York County v. Watson

The opinion of the court was delivered by SimpsoN, C. J. This is an appeal in a case “in chancery,” and it involves questions both of law and of fact. The respondent was county treasurer for York county, from March, 1871, to March, 1877. It is alleged in the complaint that during the period he held this office he collected large sums of money for the appellant, a considerable portion of which he failed and neglected to account for and pay over to appellant. This allegation seems to be true, but it appears that this default of respondent resulted from the fact that respondent had •deposited this money in the Citizens’ Savings Bank; that this — 6 — bank has failed, and the loss which has occurred was on account of this failure of the bank. The appellant contends that, even admitting this to be true, yet, as matter of law, respondent should be regarded as an insurer, liable for the whole amount collected, and that the facts set up by him constituted no legal defence. The Circuit judge declined to enforce this stringent principle, and, holding that respondent’s liability was dependent upon negligence and the proper performance of his duties, he decreed, upon the facts, that the respondent was not liable for the loss incurred by reason of his deposit in the Citizens’ Savings Bank. The ground of appeal in this case, involving this point, brings up for the first time in this state squarely the question as to the-absolute and unconditional liability of a public officer for public funds collected by him. This is an interesting and very important question, both to the-state and to all those connected with th%,fiscal department of the government, and it has been maturely considered by this court. • It is a well-settled principle of the common law that agents,, trustees, receivers, and all those sustaining fiduciary relations to private individuals, and thereby having the custody and management of their property, such as administrators, executors, guardians and other trustees, are liable only for the exercise of good faith and proper legal diligence and care. True, the court will watch very narrowly the conduct of such trustees, and will never suffer them to escape responsibility out of mere tenderness to iheir misfortunes. But when it is made to appear that they have kept themselves within the rules prescribed for the discharge of their special duty, and yet a loss has occurred without any fault, or negligence on their part, the court will protect them. This principle is founded upon the highest justice and the soundest morality. It has its roots in the doctrine of ex cequo et bono, and it meets the approval of all just men. , Where a party attends to his own business and a loss occurs, he cannot throw this loss on some one else, but he must meet and shoulder it himself. Where, then, he is under the necessity of procuring the assistance of another to attend to his affairs, because he is unable to do so himself, all that he can justly require from his agent is — 7 — good faith, competency and such diligence and care as to the matter in hand as he himself would have given it. This being bestowed, if a loss occurs it should be his loss aud not that of the employee.' Any other doctrine would cut up, root and branch, one of the most important departments of the business and social economy of the country — the department of bailments. This term, in its broadest sense, covers all classes of agencies. These ramify into and touch every interest of society, and' unless properly regulated, society would go to pieces. It is a matter of the gravest importance, therefore, that whilst the rights of bailors should be most carefully guarded and protected, yet that bailees should not be hastily sacrificed. The principles referred to above are those which prevail between private parties, and, in reference to private affairs, as found in the common law. They have been applied in many cases in this state. It is only necessary here to refer to the .recent case of Twitty v. Houser, 7 S. C. 164, where an administrator, depositing in this same bank, was protected. Does this common law principle embrace public bonded officers as well as private individuals acting in a quasi official capacity as trustees, &c. ? It would be difficult to find a clear distinction between the two — a distinction founded upon principle, such as would justify the exclusion of the one and the inclusion of the other. If it would be wrong in principle to hold a private trustee responsible for a loss which no care of his could have prevented, would it not be equally wrong to hold a public officer responsible under like circumstances ? The liability of a bonded officer may be considered, as was said in the case of United States v. Thomas, in a two-fold or double aspect. First. The obligation arising from official duty, and, second, that arising from the condition of his bond. The first is a duty which the law imposes, and the second is a duty which he expressly contracts to perform. The first is governed by the principles of the common law, the other by the terms and conditions of the bond; and if a party binds himself by an express contract to perform a certain act unconditionally, at all events, he must be held by the stipulations of that contract, because such is the agreement he has made. — 8 — Now, independent of the special stipulations and conditions found in the bond of a public officer, it has been held at common law that the principles referred to above, as applicable to private individuals, apply also to public officers, so far as their obligations arising simply from official duty are concerned. It was said in the case of United States v. Thomas, 15 Wall. 344: “The basis of the common law rule is founded on the doctrine of bailment. A public officer having property in his custody, in his official capacity, is a bailee, and the rules which grow out of that relation are held to govern the case.” And in Boyden v. United States, where the officer was held responsible, this doctrine was not denied. On the contrary, it is said in that case: “ The contract of bailment implies no more, except in the case of common carriers, than ordinary care; and the duty of a receiver, virtute offieii, is to bring to the discharge of his trust that prudence, caution and attention which careful men usually bring to the conduct of their own affairs. He may, however, make himself an insurer by express contract, and this he does when he binds himself in a penal bond to perform the duties without exception. There is an established difference between a duty created merely by law and one to which is added the obligation of an express undertaking.” The defendant in that case was held liable under the terms of his bond. Mr. Justice Bradley, in the case of United States v. Thomas, said : “ The general rule of official obligation, as imposed by law, is that the officer shall perform the duties of his office honestly, faithfully and to the best of his ability. This is the substance of all official oaths. In ordinary cases, to expect more than this would deter upright and responsible men from taking office. This is substantially the rule by which the common law measures the responsibility of those whose official duties require them to have the custody of property, public or private. If in any case a more stringent obligation is desirable, it must be prescribed by statute or exacted by express stipulations.” Accordingly, the congress of the United States and several of the states have made statutory regulations upon this subject, laying the foundation in the official bonds required for a more stringent responsibility than is — 9 — ordinarily imposed by the common law, especially as to collectors and receivers of public moneys. It will be found that the cases relied on by the appellant, viz., United States v. Prescott, 3 How. 578 ; Same v. Dashiel, 4 Wall. 185; Same v. Keehler, 9 Wall. 83; Boyden v. United States, 13 Wall. 17; Bevans v. United States, Id. 56, decided in the Supreme Court of the United States, and the case of Muzzy v. Shattuck, 1 Denio 233, in New York, all turned- upon the stipulations and conditions of the bonds; it being held in those cases, in accordance with established principles and many decided cases, that where a party contracts without qualification or condition to do a thing, he must perform it or make compensation in damages for non-performance, because it is nominated in the bond. But even this stringent rule was much relaxed in the Supreme Court of the United States in the recent case of United States v. Thomas, 15 Wall. 337, where a collector was excused even from his bond on account of overruling necessity, where it appeared he was without neglect or fault. And this rule was relaxed, although under the acts of congress collectors are allowed all necessary additional expenses for clerks, fire-proof chests and vaults for the safe-keeping, transferring and disposing of the public moneys collected by them. Now we have no act in this state which imposes a higher or more stringent obligation upon collectors and receivers of public money than that imposed by the common law. The form of the bond, it is true, is prescribed by statute, but the only condition is “ that the duties shall be well and truly performed.” This condition is the condition of the common law, arising from official duty, and is met at common law by an honest, faithful, prudent and zealous discharge of duty. Should it be thought that public policy required a more stringent rule, the general assembly, in its wisdom, could easily provide the necessary enactments to that end, but it has not done so as yet, and in the absence of such statutory regulations, the courts must follow the common law applicable to such cases. We think, in this case, the Circuit judge followed that law in declining to hold the respondent as an insurer. We do not understand that the Circuit judge ruled as a matter — 10 — of law, that the auditor’s duplicates were the only source from which to obtain the assessments by which to charge the respondents, but that he referred to these as one of the means by which this could be done, and we see no error in this. The referee and the Circuit judge have both found, as a matter of fact, that the item of $971.80 was an overcharge, and should have been deducted from the aggregate against the respondent. They have also found, as matter of fact, that the evidence did not sustain the charges of corrupt and improper conduct alleged against the respondent as to the insolvency of the bank in which he had deposited the funds in question. Where the referee and judge concur in conclusions of fact, it must be shown that the clear preponderance of the testimony is the other way to authorize this court to overthrow their findings. Austin v. Kinsman, 1 S. C. 111; Blackwell v. Searles, Id. 117. We do not find such clear preponderance in this ease as to the facts involved in this appeal. The decree below is affirmed and the appeal dismissed. McIyee and McGowaN, A. J.’s, concurred.