Bissell v. . Saxton , 1876 N.Y. LEXIS 191 ( 1876 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This action was brought upon a bond given by the defendants, Draper and Griggs, as principals, and the remaining six defendants as sureties, for the faithful discharge by Draper and Griggs of their duties as railroad commissioners for the town of Westford, under an appointment to that office, for three years, from the 10th of May, 1870.

The bond recited the appointment of Draper and Griggs as commissioners for the town of Westford, to carry into effect an act authorizing the town to subscribe to the capital stock of the Albany and Susquehanna Railroad Company, for three years, from May 10, 1870; and the condition was that Draper and Griggs should faithfully discharge their duties as such commissioners under said act, and should make a just and honest application of all moneys, stocks or bonds issued by them or coming into their hands.

The breach alleged in the complaint consisted in the conversion, by Draper and Griggs, to their own use, of the sum of about $18,000, part of the sum of $30,000, which they had received as such commissioners, in the month of July, 1869, upon the sale of 300 shares of the stock of the railroad company, which had been acquired by the town of Westford, under the before mentioned act of the legislature.

It appears clearly, from the evidence, that this sum of $30,000 had been received, and that the whole of it had been converted by the defendant Griggs, to his own use, before the commencement of the term of office for which the bond now in suit was given, and while Draper and Griggs were holding the same office under a prior appointment, for three years, commencing in May, 1867. The proceeds of sale of the 300 shares of stock were received by Griggs, and were by him paid to Vermilye Co., brokers in New York, on the 2d of August, 1869, on account of an individual indebtedness of Griggs to them, which amounted to upwards of $50,000; and no part of this money was ever repaid, or came again into the hands of either Griggs or Draper.

After the payment of this $30,000, and before his reappointment, Griggs redeemed some of the bonds of the town with money raised from other sources, so as to leave him indebted, at the time of his reappointment, in the sum of $18,000 or $20,000; but it does not appear that any other money was in the hands of the commissioners at the time of the appointment of May 10, 1870, or came into their hands afterwards, for which they have not properly accounted. It thus appears that the defalcation for which this action is brought occurred during a term of office prior to that for which the bond in suit was given.

We think it a very clear proposition, on principle and authority, that the sureties upon the bonds of a public officer are liable only for defaults committed by him after the commencement of the term of office for which they became his sureties; and that if it should so happen that the same individual had previously held the same office, under a prior appointment, and had committed defaults during the term of that appointment, those who were his sureties on such prior appointment must be looked to for such defaults, and not those who signed his bonds on his reappointment. Their engagement is for his future, and not his past conduct; and it would be a gross imposition upon them, in the absence of a special stipulation to that effect, to import into their undertaking responsibility for prior delinquencies. This principle has been frequently recognized. (Myers v. U.S., 1 McLean, 493; Farrar v.U.S., 5 Peters, 372, 389; U.S. v. Boyd, 15 Peters, 187; S.C., 5 How. [U.S.], 50; Vivian v. Otis, 24 Wis., 518; S.C., 1 Am. R., 199, and numerous other cases cited on the brief of the appellants.)

It is claimed, however, upon the part of the plaintiff, that the reports made by Draper and Griggs, to the town auditors, for the years 1872 and 1873, were conclusive evidence against their sureties, that they then had in their hands, as commissioners, the balances specified in their reports. This claim cannot be sustained. These reports were mere admissions of the principals, subject to explanation by the sureties, and not conclusive against them. (U.S. v. Boyd, 5 How., 50.) From the averments in the complaint it appear that the balances with which the commissioners charged themselves in their reports, arose from the receipt of the $30,000, in July, 1869; and the evidence shows that Griggs had converted this fund to his own use in August, 1869. Although the commissioners properly charged themselves as debtors for this balance, this did not conclude the sureties from showing that the defalcation occurred during the term which, preceded that for which their bond was given. The statements made by Griggs and Draper to the county judge, on applying for their reappointment, stand upon the same footing.

It is claimed on the part of the respondents that the proofs fail to show that the sum of $30,000, paid by Griggs to Vermilye Co., in 1869, was lost or misapplied, but show that this sum was invested by Griggs in the purchase of stocks and bonds which were, equitably, the property of the town, although held by Griggs in his own name; and that the act of 1867, impliedly, authorized Griggs to use the fund in that manner, inasmuch as it required the commissioners to account for interest on moneys which had been used or loaned by them, and therefore there was no defalcation in 1869.

I think it would be a very strained construction of this act to hold that if a commissioner used the funds in his hands, as such, in his individual business, and failed to restore them, he would not be in default, or that this provision of the act was a license so to employ the trust moneys. In the present case there was no evidence that these moneys were loaned by Griggs as commissioner, or invested in any securities. The proof was that they were paid by him on account of an existing individual debt of his to Vermilye Co.; that they, at the time, held some securities as collateral to this debt, but what was their character or value is not disclosed. It does appear, however, that none of the money so paid ever came back, and that no interest of the town in the transaction was recognized or in any manner protected. It was a clear conversion by Griggs of the fund to his own use, which was consummated before the commencement of his second official term, and for which an action on his first official bond could have been maintained.

We think the judge erred in directing a verdict for the plaintiff, and that the judgment should be reversed and a new trial ordered, with costs to abide the event.

All concur.

Judgment reversed.