State Ex Rel. Lee v. Martin

118 S.E. 914, 186 N.C. 127, 1923 N.C. LEXIS 192

• Court: Supreme Court of North Carolina
• Decided: September 26, 1923
• Status: Published

Opinion

OlaeK, 0. J.

Each and every one of the nine exceptions to the judgment should be sustained. Exception 1. 0. S., 354 provides that the official bond of the clerk of the Superior Court shall not “become void upon the first recovery, or if judgment is given for the defendant, but may be put in suit and prosecuted from time to time until the whole penalty is recovered; and every such officer and the sureties on his official bond shall be liable to the person injured for the acts done by said officer by virtue and under color of his office.”

The defendant bonding company filed in this proceeding its written admission that the bond for the second term was in full force and effect. This letter, written by Eobert M. Golder, superintendent of the bonding-company, 27 December, 1920, is as follows:

“Mr. Paul Woodard, Chairman, Board of County Commissioners, Bayboro, N. C. Dear Sir: On 16 November, 1916, the New Amsterdam Casualty Company became surety on the bond of Edgar E. Martin as Clerk of the Superior Court, Pamlico County, North Carolina. The bond was executed for the term beginning 1 December, 1916, and ending 1 December, 1918, or until Mr. Martin’s successor was elected or appointed and qualified. The above bond has been continued from year to year by the payment of an annual premium of $25. The bond contains a clause whereby the surety may terminate its liability by giving thirty days notice in writing to the Board.of County Commissioners of Pamlico County, North Carolina, and in accordance therewith, please consider' this communication as our notice to terminate our liability, under Mr. Martin’s bond, on and after 22 December, 1920.”

The defendant, the said bonding company, had previously made the following admissions in writing:

“2 April, 1920. Messrs. McOlenaghan, Griffith & Hayes, Raleigh, N. 0. Gentlemen: Be bond of E. E. Martin, Clerk of Superior Court, Pamlico County. This bond appears to have been written, December, 1916, for four years, and we understand by your letter of 28 November, 1918, addressed to Mr. Martin, as follows, viz.: ‘Be bond 28863, self, $5,000, as Clerk Superior Court, Pamlico County. We have charged renewal premium of $25, due 18 December.’ ”

“2 August, 1920. Messrs. McOlenaghan, Griffin & Hayes, Raleigh, N. C. Gentlemen: Be E. E. Martin, C. S. O., Pamlico County. Replying to your letter of the 24th ult., in reference to the above matter, beg to say that we wrote you on 2 April as follows': ‘Be bond of E. E. Martin, Clerk Superior Court, Pamlico County. This bond appears to have been written, December, 1916, for four years, and we understand by your letter of 28 November, addressed to Mr. Martin, as follows, viz.: “Be bond 28863, self, $5,000, as Clerk Superior Court, Pam-lico County. We have charged renewal premium of $25 due 18 December.” ’ That the original bond is still in force and will be until the expiration of the second four-years term, beginning December, 1916. Is this correct ?”

“Baltimore, Md., 10 August, 1920. In re bond No. 28863, Edgar E. Martin, Clerk of Superior Court, Pamlico County, N. C. McClena-ghan, Griffin & Hayes, Raleigh, N. O. Gentlemen: We have your letter of 5 August with reference to the above. In reply will say that our records indicate that the above bond has been renewed until 1 December, 1920. Trusting this gives you the necessary information, we remain.”

“Raleigh, N. C., 12 August, 1920. Mr. Z. Y. Rawls, Attorney, Bay-boro, N. C. Be bond 28863, Edgar E. Martin, due 1 December. Dear Sir: Reply to yours of the 2d inst. Enclosed you will find original letter of the 10th inst. from jrablic official department of the bonding company, which reads: ‘We have your letter of 5 August, with reference to the above. In reply, will say that our records indicate that the above bond has been renewed until 1 December, 1920. Trusting this gives you the necessary information.’ YYith best wishes. Yours truly, C. T. McOlenaghan, Raleigh, N. O.”

The ruling of the court that the liability of the defendant bonding company was limited to $5,000 on its official bond of 16 November, 1916, was therefore erroneous upon the written admission of the defendant. The bond had been renewed on 1 December, 1920, and, .therefore, there was accumulative liability for all defalcations as evidenced by the judgments on record not exceeding the amount of $5,000 on the first bond and of $5,000 additional on the second bond. 22 R. C. L., sec. 185, p. 503; Whitehurst v. Hickey, 3 Mart. N. S. (La.), 589; 15 Am. Dec., 167, and notes; 82 Ana. Dec., 764; 90 Am. St., 189. All official bonds, of course, should be recorded. However, the surety is estopped to deny the validity of the bond on the ground that it was not recorded. U. S. v. Bradley, 10 Peters, 343.

The authority of persons who sign a bond for a surety company cannot be questioned where the evidence establishes not only that the company, with knowledge of the bond, did not repudiate their authority, but that it received the premium owing to it by reason of being the surety on such bond. Eichorn v. New Orleans R. R., 114 La., 712; 3 Anno. Gas., 98.

If the defendant Martin had executed a new bond on 6 December, 1918, said bond would have been cumulative and would have been liable, not only for the defalcations occurring during that term, but for all that had accrued after the execution of the bond in December, 1916, and which defalcations were unpaid. The fact that the company received payment of the premiums on the bond as if executed on 6 December, 1918, rendered it liable, not merely as a continuance of the liability of the bond executed in December, 1916, said bond not having been discharged, but made it liable upon the acknowledgment thereby of the obligation of surety accruing for the defaults of the de facto clerk under his new term of office beginning 6 December, 1918. All the defalcations as appears by the tenor of the judgments in evidence accrued either during the first bond executed in 1916, or subsequent to the acknowledgment of indebtedness, upon the second bond of December, 1918, said acknowledgment being evidenced by the written admissions of the casualty company as filed in the record, and by said casualty company’s receipt of the premium for assuming said liability.

Exception 4 is to that part of the judgment holding said clerk, Martin, liable only as a “hold-over” of said office without being “duly inducted and qualified for a second term.” It appears in the record that Paul Woodard, chairman of- the board of county commissioners, and ~W. R. Reel, another member of said board, both testified that Martin was duly sworn and inducted into office for a second term, beginning 1918. Of course, the best evidence of his induction into office for a second term would have been the oath of office filed in the office of clerk of the court and offered in evidence., It may well be that this oath could not be offered, because the defendant Martin may have destroyed it purposely to aid in protecting himself from liability; but that he was the de facto officer, acting as such and under a certified election, is sufficient to make the surety upon his bond responsible for his defalcations, and the written admission of the bonding company and its receipt of the premiums upon the bond are sufficient to fasten liability upon the bonding company for this second bond of December, 1918. Had there been any doubt upon tbe matter, it would have been the duty of the judge to submit an issue whether the defendant Martin was actually inducted into office; but the bonding company admits the receipt of the fees for executing the bond, and its liability therefor for his official acts, and the fact that the clerk was a de facto officer, discharging the duties of the post, was not questioned.

The incumbent of an office, and performing the duties of the same, is estopped to deny the legality of his tenure. S. v. Long, 76 N. C., 254; Lumber Co. v. Hutton, 159 N. C., 445. It would be exceedingly dangerous and detrimental to the public interest if it were otherwise; and by reason of the failure of an officer occupying an official position like this, involving liabilities to infants and others for funds entrusted to his care, he could be released from all responsibilities by an inadvertence in failing to take an oath of office which he holds himself out to the public as legally occupying, or could evade all financial liability for his acts by the loss of the oath or the destruction of its record.

The Constitution of the State requires an oath of office before entering upon the discharge of its duties. But this does not affect eligibility of the officer. He must be eligible when elected. The oath is after his election and is simply his promise to be faithful to the government and to his office, which assurance is binding on his conscience. Lee v. Dunn, 73 N. C., 605. But the failure to take the oath does not release the incumbent of an office, whether merely de facto or de jure, from liability for his official acts.

Exception 8 is to the judgment excluding the other relators as barred from all right of action and claim against the bonding company upon the official bond of said Martin. This is in direct conflict with C. S., 439, which provides a period of six years for the commencement of an action against the official bond of a public officer.

The last paragraph of the judgment of Galvert, J., consolidating the several cases at bar, does not impose any limitation upon the liability of the defendants. If the payment of premiums upon Martin’s bond for the second term of office, beginning in December, 1918, had not been evidence of the execution of the bond, or at least admission of liability for his official acts during said term, even then the judgment denying the plaintiff’s interest upon their judgments would have been erroneous.

When a cause of action on an official bond arises in favor of a third person he is entitled to recover interest. Although the penalty on the bond fixes the limit of the liability of the surety at the time the liability arises, yet if the principal or surety fails to discharge that liability when it matures, interest will be allowed on the amount from the time the liability accrues, even though this would make the aggregate of recovery in excess of the penalty of the bond. 22 R. C. L., 518, para graph 206; Clispy v. Hasten, 150 Ala., 132; 124 Am. St., 64; McMullen v. Bldg. Assn., 64 Kans., 298; 91 Am. St., 236; 56 R. L. A., 924.

Tbe sureties on tbe bonds of public officers are estopped by their act of executing the bond to deny the facts recited therein. 22 R. C. L., 520; paragraph 211.

It is worthy of notice that a paragraph of defendant Martin’s bond executed by the defendant bonding company in 1916, and which was in full force and effect until 22 December, 1920, and which is set out in full in the record, provides: “It is mutually understood and agreed between all parties hereto that if the surety shall so elect, this bond may be canceled by giving thirty days notice in writing to the said Board of County Commissioners of Pamlico County, N. O.-; and this bond shall be deemed canceled at the expiration of said thirty days, the said surety remaining liable for all or any act or acts covered by this bond which may have been committed by the principal up to the date of such cancellation, under the terms, conditions and provisions of this liability thereunder, and, on surrender of the bond, refund the premium paid, less a pro rata part thereof for the time this bond shall have been in force.”

The defendant surety company, having received premiums on this bond, by its own admissions, and having failed to notify the board of county commissioners, according to the terms of the said bond, until 22 December, 1920, of its election to cancel said bond, that the same would be canceled from thereafter, 22 January, 1921, is estopped from denying its liability for all the official acts of their principal and codefendant, Martin, until 22 December, 1920.

It is also clear that the plaintiff E. II. Lee, upon the face of the record, would be entitled to a modification of the judgment in his favor by adding 12 per cent interest upon the principal ($1,112.14) from October, 1919, to date of the demand; for O. S., 356, 357, provide that “When money is unlawfully detained by public officers, and the same is sued for in any manner whatever, the plaintiff is entitled to recover (on the bond), besides the sum detained, damage at the rate of 12 per centum per annum from the time of detention until payment. Hannah v. Hyatt, 170 N. C., 634.” And the plaintiff Haskins is entitled to a modification in like manner on the judgment in her favor ($215) by computing 12 per cent interest thereon from 1 August, 1919; and| the plaintiff^, Pamlico County and the Board of Education, are entitled to a modification of the judgment in their favor by calculating 12 per cent interest on the $1,040.95 principal thereof from April, 1922, the date of the summons.

In like manner the plaintiff B. W. Best is entitled to a modification of the judgment in his favor for $500 by adding 12 per cent interest thereon from 15 February, 1923, the date of the judgment; and the plaintiff Andrew Neal, in his favor, for $51.54 by the allowance of 12 per cent interest from 15 February, Í923.

Likewise the plaintiffs in the other judgments are entitled to have the same modified, adding 12 per cent interest thereon, as follows: The plaintiff J. Y. Sawyer is entitled to recover $779.22, with 12 per cent interest thereon from 27 October, 1920; the relator, L. J. Upton & Co., should recover $754, with 12 per cent interest thereon fr'om 15 November, 1919; the relators, Betty Mayo, Florence Mayo, and Emma Mayo, by their next friend, are_ entitled to recover $587.60, with 12 per cent interest thereon from 15 June, 1919; and the relator, Griffin, guardian, is entitled to recover on behalf of his wards $3,450, with 12 per cent interest on the $880 from 14 October, 1918, and on $1,440, with 12 per cent interest from 1 May, 1919, and on $1,150 thereof, with interest from 20 December, 1919.

The above sums are recoverable as aforesaid on the bond of November, 1916, and on the obligation assumed in December, 1918, when the bond was renewed, as stated by the bonding company in the above-written admissions, by the payment of premiums, though no physical bond may have been then executed by the said bonding company.

Upon the entire record, the judgment should be reversed and the judgment modified and entered as above stated.

Judgment for plaintiffs as modified.