HARTFORD ACCIDENT INDEMNITY CO v. CITY OF TULARE (1947)

District Court of Appeal, Fourth District, California.

HARTFORD ACCIDENT & INDEMNITY CO. v. CITY OF TULARE et al.

Civ. 3518.

Decided: February 20, 1947

Maddox and Abercrombie, of Visalia, for appellant. I. H. Ham, City Atty., of Tulare, for respondents.

This is an appeal from a judgment in favor of defendants in an action brought for declaratory relief, and to recover an annual premium on an indemnity bond, together with attorneys' fees.

The city of Tulare is a municipal corporation organized and existing under a municipal charter. St.1923, p. 1508, St.1933, p. 3043, and St.1935, p. 2640. The charter was amended twice but none of the amendments affect the questions before us.

The charter provides for certain elective officers of the city among whom are an auditor and a treasurer. Section 6 provides that those officers, before entering on the duties of their respective offices ‘shall each give and execute to the city a bond with a responsible surety company in such penal sum as the City Council may be ordinance direct, * * *.’

Section 33 of the charter contains provisions concerning the city treasurer and specifies that ‘before assuming the duties of his office he shall file with the City Clerk a surety company bond in the penal sum of Fifty Thousand Dollars ($50,000.00) * * *.’

Section 5 of the charter provides that ‘the term of office of each of said elective officers shall be Four (4) years, and until his successor is elected and qualified.’

Section 8 provides that the bond of the treasurer shall be approved by the council and filed with the city clerk.

Section 9 provides that a vacancy in an elective office shall be filled by appointment by the city council, ‘such appointee to hold office until the next general municipal election,’ without any provision that the appointee shall hold office until the election and qualification of his successor.

Section 72 provides that ‘All general laws of the State applicable to municipal corporations, now or hereafter enacted, and which are not in conflict with the provisions of this charter or with ordinances or resolutions hereafter enacted, shall be applicable to the city.’

Section 879 of the Political Code, now re-enacted as section 1302 of the Government Code, provides as follows: ‘Every officer must continue to discharge the duties of his office, although his term has expired, until his successor has qualified.’

Section 959 of the Political Code, now re-enacted in section 1504 of the Government Code, provides as follows:

‘Every official bond executed by any officer pursuant to law is in force and obligatory upon the principal and sureties therein for any and all breaches of the conditions thereof committed during the time such officer continues to discharge any of the duties of or hold the office, and whether such breaches are committed or suffered by the principal officer, his deputy, or clerk.’

On June 1, 1942, Andrew J. Menown, then city treasurer of the city of Tulare, died, and on the next day the city council appointed Frances M. Besse city treasurer. She qualified by taking the oath of office and furnishing a bond in the sum of $50,000, with plaintiff as surety, which bond was approved by the city council and filed with the city clerk.

The penal clause of the bond read as follows:

‘Whereas, the above bounden was heretofore elected or appointed City Treasurer in and for the City of Tulare, State of California, and is required to furnish bond.

‘Now, therefore, if the said Principal shall for the period commencing June 2nd, A.D. 1942 and ending April 18th A.D. 1943 well, truly and faithfully perform all official duties now required of him by any law of the State of California, then the above obligation shall be null and void; otherwise to remain in full force and effect.’

The next general municipal election after the appointment of Frances M. Besse was held on April 13, 1943, in which she was elected to succeed herself. Plaintiff tendered a new bond in the penal sum of $50,000 which was rejected by the city council and was never filed.

On May 18, 1943, the city council of Tulare adopted its ordinance No. 513 fixing the bond of the city treasurer at $10,000. Frances M. Besse obtained a bond in that penal sum from another surety company. It was approved by the city council on August 19, 1943, and filed with the city clerk.

Counsel for plaintiff argue as follows: That the city council had no authority to fix the bond of the city treasurer at a sum less than $50,000; that when sections 33 and 6 of the charter are construed together the only power of the council in this regard is to fix the bond at a sum not less than $50,000 so ordinance No. 513 was void as being contrary to the express terms of the charter; that the approval of the bond in the penal sum of $10,000 was beyond the power of the council, so Frances M. Besse never qualified as city treasurer after her election on April 13, 1943; that while, under the provisions of the charter, the term of office of Frances M. Besse under her appointment expired on April 13, 1943, and as there was no provision in the charter prohibiting an appointee holding office until the qualification of an elected successor, the provisions of sections 879 and 959 of the Political Code were adopted into the charter by section 72, so that Frances M. Besse, having failed to qualify for the term of office for which she was elected, continued to hold office under her appointment and plaintiff continued to be obligated under its bond and was entitled to collect its annual premium. As an alternative it is argued that if it be held that the city council did not exceed its authority in passing ordinance No. 513 and fixing the bond at $10,000, still Frances M. Besse did not qualify after her election on April 13, until August 19, 1943, so that plaintiff continued to be her surety until the latter date and was entitled to its premium for the short term.

Were it not for decisions of the Supreme Court of this State the arguments we have summarized would seem sufficiently sound to require the most careful examination. However, a District Court of Appeal must follow decisions of the Supreme Court which have been neither criticized nor overruled, without regard to their antiquity. In this connection it should be observed that the statutes in effect when the controversies arose in the cases we will consider, concerning the term of office of a county treasurer and his qualification after election or appointment, do not differ materially from the construction urged by plaintiff of the law governing our decision here. Stats. 1850, p. 115.

Our attention is first directed to People v. Aikenhead, 5 Cal. 106. In that case the trial court held that the sureties on the bond of the county treasurer of Santa Clara County were not liable for defalcations occurring after the expiration of the term for which he had been appointed. The following facts are stated:

‘On the 4th day of October, 1852, the Court of Sessions of Santa Clara County appointed William Aikenhead, County Treasurer, in place of one Clayton, resigned. On the following day, Aikenhead gave bond, with the defendants as sureties, to continue until his successor was qualified. On the 2d of November, of the same year, Aikenhead was duly elected Treasurer of said County, and received his certificate of election, but never qualified or gave bond, and continued to exercise his official duties. On the 7th of September, 1853, one Appleton was elected as his successor, but failed to qualify within the time prescribed by law.’ The complaint alleged the defalcations occurred after October 1, 1853.

The Supreme Court affirmed this judgment releasing the bondsmen from liability, giving the following reasons for its conclusions:

‘The appointment of Aikenhead as Treasurer was to continue until his successor was qualified, and until this took place, ordinarily, his sureties would be bound. But Aikenhead was elected for a new term and ought to have given a new bond. It devolved upon another officer of the law to see to this, and the sureties upon the bond may well have rested in security under the impression that the obligations of the law had been fulfilled. If another than Aikenhead had been elected and failed to qualify, so as to have continued the latter in office, the defendants would have been chargeable with notice, and indeed their continued liability would have been but an incident of their contract.

‘The State has no right to visit upon the defendants the effects of the laches of her own officer, whose duty it was to see that a new bond was given.’

We can find no distinguishing feature between the facts of the Aikenhead case and those of the case before us.

People v. Aikenhead was cited with approval and followed in Brown v. Lattimore, 17 Cal. 93, where the Supreme Court held the sureties on the bond of a county treasurer not liable for a defalcation occurring after the term for which he had been elected had expired, although after his election and before his term had ended the legislature had extended the term of office. The law in effect at the time of his election provided that the term of office of a county treasurer should be two years and until his successor had been elected and qualified.

People v. Aikenhead, supra, and Brown v. Lattimore, supra, were cited with approval and followed in Hubert v. Mendheim, 64 Cal. 213, 30 P. 633.

Defendants also rely on King County v. Ferry, 5 Wash. 536, 32 P. 538, 19 L.R.A. 500, 34 Am.St.Rep. 880, which follows the rule of the Aikenhead case.

We find nothing in the cases of Placer County v. Dickerson, 45 Cal. 12, and Fresno Enterprise Co. v. Allen, 67 Cal. 505, 8 P. 59, contrary to the holdings in the cases already cited.

The notes to American Surety Co. of New York v. Independent School District No. 18 of Lake Park, Minn., 8 Cir., 53 F.2d 178, found in 81 A.L.R. 1, et seq., show the conflict of authority in various jurisdictions on the questions here presented. We need give them no further attention other than to quote the comment of the author on Page 17, as follows:

‘In accordance with the rule laid down in the preceding division of the annotation, it is generally held that, where the officer is re-elected or re-appointed as his own successor, the sureties are not liable for acts or defaults occurring during the second term.’

Under the foregoing authorities we must conclude that the liability of plaintiff on its bond ended with the expiration of the term of office for which Frances M. Besse was appointed, or at the latest, on April 18, 1943, as specified in the bond. This makes it necessary to consider the validity of ordinance No. 513 and the other questions argued by plaintiff. As plaintiff's liability ended April 18, 1943, at the latest, it is not entitled to recover.

Plaintiff points to inconsistencies in the findings of fact and conclusions of law. We can correct them here.

It is ordered:

That the following be stricken from finding of fact number 4:

‘* * * and save and except that as an incident to the obligations of said Bond No. 1984385 the plaintiff continued to be responsible for any acts of said Frances M. Besse up to the time of her completed qualification on August 19, 1943, or thereabouts, by giving a bond of the Maryland Casualty Company under said Ordinance No. 513 of the City of Tulare, but not thereafter.’

That the following be stricken from conclusion of law No. 1:

‘* * * with the exception that, as an incident to the obligations thereof, the plaintiff continued to be responsible for any acts of said Frances M. Besse, up to the time of her completed qualification under the Ordinance of the City of Tulare by reason of giving a Bond of the Maryland Casualty Company hereinbefore referred to, on August 19, 1943, or thereabouts, and that the liability of the plaintiff for any acts of the defendant, Frances M. Besse ceased upon such qualification, and no liability has existed since the date of executing said Bond and its acceptance by said City of Tulare as obligee.’

It is further ordered:

That paragraph numbered I be stricken from the judgment and in lieu thereof the following be substituted as paragraph 1 of the judgment:

That the plaintiff is not liable on its bond for any act or omission of Frances M. Besse as City Treasurer of the City of Tulare occurring after April 18, 1943.

As thus modified the judgment is affirmed, no party to recover costs of appeal.

MARKS, Justice.

BARNARD, P. J., and GRIFFIN, J., concur.