clerk of the Noble Circuit Court on January 29, 1932, and that thereafter, said Southern Surety Company of New York petitioned the Noble Circuit Court to spread said opinion of record, to restate its conclusions of law, and to render a new judgment thereon in accordance with the decision and opinion of the Supreme Court; that said Noble Circuit Court held up action on said motion and petition until May 20, 1933, at which date it ordered said opinion of the Supreme Court spread of record, restated its conclusions of law, and rendered judgment thereon in said cause in favor of said Southern Surety Company, and adjudged among other things that if said Southern Surety Company had paid said claims and judgments it was the owner of and entitled to said highway funds, and left open for subsequent determination upon proof to be offered in the Noble Circuit Court the said question as to whether or not said Southern Surety Company had paid said claims and judgments; that within five years from May 20, 1933, this action was brought to determine that question and in this amended complaint it was alleged that the relator herein, as successor of Southern Surety Company of Iowa, is the owner of said funds in controversy and is entitled to be paid said funds in the hands of the Treasurer when the litigation was commenced.
The questions involved herein relate mainly as to the tolling of the statutes of limitations during the pendency of said litigation and on appeal to the Appellate and Supreme Courts and pending the determination of the question as to whether or not said surety company had paid said claims and judgments and whether or not the appellant is a proper relator in this action.
To said amended complaint the appellees filed eight paragraphs of answer and also a ninth paragraph of answer by way of cross-complaint, which they later dismissed. The first paragraph of answer is a general denial.
The second paragraph alleges among other things that said Treasurer, while said appeal was pending, and before the appeal bond had been filed, to-wit on the 30th day of March, 1926, paid said funds to said Bank in alleged obedience to the original decree of the trial court in said former litigation, and that he did so more than five years before June 23, 1937, the time when this action was commenced.
The third paragraph of answer alleges among other things that in his settlements for the years of 1925 and 1926 with the Board of Commissioners of said County, said Treasurer accounted for all funds in his hands, but that he did not then account for said funds in controversy; did not pay the same over to his successor, and that his failure to report said funds to said Board of Commissioners or pay said funds to his successors, occurred more than five years before the said June 23, 1937.
The fourth paragraph of answer alleges the same facts as were alleged in the second and third paragraphs of answer, and then alleges among other things that said Southern Surety Company filed its appeal bond and prosecuted its appeal on June 2, 1926; that said appeal was finally decided by the Supreme Court on June 24, 1931, Southern Surety Co. v. Merchants' & Farmers' Bank, 203 Ind. 173, 176 N.E. 846, reversing the judgment below in said former litigation, and that said court ordered said funds paid to the Clerk to be distributed and applied pro rata on the judgments and claims of said laborers' and materialmen's liens, or to the Southern Surety Company, if it had previously paid said judgments and claims; that thereafter, on January 15, 1932, the Supreme Court denied a rehearing, 203 Ind. 173, 179 N.E. 327, on said original action and the Clerk thereof duly certified said opinion to the Clerk of the Noble Circuit Court on said date, and that if said former litigation suspended said statute of limitation such suspension ended on January 15, 1932, more than five years before the commencement of this action.
The fifth paragraph of answer was a plea of payment.
The sixth paragraph of answer alleges among other things the filing and pendency of said former litigation and the judgment therein of the trial court ordering said funds paid to said Bank; that said Treasurer paid the same to said Bank as ordered by the judgment of the trial court on March 30, 1926; that said Southern Surety Company took no steps to prevent the enforcement of said judgment of the trial court for the payment of said funds to the Bank, and that before said funds were paid to the Bank, at the request of said Bank, the County Auditor obtained the written opinion of the State Board of Accounts advising him that said funds be paid to said Bank, and that thereupon on said date, said Treasurer paid said funds to said Bank, and that none of said funds were ever restored to said Treasurer by said Bank, and that said Treasurer made a full and final accounting on January 1, 1928, to his successor of all funds then in his hands.
The seventh paragraph of answer alleges in substance that if said Surety Company paid said judgments and claims, it did so with money furnished by one James L. Thompson, its indemnitor on said contracts, and not with its own funds, and hence under the decision of the Supreme Court said funds belong to said Bank.
The eighth paragraph of answer alleges among other things that the Treasurer paid said funds to said Bank on March 30, 1926 pursuant to the judgment of the trial court in said former litigation, all prior to the filing of the appeal bond therein, and before any steps were taken by said surety to stay said payments; that said Treasurer and Auditor of said County took an indemnifying bond from said bank to the effect that if said former judgment of the trial court should be reversed and it should be held that said Bank was not entitled to said funds, the said Bank would repay said funds to said Treasurer within ten days from the date of such reversal of said judgment;...
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