Opinion of the court by
Hainer, J.:
The principal question to be decided in this case is whether a county treasurer, under our statute relating to that officer, and the bond executed by him ond his sureties, is liable for public funds in his possession which have been lost by reason of the failure of a bank in which he had deposited a portion of the funds for saffe-keeping, without any fault or negligence on the part of such treasurer. This proposition is. raised by the
facts pleaded in that portion of paragraph 3 of the answer of the defendants to which the court sustained a motion to strike out, as not being a proper defense to this action. The liability of a public officer and the sureties on his bond for loss of public funds by such officer without any intentional wrong upon his part, or without any fault or negligence, is a grave question, and of far-reaching consequences. The decisions of the state courts are not entirely harmonious upon this question. The supreme court of the United States has uniformly held to the doctrine of strict liability. There are two general rules which have been adopted by the courts íd construing bonds of public officials:
1. The first rule is based upon the strict letter of the bond, and upon consideration of public policy. Under this rule there are no exemptions, unless it is so stated in express terms in the bond. In other words, public officers who are intrusted with public funds, and required to give a bond for the faithful discharge of their official duties, are not mere bailees of money, to be exonerated b3r the exercise of ordinary care and diligence. Their liability is fixed by the bond, and the fact that the money is lost or stolen without any fault or negligence upon their part does not release them from liability on their official bonds.
2. The second rule is that the officer stands in the relation of a bailee for hire, and he is only bound to exercise good faith and reasonable skill and diligence in the discharge of the trust imposed upon him. In other words, he is simply to exercise the prudence, caution, and attention which careful men usually exercise in the management of their more important affairs of business, and he is not responsible for any loss occurring without
any fault or negligence on his part. The statute may impose or the officer may assume a higher responsibility, but under this rule of construction a greater responsibility does not result from the fact that he has entered into an undertaking to faithfully discharge the duties of his office.
On account of the important principles involved in this case, we have reviewed a number of the leading cases upon the subject. The first and leading case, decided by the supreme court of the United States in 1844, is the case of
U. S. v. Prescott,
3 How. 578. This was an action brought in the circuit court for the district of Illinois on a bond given by Prescott, with the other defendants as his sureties, for his faithful performance of the duties of receiver of public moneys at Chicago, in the state of Illinois. The defense pleaded was that the sum not paid over by the defendant Prescott, and for which the action was brought, had been feloniously stolen, taken, and carried away from his possession by some person or persons unknown to him, and without any fault or negligence on his part. Mr. Justice McLean, in delivering the opinion of the court in that celebrated case, said:
"This is not a case of bailment, and consequently the law of bailment does not apply to it. The liability of the defendant Prescott arises out of his official bond, and principles which are founded upon public policy. The conditions of the bond are that the said Prescott has Truly and faithfully executed and discharged, and shall truly and faithfully continue to execute and discharge, all the duties of said office, [of receiver of public moneys at Chicago,] according to the laws of the United States, and, moreover, has well, truly, and faithfully, and shall well, truly, and faithfully keep, safely, without loaning or using, all the public moneys collect
ed by him, or otherwise at any time placed in his possession and custody, till the same had been or should be ordered by the proper department or officer of the government to be transferred or paid out, and, when such orders for transfer or payment had been or should be received, had faithfully and promptly made, and would faithfully and promptly make, the same as directed/ etc. The condition of the bond has been broken, as the defendant Prescott failed to pay over the money received by him when required so to do; and the question is whether he shall be exonerated from the condition of his bond, on the ground that money had been stolen from him. The objection to this defense is that it is not within the condition of the bond, and this would seem to be conclusive. The contract was entered into on his part, and there is no allegation of failure on the part of the government. Iiow, then, can Prescott be discharged from his bond? He knew the extent of his obligation when he entered into it, and he has realized the fruits of this obligation by the enjoyment of the office. Shall he be discharged from liability, contrary to his own express undertaking? There is no principle on which such a defense can be sustained. The obligation to keep safely the public money is absolute, without any condition, express or implied; and nothing but the payment of it, when required, can discharge the bond. * * Public policy requires that every depositary of the public money should be held to a strict accountability, — not only that he should exercise the highest degree of vigilance, but that 'he should keep safely’ the moneys which come to his hands. Any relaxation of this condition would open a door to frauds which might be practiced with impunity. A depositary would have nothing more to do than to lay his plans ana arrange his prooxa ou as to establish his loss without laches on his part. Let such a principle be applied to our postmasters, collectors of the customs, receivers of public moneys, and others who receive more or less of the public funds, and what
losses might not be anticipated by the public? No such principle has been recognized or admitted as a legal defense. And it is believed the instances are few, if, indeed, any can be found, where any relief has been given in such cases by the interposition of congress. As every depositary receives the office with a full knowledge of its responsibilities, he cannot, in case of loss, complain of hardship. He must stand by his bond, and meet the hazards which he voluntarily incurs.”
In the case of
U. S. v. Morgan,
11 How. 154, the same question is decided on precisely the same grounds.
In the case of
U. S. v. Dashiel,
4 Wall. 182, the same question was before the court, and the case was decided upon the doctrine laid down in the case of
U. S. v. Prescott
and the case of
U. S. v. Morgan.
In this case the learned judge said “that the fact pleaded, that the money was stolen without fault or negligence, constitutes no defense to the action, was frivolous, and would have been stricken from the record, as such, on a proper motion in the court below.”
The case of
U. S. v. Keehler,
9 Wall. 83, asserts the same doctrine, and applies it to an action on a postmaster’s bond, who had an order directing him to pay said money out. Mr. Justice Miller, in delivering the opinion of the court in this case, said:
“But this court has decided more than once that, in an action on the official bonds of such officers, the right of the government does not rest on the implied contract of bailment, but on the express contract.found in the bond, to pay over the funds. * * Such was the law as declared by this court long before the rebellion broke out, and, however hard it may be in some of its aspects, the court has no option but to act on it.”
In the case of
U. S. v. Thomas,
15 Wall. 337, the question was presented whether the forcible seizure by the
rebel authorities of public moneys in the hands of loyal government agents, against their will and without fault or negligence, was a sufficient discharge from their official bonds. “This precise question,” said Mr. Justice Bradley, “has not as yet been decided by this court.” The learned court distinguishes this case from the case of
O. S. v. Prescott,
and the cases following it, and makes this exception: “No rule of public policy requires an officer to account for moneys which have been destroyed by an overruling necessity, or taken from him by a public enemy without, any fault or neglect on his part.”
While there is some conflict in the decisions of the state courts, the great weight of authorities supports the doctrine laid down by the supreme court of the United States with respect to the liability of public officers and their sureties upon official bonds. These courts hold that where the statute in strict terms imposes a duty to pay over public moneys received and held as such, and no condition limiting the obligation is found in the statute, the obligation thus imposed upon and assumed by the officer and his sureties will be deemed to be absolute, and the plea that the money has been lost or stolen without any fault or negligence on his part does not constitute a valid defense to* such an action. This rule has been adopted in the following states: Colorado1, Nebraska, Nevada, Minnesota, New Jersey, Kansas, Missouri, Massachusetts, Illinois, Arkansas, Ohio, Pennsylvania, Indiana, Iowa, New York, Washington, Texas, Mississippi, New Mexico, Wisconsin, and North Carolina. These twenty-one states have followed the doctrine laid down by the supreme court of the United States in the following cases:
Gartley v. People,
(Colo. Sup.) 49 Pac. 272;
Bush v. Johnson Co.,
48 Neb. 3, 66 N. W. 1023; State
v. Nevin,
19 Nev. 162, 7 Pac. 650;
Board v. Jewell,
44 Minn. 427, 46 N. W. 914;
Inhabitants of New Province Tp. v. McEachron,
33 N. J. Law, 339;
Rose v. Douglass Tp.,
52 Kan. 452, 34 Pac. 1046;
State v. Moore,
74 Mo. 413;
Inhabitants of Hancock v. Hazzard,
12 Cush. 112;
Thompson v. Board,
30 Ill. 99;
State v. Croft,
24 Ark. 550;
State v. Harper,
6 Ohio St. 607;
Com. v. Comly,
3 Pa. St. 372;
Halbert v. State,
22 Ind. 125;
Tillinghast v. Merrill,
151 N. Y. 135, 45 N. E. 375;
Fairchild v. Hedges,
(Wash.) 44 Pac. 125;
Wilson v. Wichita Co.,
67 Tex 647, 4 S. W. 67;
Griffin v. Board,
(Miss.) 15 South. 107;
U. S. v. Watts, 1
N. M. 562;
Supervisors v. Kaime,
39 Wis. 468;
State v. Clarke,
73 N. C. 255;
State v. Blair,
76 N. C. 78.
Applying the principles enunciated in these decisions to the case under consideration, the rule of strict construction must apply to county treasurers under the various provisions of our statute. The following provisions of our statute are applicable to this case:
Section 1660 of the Statutes of 1893, among other things, provides the form of the bond required to be given by the county treasurer. It is as follows:
“Whereas, the above bounden-, was elected to the office of county treasurer, of the county of-, on the - day of -; now therefore, the condition of this obligation is such that if the said -, or his deputy or deputies, and all persons employed in his office, shall faithfully and promptly perform the duties of his office, and if the said-and his deputies shall pay according to law all moneys which shall come to his hand as treasurer, and will render a just and true account thereof whenever required by said board of county commis-sionersi, or by any provision of law, and shall deliver over to his successor in office or to any person authorized by law to receive the same, all moneys, books,
papers, and other things appertaining thereto, or belonging to said office, then the above obligation to- be void, otherwise to be in full force and effect.”
Section 3458 reads:
“Every officer elected or appointed under the laws of the Territory, on going out of his office at the expiration of his term thereof, shall deliver to his successor in office, all public moneys, books, records accounts, papers and documents in his possession belonging or appertaining to such office.”
Sections 5689 and 5695 prohibit the county treasurer from loaning the funds, and provide:
“Sec. 5689. If the county treasurer shall loan any money belonging to his county, with or without interest, or shall use the same for his own individual purpose, he shall forfeit and pay for every such offense a sum not exceeding five hundred dollars nor less than one hundred dollars, to be recovered in an action at law at the suit of the Territory for the use of the county”
“Sec. 5695. If the county treasurer shall loan any part of the public funds in his hands as such treasurer, or shall discount any county warrant, either directly or indirectly, by himself or through others, or shall fail to produce any funds -in his hands as such treasurer, when demanded for counting, by the county clerk or board of county commissioners, or shall fail to pay over any part thereof at any time when required by law so to do, he shall in addition to the penalties prescribed in this act, be deemed guilty of a crime against the revenue, the property of the Territory, and shall be punished as provided for that offense.”
According to these plain statutory provisions-, the liability of a county treasurer is absolute, and cannot be changed o-r modified upon the plea that the public funds have been lost or stolen without any fault or negligence ■on his part. The basis of this suit is the bond, which
is in the language of the statute. These various statutory-provisions were undoubtedly intended by the legislature to hold the treasurer of public funds in this Territory to a strict accountability.
The supreme court of Colorado in 1897 decided this identical question, in the case of
Gartley v. People, supra.
The court in this case held that, in an action on an official bond of a county treasurer for public moneys collected by him, the fact that the moneys were deposited in a solvent banking institution, which afterwards failed, causing the loss of the funds, constitutes no defense. When it is taken into consideration that the Colorado statute in relation to the bond required of the county treasurer is identical with our statute, and that the provisions of our statute and the form of the bond are a copy of the Colorado law, the rule of construction laid down in the G-artley Case is especially applicable to the case at bar: In this case Chief Justice Hayt said:
“The bond is not essentially different from that passed upon by the supreme court of the United States in the case of
U. S. v. Prescott,
3 How. 578. The statute fixing the form of the bond was enacted in territorial times, when the decisions of the supreme court of the United States upon statutory construction were controlling in this jurisdiction; and, by a familiar rule, in adopting the statute we did so with the construction theretofore placed upon it. It is urged that the force of the decision in the Prescott Case was practically destroyed by a subsequent act of congress, and that we should therefore favor a less strict rule of accountability. In other words, we are asked to construe something into the statute which is not there. As in that case an act of congress was found necessary to give relief, so here relief must come from the legislature, and not from the courts.”
In
Bush v. Johnson Co., supra,
the supreme court of Nebraska held:
“The duty imposed on a county treasurer by law, and assumed by Mm, of safely keeping and accounting for and turning over the public funds which come into his hands by virtue of his office, is an absolute one. And, where his bond is conditioned for the faithful performance of the duties of the office by him, the sureties on the bond are bound and liable in like manner, and their responsibility is the same as that of their principal; and it will be no defense for either of the parties, in an action on the bond to recover public funds, predicated on an alleged failure of the treasurer to account for or pay them over, that the funds have been lost or stolen without the fault or negligence of the treasurer.”
In
State v. Moore, supra,
the defendant, who was county treasurer, answered that he ought not to be held upon his bond, because, Mississippi county “being overrun with tramps, thieves, robbers, public enemies, the money could not be safely kept in said county,” and that for the purpose of keeping it safely he deposited it, to his credit as treasurer, in a bank in St. Louis, which failed, whereby the money was wholly lost. In this case the supreme court of Missouri said:
“Such an answer as this, we think, in insufficient to shield defendant from liability, in any view which can be taken of the case. If the obligation assumed by defendant in his bond, to deliver over to his successor in office all money belonging to- the county, can only be met or discharged by making such delivery or payment, it is clear that the facts set up in the answer, and admitted to be true, constitute no defense. That the above rule is the correct one, governing in such cases, is established by the following authorities: (Citing
State v Powell,
67 Mo. 395, and the various decisions of the supreme court of the United States.) If, on the other hand, under the rule laid
down in tbe case of
U. S. v. Thomas,
15 Wall. 337, the defendant is to be regarded as a bailee, and exempt from liability to pay when the loss is occasioned by the act of G-od or a public enemy, he would still be liable under the facts stated in the answer, because they show that the loss was not occasioned in either of these ways. The tramps, thieves, and robbers which it is alleged overrun Mississippi county, while they are enemies to the peace and safety of the public, and social order, they are not public enemies, in the legal sense of these words. By enemies is to be understood public enemies, with whom the nation is itself at open war, and not merely robbers, thieves, and other private depredators, however much they may be deemed, in a moral sense, at war with society. Losses, therefore, which are occasioned by robbery on the highway, or by the depredations of mobs, rioters, insurgents, and other felons, are not deemed losses by enemies, within the meaning of the exception.”'
In
Rose v. Douglass Tp., supra,
the supreme court of Kansas said: .
“A township treasurer, by accepting the office, assumes upon himself the duty of receiving and safely keeping the township money, and of paying it out according to law, and it is no defense for such treasurer or his sureties, when sued upon the official bond for a balance unpaid, that he kept the township money on deposit in a bank, with the knowledge and consent of the township board; that the bank suspended; that the clerk of the township filed a claim with the assignee of the bank for the township money, and received a certificate therefor; that subsequently a dividend was paid, and accepted by the township, which, however, left the balance due from the treasurer sued for.”
A few of the state courts have declared the rule to be that a public officer who receives money by virtue of his office is a bailee, and that the extent of his obligation is
imposed by law; that, when unaffected by consl^tutional or legislative provisions, his duty and liability are measured by the law of bailment. This rule has been declared by the courts of Montana, Wyoming, Maine, Alabama, South Carolina, and California. The counsel for plaintiff in error contends that the county treasurer, under the laws of this Territory, is a bailee of the public, whose bondsmen assume only a liability for failure to faithfully and diligently discharge the duties of his office. And in support of thi-s doctrine the following cases are cited:
McClure v. Board,
19 Colo. 122, 34 Pac. 763;
Wilson v. People,
19 Colo. 199, 34 Pac. 944;
City of Livingstone v. Woods,
(Mont.) 49 Pac. 437;
State v. Gramm,
(Wyo.) 52 Pac. 533;
Inhabitants of Cumberland Co. v. Pennell,
69 Me. 357;
State v. Copeland,
(Tenn. Sup.) 34 S. W. 427;
State v. Houston,
78 Ala. 576;
City of Healdsburg v. Mulligan,
(Cal.) 45 Pac. 337.
In the case of
McClure v. Board, supra,
an attempt was made to trace public moneys collected by the treasurer into the purchase of certain property, for the purpose of having a trust declared and enforced against such property. In determining this question it became necessary to investigate the relationship that a county treasurer holds to the money which comes into his hands by virtue of his office, and the court said: “We think that, under the provisions of our statute relating to a county treasurer, the money collected and received by him belongs to the county, and that he holds a fiduciary relationship thereto that constitutes him a bailee with express and extraordinary liability.” As this declara tion is immediately followed by the statutory requirements of his bond, it would appear that the enlarged
liability imposed was based to some extent, at least, upon the condition of his bond. The opinion is-a direct authority for the doctrine, that the relationship of the treasurer to the public money collected by him in his official capacity is not that of a bailee at the common law.
The question presented in the case of
Wilson v. People, supra,
was as to the liability of the clerk of the district court for moneys of private litigants which had been deposited with him to abide the result of the suit. No question was then before the court with reference to the liability of a public officer for public moneys received by him. The conclusion reached in the Wilson Case was, without doubt, correct, but in the argument certain expressions were used with reference to the bonds of public officers which should have been confined strictly to the facts of the case then under consideration.
In the case of
City of Livingstone v. Woods, supra,
decided by the supreme court of Montana June 5, 1897, it was held that where a city treasurer, pursuant to statute of 1887, requiring him to deposit the funds of the city, exercised prudence in the selection of a bank of good standing in which to deposit the funds, and was free from any negligence in permitting them to remain there, he was not liable for loss of the funds by the failure of the bank. In this case, not only the statute, but the ordinance of the city, required the city treasurer to deposit the money or funds in a bank. In deciding this case the supreme court of Montana followed the doctrine announced in the case of
Wilson v. People, supra,
and the case of
McClure v. Board, supra.
When this decision was rendered the court evidently had no knowledge
of
the
decision of
the
supreme court of Colorado in the case of
Gartley v. People, supra,
wbicb was decided June 1, 1897.
The case of
State v. Gramm
was decided by the supreme court of Wyoming on March 10, 1898. That was an action by the state of Wyoming against the state treasurer upon an official bond. The facts admitted by the pleadings and stated in the reserved questions presented the general question whether the state treasurer, under the statutes relating to that officer, and the bond executed by him, was liable for public funds in his possession which had been lost by reason of the failure of a bank in which he had deposited them for safe-keeping; he being without any fault, blame, or negligence. The conditions of the bond sued upon in that' case were as follows: “Row, therefore, if the above bounden, Otto Gramm, shall well, truly, and justly account for all moneys coming into his hands by virtue of his said office as treasurer of the state of Wyoming, and shall faithfully and truly perform all the duties of his said office, then this obligation shall be void; otherwise the same shall remain in full force and effect.” The court held in this case that no recovery could be had on the bond, the treasurer not being chargeable with negligence or fraud. In this case the court followed the doctrine laid down in the Montana case, and in the case of
Wilson v. People, supra,
and the case of
McClure v. Board, supra.
No reference is made in this opinion to the later decision of the Colorado court in the case of
Gartley v. People, supra
Evidently this later decision of the Colorado court was not called to the attention of the Wyoming court.
We cannot assent to the doctrine laid down in the
Wyoming and Montana cases, which, holds that a public officer, intrusted with public funds, and required to give a bond for the faithful performance of his official duty, is a mere bailee of the money — bound,
virtute officii,
to exercise good faith and reasonable skill and diligence in discharge of the trust confided in him. Our conclusion, then, on this proposition, is that, in an action on an official bond of a county treasurer for public moneys collected by him, the fact that the moneys were deposited in a solvent banking institution, which thereafter failed, resulting in the loss of the funds without any fault or negligence on the part of the treasurer, constitutes no defense to the action. And hence the trial judge properly sustained’ the motion to strike out that portion of paragraph 3 of defendants’ answer ■ which pleaded this defense. Whether a county treasurer would be relieved from liability upon his official bond on account of a loss occasioned by the act of God or the public enemy without any fault or negligence on his part is a question not raised in this case, and therefore not necessary to decide.
It is contended by counsel for plaintiffs in error that the petition fails to state facts sufficient to constitute a cause of action against the defendants, and hence the general demurrer to the petition should have been sustained. No authorities are cited by counsel in support of this contention. We have carefully examined the petition, and think it states a good cause of action. And hence the demurrer was properly overruled by the trial court.
But one more question remains to be considered in this case, which is argued in the brief of plaintiffs in
error, and that is that it was error to order and. submit the case to a referee to be tried, over the objections of the defendants, who demanded a trial by jury. The court made a reference in this case, under section 304 of the provisions of .our Civil Code, which reads: “When the parties do not consent, the court may upon the application of either, or of its own motion, direct a refer, ence in either of the following cases: (1) Where the trial of an issue of fact shall require the examination of mutual accounts, or when the account is on one side only, and it shall be made to appear to the court that it is necessary that the party on the other side should be examined as a witness to prove the account, * * in which case the referee may be directed to hear and report upon the whole issue, or upon any specific question of fact involved therein, or, (2) where the taking of an account shall be necessary for the information of the court before judgment, in cases which may be deter mined by the court, or for carrying, a judgment into effect, or, (3) where a question of fact other than upon the pleadings shall arise upon motion or otherwise íd any stage of an action.”
The first clause of this section includes two classes of cases — first, where the trial of an issue of fact shall require the exanimation of mutual accounts; second, where an issue of fact is joined upon an account pleaded on one side only, and it shall be made to appear to the court that it is necessary that the party on the other side should be examined as a witnesss to prove the account. These two classes include the same matter form-' erly cognizable in courts of equity, and in such cases the parties were not entitled, as a matter of right, to a trial
by jury. (Story, Eq. Jur. secs. 437-459;
McMartin v. Bingham,
27 Iowa, 236.)
And the refusal to submit the case to a jury was not in coutraventicm of the seventh article of the amendment to the constitution of the United States, which provides that “in suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” (Story, Const. Lim. sec. 1768;
Edwards v. Elloitt,
21 Wall. 532;
Light v. Bank,
2 Okla. 543, 37 Pac. 1075.)
We think the questions involved in this case come clearly within the purview of the statute, and that the trial court committed no error in making the reference and in denying defendants’ demand for a trial by jury. The judgment of the district court is therefore affirmed.
Tarsney, J., having presided in the court below, not sitting; all of the other Justices concurring.