City of Butte v. Cohen

Harwood, J. The appellants in this action were sureties with others on the official bond of one Edwin G. Leiter, treasurer of the city of Butte. The said bond is in words and figures as follows: — “Know all men by these presents, that we, Edwin G. Leiter, as principal, and D. H. Cohen, Paul Davis, Charles Schlessinger, Samuel Lewis, and James B. Boyce, Jr., as sureties, are held and firmly bound unto the city of Butte in the following penal sums, to wit, the said principal in the penal sum of five thousand dollars ($5,000), and the said sureties in the following — 439 — penal sum of five hundred dollars,($500), the said Paul Davis in the penal sum of five hundred dollars ($500), the said Charles Sehlessinger in the penal sum of five hundred dollars ($500), the said Samuel Lewis in the penal sum of five hundred dollars ($500), and the said James R. Boyce, Jr., in the penal sum of three thousand dollars ($3,000), for the payment of which well and truly to be made we bind ourselves, our heirs, representatives, administrators, and assigns, jointly and severally, by these presents. “ Sealed with our seals, and dated this sixteenth day of May, 1883.” The condition of the foregoing obligation is such, that whereas the above bounden principal, Edwin G. Leiter, was at a general election held in and for the city of Butte, Silver Bow County, Montana Territory, on Monday, the seventh day of May, 1883, duly elected treasurer and assessor in and for said city. “Now, therefore, the condition of this obligation is such that if the said Edwin G. Leiter shall well, truly, and faithfully perform all the official duties pertaining to said office, and required of him by the laws and ordinances of said city, and shall pay over according to said laws and ordinances all moneys which shall come into his hands as treasurer and assessor in and for said city of Butte, and will render a just and true account thereof whenever required by the city council of said city, and shall deliver over to his successor in office all moneys, books, papers, and other things appertaining thereto, or belonging to his office, then the above obligation to be null and void, otherwise to remain in full force and effect. “ EdwiN G. Leiter, [seal.] “$500 D. H. CoheN, [seal.] “$500 Chas. SchlessiNger, [seal.] “$3,000 J. R. Boyce, Jr., [seal.] “$500 S. Lewis, [seal.] “$500 Paul Davis.” [seal.] This action was brought to recover from the defendant sureties the sum of $814.95 alleged to have been collected by said principal, as treasurer of the city of Butte, as taxes and licenses belonging to said city, and embezzled and retained by said prin — 440 — cipal, Edwin G. Leiter, in breach of the covenants of said bond. The said Edwin G. Leiter, principal, was not made a party defendant in the action. As a result of the trial of the action judgment for $652.09 and costs, amounting to $109.50, was rendered against defendants, D. H. Cohen, Paul Davis, Samuel Lewis, and James It. Boyce, Jr. The first question presented for determination on this appeal is, whether under the terms and conditions of said bond a judgment for the sums and costs aforesaid can be lawfully rendered against the defendant sureties, jointly and severally, whereas the appellants contend some of said sureties expressly undertook and bound themselves by the terms of said bond for a penal sum less than the amount of the judgment. In other words, the question to be determined is, whether the sureties on said bond are only bound severally for the amounts set opposite their respective names in the body of said bond, and set before their respective names .at the place of signing the same. Upon the subject of the construction of instruments, the statute of this State (Comp. Stats. § 631, Code Civ. Proc.) provides as follows: “ In the construction of a statute, the intention of the legislature, and in the construction of an instrument, the intention of the parties is to be pursued if possible; and when a general and particular provision are inconsistent, the latter is paramount to the former. So a particular intent will control a general one that is inconsistent with it.” (§ 336.) “When the terms of an agreement have been intended in a different sense by the different parties to it, the sense is to prevail against either party in which he supposed the other understood it; and when different constructions of a provision are otherwise equally proper, that is to be taken which is most favorable to the party in whose favor the provision was made.” Applying these rules of construction to the instrument in question we find no difficulty in constructing it. The evident intent of the parties who executed this bond is plain. It recites in the body thereof: “That we, Edwin G. Leiter, as principal, and D. H. Cohen, Paul Davis, Charles Schlessinger, Samuel Lewis, and James It. Boyce, Jr., as sureties, are held and firmly bound unto the city.of Butte in the following penal sums, to wit, the said principal in the — 441 — sum of five thousand dollars (§5,000), and tbe said sureties in the following penal sum of five hundred dollars (§500), the said Paul Davis in the sum of five hundred dollars (§500), the said Charles Sehlessinger in the penal sum of five hundred dollars ($500),” etc. Now, if the said Paul Davis and other sureties who recited that they were bound in the sum of five hundred dollars, intended to be bound in the sum of five thousand dollars ($5,000), why did they make these particular provisions that they were bound in the sum of five hundred dollars? Again, at the place where these sureties sign the bond is written before each of their names a sum like the one expressed after their names respectively in the body thereof. It is plain that each intended to be bound in the sum expressly stated for each of them, as distinguished from the amount that the principal was bound for. So far there appears to be no ambiguity or inconsistency in the language of the bond. There is a phrase, however, further along in the contents of the bond which appears to be inconsistent with these particular limitations and several character of the penal sums for which each surety undertook to be bound. That phrase is as follows: “For the payment of which well and truly to be made we bind ourselves, our heirs representatives, administrators, and assigns, jointly and severally, by these presents.” It is contended by respondent that this provision binds the sureties jointly and severally for the whole penal sum of five thousand dollars. This is certainly a general provision in the bond, and is inconsistent with the particular provisions which go before it. Apply the statutory rule above quoted to this state of facts, the particular provisions must prevail over the general. It appears from the complaint that the plaintiff understood the liability of the sureties to extend to the amount stated in the bond as the penal obligation of each surety. The seventh paragraph of the complaint alleges: “That by reason of the breach aforesaid, the defendants have forfeited the said bond, and become and are indebted to plaintiff in the respective sums set after their names in said bond.” IVe think this instrument should be construed as binding the sureties severally, for that amount expressly stated in the bond as the obligation respectively undertaken. Hence the judgment — 442 — against any surety should not exceed the amount for which he bound himself in case of a breach of the condition, and may be enforced up to that amount against each surety sued until the judgment is satisfied. (People v. Edwards, 9 Cal. 286; People v. Love, 25 Cal. 521; People v. Rooney, 29 Cal. 643; City of Los Angeles v. Mellus, 59 Cal. 444; Moss v. Wilson, 40 Cal. 159; Bank of Brighton v. Smith, 12 Allen, 243; 90 Am. Dec. 144; New Hampshire Bank v. Willard, 10 N. H. 210; Murfree on Official Bonds, §§ 236, 237.) If this was the only error complained of by appellants, the judgment in the court below should be modified to conform to the foregoing conclusions, but there are other assignments of error which demand consideration. The complaint in this action alleges: “That while the said Leiter was, and acted as, such treasurer and assessor, he committed a breach of the condition of said bond by misappropriating, embezzling, and failing to account for moneys collected by him for the use of the plaintiff, and by otherwise failing to well, truly, or faithfully perform his . official duties to said office, and failing to pay over according to the laws and ordinances the money which came to his hand-as treasurer and assessor as aforesaid, and by failing to render a just and true account thereof; and more particularly by embezzling and converting to his own use, and failing to account for the sum of $585, collected by him as such treasurer and assessor, for licenses collected at various times from divers aud sundry persons, and the further sum of $218.96 collected by him as such officer for taxes collected at various times from divers persons.” The defendants appeared, and by answer made specific denial of all the allegations of the complaint. To establish the allegations of' the complaint the plaintiff offered, and the court admitted in evidence,- certain books provided by ordinance of said city pertaining to the city treasurer’s office kept by said Leiter. According to the showing on the face of said books a number of parties appeared to be indebted to the city for taxes or licenses, but upon investigation such parties produced a receipt from said Leiter, or other competent evidence, showing that such payments had been made. The books, on the other hand, did not show that said money had been paid over — 443 — or accounted for to tbe city. The aggregate of the various amounts so proved is, we presume, the amount of the judgment, $652.09. Having made such showing, the plaintiff’s counsel offered, and the court received in evidence, section 9 of Ordinance No. 5 of said city, which provides, among other things, that, “it shall be the duty of the city assessor, as ex offieio treasurer and collector, to keep a true account of all moneys received by him, stating from whom, and on what account the same was received, in suitable books to be provided by the city council, and kept by him for that purpose.” And with this proof the plaintiff rested its case. The defendants then offered in evidence on their defense section 8 of said Ordinance No. 5, which was admitted by the court without objection, and which provides, among other things, that the city treasurer “shall receive one sixth of all moneys collected by him, and such other compensation as the city council may allow.” The defendants further offered, and the court received in evidence the books of account kept by said treasurer, which showed the amount of licenses collected and turned into the city treasury by said Leiter during the time he acted as treasurer, and during the time the said defalcations are alleged to have occurred. In this respect the books showed that during said period the sum turned into the treasury was $9,247.55. These books also showed that said treasurer had received only ten per cent, or one tenth of said collections as compensation, whereas, the said ordinance allowed him one sixth thereof, or sixteen and two thirds per cent. The appellants contend that this additional allowance which would be due to said treasurer on the showing of the books should be considered by the court to the extent of the sum it amounted to, as a bar to recovery against the defendant sureties of the sum proved to have been collected and retained by said Leiter. We are of opinion that this ought to have been so considered. The defendants had denied in effect that the said Leiter, for whom they were sureties, had retained and converted to his own use moneys belonging to the city, as alleged in the complaint. They were there making proof upon their side of the issue presented by such allegations and denials. The books required to be kept were properly introduced to prove facts which the ordinance required to be recorded in them, — 444 — and these entries were made by the treasurer against his interest. (Coleman v. Commonw. 25 Gratt. 865; 23 Am. Rep. 711.) No evidence was introduced in rebuttal of the showing made by the defendants. It is urged by counsel for plaintiff that the defendants should have set up these fadts in their answer, in order to avail themselves thereof in defense on the trial, and is suggested by counsel for plaintiff that if that showing was, allowed, it would more than counter-balance the whole deficit proved by plaintiff, and defendants would be entitled to a balance from the city; that the only way defendants can avail themselves of a counter-claim is to set it up by answer or cross-complaint. We do not agree with that proposition. This action is not against the principal, but is brought against certain sureties. The sureties in this action are not entitled to a counter-claim or set-off, which exists in favor of the principal as between him and the city. But the sureties are entitled to defend against the main allegation which involves them in a liability. These defendants are entitled to prove facts which would bar a recovery against them on an issue raised by the allegations of the complaint, and a specific denial of such allegations by answer. The principal, Leiter, if a party defendant to this action, could likewise make the same showing on a simple denial of the allegations of the complaint to bar a recovery. If he was shown to be entitled to a certain portion of the moneys collected, and this amount was proved, or the facts from which the mathematical deduction can be made with certainty, and this amount exceeded what he was charged with having retained, then this shoAving would be a bar to recover from him or his sureties. Surely, what would be allowed to the principal in an accounting with the city, a fortiori, should be considered when proved on behalf of the sureties in an action for a breach of the covenants of the bond. The judgment is reversed, and the case remanded to the trial court, to enter a judgment in conformity with the conclusions herein expressed. Blake, C. J., and Hauwood, J., concur.