New Amsterdam Cas. Co. v. Norwalk (City)

The city of Norwalk brought an action in the Huron Common Pleas against the New Amsterdam Casualty Co. to recover on the official bond of Alvin B. Terry for an alleged default in performance of his official duties as city treasurer in connection with the sale, issuance and delivery of certain street improvement bonds.

The bond for $10,000 of which the company was surety read in part: “If said Alvin B. Terry----shall well and truly perform the duties of his office, and account to Norwalk for property and money coming into his hands as treasurer, then this obligation shall be void - -.”

It seems that Terry signed a certificate, certifying the issue of bonds aggregating $53,-720 to one, Bennett. Negotiations for the xsale of the bonds were entered into with Bennett by L. D. Snook, who was city auditor and clerk of the council, and upon assurance of Snook that the certificate was the same kind of a receipt all bond buyers requested, Terry signed said paper without being shown.Bennett’s check for the bonds and without even seeing the bonds, which were in Bennett’s satchel. It developed that Bennett sold the bonds to the Guardian Bank of Cleveland and when Snook attempted to cash Bennett’s check, which was post dated, it was discovered that Bennett had less than $100 to his credit at the time. He absconded and has not been located since.

The Common Pleas Court directed a verdict in favor of Norwalk on its own motion and this judgment was affirmed by the Court of Appeals on prosecution of error.

The case is pending in the Supreme Court on motion to certify and it is contended by the Company 'that Terry’s signing of the certificate was not an official act so that his surety could be charged, for the loss, if any, consequent upon it; that even if held to be an official act; the question of whether it was the proximate cause of any loss to the city was for the jury; that the law imposed no duty upon Terry on connection with the authorization, custody, sale or delivery of the bonds or payment therefor, excepting a duty to receive from the auditor and finance committee of the council that part of the purchase price paid to them, viz., the face value of the bonds, required to be deposited in the city treasury; and that even if Terry was under a duty to demand payment of debts due the city, it could not arise unless he know that the bonds were not paid for and hence that Bennett was indebted to the city; this being a question for the jury.

“There is no proposition of law more firmly settled in this state than that sureties are not liable beyond the letter of their contract.” State v. Griffith, 74 OS. 80, 92. It is claimed that a surety is not bound where the act does not occur in an attempt to perform some legal duity or exercise some legal power. It is urged that whether or not Terry’s alleged disregard of his duties of treasurer is one of the ultimate facts to be proven there being a question as to whether or not the issuance of the certificate was the proximate cause or not of the loss, the question should have been submitted to the jury.

It is contended that authority to issue includes authority to deliver, and delivery must, under the law, be concurrent with payment. Terry had a right to presume unless informed to the contrary that the bonds issuing authorities had already receive payment when the bonds were delivered to Bennett by the bond issuing authorities.