Western Cas. & Guar. Ins. Co. v. Board of Com'rs of Muskogee County
| Decision Date | 08 August 1916 |
| Docket Number | 7619. |
| Parties | WESTERN CASUALTY & GUARANTY INS. CO. v. BOARD OF COM'RS OF MUSKOGEE COUNTY ET AL. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court.
One who guarantees by bond the payment of public funds deposited by a county treasurer in a bank designated as a county depository under the provisions of section 1540, R. L. 1910, may not defeat liability on the bond by showing that the designation of such bank as a county depository was irregular or illegal.
Where a depository bond executed pursuant to the provisions of said section 1540, contains the exact conditions imposed by the statute and, in addition, other conditions which are not provided by the statute, tending to limit or evade liability the bond will be upheld as to the conditions imposed by statute, and the other provisions will be treated as surplusage.
Commissioners' Opinion, Division No. 4. Error from District Court, Muskogee County; H. C. Thurman, Judge.
Action by the Board of County Commissioners of Muskogee County against the First State Bank of Wainwright and others. Judgment for plaintiff, and defendant Western Casualty & Guaranty Insurance Company brings error. Affirmed.
Zevely Givens & Stoutz, of Muskogee, for plaintiff in error.
Fred P Branson, Co. Atty., W. E. Disney, B. B. Blakeney, and J. H. Maxey, all of Muskogee, for defendants in error.
For convenience and brevity the board of county commissioners will be referred to as the Board, the Western Casualty & Guaranty Insurance Company as the Western Company, and the First State Bank of Wainwright as the Bank.
This is an action in which the board of county commissioners of Muskogee county brought suit against the First State Bank of Wainwright and the Western Casualty & Guaranty Insurance Company upon a depository bond, the petition alleging that on December 1, 1912, W. H. Wainwright was the duly elected, qualified, and acting county treasurer of Muskogee county, and continued to act as such until the 31st day of October, 1913; that on or about said 1st day of December, 1912, the said Bank was a corporation under the banking laws of the state of Oklahoma, engaged in the banking business, at Wainwright, Muskogee county; that the defendant the Western Casualty & Guaranty Insurance Company was a corporation under the laws of Oklahoma, authorized and empowered to write indemnity and depository bonds; that on or about the 1st day of December, 1912, the board of county commissioners of Muskogee county designated the said Bank as a county depository for the deposit of county and other funds in the hands of the treasurer of said county, and that said Board at the time of designating said Bank required that said Bank should execute a bond with good and sufficient surety, in the sum of $10,000, to secure the deposit of the county funds and funds deposited with said Bank by the said treasurer, and that on the 3d day of December, 1912, the Bank tendered to the county treasurer a bond in said sum executed by it and the said Western Company, as surety, the said bond containing conditions as follows:
Then follow allegations of a conspiracy between the county treasurer and the president of said Bank and allegations of embezzlements and of the forging, altering, and mutilating the records of said Bank. It is alleged further that the county treasurer was, in fact, the owner of the stock of said Bank, and had secretly transferred the same to other parties, and made the Bank's records show that other parties were the owners of the stock of said Bank; that the records of the county treasurer were falsified to show that no money belonging to said county was on deposit in said Bank. Then it is alleged that on the 16th day of October, 1913, the said Bank closed its doors and refused the payments of money on deposit in said Bank, refused to pay checks and drafts drawn by the said county treasurer, and that on the 19th day of December, 1913, this plaintiff discovered that an amount in excess of $10,000 of the funds of said county was actually on deposit in said Bank, and had been continuously since the execution and approval of said bond; that plaintiff at once served written notice of said default upon the said Western Company at its office in Oklahoma City, and attached thereto a certified statement, showing the facts so far as known by the plaintiff.
Plaintiff alleges: That it did not discover that there was any money of said county on deposit in said Bank prior to December 19, 1913, and sets out at length the concealment practiced which prevented it from knowing of such deposit. Plaintiff alleges that it has done and performed all the conditions of the said bond, but that the said Bank has refused to pay checks drawn by the treasurer on said deposit, and that there has accrued upon said deposit, at the agreed rate, interest in the sum of $600. Judgment is prayed against the said Bank for the sum of $60,600, and against the Western Company for $10,000, with interest. Motions to strike out certain portions of the answer were filed by the defendant Western Company, and, after being overruled, a demurrer was filed, which was overruled, and the said defendant then answered, setting up four separate defenses, the first being a general denial, except as to the execution of the bond sued upon and the corporate existence of the parties; second, the defendant alleges, in substance, that at the time the said Bank was designated as a county depository, W. H. Wainwright, the county treasurer, owned a large amount of the stock of said Bank, and that the designation of said Bank was therefore in violation of the provisions of section 1540 of the Revised Laws of Oklahoma, and the bond, being in furtherance of said unlawful purpose, was without validity and not binding; third, that the said bond sued upon provided that in the event of default on the part of the principal, written notice, with a certified statement of the facts showing such default, should, within 30 days after such default, be delivered to the surety at Oklahoma City; that the said Bank, on the 16th day of October, closed its doors and refused all payments of money on deposit in said Bank, and the plaintiff, not having within 30 days thereafter given notice as provided in said bond, is not entitled to recover; fourth, that the bond was procured by fraud, in that the county treasurer was the owner of a part of the capital stock of the said Bank, and the designation thereof as a depository was illegal. That the defendant Western Company was not aware of the ownership of stock by the county treasurer and, if such fact had been known, would not have executed said bond. That it was the duty of the county commissioners to know whether said county treasurer was interested in said Bank, and whether said Bank might be legally designated a depository. That by reason of the fraud as aforesaid the bond is null and void. The plaintiff filed a general denial by way of reply. Judgment was entered by default against the Bank, express reservation being made of the cause of action upon the depository bond upon which the Western Company is here sued.
At the time of the rendering of the judgment against the Bank, an amended petition was filed by the plaintiff, which amounts in effect to a severance of the causes of action against the Bank and the defendant, the Western Company. The cause as between the plaintiff and the Western Company was referred to and tried by a referee, who took the evidence and made findings of fact and conclusions of law, which were duly transcribed and filed in the superior court. Later, upon motion, the report was confirmed, and judgment entered for the plaintiff and against the defendants, the Bank and the Western Company, jointly and severally, for the sum of $10,000, with interest thereon at 2 1/2 per cent. per annum, from the 17th day of October, 1913. Proper motions for new trial were filed and overruled and exceptions saved, and within due time the cause was appealed to this court. The record is voluminous, containing about 800 pages.
The contentions of plaintiff in error may be summarized as follows: First, that the company is not bound except for legal deposits; second, that the bond is not valid; third, that the county failed to give notice as the bond provides.
These contentions will be noticed in the order presented. Upon the first proposition, that the company is not bound except for legal deposits, the plaintiff in error contends that the bond in question is one to guarantee the payment of deposits only and, as it appears that there was no legal authority for making the deposits by the county treasurer in the bank, that the bond is not liable, whether such lack of legal authority be based upon violation of law or lack of facts justifying the deposit; that the title to the funds never passed, and the relation of debtor and creditors never arose; that the...
To continue reading
Request your trial