Webb v. United States Fidelity, Etc. Co.

• Decision Date: 14 November 1935
• Citation: 165 Va. 388
• Court: Virginia Supreme Court
• Parties: J. R. WEBB v. UNITED STATES FIDELITY & GUARANTY COMPANY.

Page 388

165 Va. 388

J. R. WEBB v. UNITED STATES FIDELITY & GUARANTY COMPANY.

Supreme Court of Virginia, Richmond.

November 14, 1935.

Present, Campbell, C.J., and Holt, Hudgins, Gregory, Browning and Eggleston, JJ.

1. LIMITATION OF ACTIONS — Period of Limitation — Action to Recover Money Illegally Paid by County Treasurer from Fiduciary Funds — Case at Bar. — In the instant case the surety on the official bond of a county treasurer, having made good a shortage in his accounts, sought to recover for two checks drawn on his treasurer's account to pay personal debts due by him to appellant. As to one item the lower court sustained defendant's plea of the three year statute of limitations.

Held: That defendant's liability to refund the items was based upon his implied promise to refund the money illegally paid to him by the treasurer out of his fiduciary funds, and this being true, the three year limitation prescribed by section 5810 of the Code of 1930 applied.

2. LIMITATION OF ACTIONS — Time of Commencement of Suit — Time as to New Party Brought in by Amended Pleading. — Where a new party is brought into a suit by an amended pleading, the suit must be deemed to have been commenced as to him at the time that he was so brought in.

3. LIMITATION OF ACTIONS — Action to Recover Money Illegally Paid by County Treasurer from Fiduciary Funds — Case at Bar. — In the instant case the surety on a county treasurer's official bond, having made good a shortage in his accounts, filed a petition against the bank in which funds of the treasurer had been kept, seeking recovery for diversions therefrom. By an amended petition appellant was made co-defendant and judgment was prayed against him for two items alleged to have been paid him from the treasurer's fiduciary funds. The amended petition was filed more than three years after payment of one of the items and the lower court sustained appellant's plea of the statute of limitations with reference to this item.

Held: No error.

4. PARTIES — Misjoinder of Parties — Misjoinder Cannot Be Reached by Demurrer. — Under section 6102 of the Code of 1930, misjoinder of parties cannot be reached by demurrer.

5. COUNTIES — Treasurer — Bond and Sureties — Action by Surety to Recover for Illegal Payments from Fiduciary Funds — Multifariousness — Case at Bar. — In the instant case the surety on a county treasurer's bond, having made good a shortage in his accounts, filed a petition against a bank in which funds of the treasurer had been kept, alleging that it was liable for two checks drawn on the treasurer's account to pay his personal debts to appellant. During the taking of testimony it developed that one check was drawn on the treasurer's account in another bank and thereafter the surety filed an amended petition in which the allegations were made to conform to the proofs already taken; appellant was made a co-defendant, and judgment prayed against him for the amounts paid him from the fiduciary funds in the two banks. Appellant's demurrer to the petition, on the ground of multifariousness, was overruled by the trial court.

Held: No error.

6. COUNTIES — Treasurer — Use of Public Funds to Pay Treasurer's Personal Debt — Case at Bar. — In the instant case the surety on a county treasurer's bond, having made good a shortage in his accounts, sought to recover from appellant for a check on the treasurer's account in bank given to appellant to repay money loaned to the treasurer personally. The check on its face showed that it was drawn by the treasurer in his official capacity and carried the notation "for cash, warrants and checks." It was paid from public funds.

Held: That the treasurer was but custodian of his official funds and had no right to use such funds to pay his personal debts, nor had appellant any right to accept public funds for such a purpose.

7. COUNTIES — Treasurer — Payment of Personal Debt from Treasurer's Account — Treasurer Short in His Accounts Has No Personal Funds Therein by Way of Commissions — Case at Bar. — In the instant case the surety on a county treasurer's bond, having made good a shortage in his accounts, sought to recover from appellant for a check on the treasurer's account in bank, given to appellant to repay money loaned to the treasurer personally. Appellant contended that the check might have been paid out of the treasurer's personal funds, by way of commissions, in the account, but it was undisputed that at the time the item was paid the treasurer was short in his accounts by a large amount.

Held: That there was no merit in appellant's contention, for the treasurer, being short in his accounts, had no personal funds by way of commissions in his fiduciary account.

8. COUNTIES — Treasurer — Bond and Surety — Subrogation — Right of Surety to Recover Sum Illegally Paid from Treasurer's Account — Case at Bar. — In the instant case the surety on a county treasurer's bond, having made good a shortage in his accounts, sought to recover from appellant for a check on the treasurer's account in bank given to appellant to repay money loaned to the treasurer personally. The check on its face showed that it was drawn by the treasurer in his official capacity and carried the notation "for cash, warrants and checks." It was paid from public funds.

Held: That the surety, having paid the State and county the sum misappropriated by the treasurer and paid to appellant, was entitled by subrogation to recover said sum from appellant.

Appeal from a decree of the Circuit Court of Bath county. Decree for complainant. Defendant appeals.

The opinion states the case.

Timberlake & Nelson, for the appellant.

Apperson, Rush & Gentry, for the appellee.

EGGLESTON, J., delivered the opinion of the court.

This litigation, like the companion case of E. B. Jones, Receiver, etc. United States Fidelity & Guaranty Company, ante, page 349, 182 S.E. 560, decided at this term, arises out of the defalcations of George B. Venable while treasurer of Bath county.

The United States Fidelity & Guaranty Company, as surety on Venable's official bond, having settled for his shortages in his public funds, filed its petition in the receivership proceedings wherein the affairs of the Bank of Warm Springs, Inc., were being liquidated. The surety alleged, among other things, that the bank had aided and abetted Venable in diverting funds from his treasurer's account in that bank, and that it, the surety, having made good these shortages was entitled by subrogation to all rights of the State and county against the bank for the recovery of the amounts so diverted.

In addition to the six items which were the subject of the opinion in E. B. Jones, Receiver, etc. United States Fidelity & Guaranty Company, supra, the petition alleged that the bank had, by honoring checks on Venable's treasurer's account, aided and abetted him in paying out of his fiduciary funds two personal debts due by him to J. R. Webb. One check was for $6,079, paid on October 17, 1930, and the other for $5,853 and paid on December 7, 1931.

The answer of the bank and the receiver alleged that the obligation to reimburse the surety for the Webb payments rested on Webb, if on anyone, and not on the bank. It prayed that the answer be treated as a cross-bill against Webb, that he be made a party defendant to the proceedings, and be required to refund to the bank any amount which it might be required to pay to the surety on account of the payments to Webb.

To the bank's cross-bill Webb filed a demurrer and answer in which he denied any legal obligation to refund to the bank, its receiver, the surety, or any other person, the money which he had received from Venable.

During the taking of the testimony before a special master, to whom the matter had been referred, it developed that the check dated December 7, 1931, for $5,853, payable to Webb, had been drawn on Venable's treasurer's account in the Bath County National Bank and not on the Bank of Warm Springs, Inc., as alleged in the surety's petition. Therefore, the trial court held that the Bank of Warm Springs, Inc., was not liable to the surety on this item.

For reasons which need not be stated, the lower court also disallowed the surety's claim against the Bank of Warm Springs, Inc., for the item of $6,079 paid Webb on October 17, 1930.

Thereupon, on April 16, 1934, the surety filed an amended petition against the Bank of Warm Springs, Inc., in which the allegations were made to conform to the proofs already taken. Webb was made co-defendant with the Bank of Warm Springs, Inc., to this amended petition and the surety prayed for judgment against him for the two items of $6,079 and $5,853 alleged to have been paid him out of the treasurer's fiduciary funds.

To the surety's amended petition Webb filed a demurrer and answer in which he alleged that: (1) The amended petition was bad for "misjoinder of parties" and for multifariousness; (2) the claim for the item paid him on October 17, 1930, was barred by the three year statute of limitations; and (3) he was not liable, in any event, on the merits for the return of either payment made to him.

By agreement of the parties all matters of law and fact were submitted to the court on the evidence theretofore taken.

Webb's demurrer alleging misjoinder and multifariousness was overruled and judgment was entered against him in favor of the surety for the sum of $5,853 paid to him on December 7, 1931. From this judgment Webb has been allowed an appeal by one of the justices of this court.

As to the item of $6,079 paid Webb on October 17, 1930, the lower court sustained his plea of the statute of limitations and entered judgment thereon in his favor. By a cross-assignment of error the surety brings under review the action of the court with respect thereto.

We think the trial court was right in sustaining Webb's plea of the statute of limitations with reference to the item paid him on October 17, 1930. Webb's liability to...