State Surety Co. v. Peters, 40773

• Decision Date: 26 January 1977
• Docket Number: No. 40773,40773
• Court: Nebraska Supreme Court
• Parties: STATE SURETY COMPANY, a corporation, Appellant, v. William E. PETERS, Tax Commissioner of the State of Nebraska, et al., Appellees.

Page 740

249 N.W.2d 740

197 Neb. 472

STATE SURETY COMPANY, a corporation, Appellant, v. William E. PETERS, Tax Commissioner of the State of Nebraska, et al., Appellees.

No. 40773.

Supreme Court of Nebraska.

January 26, 1977.

Syllabus by the Court

1. The liability of a surety on statutory undertakings is measured by the terms of the statute rather than by the terms set forth in the agreement, where the two are in conflict, as the statute forms a controlling part of every such agreement.

2. Courts construe the contract of a surety company, acting for compensation, and of any other surety for hire, most strongly against the surety and in favor of the indemnity which the obligee has reasonable grounds to expect.

3. The words 'due and to become due' express a clear legislative intent to impose liability for all sums due when the bond is filed.

4. A statutory bond will be construed in the light of the purpose for which it is required as expressed in the statute. Accordingly, in view of the fact that the public has an interest in official and other statutory bonds, such bonds should be liberally construed to effect the purpose for which they were given, and the ordinary rules of construction give way.

Edward F. Carter, Jr., Barney & Carter, P.C., Lincoln, for appellant.

Paul L. Douglas, Atty. Gen., Ralph H. Gillan, Asst. Atty. Gen., Lincoln, G. Michael Wiseman, Fremont, for appellees.

Heard before SPENCER, BOSLAUGH, McCOWN, NEWTON, CLINTON and BRODKEY, JJ.

SPENCER, Justice.

This is an action for a declaratory judgment for a determination of the liability of State Surety Company, appellant, upon a special fuel tax bond. The issues tried below and presented here are: (1) Does the bond have retroactive effect? (2) If not, do payments of $8,405.16 made in June 1970, apply against the principal's prebond liability, or should they be applied to reduce appellant's liability? (3) Was the liability of appellant fixed and determinable on November 8, 1972, so as to impose liability for interest? The court found the liability of appellant to be retroactive, and rendered judgment for the face amount of the bond, $15,000, with interest at the rate of 7 percent from November 8, 1972. Plaintiff-appellant appeals. We affirm.

On or about May 27, 1969, Larry L. Thompson commenced the sale of fuel in Fremont, Nebraska. He sold fuels which are subject to special fuel tax under the provisions of the special fuel tax act, sections 66--601 to 66--639, R.R.S.1943. From that date through June 7, 1970, he continued said business without being licensed or bonded and without remitting to the State of Nebraska special fuel use tax due upon the sale of said fuels.

Larry L. Thompson applied for a Nebraska special fuel dealer's license and the same was granted to him on June 8, 1970, upon his posting a bond as required by section 66--609, R.R.S.1943. This bond was issued by Nebraska Surety Company in the penal sum of $15,000. Nebraska Surety Company was thereafter acquired by, merged into, and became a part of the appellant, State Surety Company.

Beginning in June 1970, Thompson started filing reports of special fuel sales, generally accompanying his reports with checks in the exact amount of the tax shown due for the months reported. Additionally, in June 1970, he also remitted two checks in the total amount of $8,405.16, the application of which is disputed by the parties.

The parties have stipulated that the disposition of this case is entirely dependent upon application of the law to the undisputed facts of taxes due and payments made so that one of the following three conclusions apply:

'i. If the court determines the bond to have retroactive effect so as to render plaintiff liable for the principal's gas tax indebtedness incurred prior to June 8, 1970, then and in that event the court should find plaintiff obligated unto the State of Nebraska in the principal sum of $15,000, which amount is the full face amount of the bond, together with such interest and costs as may be prescribed by law. Interest at 7% On $15,000 from November 8, 1972 to November 4, 1975 is $3,138.81.

'ii. If the court determines that the bond does not have retroactive effect so as to render plaintiff liable for the principal's gas tax indebtedness incurred prior to June 8, 1970, and if the court determines that all payments made by the principal after June 8, 1970 apply against the liability incurred during the term of this bond, then and in that event the court should find that the plaintiff has no liability to the State of Nebraska upon its bonds; and

'iii. If the court determines that the bond does not have retroactive effect so as to render plaintiff liable for the principal's gas tax indebtedness incurred prior to June 8, 1970, and if the court determines that all payments made by the principal after June 8, 1970, except '(a) the June 19, 1970 payment of $5,000.00 appearing at Exhibit 2, page 209; and

'(b) the June 24, 1970 payment of $3,405.16 appearing at Exhibit 2, page 209;

then and in that event the court should find plaintiff obligated unto the State of Nebraska in the principal sum of $7,612.44 plus interest and penalties to 11--4--75 of $5,333.26 together with such interest on the judgment and costs as may be prescribed by law.'

The bond is executed on a form provided by the State. It is silent on the question of the surety's liability for the principal's past indebtedness. It simply provides that the surety and principal are jointly and severally bound in the penal sum of $15,000, and if the principal 'shall make reports, pay all motor fuel taxes, penalties and interest which may be assessed or imposed...