Opinion
No. 20035
Decided May 25, 1927.
Suretyship — Bond voluntarily furnished, although not required by law — Such bond an official bond and surety liable thereon, when — Section 11242, General Code — Signer's obligation primary, where officer did not sign bond, when — Limitation of action — Ten year limitation applies although action against officer barred.
1. Where the state, or a political subdivision of the state, takes from any one an indemnity bond for the faithful performance by an officer of official duty, and such bond is voluntarily given, is based upon a valuable consideration and is not prohibited by law or against public policy, liability of the obligor of such bond upon a breach of its condition is enforceable, notwithstanding the execution of such bond is not required by any statute of the state or by the charter or an ordinance of a municipality.
2. Such a bond is an official bond within the meaning and contemplation of Section 11242, General Code.
3. Where such bond is executed by a bonding company for a valuable consideration, and the form of the instrument and the whole transaction disclose that it was never intended that the officer covered by the bond was to join in its execution or its obligation, the contractual obligation of the signer thereof is primary and not that of a surety.
4. An action on such bond may be instituted at any time within the period of ten years after the cause of action accrues, even though an action against the officer for a breach of the official duty imposed upon him by law has been barred by the statute of limitations applicable to the act constituting such breach.
ERROR to the Court of Appeals of Montgomery county.
On the 28th day of January, 1923, Patrick Roach was a police officer in the city of Dayton. Prior thereto the plaintiff in error entered into an obligation with the city of Dayton, whereby it bound itself to pay the city of Dayton the sum of $600 should Patrick Roach fail to honestly, faithfully, and impartially discharge his duties as a police officer of the city of Dayton. This obligation was in full force on the 28th day of January, 1923. In the early morning of that day Officer Roach and Officer Clark, who were in plain clothes, had an encounter with the defendant in error, in which encounter the defendant in error was injured.
On September 23, 1924, this action was begun against Officer Roach and the plaintiff in error, upon the bond executed by the plaintiff in error to the city of Dayton. To this petition Officer Roach and plaintiff in error filed their several demurrers. The demurrer of Officer Roach to the petition was sustained upon the ground that the petition did not state a cause of action against him. The cause proceeded against the plaintiff in error alone.
By answer, the plaintiff in error admitted the execution of the bond to the city of Dayton; also that Officer Roach, on the 28th day of January, 1923, was a policeman, in the employ of such city; that Officer Roach was acting within the scope of his employment when the injury to the defendant in error occurred; and denied the other averments of the petition.
The evidence disclosed that the bond executed by the plaintiff in error was an "omnibus" bond, covering many of the officers of the city of Dayton, and reading as follows:
"Maryland Casualty Company, Baltimore.
"Know all men by these presents: That the Maryland Casualty Company, having its principal office in the city of Baltimore, Maryland (hereinafter called the company), is held and firmly bound unto the city of Dayton, state of Ohio (hereinafter called the obligee), in such specific sums as may be set forth in the schedule attached hereto and placed opposite the names of the officials named in said schedule, which schedule is hereby referred to and made a part hereof, or in such specific sums as may be hereafter set forth in the said schedule and placed opposite the names of the officials added to the said schedule, as hereinafter provided for, the payment of which the company binds itself, its successors and assigns firmly by these presents.
"Dated this 1st day of August, 1922.
"Whereas, sundry persons have been appointed to positions set forth in the said schedule, and others may be substituted for them, or some of them, in the manner hereinafter provided, all of whom are hereinafter called officials:
"Now, therefore, the conditions of this obligation is such that if the said official shall honestly, faithfully, and impartially discharge the duties of their several offices, then this obligation shall be void; otherwise it shall remain in full force and virtue.
"It is further understood and agreed as follows:
"First. That the obligee may at any time while this bond is in force remove from the said schedule the names of any officials or add to the said schedule the names of any other officials, or increase or decrease the amount of insurance in the case of any official, provided that, in the case of any official being added to said schedule, the obligee shall notify the company in writing within sixty (60) days from the date of such addition, and, or in the case of any increase in the amount of insurance for any official, within thirty (30) days from the date of such increase, and the company shall be bound as of the date of such addition or such increase up to the total amount of twenty thousand dollars ($20,000.00) for any one official.
"Second. In the case of any addition or increase as hereinabove provided, the company may, within thirty (30) days after receipt of notice thereof, advise the obligee in writing of its refusal so to be bound, in which event the company shall not be bound from the date it so notifies the obligee. Upon the removal or addition of the name of any official, or the increasing or decreasing of the amount of insurance in the case of any official as herein provided, a prorate adjustment of the premium as herein provided shall be made.
"Third. This bond shall extend to cover the action of the bonded officials in any position or in any location in the service of the obligee subject to the limit of insurance hereinbefore provided, and the obligee may, without notice to the company, shift the officials named in the schedule from place to place and from position to position, or employment to employment, as well as increase or restrict their duties, or change their positions, without in any way affecting the liability of the company hereunder.
"Fourth. The company may at any time cancel this bond as an entirety, or as to any official covered hereunder, by giving thirty (30) days' notice in writing, mailed or delivered to the obligee, and the obligee may at any time cancel this bond by notice in writing, mailed or delivered to the company at its home office in Baltimore City, specifying the effective date thereafter of such cancellation. Upon cancellation of this bond by either party, the prorate unearned portion of the premium shall be returned to the obligee.
"The company's total liability under this bond or any bond issued in lieu thereof on any one official in either the original or increased or decreased amount, is not to exceed the largest single amount set opposite the name of the official.
"In witness whereof, the company has caused this instrument to be signed by its vice president and its corporate seal to be hereto affixed by its assistant secretary, the day and year above mentioned. [Signed] The Maryland Casualty Co., E. Bond, Vice President, W.F. Harper, Assistant Secretary. Approved as to form, J.H. Harshman, City Attorney."
The bond contained a schedule of the various officers covered and the extent of the liability as to each officer. The name of Officer Roach appeared in the schedule, and the extent of liability as to him was $600.
The plaintiff in error, by demurrer, by apt motions at proper times, and by exceptions, preserved the questions here presented throughout the proceedings in the trial court.
A verdict was returned for the defendant in error in the full amount of the coverage of the bond; judgment was entered upon the verdict; motion for new trial was made and overruled; and error prosecuted to the Court of Appeals where the judgment of the lower court was affirmed. Error is prosecuted here to reverse the judgment of the Court of Appeals.
Messrs. McMahon, Corwin, Landis Markham, for plaintiff in error.
Mr. Joseph W. Sharts and Mr. Drewey H. Wysong, for defendant in error.
Two questions are presented here:
(1) Is a bond such as here under consideration one upon which the obligor may be compelled to respond in an action by the person injured by the malfeasance of a police officer, upon the faithfulness of whose conduct the bond is conditioned, or does the bond run only to the benefit of the obligee named therein, the city of Dayton?
(2) Is an action upon such bond barred by the provisions of Section 11225, General Code, after one year from the date the cause of action accrued?
We are not advised, either by the pleadings or by the evidence, of the existence of a provision in the charter of the city of Dayton, or of the enactment of an ordinance by the city, requiring its police officers to execute or furnish an official bond. Neither this court nor the courts below could take judicial notice of the existence of such a provision. We are advised by the evidence in this case that it was the practice of the city of Dayton to have its police officers file an application for an indemnity bond, and that it was the practice of the city of Dayton to cover all such officials by an omnibus bond, for which it paid; that such bonds had for a period of years been furnished by the plaintiff in error, and that the contract therefor had been awarded by a public letting, after advertisement, and that the plaintiff in error was the best bidder; that the signatures of its police officers were not required or obtained to such bond, and that by agreement between the city and the plaintiff in error such officers were covered by such bond, and the amount of coverage for each was indicated only by a schedule attached to the bond; that the schedule contained the name of Officer Roach, and liability for unfaithful performance by him of his duty as a police officer was indicated to the extent of $600.
While there was no issue of want of consideration made by the pleadings, the record discloses that the city of Dayton paid to the plaintiff in error the sum of $3 on account of the name of Officer Roach appearing in the schedule and the coverage of $600. Whether the plaintiff in error exacted and received an annual payment of that sum on account of Officer Roach, or whether that sum constituted payment for the period of his employment, the record does not disclose. While the plaintiff in error in its bond refers to the policemen as officials, and to their positions as officers, and the trial was had apparently upon the theory that the bond was authorized either by the charter or by an ordinance of the city of Dayton, we cannot assume that to be a fact which the record does not disclose, but are compelled to treat the bond as though issued without authority of any provision of the charter or act of the legislative body of the city, which necessarily adds to this case a complication which, by a reasonable degree of painstaking in the trial of the case, might well have been obviated.
In the case of Ahsmuhs v. Bowyer, 39 Okl., 376, 135 P. 413, 50 L.R.A., (N.S.), 1060, the Supreme Court of Oklahoma held:
"A bond, voluntarily given by a district court clerk prior to the passage of the Act of March 19, 1910 [Laws 1919, c. 69], naming the state of Oklahoma as obligee, conditioned for the faithful performance of his official acts, and for the accounting and paying over of all moneys by him received as such officer, is a valid and binding obligation, though not required to be given by statute, where supported by a valid consideration."
Upon the authority of that case and the authorities therein and in the footnotes thereto cited, we hold that the bond of the plaintiff in error to the city of Dayton, in the absence of proof that it was required by the charter or an ordinance of the city, is a common-law bond for a consideration, and enforceable against the plaintiff in error; and, while it is not, in the absence of such proof, strictly speaking, an official bond, it having been executed for such purpose, it comes within the meaning and contemplation of the provisions of Section 11242, General Code, and inures to the benefit of any person who has been injured by its breach. For, if this bond be not for the benefit of such person, it necessarily is for the benefit of no one, since the city of Dayton could not be held liable for any act of its policemen done in the discharge of official duty.
We will not assume either that the plaintiff in error exacted and received a valuable consideration from the city of Dayton without itself intending to incur some liability, or that the city of Dayton purchased this contract of the plaintiff in error and parted with a valuable consideration therefor without a purpose of receiving some benefit therefrom. We therefore conclude that it not only was the intention of the parties to the contract that the benefit of this contract should inure to any person injured by its breach, but that, being a bond of indemnity for the faithful performance of official duty by an officer, it is an official bond within the meaning and contemplation of Section 11242, General Code, the provisions of which section were ingrafted therein by operation of law.
Since by the form of the contract it is apparent that there never was any intention upon the part of the plaintiff in error to have Officer Roach or any other officer covered by such contract join in the execution thereof, the contractual obligation of the plaintiff in error on the bond was sole and not collateral. It is further apparent that by its contract, executed for a valuable consideration, plaintiff in error agreed with the city to be severally bound in the sum of $600; that the fact that the bond was conditioned upon the faithful performance of official duty by Officer Roach did not create any new or additional obligation on him; that he owed to the plaintiff in error the same duty he owed to the general public, and no more, and owed that duty, not because of the bond, but as an officer, because of his office; that, while the plaintiff in error might have entered into a joint obligation with Officer Roach to the city, and might have required him to assume the obligation of principal therein, and might have limited its liability to that of surety, in which event the liability of Officer Roach under the bond would have continued for nine years after his liability for a violation of his duty imposed by law had been barred by the statute of limitations, yet, had it done so, the extension of the period of the liability of Officer Roach from one year to ten years would in no way have changed the period of liability of the plaintiff in error, and that, while it might have enabled plaintiff in error to recoup from Officer Roach, it was a subject with reference to which plaintiff in error had a right to contract, and, not having done so, it cannot now, to the prejudice of the defendant in error, avail itself of its own failure to so protect itself. This obligation, therefore, does not come within the rule of those cases which declare that there can be no obligation of a surety in the absence of an obligation of the principal upon which to base or found the obligation of the surety.
Having reached this conclusion, it becomes unnecessary to distinguish this case from the case of State, for Use of Com'rs. of Knox County, v. Blake, 2 Ohio St. 147, upon that question, and equally unnecessary to distinguish that case and the cases of State, for Use of Immel's Adm'r., v. Newman's Ex'r., 2 Ohio St. 567, and State for Use of Mount Pleasant Bank, v. Conway, 18 Ohio, 234, from the cases of King, Carey Howe v. Nichols, 16 Ohio St. 80, and State, for Use of Com'rs. of Crawford County, v. Orr, 16 Ohio St. 522. However, in the case of King v. Nichols, supra, this court has itself distinguished those cases; and because Sections 11225 and 11226, General Code, have the same distinguishing language from the act of 1831 (29 Ohio Laws, 214, 215), upon which State v. Conway, State v. Blake, and State v. Newman, all supra, were based, that the Code of 1853 (51 Ohio Laws, 59) had, upon which King v. Nichols and State v. Orr, both supra, were based, we are content with the distinction therein made by this court.
The judgment of the Court of Appeals is affirmed.
Judgment affirmed.
MARSHALL, C.J., DAY, ALLEN, KINKADE, JONES and MATTHIAS, JJ., concur.