Price v. Price

I respectfully dissent from the opinion of the majority of the Court in this case because I believe it violates a sound principle of public policy of vital importance to every one who deals with public officials required to execute a bond.

Under the majority opinion, and from this time on, the security of official bonds in this state, heretofore, as I believe, assumed to be for the benefit of all those entitled to rely thereon upon a basis of entire equality, will, in cases where liability exceeds the penalty of the bond, be limited to those who, by reason of superior information, alertness or vigilance, are able, by an action at law, to secure a preference over those less fortunate. Thus the security designed to be afforded to all, either in full or ratably, will be appropriated to the sole benefit of a particular class. The maxim that "equality follows the law" is made the means by which another cherished maxim, "equality is equity", is destroyed in cases such as that before us. The rule announced will, in my opinion, strike a heavy blow to the confidence which the public has the right to repose in the security provided by law in respect to acts of public officials, and its effect on such confidence cannot be easily exaggerated. We are dealing with a question which affects the official bonds of thousands of public officials, and its effect on a still greater number of individuals who day by day transact business with these officials, and rely upon the security supposed to be afforded by their bonds. While comparatively few cases will present the question here involved, there is no way to determine in advance the particular bonds which will raise the question. The public policy here involved, far transcends the individual interests of the litigants now before the court.

The majority opinion very ably presents the viewpoint that equity will not divest rights acquired at law, and with the conclusion therein reached I am in full accord, so far as it applies to ordinary private transactions wherein no public interest is involved, and no public policy is at stake. I do not think the case before us is one to which the arguments of the majority opinion should be applied. In my judgment, the bond of a public official is, on grounds of public policy, a fund or reservoir of public security to which preferential claims cannot attach, and with respect to which the force and validity of judgments, as ordinarily applied, are unimportant.

It seems to me that the prime purpose of any bond, executed to secure the performance of a public duty, is to guarantee such performance to all who may have the right to rely thereon; that the rights of those who are entitled to rely on such security are equal, and are based upon the bond itself and attach thereto immediately upon its execution; and that they cannot be appropriated, in whole or in part, by the separate and independent action of any one or more persons, where the result would be to wholly deprive others equally entitled thereto of any part of the protection intended for all. If the bond is, as I believe, a special fund for the benefit of all, it must be preserved as such, and the mere fact that a person may obtain a judgment at law, under the bond, while valid as fixing the right to participate in the fund and settling the amount of his claim, as well as establishing a statutory lien on the property of those against whom the judgment is recovered, does not entitle him to use such judgment to exhaust the fund provided by the bond to the prejudice of others whose rights thereunder are equal to his own. The fund created by the bond cannot, in my opinion, be made subject to the preference which a judgment and execution ordinarily give.

I concede, of course, that actions may be maintained by individuals, in the name of the state, to collect individual claims to the amount of the penalty of a bond payable to the state. Code, 6-2-17. But I do not believe that this rule should be made something akin to a fetich, in the adoration of which we should blind ourselves to equitable rules which I consider of paramount importance. Equity will not permit the processes of a court to be used to work injustice unless restrained by some rigid rule which prevents action on its part. I do not believe a court of equity is barred from granting relief in this cause. I agree that in the absence of a showing that the total claims under the bond exceed its penalty, full force and effect will be given to a judgment thus obtained. It is only where it appears that the collection of such judgment will destroy the right of equality in the bond that a court of equity will interfere. When this happens, then the principle of equality will and should be enforced regardless of the claimed priority of a judgment.

I think it is conceded that as to official bonds the principle of equality of claimants thereunder should prevail, and, in the absence of a judgment at law or some other character of lien, does prevail. Much could be said in favor of this principle. It is applied in all cases where funds come into the possession of a court, and I think it reasonable to contend that a bond executed under statutory requirements, for the benefit of the public at large, is, and should be, as much within the control of the law as is a fund upon which a court has laid its hands. It is not necessary to argue this point further. It was so well stated by the author of the majority opinion on this appeal, when this cause was heretofore before the court, 118 W. Va. 48, 188 S.E. 770, that a quotation from that opinion will sum up the arguments in favor of my position much better than I can hope to do. Therefore, I take the liberty of quoting the same:

"In a scramble of creditors for preference in a common fund, equity imputes no particular merit to diligence, alone. In re. Lord Polk Chemical Co., 7 Del. Ch. 248, 44 A. 775, 778; Ill. Surety Co. v. Mattone, 122 N.Y.S. 928, 929, 138 A.D. 173; Am. Surety Co. v. Lawrenceville, 96 F. 25. That equality is equity, is an established principle of equity. In conformity wherewith, unless inhibited by statute, courts of chancery treat as equal all non-lien claimants of a common fund. Lippitt v. Thames, 88 Conn. 185, 90 A. 369. Where all the claimants of a fund have a common interest therein, an adequate remedy is one which affords uniform recoveries to all. If the claims do not exceed the fund, then priority has no significance, and each claimant has a plain and adequate remedy at law. If the claims do exceed the fund, each claimant is entitled equitably only to his pro-rata share therein, and the law provides no means for such an adjustment; equity alone is prepared to make it. Dimmick v. Register, 92 Ala. 458, 9 So. 79, 80. It is even said that no rule of equity appeals more to the conscience of a chancellor than that requiring an insufficient fund to be apportioned ratably among all its claimants. Livingstain v. Columbian Banking Trust Co., 77 S.C. 305, 57 S.E. 182, 22 L.R.A. (N.S.) 442, 122 Am. St. Rep. 568, 572. So it may be taken as settled that equity will assume jurisdiction when necessary to prevent unequal distribution of a limited fund. 'The Primary equity of the bill is the adjustment of claims and the equitable apportionment of a fund provided by law which is insufficient to pay claimants in full. * * * The basic principle of the bill is sound. Equality is equity.' Nat. Surety Co. v. Graves, 211 Ala. 533, 101 So. 190. Accord: Guffanti v. Surety Co., 196 N.Y. 452, 90 N.E. 174; Pomeroy's Eq. Juris. (4th Ed.), sec. 407. Under this view, a discussion of the question of multiplicity of actions is unnecessary."

It may be fairly contended that the reference to "non-lien claimants of a common fund" leaves the door open to the position now taken by a majority of the court. I think the force and reasoning in favor of the principle of equality expressed by the learned judge and quoted above, supported by the many authorities he cites, outweighs the contention that a deep-rooted principle of equity may be overcome by the mere recovery of a judgment, which, I agree, created a lien against the property of the defendants therein, but which, I contend, at no time touched the fund created by the bond. In my research on this question, I find three cases which support the contention that a preference may be obtained in a matter wherein a bond is involved. One is the case of M'Kean v.Shannon (Pa.), 1 Binney 370, decided in 1808, which involved an auctioneer's bond; another is Christman v. Commonwealth (Pa.), 17 Sergeant Rawles 381, decided in 1828, and another, State v. Ford (Ind.), 5 Blackford 392, decided in 1840. These cases are not in accord on the question of whether or not the suit or the judgment determines the priority to be allowed. As against these cases, may be set up what I think is the better rule as announced in Guffanti v. Surety Co., 196 N.Y. 452,90 N.E. 174, 134 Am. St. Rep. 848; National Surety Co. v.Graves, 211 Ala. 533, 101 So. 190; Illinois Surety Co. v.Mattone, 138 A.D. 173, 122 N.Y.S. 928. In the latter case, one Pesce was required to give a bond to secure the transmitting and paying over of moneys received by him for transmission to foreign countries, and to keep money received by him upon deposit. Pesce defaulted, after which a number of actions were brought on the bond, some of which, it is stated, had come to judgment and which actions were mainly instituted in courts having no equity jurisdiction, and yet when an injunction was sought to secure equitable distribution of the amount of the bond, it was granted and the court expressly held that:

"The plaintiff, however, is liable in the aggregate only to the amount of its undertaking, and that amount constituted a fund for the payment of the creditors pro rata, and is to be distributed among them equitably according to their respective claims. Mere diligence in prosecuting a claim against such a fund will not entitle the prosecuting claimant to a priority of payment."

It is stated in the majority opinion that it was held in theMattone case that the creditor of the agency could sue on the bond in equity only. That may be true, but the principles of equality are clearly stated, and judgments were ignored when they interfered with that principle. It is true that under our statute a creditor may sue at law; but even so, the question remains as to whether or not, by obtaining a judgment in such a suit, he secures a preference over those whose rights in the fund he relies on are equal to his own. As so clearly stated in the opinion upon the former appeal herein, if the claims do not exceed the fund, the priority has no significance, but where they do exceed the penalty of the bond, the doctrine of priority destroys the equality principle with which the bond was intended to be surrounded from the beginning. Without in any way destroying the force or effect of a judgment as against the defendants therein, this Court can uphold the principle of equality of rights, as respects the bond of a public official, by holding that anyone who recovers a judgment under our statute on such bond, under the circumstances developed herein, holds the same for the benefit of everyone similarly situated with respect to such bond, as the matter stood immediately before entry of such judgment. The fact that the claims under the bond exceed its penalty was developed in this cause prior to the distribution of the fund which grew out of the bond, and nothing stands in the way of an equitable distribution thereof. I am not prepared to say that the rule I advocate would be extended to a case where claimants under the bond stood by, without action, and allowed other claimants to prosecute suits to the extent of actual recovery. In such a case I apprehend that other principles of equity could be invoked which would prevent the application of the equality rule. That, however, is not the case before us, and I am impelled to the conclusion that nothing has happened in this case to interfere with the sound and equitable principle that the fund arising from the bond of a public official should be distributed among those entitled to its protection on the basis of exact equality.

I would reverse the decree of the circuit court and remand the cause for such proceedings as may be necessary to a ratable distribution of the fund arising from the official bond here involved.