Inhabitants of Farmington v. Stanley

Official bond. Powers of selectmen. Then- neglect no discharge of sureties. The failure of the selectmen to examine the accounts of a town treasurer, as directed by R. S., c. 6, § 152, will not affect the liability of the sureties upon Ms bond. Nor will a surety be released if the selectmen, failing to detect an error in addition, certify the treasurer’s account to be correct, when, in fact, there is a deficit; even if this certificate be made known to the surety soon after its entry upon the treasurer’s books, and while the treasurer has attachable assets enough to cover the deficit, though he subsequently dies insolvent.

On report. Debt on bond given by Leonard Keith, as treasurer of the town of Farmington, for the year 1863-4, with the defendants as sureties, conditioned that he ‘ shall faithfully discharge all the duties of said office.’ Keith’s actual receipts as treasurer, during the municipal year aforesaid, were $12,320.85 ; but, from an error in adding up the items, the footing up on the books was only $10,230.85, being $2,090 less than the true amount. He credited himself with $8,165.90 paid out for the town and with a balance in the treasury March 4,1864, carried to his next account, of $2,064.95, making $10,230.85, balancing his apparent indebtedness as shown by the false addition. The selectmen, on March 4, 1864, not knowing or discovering this error in addition, certified that they had examined the accounts, and that they ‘ finding the same correct, allow the same,’ which certificate was entered upon the treasurer’s book, and soon afterward seen by Stanley, one of the sureties. At that time Keith had a large stock of goods exposed to attachment, amply sufficient to secure Stanley had he then known of the defalcation, which was not discovered till after Keith had died insolvent. The selectmen did not make the quarterly examinations of the treasurer’s accounts required by R. S., c. 6, § 152. Keith was treasurer for several years prior to his death Jan. 22, 1866, and for each year after 1861 there was a defalcation. The plaintiffs claimed that the difference between the amount in the treasury at beginning of the municipal year 1863-4, $1,556.72, and the balance there .at the end of same year, $2,064.95 — being $508.23 — should be added to the $2,090 error in footing, to ascertain the whole amount of his defalcation, making it $2,598.23. Keith, in 1865-6, as treasurer, deposited monies with the Sandy River National Bank, and there was deposited to the credit of the treasurer, at the time of his death, $3,650, which was paid to his successor in office. It was claimed that this sum was derived from the sale of certain bonds of the town, issued in 1865 for a specific purpose, and admitted that $1,000 of it came from this source. After Keith’s death, there was found among his papers evidences of town indebtedness paid by him, after his election as treasurer in 1865, to the amount of $15,519.34, which had not been entered upon the treasurer’s book; but, with the deposit aforesaid, this was allowed upon his liabilities for the years 1865-6, in a settlement made between the selectmen and Keith’s administrator, without the knowledge or consent of the defendants. Some of Keith’s bondsmen for the several years during which defalcations occurred, had deposited with the town treasurer a sum sufficient to pay about forty-five per cent of the defalcation of each year, under an agreement that this was in nowise to operate as a release. The claim .for the $508.23 difference between the amounts in the treasury at the beginning and close of the year, as by the treasurer’s book, is based upon the assumption that there was, in fact, no money in the treasury, of which assumption there is no evidence, but the contrary appears by the treasurer’s books, the correctness of which is certified by the selectmen, and must be considered correct except where proved to be erroneous. The bank deposit was unappropriated funds in Keith’s hands at the time of his death, even if he and the selectmen intended to apply it to the payment of a particular debt. It had not been so applied, but could, have been drawn out by Keith at any time, and applied as he pleased. The application by the selectmen and Keith’s administrator of this deposit, and the $15,519.34 payments made by Keith for the town after March 1, 1865, to the diminution of his liabilities for the year 1865-6, was not consented to by the defendants, and was unauthorized by law, which directs its application to the oldest debt. Milliken v. Tufts, 31 Maine, 49.7; Goss v. Stinson, 3 Sumn. 98; Beadfield v. Shaver, 50 Maine, 37; Parker v. Green, 8 Met. 144; Sandwich v. Pish, 2 Gray, 299. The amount so applied was much larger than the whole indebtment claimed for the four preceding years. The defendants are discharged from liability by the laches of the municipal officers, who did not make the examination required by law, nor kept any account with the treasurer, but settled wholly by his books, which they assumed and certified to be' correct, and allowed his accounts without even verifying the footings. The law requiring examinations was designed to protect the sureties as well as towns; and the former sign the bonds under the implied promise that this duty will be performed, and their interests protected to this extent. The settlement with, and certificate of the selectmen, made March 4, 1864, discharged the sureties. It was notice to them of payment by the principal, which, even if erroneous, will discharge the surety, if by relying upon it he lose the opportunity of securing himself. Baker v. Briggs, 8 Pick. 122; Carpenter v. King, 9 Met. 511; Harris v. Brooks, 21 Pick. 195.