Stinson v. Bd. Of Sup'rs Of Buchanan County *

• Decision Date: 19 September 1929
• Citation: 149 S.E. 531
• Parties: STINSON et al. v. BOARD OF SUP'RS OF BUCHANAN COUNTY et al.*
• Court: Virginia Supreme Court

149 S.E. 531

STINSON et al.

v.BOARD OF SUP'RS OF BUCHANAN COUNTY et al.^*

Supreme Court of Appeals of Virginia.

Sept. 19, 1929.

Appeal from Circuit Court, Buchanan County.

Action by the Board of Supervisors of Buchanan County and another against J. H. Stinson and others. From an adverse decree, defendants appeal. Affirmed.

A. A. Skeen and Chase & McCoy, all of dintwood, for appellants.

Williams & Combs and H. Claud Pobst, all of Grundy, and Barnes Gillespie, of Tazewell, for appellees.

PRENTIS, C. J. The appellants are sureties on the last of three bonds executed by A. C. Stacy, who was treasurer of Buchanan county, and they are here appealing from a decree which determines his liability and their own as his sureties.

Stacy was elected treasurer of Buchanan county November 6, 1923, but failed to qualify and execute his bond before January 1, 1924, and the court, by order of February 4, 1924, declared the office vacant, but upon the same date, upon motion of Stacy, appointed him treasurer, and he then qualified and executed a bond in the penalty of $75,000, with the Maryland Casualty Company as surety. Thereafter, July 30, 1924, Stacy was allowed to give another bond in the penalty of $100,000, with these appellants and one S. R. Hurley as his sureties, in lieu of the bond which he had previously given with the Maryland Casualty Company as surety.

These appellants allege, in their answer to the original bill, that after this $100,000 bond was given (four months thereafter in fact), Stacy made his regular annual settlement with the board of supervisors, by which settlement it was shown that he had fully and correctly accounted for all funds which came into his hands between January 1, 1924, the date his term of office began, and July 30 1924, the date of the new bond, and that as a result of this settlement the board of supervisors, at its regular meeting, December 3, 1924, by a formal order, released the Maryland Casualty Company as surety upon the first bond in force prior to the execution of the $100,000 bond. They file this order as a part of their bill, and it recites that the treasurer had fully and correctly accounted for all funds which came into his hands from January 1, 1924, until July 30, 1924. Thereafter, November 9, 1925, 15 months after the $100,000 bond was given, in which appellants, together with Hurley, are sureties, Stacy made his regular annual settlement with the board of supervisors, showing the amounts to the credit of the various funds under the control of the board of supervisors, and they file a copy of this settlement with their answer to the bill.

About one year later, pursuant to Code, § 2777 (as amended by Acts 1926, c. 14), the circuit court of Buchanan county entered an order requiring the commissioner of accounts to examine and report as to the sufficiency of the $100,000 bond of Stacy, and on August 4, 1926, the commissioner reported that this bond was insufficient in penalty; whereupon the court entered an order requiring the treasurer to execute a new bond, as the law directs, in the penalty of $250,000.

In accordance with this order, Stacy, together with appellants as sureties, on August 10, 1926, executed the last bond, in the penalty of $250,000. Within a month after this bond had been executed, the state accountant, at the request of the board of supervisors, made an audit of the accounts of the treasurer, and found that at that time he was in default in the sum of $89,596.40.

In June, 1927, the board of supervisors of Buchanan county filed its bill against A. C. Stacy, treasurer, and against S. R. Hurley, one of the sureties on the $100,000 bond, and the appellants, alleging the deficiency shown by the report of the state accountant as of September 6, 1926, prayed for a full accounting and for a recovery against the defendants of the amount found to be due.

With the exception of S. R. Hurley, the sureties on the two bonds are identical, and it is shown that at the time of the institution of this suit Hurley was insolvent.

All of the defendants filed their answers to the bill August 1, 1927, denying all liability, and joined in the prayer for an accounting, and thereafter, December 1, 1927, Hurley filed an amended answer in which he alleges that there is no liability on him as surety on the $100,000 bond, and that the existing liability rests solely upon the sureties on the latest bond of $250,000.

There was a decree of reference to M. P. Farrier, as special commissioner, with directions to make a full and complete settlement of accounts between the complainants, theboard of supervisors, and the defendants, to report the status of the same, together with any other matter deemed pertinent by himself, or requested by any other party.

Farrier, special commissioner, after due notice, opened his proceeding August 29, 1927, upon which date the appellants, together with all the other parties, were present by counsel, and thereupon this stipulation was agreed to by all the parties to the proceeding:

"It was then mutually agreed that the audit of the accounts of A. C. Stacy, treasurer, made by the State Accountant as of September 6, 1926, should be treated and considered as prima facie correct, but with the right reserved to any party in interest to point out and have corrected any specific errors therein, as well as in any prior settlement of Mr. Stacy's accounts."

This agreement appears to be perfectly clear in its import. It means that it was then agreed that Stacy, as treasurer, was in default as of September 6, 1926, for the period covered by the audit of the state accountant, in the total sum of $S9, 596.40, subject to the right of any interested party to show any error therein.

The commissioner reported that he kept the account open until he filed his report November 18, 1927—that is, for a period of more than two months—and that all the parties were given opportunity to produce evidence of any errors in any of the previous settlements.

The commissioner's report was confirmed without objection or exception by decree entered December 1, 1927, and it was adjudged that the balance due Buchanan county by A. C. Stacy, treasurer, as of August 29, 1927, was $116,290.82, and reserved all other questions involved for future decision.

At the time this decree was entered, December 1, 1927, E. E. Smith had, at the previous November election, been elected treasurer of Buchanan county to succeed Stacy. It is said in the brief for the appellees that the reason for the reservation was that the time was so short between the date of the confirmation of this report and the date when Smith would take over the office, January 1, 1928, and thereupon take over the moneys, records, and duties of the office, that the court, after making this adjudication, left further proceedings in the case open until Smith should become treasurer, and that this was the most practical and expeditious method of dealing with the subject.

After January 1, 1928, there was a further accounting between Stacy and the board of supervisors as to collections and disbursements made by him after August 29, 1927, the date of the adjustment made by Farrier, special commissioner, and before January 1, 1928, when his term expired, and this accounting left Stacy in arrears and in default for an additional sum, which added to the amount named in the decree showed that he was then in default in the sum of $136,493.75.

Then Smith, in March, 1928, filed his petition in the case, to which the treasurer, Stacy, Hurley, and the appellants were made defendants, which recited all of these previous proceedings, alleged that he (Smith) had been elected, had qualified and assumed the duties of the office of treasurer of Buchanan county, January 1, 1928, and that Stacy, the former treasurer, was in default in the gross sum just named, and prayed to recover that amount of Stacy and the defendants. Expressed differently, the petition was a formal demand for settlement of the amount clearly due by Stacy. Then the appellants filed their joint answer to Smith's petition, in which they reiterated the principal defenses which had already been made in their answer to the original bill. They specifically denied the legality of the $250,000 bond, but did not deny any of the other allegations of the petition. They then for the first time, April 27, 1928, nearly 12 months after the bill had been filed, made the defense which they are now here relying upon; that is, in substance, they claim that Stacy was in default for a large sum, to wit, $55,315.87, prior to July 30, 1924, when the $100,000 bond was executed, and they asked for another order of reference in order to ascertain the precise amount due by Stacy for his breaches of duty and defalcation, if any there were, which occurred prior to July 80, 1924; that is, upon the very day of the final decree they asked to reopen every issue in the cause which had been theretofore decided, as well as to begin an inquiry into the issue first tendered then in the answer to the Smith petition.

The appellees moved to strike out the answer, claiming that the matters referred to had been adjudicated by the decree of December 1, 1927, and that this answer was equivalent to an exception to the original report of the commissioner, which, as has been stated, had been previously confirmed without exception.

The decree shows on its face that the court "asked counsel for defendants If they questioned the correctness of the final settlements exhibited with the petition of E. E. Smith, Treasurer, and they stated that they had no errors therein to point out, but that they, desired further time to check said settlements to ascertain if there were any errors therein, but no sufficient reason was given therefor, and such request is denied. And thereupon the court asked counsel for defendants if they desired to answer said petition further, and they stated that they relied upon the answers as filed and stricken out. ...