This is one of eight suits brought by the County Commissioners of Harford County against William J. Shanahan, a former treasurer of that county, and the United States Fidelity and Guaranty Company, the surety upon his official bond as such treasurer. By the local law of Harford County, the county treasurer is elected by the voters of the county for a term of four years. He is not, as is often the case, an appointee of the County Commissioners. He is required to give bond annually.
William J. Shanahan was first elected treasurer in 1909, and upon the expiration of his term was elected for a second term in 1913. He gave bond annually as required by the statute, and it is upon his bond for the year 1914 that this suit was brought. The case was first argued at the April Term, 1922, and later, upon a motion filed on behalf of the appellee, a reargument was granted on account of the importance of the questions involved, and it was felt best that it should be passed on by a full bench. This re-argument took place at the October Term, 1922. The case has thus been twice considered.
There were twenty-six exceptions contained in the record, but it will not be necessary to pass upon these singly, as many of them present the same identical question, having been first raised upon a question of the admissibility of evidence, and again presented by one or more of the prayers offered in the case.
Before taking up the matter in detail, it is well to have clearly in mind the law which is involved and which must necessarily be controlling of the case.
The local law of Harford County was codified by the Act of 1916, chapter 680. The most important provision involved in this case is but a repetition totidem verbis of the Act of 1912, chapter 128, section 262-J, which is reproduced in the Act of 1916 as section 475. That section reads as follows: *Page 626
"262-J. The said treasurer shall, at the expiration of his term of office, make a full statement with the county commissioners of all county taxes placed in his hands for collection and all erroneous and insolvent tax bills for which he shall claim a credit shall be presented to said county commissioners before or at the time above specified for said final settlement, and in no case shall said county commissioners allow a credit for erroneous or insolvent tax bills, unless satisfactory proof be produced, under oath, that said bills cannot be collected; and the said treasurer is required to enforce payment of taxes by sale, as herein provided of all property upon which taxes are in arrears, as soon as he is empowered so to do, and upon his retirement from office he is directed and required to deliver to his successor all office books and papers and all balances of taxes due upon the levies for which he is charged, including all cash in his hands as treasurer, whether from taxes, the proceeds of sale of property of delinquent taxpayers or from any other source; and also to deliver to him all proceedings had for the enforcement of the payment of said taxes, and the successor of a deceased or retiring treasurer is empowered and required to collect and enforce the payment of said taxes, as herein provided; and in all cases where a treasurer has taken steps for the enforcement of the payment of said taxes, and shall retire or die before the collection of said taxes, or before said proceedings are completed, his successor is empowered and required to continue and complete said proceedings for the enforcement of the payment of said taxes, and so collect the same; and is hereby clothed with all the power and authority in law had by the retiring treasurer during his term of office for that purpose."
It will be observed that one peculiarity of the situation is, that the treasurer, who is elected for four years and who is required to give a new bond each year, is not, by the terms *Page 627 of the act, required to render to the County Commissioners a "full statement" of all county taxes placed in his hands for collection until the close of his term. Therefore the present suit is upon a bond which covers only the first year of his last term as county treasurer. Some confusion may be avoided by keeping this fact clearly in mind in considering the testimony which was offered in the case, and in the next place, that the act did not contemplate that he would collect during the year the entire amount of the levy placed in his hands for any one year, for on his retirement from office he is directed and required to deliver to his successor all balances of taxes due upon the levies for which he is charged, and the successor is empowered and required to collect and enforce the payment of said taxes.
The first question presented by this appeal was raised by a demurrer to the declaration, and the ground of it seems to have been as to the form of the suit. As entitled, it was the State of Maryland to the use of the County Commissioners of Harford County, plaintiff. This form of suit has been approved in such cases as Ing v. State, use of Lewis, 8 Md. 287; Logan v.State, use of Nesbitt, 39 Md. 177; Le Strange v. State, useof Roche, 58 Md. 26, and in overruling the demurrer the trial court was entirely correct.
The plaintiff also demurred to the eighth plea of the defendants, which was in the nature of a plea of accord and satisfaction, and this demurrer was sustained by the Circuit Court for Baltimore County when the case was tried, and the same question was subsequently raised a number of times in objections to offers of evidence or to the prayers, and the trial court acted with entire consistency whenever this question was raised.
The objection to the plea, and to the offers of evidence and to the prayers which related to the question of accord and satisfaction, was originally upon the ground that if the County Commissioners of Harford County had done anything of this nature, the act was ultra vires, and therefore *Page 628 null and void. Later on the plaintiff's counsel suggested another ground, namely, that inasmuch as a portion of the duties of the treasurer required him to collect State taxes as well as county taxes, the County Commissioners had no power to compromise or settle any suit because of its bearing upon the State taxes.
The original claim of the County Commissioners against Mr. Shanahan was of a twofold nature. First, that he had not properly accounted for and paid over the moneys collected by him as taxes; and, second, that he had been derelict in his duty by failing to collect a portion of the taxes which appeared on the levy list that had been placed in his hands at the beginning of each year of his incumbency of the treasurership of Harford County.
The plea of accord and satisfaction, apparently, and the facts which gave rise to it, was confined to the matter of the discrepancy in the cash, and in no way related to the other branch of the claim. A number of the witnesses examined were more or less expert accountants, but their evidence dealt mainly with a shortage in the cash received by Mr. Shanahan in the payment of taxes. In his testimony, Mr. Shanahan uses language which is susceptible of the construction that it covered both. As when he testified that "the commissioners said that if I would settle up this report and these figures that had been hanging fire between them and I during the month, they would consider it a final settlement."
In this condition, and for reasons which will appear in a moment, the trial court erred in sustaining the demurrer to the plea and in its subsequent rulings involving the same question. It is urged that the duties and powers of county commissioners and those occupying similar positions were limited by the terms of the act which created them, and that they could have no power unless it was clearly expressed in the legislative enactment, and there are many of the early cases which sustain this view. But, as it became apparent that in many instances great hardship resulted, there arose a *Page 629 disposition to recognize such bodies as possessing certain implied powers, and this idea of implied powers has added somewhat to the confusion of the law upon the subject, and is a matter to be jealously watched because of the liability to grave abuse. This Court has been extremely reluctant to give its sanction or recognition to the doctrine of implied powers, but in a case like the present, it would have been perfectly easy, by indirection, to accomplish all that was accomplished by an accord and satisfaction. For example, if the County Commissioners and Mr. Shanahan and his bondsmen had agreed that a judgment should be entered against him in this suit for a certain amount, and a jury had been impaneled and been told to render a verdict for that sum, and the judgment entered accordingly, the result would have been the same, and the end would have been accomplished by indirection. No good reason appears why parties should be driven to concealing what they are doing in adjusting claims against one another, when the same end can be accomplished without concealment by an application of the doctrine of implied powers. Nor has the argument that the County Commissioners are without power to settle a claim for taxes, because a portion of the taxes to be collected belonged to the State and not to the county, of any controlling force. This necessarily follows from the power given to the County Commissioners, upon its being satisfied of the insolvency of a taxpayer, to strike off the list of taxpayers such individual or corporation, even though a portion of the taxes which the citizen is expected to pay would belong to the State of Maryland, and to say that in one case bodies such as the County Commissioners are fully authorized to abate the taxes payable by one individual, but not to abate those payable by another, demonstrates the fallacy of this contention. This same argument was urged in the case of Blundon v. Crosier,93 Md. 355, when the question was one of the power of county commissioners with regard to the selection of certain roads. This Court held that the only question so raised was *Page 630 one of the good faith of the county officials and there applied the doctrine of implied powers.
This brings us to the question of the duty which is owed by the county treasurer by virtue of his office. There are many cases, both in this state and elsewhere, which prescribe with more or less clearness the duties of such an official as a county treasurer, but nowhere is it more clearly defined than in the case of United States v. Thomas, 15 Wall. 337, which opinion was written by JUSTICE BRADLEY, and in it he lays down the rule that "a collector of public moneys is a bailee and only bound to due diligence and only liable for negligence or dishonesty. * * * The measure of his accountability is to be found in the official bond." This decision is in accord with Colerain v. Bell, 9 Metc. (Mass.) 499. In Olean v. King, 116 N.Y. 355, the collector and his bond were held liable because of the fact that he rendered no account whatever of uncollected taxes, and the case of Supervisors v. Otis, 62 N.Y. 88, follows the same rule as did JUSTICE BRADLEY in United States v. Thomas,supra.
Looking now to the measure of accountability as fixed by the bond of Mr. Shanahan, which in the last analysis must be taken as affording the measure of liability, the language of the bond is as follows:
"Now, therefore, the condition of this obligation is such, that if the said William J. Shanahan shall well and faithfully for the term of one year beginning the first day of May, 1914, execute and perform the duties required of him by the laws of the State of Maryland, local and general, as treasurer of Harford County as aforesaid, and shall well and truly collect and legally disburse, pay over and account for all moneys that shall be legally collectible and payable or to be accounted for by him as treasurer as aforesaid, including all moneys and funds that shall come into his hands or possession from any source whatever belonging or payable to Harford County, and keep the records and vouchers thereof, and shall in all things execute *Page 631 the said office of treasurer of Harford County, according to the act or acts of the General Assembly of Maryland, local or general, applicable to said office, for and during the term of one year from the first day of May, 1914."
The use by JUSTICE BRADLEY of the term "bailee" has given rise to some criticism. A collector of public moneys is sometimes described as a "special bailee," while some of the cases decline to regard him as being in the position of a bailee at all, especially when the bond is that of a public official, charged with the handling of public moneys.
The reading of the condition of the bond has been given because some of the cases, notably the earlier ones, tend to treat an official in such a position as Mr. Shanahan occupied as an insurer of all lists or accounts given to him. The use, in the condition of the bond, of the phrase "legally collectible" has been the subject of some misapprehension. Thus some cases regard everything as legally collectible, meaning thereby that it would be entirely lawful to collect it; while in other cases the construction placed upon such language is that a particular item or items shall be collectible by process of law. To adopt the first construction would make a collector of taxes an insurer of bills placed in his hands, irrespective of whether there was any property whatever within the reach of legal process, out of which collection could be made. By the other interpretation a much wider latitude is given to the collector.
It is, of course, perfectly evident that a collector may be liable for taxes which he never collects, where the failure to collect was due to some omission or act of negligence upon his part, and yet if the property upon which the tax is placed has disappeared or ceased to exist, it is equally clear that the tax, and the remedies provided by statute for its collection, can produce nothing, and to hold him and his bond to the payment of these, would place him at once in the position of an insurer. *Page 632
The uncollected items of taxes, to recover which this suit is brought, may in general be said to be made up as follows:
Taxes levied upon personal property such as stock held in a corporation. If now before the tax bills ever reach the hands of the collector, the corporation has ceased to exist or been dissolved, the tax cannot be said to be legally collectible. In the case of chattels, they may have been entirely consumed, or have disappeared before the bills for the tax upon them ever reaches the hands of the collector, and the same is true in such cases as in the case of corporations just mentioned. It has further been held by this Court that where property is under the control and jurisdiction of the court, the tax collector has no power to seize and sell the same, or any part thereof, for taxes which may be due. Prince George's County v. Clark Berry,36 Md. 206; Hebb v. Moore, 66 Md. 169; Degner v. Baltimore,74 Md. 144; Blakistone v. State, 117 Md. 237. Therefore any taxes of this nature may not be legally collectible during the period fixed by law within which the collector shall perform his duties.
There seems to have been some feeling between Mr. Shanahan and the County Commissioners, and each was following what they believed to be the custom of the office in dealing with such matters, rather than observing strictly the provisions of law. Thus the statute already quoted, section 262-J, provides that in the final settlement of accounts the treasurer shall not be allowed credit for uncollected bills unless "satisfactory proof be produced under oath that said bills cannot be collected." What was done, as testified to by Mr. Norris, one of the County Commissioners, was that the treasurer presented to the County Commissioners the list of uncollected taxes, and each member of the County Commissioners made a copy of the names of those who lived in his own district, and if he was satisfied from his investigation that the taxes were in fact uncollectible, he so reported and the allowance was made irrespective of any oath being made by him or any one else, and this evidence is confirmed by that of Mr. Shanahan when *Page 633 he says: "Each commissioner would go over that list and what they knew personally they would mark off and issue insolvency for, and included in that list was a list of all items that were in court and trustees' hands and which I could not advertise."
This was manifestly not a strict compliance with the law, that when Mr. Shanahan attempted to settle his final account the County Commissioners "asked him if he was willing to take oath that these uncollected taxes were uncollectible," or, as testified to by another witness, "that he had availed himself of all the means in his power to collect the taxes," and Mr. Shanahan's reply was "No, damned if I will," or, as testified to by another witness, that he said that he would not commit perjury.
When Mr. Shanahan comes to detail the occurrence, he denies that he said that he would not perjure himself, but he inferentially admits the other remark when he says "I might have said it. I said I wouldn't make it."
Mr. Shanahan was also apparently derelict in another respect. The only return which he seems to have made was as of insolvency, but did not return any list either of defunct corporations, chattels no longer in existence, nor on property in custodialegis, nor does it appear that in the case of property incustodia legis he made application to the court under the jurisdiction of which the property was, for leave to sell, or if not granted, for an order which would give him a priority for taxes in the proceeds, the method which was clearly pointed out by JUDGE PEARCE in Blakistone v. State, supra. Apparently all such items were returned by him in his statement of accounts to the County Commissioners under the title of "insolvency." But while there was this technical breach of duty upon his part, it furnished no ground for the refusal of the commissioners to make him an allowance for any proper items.
As already stated, there was error in sustaining the demurrer to the defendants' eighth plea, as, by reason of its *Page 634 two-fold aspect, the question raised by this was one which could only be passed upon by a jury, and that same error makes the ruling of the court with regard to the plaintiff's special exception to the defendants' fifth prayer erroneous.
Four prayers were offered by the plaintiff and six by the defendants, all of which prayers the reporter is requested to insert in the report of this case. The trial court granted all of the plaintiff's prayers and refused all of the defendants'.
The plaintiff's first prayer was very prolix; it involved two possible questions, and as phrased was likely to be construed by a jury as constituting Mr. Shanahan an insurer of the levy given him by the County Commissioners, and so was calculated to mislead the jury, and should have been refused.
The plaintiff's second prayer likewise was based on the theory that the liability of Mr. Shanahan was that of an insurer, and for that reason the prayer should have been refused. The plaintiff's third prayer takes no account either of property incustodia legis or of property which had ceased to exist, and was defective in this respect and should have been refused; and it should also have been refused since it embraces in the one prayer the liability which might arise on the part of Mr. Shanahan and his bondsmen both for cash collected and losses, if any, which might have resulted from a dereliction of duty, and moreover the nature of the liability both of Mr. Shanahan and his bondsmen was, under the phraseology of this prayer, treated as that of insurer of the tax levy placed in his hands.
The fourth prayer of the plaintiff, with regard to ignoring the testimony of Gillespie, was entirely correct under the evidence as given in the case, as his examination of the books had at best been so far from complete, that it had not qualified him to speak as an expert.
The first prayer of the defendants was very nearly a correct statement of the law, but it was defective in one respect. By the use of the word "unless," it was liable to the construction that the burden of proof was on the plaintiff, when in reality *Page 635 it belonged to the defendants to show that he had used due diligence in his endeavor to collect all the taxes set out in the levy delivered to him, and that the failure to collect some of them was not due to any omission or lack of diligence on his part.
The second, third and fourth prayers of the defendants were properly refused. These prayers all dealt in varying phraseology with the relation of Wm. A. Wheeler, the successor of Mr. Shanahan in the office of treasurer, to the unpaid tax bills for the years when Mr. Shanahan held that position. These seem to have been based upon the assumption that, inasmuch as the statute authorized Mr. Wheeler to receive such taxes, a duty was thereby imposed upon him with regard to their collection, and that the effect of this provision was to relieve entirely Mr. Shanahan and his bond of all liability. It is perfectly manifest that, after Mr. Shanahan ceased to be the county treasurer, he had no means at his command by which to enforce the payment of taxes due for the years when he had been county treasurer which he had not collected, but this cannot be carried to the point of saying that he and his bond were relieved of all liability for the non-collection of taxes when that was the result of some dereliction upon his part.
Defendants' fifth prayer deals with matters properly arising under the plea of accord and satisfaction and yet, as expressed, this prayer was not necessarily confined to matters properly to be described under such a title. It was therefore properly refused. With regard to the defendants' sixth prayer, it is perfectly true, as stated therein, that the oath is not necessarily that of the county treasurer. What the statute requires, and all that it requires, is that the claim by which the treasurer shall be released from personal liability shall be under oath. This oath may be that of the treasurer, or of any person sufficiently cognizant of the facts to be able properly to make the oath. The refusal of this prayer, while possibly error, was not of such a serious character as to make it a reversible error. *Page 636
The judgment appealed from will, for the reasons already stated, be reversed, and the case remanded for a new trial.
Judgment reversed and case remanded for a new trial, theappellees to pay the costs.