State v. McFetridge

• Citation: 84 Wis. 473,54 N.W. 1
• Parties: STATE v. MCFETRIDGE ET AL.
• Decision Date: 10 January 1893
• Court: Wisconsin Supreme Court

84 Wis. 473

54 N.W. 1

STATE

v.MCFETRIDGE ET AL.

Supreme Court of Wisconsin.

Jan. 10, 1893.

Appeal from circuit court, Dane county; A. W. Newman, Judge.

Action by the State of Wisconsin against Edward C. McFetridge, James A. McFetridge, John T. Smith, John S. Rowell, George B. Congdon, T. L. Newton, Andrew Willard, George Mertens, J. J. Gattiker, William Stanley, E. Mariner, and Catharine Warren, administratrix of the estate of T. M. Warren, deceased. Judgment for plaintiff. Defendants appeal. Affirmed.

The other facts fully appear in the following statement by LYON, C. J.:

This action is upon the official bond of the defendant Edward C. McFetridge, as state treasurer, during the term commencing on the first Monday in January, 1885, and ending on the first Monday in January, 1887, to which office he was duly elected at the general election in November, 1884. It is brought against him and all the surviving sureties in such bond, 11 in number. Three of the sureties deceased before the commencement of the action. The bond is in the penal sum of $500,000, and the condition thereof (omitting formal recitals) is as follows: “Now, therefore, if the said Edward C. McFetridge shall faithfully discharge the duties of the said office of state treasurer, and also his duties as a member of the board of commissioners of the public lands, and in the investment of the funds arising therefrom, and if all persons appointed or employed by him in his said office shall faithfully perform their duties and trusts therein, and if the said Edward C. McFetridge shall deliver over to his successor in office, or to any other person authorized by law to receive the same, all moneys, books, records, papers, and other articles and effects belonging to his said office, then this obligation to be void, otherwise to be and remain in full force and effect; and the said bond and obligation hereby entered into is hereby deemed to extend to the faithful execution of the duties of the said office of treasurer until his successor shall be elected and fully qualified.” It is alleged in the complaint that during said term the defendant Edward C. McFetridge, the principal in said bond, loaned to or deposited with certain banks, banking corporations, and banking firms large sums of the public funds which came to his hands as such treasurer, and received from such banks, corporations, and firms, as a consideration for such loans or deposits, and as interest thereon, large sums of money. The failure of said treasurer to account for or pay over such interest money to the persons entitled thereto, or to his successor in office, is alleged as a breach of the condition of the bond. A further breach thereof is assigned in respect to the alleged failure of Treasurer McFetridge to perform his duties as one of the commissioners of the public lands in the investment of the trust funds in the treasury. The defendant Edward C. McFetridge answered separately, as did the defendant James A. McFetridge, one of the sureties. The other sureties answered jointly. It is substantially admitted in each answer that the treasurer did deposit the public funds in banks, and in his answer it is admitted that he received some pecuniary gains, compensation, or percentage from some of said banks, in consideration of the incidental benefits accruing to them from such deposits. It is alleged in each answer that the making of such deposits was unauthorized by law.

A trial of the action in the circuit court resulted in findings of fact to the effect that, during his said official term, the defendant Edward C. McFetridge, the principal in the bond in suit, loaned to, and placed and kept on deposit with divers banks and banking associations and firms, from time to time, a large portion of the funds and public money of the state, which came to his hands as state treasurer, with the agreement or understanding that such banks, associations, and firms “should pay, as compensation for such loans or deposits, a percentage or interest upon the average amount of such loans or deposits, at certain rates for certain fixed periods, at certain definite times;” that said Edward C. McFetridge, during his said term, received of such banks, associations, and firms $44,217.83 as interest upon the funds and public money in his hands belonging to the state, thus deposited, which sum he failed to account for as public money of the state, or to pay the same over to his successor in office. As conclusions of law the court found that the money thus received by the treasurer, as interest on the public funds thus loaned or deposited, became accessory to and a part of those funds; that such funds, thus increased by the interest paid thereon, belonged to the state, and not to the treasurer; and that Treasurer McFetridge, having failed to charge the same to himself in his account with the state, or to pay the same over to his successor in office or other person lawfully entitled thereto, is, and the sureties in his official bond are, liable in this action for the amount thus paid the treasurer as interest and unaccounted for, together with interest thereon from the first Monday in January, 1887, at which date he surrendered his office to his successor. There is no controversy concerning the amount thus received by the treasurer from the banking institutions in which he made the deposits. The circuit court refused to find, as requested by the defendants, that none of the sureties (with a single exception) knew that the treasurer deposited the public funds with such banks and banking institutions, or that he received interest thereon, and never consented that he might do so; that such acts were unlawful, and such depositing of the public funds by the treasurer for his own gain and profit is prima facie evidence of embezzlement of such funds by him, and that the sureties are not liable on his official bond for money thus obtained by him by such unlawful use of the public funds in his hands as treasurer. Judgment was thereupon entered for the state against all the defendants for $44,217.83, and interest thereon from the first Monday in January, 1887, being $15,906.14,--amounting in all to $60,123.97, --and for costs. The circuit judge filed a written opinion in the case, which will be found in a note hereto. All the defendants join in an appeal from the judgment.Joshua Stark, for appellants.

The liability of a surety is restricted to the express terms and the necessary import of his undertaking. Miller v. Stewart, 9 Wheat. 681;People v. Chalmers, 60 N. Y. 154; Brandt, Sur. § 59; Kingsbury v. Westfall, 61 N. Y. 356;Lang v. Pike, 27 Ohio St. 498; De Col. Guar. p. 233; Vivian v. Otis, 24 Wis. 518. Such express terms of an official bond are themselves limited by the statutes prescribing the duties of the officer. Nolley v. Callaway County Court, 11 Mo. 447;People v. Pennock, 60 N. Y. 421;Orman v. City of Pueblo, 8 Colo. 292, 6 Pac. Rep. 931;Gaussen v. U. S., 97 U. S. 584;Furlong v. State, 58 Miss. 717;Carey v. State, 34 Ind. 105;State v. Givan, 45 Ind. 267. A distinction is noted between acts virtute officii and acts colore officii. Gerber v. Ackley, 37 Wis. 43;Taylor v. Parker, 43 Wis. 78;Barnes v. Whitaker, 45 Wis. 204; State v. Conover, 28 N. J. Law, 224; State v. Medary, 17 Ohio, 554;Eaton v. Kelly, 72 N. C. 110; Leigh v. Taylor, 7 Barn. & C. 491; Frost v. Mixsell, 38 N. J. Eq. 586. The deposit of state funds in banks was unauthorized, and punishable as a crime. See statutes; also, State v. Harshaw, 76 Wis. 230, 45 N. W. Rep. 308. If there was any technical breach of the bond, it was healed by delivery to the treasurer's successor of all moneys deposited. State v. Baetz, 44 Wis. 624;State v. Mills, 55 Wis. 229, 12 N. W. Rep. 359;Renfroe v. Colquitt, 74 Ga. 618;State v. Kent, 53 Ind. 112. The statutes and bonds made the treasurer insurer of the funds, and such responsibility should be restricted to those moneys of which he was made custodian. U. S. v. Prescott, 3 How. 578;U. S. v. Morgan, 11 How. 154;U. S. v. Dashiel, 4 Wall. 182;U. S. v. Keehler, 9 Wall. 83;Boyden v. U. S., 13 Wall. 17; Bevans v. U. S., Id. 56; U. S. v. Thomas, 15 Wall. 337; Com. v. Comly, 3 Pa. St. 372; Inhabitants v. McEachron, 33 N. J. Law; 339; State v. Powell, 67 Mo. 395;State v. Moore, 74 Mo. 413;Union Tp. v. Smith, 39 Iowa, 9;Lowry v. Polk Co., 51 Iowa, 50, 49 N. W. Rep. 1049;Wilson v. Wichita Co., 67 Tex. 647, 4 S. W. Rep. 67;Boggs v. State, 46 Tex. 10;State v. Clarke, 73 N. C. 255;Commissioners v. Lineberger, 3 Mont. 235;State v. Jaynes, 19 Neb. 162, 26 N. W. Rep. 711;U. S. v. Watts, 1 N. M. 553;State v. Harper, 6 Ohio St. 610;Supervisors v. Kaime, 39 Wis. 468. The title to the public funds was vested in the treasurer. Muzzy v. Shattuck, 1 Denio, 233; Colerain v. Bell, 9 Metc. (Mass.) 499; Inhabitants of Hancock v. Hazzard, 12 Cush. 112;Inhabitants of Egremont v. Benjamin, 125 Mass. 19;Halbert v. Martin Co., 22 Ind. 125;Mordeck v. State, 28 Ind. 86;Inglis v. Van Buren Tp., 61 Ind. 212;Bocard v. State, 79 Ind. 270;Rock v. Stinger, 36 Ind. 346;Shelton v. State, 53 Ind. 331. See also Inhabitants of Cumberland v. Pennell, 69 Me. 357;York Co. v. Watson, 15 S. C. 1;State v. Houston, 78 Ala. 576. The state treasurer is not bound to keep in his vaults the identical moneys received. Perley v. County of Muskegon, 32 Mich. 132;Beck v. McGillis, 9 Barb. 35; Vaisey v. Reynolds, 5 Russ. 12; Parker v. Marchant, 1 Phil. Ch. 356; Mann v. Mann, 1 Johns. Ch. 231; 2 Amer. & Eng. Enc. Law, 94, note. The treasurer was not required to account to the state for interest on deposits. Com. v. Godshaw, (Ky.) 17 S. W. Rep. 737;People v. Walsen, (Colo. Sup.) 28 Pac. Rep. 1119;Rock v. Stinger, 36 Ind. 346;Shelton v. State, 53 Ind. 331.

On the question of contemporaneous legislative construction of the laws fixing the treasurer's salary, see State v. Hoeflinger, 31 Wis. 257;Smith v. Hoyt, 14 Wis. 273;Williams v. State, 2 Sneed, 162;Hughes v. People, ...