Skipwith v. Hurt

J.C. Skipwith was elected treasurer of Clay County at the regular election in November, 1894, and on the 30th day of that month executed his bond as such county treasurer in the form required by law, with P.M. Stine, J.A. Frazar, J.H. Ferriss, S.M. Satterfield, H.R. Bratt, D. Gilvin, J.B. Ford, John Jackson, R.S. Hilburn, and T. Cash as his sureties. Skipwith was re-elected to the same office at the November election, 1896, and on the 25th day of that month executed his bond in the manner and form required by law, with F.L. Miller, Sidney Webb, C.B. Patterson, S.M. Sears, P.M. Stine, and J.A. Frazar as his sureties

Upon the expiration of his last term of office Skipwith failed to pay over to his successor the money which his report showed to be due from him to the county, whereupon suit was brought in the name of E.S. Hurt, county judge, against Skipwith with his sureties on both of his bonds, it being alleged that it was difficult to determine the term during which the default occurred. The sureties on the first bond pleaded and contended that the default occurred during the last term held by Skipwith, and the sureties upon the last bond pleaded that the default actually occurred during the previous term to that upon which they became his bondsmen.

The sureties upon the last bond pleaded that Skipwith kept his account and his money which belonged to the county with the Farmers National Bank of Henrietta, and that at each regular term of the Commissioners Court of said county during the said term, and especially in August, 1898, the County Commissioners Court of Clay County, in pursuance of the requirements of the law, received a draft from Skipwith upon the bank for the amount of money shown by his report to be on hand, and that the said Commissioners Court went to the bank with the draft and the bank officers honored the draft and turned over and delivered to the Commissioners Court the sum expressed in the said draft, which was a sum covering the whole amount shown by the treasurer's report to be on hand; that the money was counted by the Commissioners Court and then returned to the bank. It was alleged that the said bank had subsequently appropriated the said money to the payment of a private debt due by Skipwith to it, knowing at the time that it was the money of Clay County and in the hands of Skipwith as its county treasurer. They prayed that the said bank be made a party defendant, and that in case Clay County should recover against them, that they have judgment over against the bank for the same amount. The Farmers National Bank excepted to this plea upon the ground that it was a misjoinder of causes of action, and the trial court overruled the exception.

The case was tried before a jury upon special issues, under which a verdict was returned and judgment entered for Clay County against the sureties on the last bond and in favor of them over against the bank for the same amount. Judgment was entered that the county take nothing against the sureties on the first bond above mentioned. The Court of Civil Appeals reversed the judgment of the District Court in favor of the sureties upon the last bond against the Farmers National Bank and dismissed it from the case, holding that the exception of the bank should have been sustained to the plea which made it a party defendant to the suit, affirming the judgment in favor of the county against the said sureties, and the judgment in favor of the sureties on the first bond.

The verdict of the jury and undisputed facts show that Skipwith, during the two terms, kept his account with the Farmers National Bank, and that at the regular term held in August, 1897, and at each subsequent regular term, including August term, 1898, the Commissioners Court of Clay County examined the report of Skipwith as treasurer of the county, and on each occasion took a draft from Skipwith upon the Farmers National Bank for the amount of money shown by his report to be on hand, and that on each occasion the said court presented the draft to the bank and the money called for on the face of the draft was delivered to the Commissioners Court and by them counted and found to be correct, after which it was returned to the bank and the draft destroyed. After the money was counted in August, 1898, the bank appropriated to itself the amount shown to be short in the final settlement.

Article 867, Sayles' Revised Statutes, provides: "When the commissioners court has compared and examined the quarterly report of the treasurer and found the same correct, it shall cause an order to be entered upon the minutes of the court, stating the approval thereof, which order shall recite separately the amount received and paid out of each fund by the treasurer since the preceding treasurer's quarterly report, and the balance of such fund, if any, remaining in the treasurer's hands, and shall cause the proper credit to be made in the accounts of the treasurer in accordance with said order, and said court shall actually inspect and count all the actual cash and assets in the hands of the treasurer belonging to the county at the time of the examination of his said report." When the Commissioners Court of Clay County counted the money which belonged to the county in the custody of its treasurer, it acted officially, representing Clay County; the money which the bank delivered to the county officials, upon the presentation of the draft drawn upon it by Skipwith, became the money and property of Clay County, and when returned to the bank, the money went into the custody of the treasurer, whose account was kept in that bank. The Commissioners Court received the money as the property of the county, and the secret intention of the bank's officers could not change the legal effect of their acts. The Farmers National Bank knew that the funds so returned to it by the county officials belonged to the county and that Skipwith held the money in trust for the county. When the bank appropriated the money to its own use or to the payment of a debt which Skipwith may have contracted in order to secure the money to be counted, it rendered itself liable to Clay County for all of the fund so used. Anderson v. Walker,93 Tex. 119; Love v. Keowne, 58 Tex. 200 [58 Tex. 200]; Bank v. Investment Co., 74 Tex. 421.

The officers of the bank may have done an act not authorized by law if they made an agreement with Skipwith by which the money of of the bank was to be furnished for the purpose of being counted as the money of the county, but when Skipwith drew a draft upon the bank with which he kept his account, in order to put the county in possession of the money, the officers of the bank had authority to deliver the money to the county officials, who had the right to have actual possession of it to enable them to perform their duty of counting it. The transaction was regular and in the due course of business, and, so far as the county is concerned, was binding upon the bank. The bank is estopped to deny that the money belonged to the county.

The Farmers National Bank being liable to Clay County for the money, it follows that the sureties on Skipwith's second bond, after having paid the amount for which the bank was liable, would be subrogated to the rights of the county against the bank, and could recover against it to the same extent that the county might have done. Anderson v. Walker, 93 Tex. 119.

Clay County might have joined the Farmers National Bank as a defendant in this suit to recover from it the amount of money which was appropriated by it out of the funds in the hands of its treasurer, Skipwith. All of the defendants were liable for the one subject matter of the suit, the county's money in Skipwith's hands. Bank v. Investment Co., 74 Tex. 421; Love v. Keowne,58 Tex. 200; Mathonican v. Scott Baldwin,87 Tex. 396. If Clay County had made the Farmers National Bank a party defendant to this suit, then the sureties upon the bond of Skipwith could have pleaded over against the bank and could have held it liable for any judgment rendered against them for money which the bank had appropriated out of the trust fund in its possession. It may be that Clay County could have objected to bringing the Farmers National Bank into this suit as a party defendant, but that question is not presented, for the objection was not made. The question recurs, since the sureties upon the bond had a good cause of action against the Farmers National Bank upon which they might have brought an independent suit against the bank, what reason is there that the bank should not be made a party to this action so as to settle the rights of all the parties in one suit?

In the case of Love v. Keowne, an administrator had, in collusion with certain other parties, invested the funds of the estate that he represented in railroad stocks, which were held by the persons who had confederated with the administrator to make the investment. Subsequently the bondsmen of the administrator called upon him to give a new bond, which he did, and those persons who had received the railroad stock from him became his sureties upon the second bond. A suit was brought by the heirs against the administrator and the sureties upon his first bond, also the sureties upon his second bond, and against those sureties on the second bond for their participation in the misappropriation of the funds of the estate. The question of the joinder of these several causes of action was made in that case by exceptions, and this court held, in a very strong opinion by Judge Stayton, that all of these parties and causes of action were properly joined in that action. Speaking of the sureties upon the second bond, Judge Stayton said: "The sureties upon the second bond are liable to the plaintiffs without regard to their bond for and on account of their having, if the averments of the petition are true, appropriated, in connection with one of the administrators, a portion of the assets of the estate, prior to the time they became sureties, in the purchase of railroad stock, which they must be held to have held in trust for the estate. Having thus connected themselves with the subject matter of the controversy, i.e., with the property of the estate, they are liable, in connection with the sureties upon the first bond, without reference to the bond which they subsequently executed; at least, to the extent of the assets which they so appropriated, or the value of the property which they acquired by purchase, with the funds of the estate." The court also held that it was the right of the sureties on the first bond to have the proceeds of the funds of the estate, misappropriated while they were bondsmen, which may have gone into the hands of the sureties on the second bond with notice of their character, applied in discharge of their liability. The parties who participated in the misappropriation of the trust fund were liable before the sureties of the administrator. The effect of this holding is that the sureties upon the first bond in that case — who stood in the like attitude as the sureties upon the second bond in this case — had the right to have the funds which were misappropriated applied to the payment and discharge of the obligation of the trustee in order to protect them from liability.

In the case of Love v. Keowne, cited above, the court said: "It has been found impracticable to lay down any positive general rule as to what will or what will not constitute multifariousness, but the courts have wisely left the question as one of convenience, to be decided according to the peculiar circumstances of the case. Every case must be governed by its own circumstances, and, as they are as diversified as the names of the parties, the court must exercise a sound discretion on the subject." The general doctrine of our courts is that the rights of all parties in the subject of litigation may and should be settled in one suit, within the limitation that parties can not be so introduced as to prejudice the rights of those who have already commenced the litigation. In this case the facts are so blended and connected as to the rights of the county against these sureties and their rights against the bank that in the trial of the case, the fundamental fact of the liability of Skipwith must be established in the action by the county against the sureties, which would not bind the bank; and if another action were brought by the sureties against the bank, the same issue must be tried anew, whereas the determination of that issue in this action involves but one trial. The act of the bank in misappropriating the money of the county made it primarily liable at the option of the county, but the county having elected not to sue the bank, the sureties ought not to be required to pay the money and await the result of a suit against the bank, but are entitled to settle the whole matter in this action. We can see no reason why the bank can not have as fair and just a trial in answer to the plea of the defendants as if it had been an independent proceeding by these sureties against it. It will greatly facilitate the administration of justice to sustain such proceedings and save much of the time of the courts in the investigation of questions of this character, and we believe that upon the broad principles underlying our system of procedure, the action of the District Court in overruling the exceptions of the bank was proper and that the Court of Civil Appeals erred in reversing the judgment of the District Court upon that ground.

The facts establish the liability of the Farmers National Bank to Clay County for the money delivered by the officers of the bank to the Commissioners Court of that county in August, 1898, so far as that money was subsequently misapplied by the bank. The judgment in this case rests upon that transaction, and we find no error in the proceedings of the trial court with reference to that matter. We do not think it necessary to examine the grounds of error alleged against the trial of other issues, because they could not materially affect this judgment; if they all be determined in favor of the bank, the judgment must be the same.

It is ordered that the judgment of the Court of Civil Appeals be reversed, and that the judgment of the District Court be affirmed.

Judgment of Court of Civil Appeals reversed. Judgment of District Court affirmed.