Lancaster County v. Hershey

Mestbezat, J.,

dissenting:

I would reverse the judgment entered in the court below for two reasons: 1. The sureties on an official bond, given by a county treasurer to the county, are not liable thereon for his failure to account for moneys collected by him for the state and payable to the state treasurer. 2. If there is a liability on the bond, no action will lie against the treasurer or his surety until the auditors of the county have setted the accounts of the treasurer and ascertained the amount due from him to the county. If, however, neither of these positions be tenable, the judgment should be reduced by at least $30,000, as it is clearly excessive to that amount as shown by the appellee’s own figures.

1. This action was brought February 9, 1900, by the county of Lancaster against the treasurer of the county and his sureties on the bond given by the officer to the county. The record discloses the fact that service of the writ was made on the treasurer and the administrator of one of the other sureties and was accepted by counsel of the other surety. All parties, therefore, were in court subject to its orders and judgment. The plaintiff filed a statement in which it is averred that the treasurer failed to pay to his successor in office the sum of $65,037.94. But of that sum $10,666.43 had since been collected in a suit on the state bond leaving $54,371.51 as a claim in this suit. The sureties filed an affidavit of defense denying the right of the plaintiff to recover any sum in the action because, among other reasons, the amount, if anjq due from the treasurer had not been determined by the county auditors at the time of bringing the action; and the said amount is the tax on personal property collected for, and due, the commonwealth. This is a rule for judgment for want of a sufficient affidavit of defense and these averments must, therefore, be taken to be true.

The Act of April 15,1834, Purd. Dig. 462, pi. 8, requires the county treasurer to give two bonds : one, “conditioned for the faithful performance of the duties of his office, for a just account of all moneys that may come into his hands on behalf of the county, .... and for the payment to him (his successor), of any balance of money belonging to the county remaining in his hands;” the other, “conditioned for the faithful *357discharge of all duties enjoiired upon him by law in behalf of the commonwealth, and for the payment, according to law, of all moneys received by him for the use of the commonwealth.”

The Act of April 29, 1844, sec. 40, Purd. Dig. 1967, pi. 20, provides that “ it shall be the duty of the commissioners of the several counties to cause to be collected the tax as aforesaid adjusted and assessed; and the respective county treasurers shall pay over the same, as fast as collected, to the state treasurer; and if the quota of any county be not paid before the second Tuesday in January in each year, to the state treasurer, then and in such case, the amount remaining unpaid, after deducting such commissions as are or shall be allowed, by law for the collection of the same, shall be charged against said county on the books of the state treasurer.”

In Commonwealth v. Philadelphia County, 157 Pa. 531, it is said that the act of April 29, 1844 is substantially the same in its provisions as the act of 1889. The cases of this court construing the prior legislation on this subject may, therefore, be regarded as controlling the question under consideration here.

It will be observed that the county treasurer has duties to perform not only for the county, but also for the commonwealth. He must collect the tax levied by the county and certain taxes levied by, and payable to, the commonwealth. For this reason, he is required by law to give a bond to each ; the one, to the county that he will account for and pay over all moneys that may come into his hands belonging to the county; the other, to the commonwealth that he will make payment, according to law, of all moneys received by him for the use of the commonwealth. It is, therefore, apparent that the two bonds are given for different purposes, to secure the payment of different funds, and that the sureties on the one are not liable for a default and failure of their principal to account for moneys secured by the other. If this be not true, and the sureties on the county bond are liable for moneys collected by the treasurer for the state, why take two bonds ? The additional, or state, bond is taken for some purpose, and that purpose is found and disclosed in the bond itself, to wit: to secure payment of moneys collected for the commonwealth.

The foregoing view of the liability imposed by the respective *358bonds is sustained by the adjudicated cases. In Hughes v. Commonwealth, 48 Pa. 66, an action on a state bond by the commonwealth against a surety on the bond to recover for “state taxes on zeal and personal estate,” it was held that “a surety on the state bond of a county treasurer is liable for taxes on real and personal property received by him for the use of the commonwealth and not paid over; and though the county is the debtor of the state for interest accrued and accruing on, and possibly for the principal of such taxes, the surety cannot require the state to look to the county, and it to the surety oiz the county bozzd.” Elder v. Commonwealth, 55 Pa. 485, was an action on a state bond by the commonwealth for the use of Juniata county against the sureties on the bond of a coiznty treasurer. The county auditor’s settled the accounts of the treasurer and found a balance due from him to the commonwealth for state taxes which the county paid. It was held that the county having paid the commonwealth the balance due by her for state taxes for which the treasurer was in default, might recover against the sureties on the state bond. The doctrine of subrogation was applied, and the county was reimbursed by an actiozz for its use on the bond. It was not even suggested that there was any liability imposed by the county bond for the state taxes collected by the treasurer. The county’s responsibility' arose under the act of 1844, and when the auditors had determined the amount due from the treasurer to the commonwealth and he had failed to pay, the act required it to be “ charged against such county on the books of the state treasurer.” The liability of the county in such cases is not put on the ground that it is responsible for the treasurer, but on the positive words of the-act of assembly which holds the county responsible for the taxes until paid into the state treasury: County of Schuylkill v. Commonwealth, 86 Pa. 524.

Neither the act of June 1, 1889, nor the act of June 8, 1891, has changed the mode of collecting state taxes, nor the liability imposed by the respective bonds required by the ti’easurer under the act of 1834, nor the manner of keeping accounts as required by that act. Under the late legislation a four-mill tax is imposed on personal property for state purposes, and it is provided that “ three fourths of the net amount of taxes based on the *359return of property subject to taxation for state purposes . . . . that is collected, and paid into the state treasury by a county .... shall be returned by the state treasurer to such county . . . . for its own use inpayment of the expenses incurred by it in the assessment and collection of said taxes.” It is, therefore, clear from this statutory provision that the whole sum, and not the one fourth thereof, required, to be collected for state purposes is a tax imposed by law, and is collected for the use of the commonwealth. Hence, nothing relieves the county from liability to the state for the tax but actual payment of the entire sum to the state treasurer: Commonwealth v. Philadelphia county, supra. It is a fund entirely distinct from that produced by county taxation and is due, and must be paid, to the commonwealth for whose use it was levied and collected. It is not subject to the control of, nor can it be applied by, the commissioners for any county use ; and until the whole sum is collected and paid to the state treasurer, the county is not entitled to three fourths of the fund with which to reimburse itself for the collection of the tax: Commonwealth v. Philadelphia County, supra.

2. xAlmost a century ago the legislature of this state declared that in all cases where a remedy was provided, or duty enjoined, or anything directed to be done by any act or acts of assembly of this commonwealth, the directions of the said acts should be strictly pursued; and no penalty should be inflicted, or anything done agreeably to the provisions of the common law, in such cases, further than should be necessary for carrying such act or acts into effect. In the many years which have intervened since this statute became a law of the commonwealth, no court has heretofore failed or refused to enforce its positive mandate or hesitated to give due effect to its provisions. Notwithstanding the uniformity of action by the courts and the settled construction of the act, the judgment of the court below in the present case was entered in direct violation of its terms.

The Act of April 15,1834, section 48, Purd. Dig. 447, pi. 10, provides that “ the auditors of each county .... shall audit, settle and adjust the accounts .... of the treasurer .... of the county, and make report thereof to the court of common pleas of such county, together with a statement of the balance *360due from or to such .... treasurer.” The 49th section of the act makes it the duty of the auditors to audit the accounts of the county treasurer with the state treasurer and to make a separate report to the court with a statement of the balance due from or to the county treasurer. The auditors are invested with ample powers to enable them to perform the duties imposed upon them by the statute. In discharge of these duties the auditors are authorized to compel the appearance of witnesses and the production of papers, to administer oaths, and to commit persons for refusing to testify. The act further provides that their report shall be filed in the court and shall thereupon have the effect of a judgment against the officer if he is indebted to the commonwealth or county. An appeal lies to the common pleas in favor of any party interested within the time and on the terms provided by the statute. If an appeal results in a judgment or there is no appeal taken, execution may issue against the defaulting officer.

It will thus be seen that the legislature has created a special tribunal with ample powers to settle and adjust the accounts of the county treasurer with the commonwealth and the county, and thereby to ascertain and determine what, if anything, is due from the officer. The statute, it will be observed, is imperative and provides that the auditors “ shall audit, settle and adjust the accounts of the .... treasurer.” The details of the subsequent procedure are provided for until final adjudication by the appellate court. Here then, is a complete and effective remedy or course of procedure directed by statute by which the accounts of the treasurer shall be adjusted and the balance, if any, due by him to the county or commonwealth ascertained. This, under the act of 1806, is the exclusive and only method by which the treasurer of a county can be determined to be in default. Such has been the uniform interpretation put upon the statute by all the courts of the commonwealth before which the question has been raised, and there is not a single solitary decision to the contrary. Sixty years ago this court held, in Northumberland County v. Bloom, 3 W. & S. 542, that a settlement of the account of a county treasurer by the auditors unappealed from was conclusive against both the county and the officer. In Blackmore v. Allegheny County, 51 Pa. 160, Justice Agnew, delivering the opinion, after refer*361ring to the act of 1834, by authority of which the accounts of the county officers are to be audited, says: “ Thus a special tribunal has been created with all necessary judicial powers to determine the indebtedness from or to the officer, and enforce collection in due course of law ; and this under the provisions of the 13th section of the act of March 21,1806, precludes a resort to an action at common law. The decision of this tribunal is also conclusive, and cannot be inquired into, either by the same tribunal at another time, or by a court of law, except in the manner provided, upon an appeal by the county or the officer. A long line of decisions has set this point at rest.” In Siggins v. The Commonwealth, 85 Pa. 278, an action on a treasurer’s official bond to recover a “ balance in his hands not shown by the auditors’ settlement,” Justice Woodward says : “ Blackmore v. Allegheny County, 51 Pa. 160, and the array of precedents there collected, abundantly prove that the decision of the auditors on the accounts of the treasurer is controlling, and cannot be inquired into either by the same tribunal at another time, or by a court of law, except upon appeal. When the accounts of Siggins, as treasurer of the county of Forest, were adjusted in January, 1871, by a report from which there was no appeal, the settlement was final and binding on all parties and for all time.” In Godshalk v. Northampton County, 71 Pa. 324, Justice Williams, speaking for the court, says: “ It is manifest from all the provisions of the statute, that it is the duty of the auditors to ascertain and settle the amount of public money received by any of the officers whose accounts they are required to audit, whether they have settled or refused to produce their accounts. The power of the auditors to settle and adjust the accounts of such officers is not suspended or held in abeyance by their neglect or refusal to settle or produce their accounts.” In Northampton County v. Herman, 119 Pa. 373, Justice Sterrett, delivering the opinion, after stating it to be the duty of the county auditors under the act of 1834 to audit the accounts of the county officers, says : “ A special tribunal is thus erected, with all necessary powers to bring before it the parties, witnesses, etc., determine the indebtedness by or to the officer and enforce its collection. This, under the provisions of the act of 1806, necessarily excludes every other remedy except the appeal provided for; and, if that is not taken *362within the sixty days limited by the act, the decision of the auditors becomes final and conclusive, and cannot afterwards be inquired into either by the auditors themselves or by a court of law.” To the same effect is Schuylkill County v. Boyer, 125 Pa. 226, where the present chief justice says: “It has been repeatedly held by this court that the act of April 15, 1834, which defines the powers and duties of the county auditors, constitutes a special tribunal for the settlement of the accounts of the officers named in it, with necessary authority to compel the attendance of witnesses and the production of papers, and to determine the indebtedness by or to the officer, and to enforce its collection.” And in the recent case of Westmoreland County v. Fisher, 172 Pa. 317, our Brother Fell, citing some of the numerous authorities on the subject found in our reports, says : “ Since the passage of the act (of 1834), it has been uniformly held that the special tribunal created by it for the settlement of the accounts of the county officers named is exclusive of all others, and that its decision if not appealed from is final and conclusive, and cannot be opened for the correction of errors or again inquired into by the auditors or by the court.” Branch Township v. Youndt, 23 Pa. 182, was an action against a collector of road taxes and his sureties on his official bond, given in pursuance of a special act of assembly. The trial court held that until settlement of the account of the collector by the township auditors, no action would lie upon his bond. Knox, J., in affirming the judgment, said: “ This was correct. The liability of the sureties is contingent, and no resort can be had against them until the default of the principal is fixed. The township auditors have unquestioned jurisdiction to settle the account of the supervisor and collector, and their settlement unappealed from would be conclusive in an action upon the bond. If the supervisor neglected to appear upon notice and exhibit the state of his accounts, the auditors should have passed upon them in his absence, and unless evidence of payment were before them, they would have been justified in reporting a balance against him equal to the entire amount of the duplicate, which they could have ascertained without difficulty, as it was recited in the bond. The legislature has provided a local tribunal to determine primarily the amount of the receipts and expenditures by the officers whose duty it is to collect and *363disburse the township revenues, and public policy coincides with the rules of law in requiring the remedy plainly pointed out to be pursued.”

These are but a few of the many cases by which it is conclusively established that a common-law action will not lie against a county officer for an alleged shortage in his accounts with the county and that an adjustment of his accounts by the county auditors is a prerequisite to an action on his official bond. They show, if anything can be settled by the repeated decisions of this court, that the act of 1834 provides a complete and exclusive way in which the accounts of a county officer with the county and the commonwealth must be settled and the amount, if any, be ascertained to be due to or from the officer. It necessarily follows that until this tribunal has determined an amount to be due from an officer, he is not in default and no action will lie against him or his sureties on his official bond. This evidently was the view of the appellee, as its substitute statement avers what the original statement omitted, that the accounts of the treasurer had been audited by the county auditors. This, as appears by the affidavit of defense and is conceded, had not been done when this suit was brought, and even if done subsequently cannot avail the plaintiff here, as was correctly ruled by the Superior Court in Commonwealth v. Piroth, 17 Pa. Superior Ct. 586.

The learned trial judge supports his position that a suit will lie on the bond without the prior action of the county auditors in determining the sum due from the officer by saying, arguendo, that to await the action of the tribunal created by law to establish the officer’s default might result in loss to the county by the death or insolvency of the sureties on the bond. With equal relevancy and force it may be suggested that both these events might occur and like conseq uences might result before the expiration of the officer’s term prior to which time no action will lie on the bond. It is further said in support of the position of the court below that the county might be qirejudiced by the delay attending the audit and final settlement of the officer’s accounts. This proposition is sufficiently answered by the suggestion that no delay in the audit of the officers’ accounts can occur unless the auditors fail to perform their duties, which we will not presume the court below, from which this appeal *364was taken, would permit. It is further contended by the appellee that the action being on the bond, the default consists in the officer’s failure to pay the “ balance of money belonging to the county remaining in his hands,” as required by the condition of the bond, and that it is a breach in the officer not to pay the money immediately on the expiration of his term, which imposes a liability on the sureties. For this reason, it is asserted that no prior settlement by the auditors is required. The fallacy of this argument lies in the fact that at that time the amount due has not been ascertained, and hence is not known. Suppose the officer would pay the amount he and the county then thought was due, and the subsequent audit of his accounts should show a sum far in excess or much less than was paid was really due the county, the mistake could not be corrected and one of the parties must suffer an injustice. Is it not, therefore, apparent that the proper interpretation of the condition of the bond did not require the officer to pay the balance to the county until it had been ascertained in the mode provided by law, and that consequently no action would lie until the county auditors ,had determined the sum due?

But if the county-may bring suit on the bond without awaiting the action of the auditors, how is it to establish its claim before the court and jury? This requires, in the present case, a settlement of the accounts of the treasurer during at least one year of his term. The appellee contends that the amount due from the officer shall be ascertained from the “ true and correct accounts” required by the act of assembly to be kept by him. I cannot imagine that the county or the sureties on tbe bond would want to accept as verity an account stated by a defaulting officer. The law requires him to keep an account with the county as well as with the state, but it concludes no party, except possibly the officer himself, and not him if a mistake should be made to appear in the settlement of his accounts by the auditors. To sustain this action, however, the county is driven to the position of accepting his accounts, and has attached copies of it to the statement to show the amount due from the sureties on the bond. Should the case reach a jury, that body wholly unfitted for the purpose must pass upon and determine the correctness of a long and intricate account. The case would be similar to Mothland v. Wireman, 3 P. & W. 185, in which *365Chief Justice Gibson says: “ In the trial of the issue the jury were burdened with accounts which were proper for adjustment by no one but an auditor.”

From the plaintiff’s statement it appears that on January 1, 1900, there was due from the treasurer $126,661.44 which the affidavit of defense shows, and it is conceded, represents two funds, viz: $88,980.88, state taxes on personal property for 1899, and $42,730.61, county taxes for the year 1899. Of this amount the statement avers that there was paid to the county $61,623.50, leaving yet due $65,037.94. This is the total shortage according to the contention of the appellee. As conceded by all parties, and on the theory adopted by this court in Commonwealth v. Hershey, 200 Pa. 306, an action on the same treasurer’s state bond, this sum represents two funds, $43,096.64, state taxes, and $21,941.30, county taxes. The default of the treasurer to the county is, therefore, by the appellee’s own figures only $21,941.30, instead of $54,371.51, the amount declared by the court below to be due from the sureties on the bond and for which the court entered a judgment against them.

Commonwealth v. Hershey, supra, was an action brought for the use of Lancaster county against this same treasurer and his sureties on the state bond to recover that part of the deficit of $65,037.94 due the state and which the county had to pay. The same trial judge tried both cases, and in Commonwealth v. Hershey gave judgment in the action on the state bond for $44,072.94, the amount shown above as the state’s share of the total deficiency. This court held that as three fourths of the $83,930.83 was required to be returned to the county by the state treasurer, there was but one fourth of that sum, $21,612.18, lost to the state by the defaulting of the officer, and the proportionate share of that sum, to wit: $10,666.43, could be recovered from the sureties on the state bond. In this case the trial judge erroneously concluded that as the total shortage was $65,037.94, and this court had held that but $10,666.43 belonged to the state, the residue of the total deficiency was due the county from the treasurer, and that, therefore, the sureties on the county bond were liable for that sum. The trial judge misapplied Commonwealth v. Hershey, and consequently brought about an erroneous conclusion. That *366case did not determine the rights or liabilities of the sureties on the respective bonds, as is distinctly stated in the opinion where it is said: “We are not adjusting the equities between the sureties on the county bond and those on the state bond, but dealing only with the strict rights of the parties to this action.”

Believing that the position taken by the majority of the court is in direct conflict with all prior rulings of this court, and that the decision will unsettle the well established practice of more than half a century in the audit and adjustment of the accounts of state and county officers by the controllers and auditors of the state, I have felt justified in citing the authorities bearing on the question raised on the appeal and in stating at some lengths the reasons why the judgment of the court below should be reversed.

I am authorized to say that Justice Potter joins in this opinion and dissent.