State, use Lafayette County v. Hall

1. Equity Jurisdiction. Enforeiny statutory penalties. Full relief. While courts of equity refuse to enforce penalties growing out of private contracts, they will, in proper cases, enforce statutory penalties, as where, having jurisdiction for one purpose, the enforcement of such penalty is necessary to full relief. 2. Same. Treasurer’s bond. Reformation. Decree for penalty. Code 1880, §375. Where the chancery court exercises its jurisdiction to reform a general bond of a defaulting county treasurer, and, according to the intent of the parties, decrees that it shall also stand as a bond for school-funds, it should then treat it just as if originally executed as a bond for school-funds, and a decree thereon against the treasurer and his sureties should include the penalty provided for by ? 375, code 1880, and be for double the deficit.

From the chancery court of Lafayette county. Hon. B. T. Kimbrough, Chancellor. The bill in this case was filed by the state in behalf of Lafayette county against ,J. M. Hall, former treasurer of said county, and the sureties on his bonds, executed as such for two successive terms of office. The jurisdiction of the chancery court was invoked to reform the bond, which was, in form, a general bond, so as to include the school-funds within its protection, this being the intention of the parties. The court decreed a reformation of the bonds, and an accounting, and from this decree an appeal was granted to this court to settle the principles of the cause. The decree of the chancery court was affirmed, and the cause remanded for further proceedings. The case, as reported on that appeal, contains a full statement of the facts. See Hall v. Lafayette Co., 69 Miss., 529. On the return of the ease to the chancery court, an account was taken, and the amount of the defalcation found to be $4,232.67. Thereupon, complainant demanded a. decree, under § 375, code 1880, for double the deficit, with interest on the whole from the date of the expiration of the last term of office of said treasurer. The court refused to enforce the penalty, but rendered a decree for the amount of the deficit, with interest. Complainant appeals. The refusal to render a decree for the prescribed penalty presents the only question involved. 1. There is nothing in the contention that this is not a suit on the bond, but one based upou general principles of equity, without any decree reforming the bond. The final decree was for reformation of the bond, and the whole purpose of the suit is to recover on the .bond as reformed. ' Hall v. Lafayette Co., 69 Miss., 529. The penalty prescribed by § 375, code 1880, is against the treasurer and his sureties. In this it is different from § 369, which provides a forfeiture against the treasurer personally. Hence, State v. Baker, 47 Miss., 88, does not apply. 2. The rule that equity never enforces a penalty or forfeiture does not apply where a court of equity has jurisdiction for other purposes, and enforces a penalty that is necessary to full relief. Even a court of equity will not set itself above the will of the sovereign as expressed in legislation, but will enforce statutory penalties. • The authorities cited by appellee do not contravene this rule. It will be found that the forfeitures which coui’ts of equity have refused to enforce are those arising out of private contracts. See Clark v. Barnard, 108 U. S., 436. This suit was brought since the adoption of the constitution of 1890, which, by § 161, gives the chancery court concurrent jurisdiction over suits on officers’ bonds. The general doctrine that equity abhors penalties does not apply where the penalty is imposed by statute. Courts of equity will not impede the assertion of a legislative enactment in furtherance of public policy, nor sit in judgment on the wisdom of the legislature. I admit that penalties are not, ordinarily, collectible by decrees in equity, but a strictly legal remedy will often be worked out by equity courts where there is some other distinct equity that has given the court jurisdiction. That is the case here. Clark v. Barnard, 108 U. S., 436. The court below proceeded upon a misapplication of a mere remark of this court in State v. Baker, 47 Miss., 88, holding that this case was within the reason of the statute, but not within its letter, since there had not been an actual manual execution of a school-fund bond. I submit that when the bond was reformed, it was given the same value and potency as if originally executed according to the intent of the parties. Otherwise, this 'question, which was intended to be laid at rest by this court in its former decision, is still unsettled. Unless the bond is given the force of a school-fund bond, we will have an anomalous instrument — one that, by the decree of the-court, will have an effect different from that intended by any of the parties — namely, a bond reformed so as to include the school-fund, but not to include the sanctions provided by law for the protection of the fund against embezzlement. 3 Pom. Eq. Jur., §§ 1375, 1376. I. It is true, the appellees have been held liable in equity, but the recovery is not on the school-bond. The court did not reform the general bond, but held the sureties liable upon principles of equity. It is not, technically, a recovery upon a bond, but a recovery according to the intent of the parties. See Hall v. Lafayette County, 69 Miss., 529. Section 375, code 1880, makes the treasurer and the sureties liable in a suit upon his bond. The statute is penal, and must be re-, striated to suits at law. It cannot apply to cases not plainly within its meaning and letter, Johnson v, State, 63 Miss., 2g§, 2. It is a universal rule that equity will not enforce a penalty or forfeiture. 2 Story, Eq., § 1319; Livingston v. Tompkins, 4 Johns. Oh., 431. The authorities concur that, even where a court of equity will not set aside a forfeiture, it will not lend its aid to enforce it. Leading Cases in Equity (White & Tudor), 2048; Atlas v. Bank, 3 Mete., 581; 34 Mich., 138 ; 1 Douglas, 527 ; 7 Paige, 351; 40 N. H., 530 ; 31 Conn., 468; 39 Wis., 353; 12 P. E. Smith, 28; 7 lb., 65. The question of the enforcement of a penalty by equity was not considered in Clark v. Barnard, 108 U. S., 436. Relief against a penalty is one thing and the enforcement of a penalty quite another. There is-no conceivable difference between a statutory penalty and a penalty by agreement. In Atlas v. Bank, supra, the penalty was statutory.