Bush v. Johnson County

Harrison, J. David R. Bush was elected treasurer of Johnson county at an election held during the fall of 1889, and took possession of and commenced the performance of the duties of the office in January, 1890. He was re-elected — 4 — in tbe fall of 1891, and in January, 1892, closed bis first and began bis second term as treasurer. Tbe other plaintiffs in error were bis bondsmen for tbe first term. Bush’s immediate predecessor in tbe office of county treasurer, when be turned over tbe office and funds in January, 1891, delivered to Busb some forty or fifty dollars in actual cash, or money in tbe strictest meaning of tbe term, and gave bim certificates evidencing deposits wbicb tbe retiring treasurer then bad in banks, and also some checks. These were accepted by tbe incoming treasurer and received, as between bim and tbe outgoing one, as payment of tbe amounts stated in them. One of these certificates, or checks, was for tbe sum of $6,000, payable by tbe bank of Russell & Holmes at Tecumseb. Busb presented this at tbe banking office of Russell & Holmes, and in lieu of it received a certificate of deposit for tbe sum named. This be retained through and beyond tbe entire time and close of bis first term as treasurer. In bis report to tbe county board, at or near tbe close of bis first term, a certain balance was shown to be on.band. A portion of this balance was this sum evi-<1 enced by tbe certificate mentioned. Tbe bank in wbicb this money was deposited continued business in tbe regular manner until October, 1891, at wbicb time it closed, a month or two before the expiration of Bush’s first term. When tbe facts were discovered in regard to this and some other certificates of deposit, — we have here to deal particularly with this one, — action was instituted on tbe bond against plaintiffs in error to recover tbe amount as an alleged shortage. There were two principal questions raised by tbe pleadings: First, that Busb, tbe county treasurer, never received tbe money, tbe $6,000, to recover wbicb was tbe object of this suit; second, that at tbe expiration of bis term of office be made a settlement of bis doings and accounts as county treasurer with the county commissioners, whereby tbe county became bound, and that, in consequence, it cannot, or should not be beard to assert any claim as against the treasurer — 5 — or bis bondsmen. A jury was waived and a trial bad. Judgment was rendered against tbe treasurer and bondsmen for tbe $6,000 and interest tbereon. Tbe case bas been brought to tbis court by proceedings in error. In regard to wbat transpired in January, 1889, between tbe outgoing treasurer and Mr. Busb, tbe incoming-officer, in regard to tbe funds of tbe county and tbeir transfer from one to tbe other of tbe officers, Mr. Zutavern, tbe retiring treasurer, testified as follows: Q. Mr. Zutavern, what official position did you bold in tbis county in tbe years ’88 and ’89? A. County treasurer. Q. Who was your successor? A. D. R. Busb. Q. Do you know how much money you turned over to Mr. Busb at tbe time you went out of tbe office? A. I do not know now. Q. You may state to tbe court bow you delivered tbe. things in tbe treasurer’s office to Mr. Busb, at tbe time, your term of office expired, with reference to tbe money on band. A. I turned over all tbe money that belonged to tbe county to D. R. Busb. Q. How did you turn it over? A. Why, by checks, most of it. I guess I bad a little cash on band, maybe $40 or $50, in tbe drawer, and I turned that over. I turned him over a few certificates. Q. State bow it was you did not give him tbe money. A. I bad tbe certificates and -asked Busb if be could use them, whether they would answer as well as money, and he said they would. There was nothing said about me getting tbe cash, I do not think. Q. State tbe facts as to whether they were equivalent to cash at that time, and for bow long. A. They were. Q. Did Mr. Bush ever give you any information, in any form or manner, after tbis, that be could not use these — 6 — certificates, or ask you to take them up, or any of the things you turned over as the amount of money on hand? A. No, sir. Q. Why didn’t you turn the money over in cash at the expiration of your term of office to Mr. Bush? A. I had these certificates and showed them to Bush and asked him if he could use them, and he said that he could. That was my reason. He said they would do him as well as money. Q. You were acquainted with the financial condition of the different banks upon which you had the bank certificates? A. I think I was. Q. You were acquainted with their condition with reference to paying of their papers presented .to them, for a year after that? Q. From that time on for another year? A. I think I was. Q. Well, what was it? A. They were good. Q. They paid all of the demands made on them? A. Yes, sir. A portion of the testimony of Mr. Bush is as follows: Q. Mr. Bush, you are the defendant, one of the defendants, in this case? A. Yes, sir. Q. You are the principal defendant, are you not, in this case? A. Yes, sir. Q. (Handing witness plaintiff’s Exhibit “E.”) What is that paper you now have? A. It is a certificate of deposit on the bank of Russell & Holmes. Q. You are the person who is named in that certificate as payee, are you? A. Yes, sir. Q. You were county treasurer at that time? A. Yes, sir. — 7 — Q. It was paid to you. as county treasurer? A. Yes, sir. Q. The consideration of that check was county money? A. It was a check given me for county money. Q. And you took the check to the hank and got that? A. Yes, sir. Q. At your own request? A. At the request of Mr. Charles Holmes. Q. Did you ask him for the cash? A. No, sir. Q. You did not want it? A. No, sir. Q. You could have got it? A. I do not know whether I could or not. Q. You had every reason to believe it? You had not known them to refuse any certificates, had you? A. No, sir. Q. You have got money out of there as county treasurer since that was deposited there, haven’t you? A. Yes, sir. Q. That was a part of the funds you received from Zu tavern, yonr predecessor? A. Yes, sir. Q. At the end of your first term you did not turn that ■over except in the form of a certificate as it appears there, to yourself? A. There was no change. Q. Jnst that certificate? A. Yes, sir. Q. When you settled with the county board at the end ■of your first term, January, 1892, you turned over that certificate in your report to the county commissioners as part of the funds on hand? A. Why, I suppose, you would call it that; simply in my own hands. Q. You turned it over to yourself as successor? A. I believe that is what it would be. Q. You never turned any cash over to represent that? A. No, sir. — 8 — In this connection it may be further said that all of the testimony introduced which had a bearing upon the question of whether or not the bank of Bussell & Holmes was, at the time of the transaction between Zutavern and Bush, of date January, 1890, solvent and meeting all demands for payments of money made upon it, tended to establish that it was so, and so doing, and continued in such condition for more than a year subsequent thereto. It is clear from the evidence that Mr. Bush, on assuming the duties of the office of county treasurer, received from the retiring officer a check or certificate of deposit entitling him to demand from the bank of Bussell & Holmes the sum of $6,000, and that it was so accepted by him in such form, in lieu of the cash, either coin or legal tender currency; that he did not demand any other or different payment, but waived it, and the check or certificate of deposit was by him delivered to the bank and canceled, and at the request of the banker he received a new certificate of deposit for the sum named, payable to himself as county treasurer. The title or right to the sum of money ■involved was, by the methods stated, transferred from Mr. Zutavern to Mr. Bush, the latter being the recipient of it by reason of his occupancy of the office of county treasurer. The reception of this money from his predecessor was one of the duties which devolved upon the incoming treasurer, his due and proper performance of which, together with all others pertaining to the office, his sureties, by signing the bond, had guarantied. Giving the bond was one of the essential prerequisites of his assuming the office, without which he could not legally do so, and the sureties, by their signatures, enabled him to meet this requirement and to acquire title or right to this money, and, having so acquired it, he and the bondsmen became liable to the county for it. The fact that he elected to take a certificate of deposit evidencing the indebtedness of a bank to his predecessor in office for the amount, instead of coin or currency, and to have the certificate canceled and a new one issued payable to him — 9 — self as county treasurer, and to let tbe money remain in tlie bank and to carry tbe sum thus treated in bis accounts as sucb treasurer, as moneys or funds on band, could in no manner or degree affect bis liability or that of his bondsmen. He became possessed of tbe right to $6,000 of tbe funds of tbe county, and liable for its safekeeping and to account for it, and at tbe request of tbe banker left it in tbe bank. This was a sufficient reception by him of tbe money of tbe county to render him and bis sureties liable for it under tbe conditions of this bond within tbe rule announced in State v. Hill, 47 Neb., 456. What effect tbe transactions we have outlined between tbe two treasurers would have upon tbe rights of tbe county, if any, existing or arising therefrom, against Zutavern, tbe outgoing treasurer, and bis bondsmen, is not involved in this case and will not be discussed or decided. It is evident that Bush, tbe incoming treasurer, acquired tbe right to act in relation tq tbe $6,000 of tbe county funds, and by bis action it was left in tbe bank. This was sucb an act of right, of control, and disposition of tbe money as rendered him liable to account for it. It is argned that tbe treasurer is only bound to use due and ordinary care for tbe safe-keeping and preservation of tbe money of tbe county, and if be deposited it in tbe bank after using reasonable and ordinary care and caution in ascertaining tbe standing and solvent condition of tbe bank, and was watchful in this particular so long as it remained there, if the bank failed and tbe money was thereby lost to tbe county, in whole or in part, without any fault or negligence attributable to tbe treasurer, be was not liable for sucb loss, nor were bis sureties so liable. There exists an irreconcilable conflict in tbe decisions of tbe courts in regard to tbe liability of public officers and their bondsmen for funds lost without fault or negligence on tbe part of tbe officers, but tbe weight of authority in this country is to tbe effect that a public officer and bis sureties are to be held responsible for public funds lost, regardless of tbe question of fault or negli — 10 — gence on tbe part of the officer, where the law, in positive terms or from its general tenor and without any limitation upon the. obligation, requires that the officer pay over public funds which have been received by him and held as such. Where the statutes impose the duty of payment it is sufficient, if the bond is conditioned for the Paithful discharge of the duties of the officer, to render the sureties liable to the same extent as their principal. Our statutes on the subject, by their general tenor, if not in direct terms, require the retiring treasurer to account for or pay over the public moneys. The bond in this case was conditioned for the faithful discharge by the treasurer of the duties of the office, and for the faithful accounting for and paying over of all the moneys of the county which he received, and both he and his sureties became liable for any failure on his part to pay over any of the public money, notwithstanding it may have been lost without his fault or negligence. (Board of Education of the Village of Pine Island v. Jewell, 46 N. W. Rep. [Minn.], 914, and cases cited, as follows: United States v. Prescott, 3 How. [U. S.], 578; United States v. Dashiel, 4 Wall. [U. S.], 182; Boyden v. United States, 13 Wall. [U. S.], 17; Inhabitants of Hancock v. Hazzard, 12 Cush. [Mass.], 112; Inhabitants of New Providence v. McEachron, 33 N. J. Law, 339; Commonwealth v. Comly, 3 Pa. St., 372; State v. Harper, 6 O. St., 607; District Township of Taylor v. Morton, 37 Ia., 550; Thompson v. Board of Trustees, 30 Ill., 99; Halbert v. State, 22 Ind., 125; Morbeck v. State, 28 Ind., 86; Ward v. School District, 10 Neb., 293; Wilson v. Wichita County, 67 Tex., 647; State v. Nevin, 19 Nev., 162; State v. Moore, 74 Mo., 413; State v. Powell, 67 Mo., 395; Commissioners of Jefferson County v. Lineberger, 3 Mont., 231; Redwood County v. Tower, 28 Minn., 45.) The case of Ward v. School District, 10 Neb., 293, cited in the opinion of the Minnesota court just alluded to, in support of the doctrine of strict accountability of treasurers and their bondsmen for public money entrusted to the care of the treasurers by virtue of their — 11 — ¡being such officers, may be said to be not strictly in point, for the reason that the money lost by failure of the bank, and sought in the action to be recovered of the treasurer ■and his bondsmen, had been deposited by the treasurer in the bank,' to his own individual credit. This court held: “The defendant, while treasurer of the plaintiff ■district, deposited the money in question with his banker to his own individual credit. The money was intended to meet certain bonds of the district, then about to fall ■due, and which were payable at that bank, and the defendant so informed the banker and directed him verbally to so apply it when the bonds were presented. While in this condition the bank failed and the money was lost. Held, that the banker was the agent of the treasurer, and not of the district, and that the money was recoverable by the district in an action on the treasurer’s bond.” And it was said in the text of the opinion: “It was Ward’s duty, under the law, to keep the money securely until properly directed, as before shown, to pay it over to the holder of the district bonds. The money was within his control, placed there by force of the statute, and if he saw fit to entrust it to the care of another, he ¿id so at his peril.” In the opinion in the case of State v. Sheldon, 10 Neb., 452, in stating the liability of a treasurer for public funds it was held: “The fact that the public funds have been stolen from the treasurer is no legal justification for the failure of the treasurer to account for them.” This was not a case, however, wherein the recovery of the public funds was the object of the action, but was one in the nature of a quo warranto to oust the defendant from the office of county treasurer of Greeley county, and in reaching a conclusion as to whether the treasurer had been guilty of neglect of duty as an officer it was observed: “This being the case, the county treasurer having failed to account for the moneys in his hands, properly chargeable against him as treasurer, is guilty of willful neglect of duty and may be removed from office. And the fact — 12 — that the moneys were stolen is no legal justification for the failure to account for them.” While it may be said that these cases are not in point and cannot be said to support the rule which holds treasurers to a strict accountability in respect to public funds which come into their possession as officers, for the reason that, strictly speaking, it was not the main question involved in either case, but only incidentally, yet it was so necessarily connected with the matters under discussion and which were determined, that it became necessary to pass upon it, and the decisions show what the opinion of the court was in regard to the responsibility of the treasurers for public money which they handled as officers. It is argued that if the delivery of the certificate of deposit or check by Zutavern to Bush when the latter assumed the duties of the office was a sufficient payment to render Bush and his bondsmen responsible to the county for the amount thus paid, inasmuch as at the expiration of the first term of his services as treasurer and assumption of the duties of the second term, January, 1892, he turned this $6,000 certificate of deposit over to himself as his own successor, this released the sureties herein sued, who signed his bond for the first term, and the action must fail as to them. Whatever might be said of this contention had the certificate of deposit in question, at the time of the termination of the first term which Bush occupied the office as treasurer, retained its full force and vigor as a demand against the bank for the sum evidenced by its face, we must now recall to mind the fact that during the month of October, 1891, the bank payor of the certificate failed, or quit business, had passed out of existence in the business world, and the certificate of deposit wras no longer a demand against a living business being, but was merely evidence of a claim against what might at some time be realized of the assets of the bank which had failed, and was certainly not entitled to be considered as such a payment when retained — 13 — by Bush in making tbe change from his first to his second term, of the amount of funds on hand, to him as his own successor, as to render or raise a liability for the amount of the certificate against him and his bondsmen for the second term as a loss occurring during the second term, and certainly was not a paying oyer of the county funds which worked a release of the sureties who signed the bond for the first term. The failure to otherwise pay the sum expressed by the face of the certificate, at the expiration of the first term of office, was such a failure to faithfully discharge the duties of the office required by law, to faithfully account for and pay over all funds which had come into his hands or under his control by yirtue of his office, as rendered him and the sureties for the first term liable therefor. A further contention is made on behalf of plaintiffs in error, that the county board, or commissioners, had settled with Mr. Bush, comprehending in such settlement all his actions as county treasurer during his first term, and had examined his final account and approved it and made such approval a matter of record; that this constituted an adjudication of all these matters which was final and conclusive; hence this action will not lie. Our statutory law requires the county treasurer to make periodical reports, which must show, somewhat in detail, the main transactions, more particularly in relation to disbursements of the public moneys and balances remaining on hand in the various funds,, and these must be scrutinized and pa,ssed upon by the county board, and they make what is denominated a settlement with the treasurer. But call it what you may, we are satisfied that it is nothing more than an examination of the accounts and report of the business acts of the treasurer during the period covered by it, a scanning of such acts, a “checking up,” if the expression is allowable, by the county commissioners, the parties designated by law to attend to it, made in the interest of the public and the county and for the benefit of the public and the county. Its main object — 14 — and purpose is to maintain an espionage and supervision over the finances of the county and their management by the treasurer, and secure, by such means, as great promptitude and care and exactitude in their management as possible. It is not in any sense or degree on behalf of the sureties on the bonds of the officers. Their contract is that the officer will perform his duties faithfully and properly, and for any failure so to do they become liable. The law does not contemplate that the officer shall be watched by the county or its officers for the benefit of the sureties. It is no part of the contract with the sureties that it shall be done; and where reports and settlements are required by law it does not change the obligation of the sureties or enter into their contract. It is their duty to see to it that the duties of the officer are faithfully discharged, and, if the county board should be negligent, or careless, or irregular in an examination of an account or report of a treasurer, or in what is termed a settlement, it would be no available defense to sureties, on his bond in an action to recover an amount of public funds which the treasurer had failed to pay over. These periodical settlements assigned by our statutes to be made with county treasurers do not have the elements in them of a judicial determination of the subjects involved. It would not be contended that if the county commissioners state, as a matter of record, as the result of one of these so-called settlements, that' the treasurer was-short in his accounts in a stated sum and consequently indebted to the county in such sum, that this would constitute an adjudication of the whole matter, and, unless-appealed from, it would be final and binding on the parties, and not open to attack. No more can the result obtained by the examination be said to be binding and conclusive upon the county in regard to the amounts reported on hand by the treasurer being the exact, true amounts, or their payment by the treasurer preclude the institution and successful prosecution of an action for any further sums which he has failed to report or to pay — 15 — over. It can have no further or greater conclusiveness than any settlement made between private persons. We are cited on this point in the case to the decision in the case of Ragoss v. Cuming County, 36 Neb., 375, as sustaining the position of plaintiffs in error, but we do not so read it. It was held, “Where the county board has before it a matter which it may reject or allow, and its action thereon will be final unless appealed from, its order in the premises cannot be attacked collaterally, except for fraud,” which is entirely correct; but in passing upon the report of a county treasurer the board do not reject or allow it in the sense in which these words were used in the case referred to. It is only approved or disapproved, and not conclusively. In the same decision it is observed: “An officer who has faithfully performed the duties of his office, and made a full settlement with the tribunal authorized to settle the same, should be permitted to rest on such settlement unless there is fraud, mistake, or imposition in making the same.” The rule announced in the third paragraph of the syllabus to the case, which we have quoted, had reference to an order of the county board allowing the county clerk deputies and the application of the fees of the office to the payment of their salaries as fixed by the board, and was entirely applicable. What was said in the opinion in regard to the settlement was substantially the same as herein stated. Any settlement is all right and entitled to stand in favor of.an officer who has faithfully performed the duties of his office, when in the settlement there is neither fraud nor mistake, or imposition. In support of what we have said in regard to these reports and their examination and approval and settlement, see Crawn v. Commonwealth, 4 S. E. Rep. [Va.], 721; Rose v. Douglas Township, 34 Pac. Rep. [Kan.], 1046; Board of County Commissioners v. Sheehan, 43 N. W. Rep. [Minn.], 690; Britton v. City of Ft. Worth, 14 S. W. Rep. [Tex.], 585. In the case at bar it was shown by the testimony that at the close of his first term Mr. Bush made a report or — 16 — account which was examined by tbe county board. Tbe statements of tbe commissioners’ record in respect to tbe settlement bad at that time were as follows: Under date January 29, 1892: “Tbe county commissioners proceeded to settle with tbe county treasurer. Tbe board adjourned to January 30,1892.” Under date of January 30, 1892: “Tbe board then proceeded to settle with tbe county treasurer. Board adjourned to February 1, 1892.” Under date of February 1, 1892: “Tbe board proceeded to settle with tbe county treasurer. Pending settlement tbe board adjourned to February 2, 1892.” Under date of February 2, 1892: “Tbe board completed witb tbe county treasurer.” Tbe account indicated tbe proper and true amount wbicb bad come into tbe possession of tbe county treasurer, or bad been paid to bim, as on band, but it in fact included tbis certificate of deposit for $6,000 issued by tbe bank, wbicb bad, subsequently to sucb issuance, but prior to tbe time of settlement, failed. Tbe fact that tbis was so included and counted by tbe treasurer as money on band was not known by tbe county board. Tbe funds were not asked for by tbe board, were not produced by tbe treasurer, and any approval of tbe account or report of tbe treasurer at that time was so made without any knowledge of tbe existence of tbe certificate of deposit, or that it figured or was claimed by tbe treasurer as a part of tbe moneys on band. There was a mistake in tbe settlement, if any was made, to tbe amount evidenced by tbe certificate, and tbe paying over tbe funds shown by tbe report to be on band, by Bush to himself, to tbe extent that it consisted of bis retaining tbis certificate and counting it as so much money, was a failure to account and pay over tbe moneys of tbe county, —a failure to faithfully discharge the duties of bis office as required by law, and for wbicb be and bis bondsmen became liable. It follows that tbe judgment of tbe district court must be AFFIRMED. Norval, J., not sitting.