
    New Amsterdam Casualty Co. v. City of Norwalk et al.
    
      Municipal corporations — Sale of bonds — Duty of treasurer to receive payment and issue receipt — Liability of treasurer’s surety — Bonds delivered, receipt issued, but worthless checks accepted, »
    1. A city’s offer to sell its bonds having been accepted by a purchaser, there is a debt due the city from such purchaser, and the treasurer having undertaken to collect it, it is his duty to demand and receive proper payment, and the giving of a receipt for payment is one of the ordinary duties of the treasurer.
    2. Where, in such case, the checks in payment of the bonds are given to the city auditor, the treasurer, by giving his receipt therefor without demanding the money and by permitting the auditor to receive and hold the checks instead of money, thereby adopts the acts of the auditor in accepting the checks in payment of the bonds,' and the holding of the checks by the auditor becomes the treasurer’s holding, and the latter’s failure to account for the funds because of the checks being worthless renders his bondsmen liable.
    [1] Municipal Corporations, 28 Cyc. p. 1597 (Anno-); [2] Id. p. 475 (Anno.).
    (Decided June 8, 1925.)
    Error: Court of Appeals for Huron county.
    
      Messrs. Denman, Wilson, Miller & Wall, for plaintiff in error.
    
      Mr. Chdrles Ruhr, city solicitor, and Mr. G. Ray Craig, for defendant in error city of Norwalk.
    
      Messrs. Rowley & Carpenter, for defendant in error Terry.
   Washburn, J.

In 1923 the city of Norwalk, a non-charter city, by legislation duly passed and proceedings duly had, offered certain bonds of the city for sale, and one H. B. Bennet, doing business as H.. B. Bennet & Co., filed with the city auditor, L. Snook, who was also clerk of the city council, a written proposal to pay the city a certain sum for the bonds, which proposal was later duly accepted, and the bonds, which were payable to bearer, were duly signed by the proper officials of the city and the seal of the city placed thereon, and were ready for delivery upon the payment of the price bid.

On the same day the purchaser appeared in Nor-walk with a receipt for the treasurer of the city, A. B. Terry, to sign, showing that the bonds had been “paid for by the purchasers thereof in full.” Said purchaser then made out and signed checks payable to the city for the purchase price of the bonds and gave the same to the auditor and clerk.

After the bonds were signed by Mr. Leylin, the mayor, in the presence of said purchaser and auditor Snook, the purchaser took possession of the bonds and he and Snook went to the residence of the treasurer, A. B. Terry. The bonds were either left in the purchaser’s car, in his grip, or were taken with them into the treasurer’s residence, but the treasurer did not see them, or have them in his possession. The treasurer, without seeing the checks given for the bonds, but supposing them to be genuine and good, signed the receipt, which is as follows:

“Squire, Sanders & Dempsey,

‘ ‘ Cleveland.

“Treasurer’s Receipt.

“I, A. B. Terry, Treasurer of the City of Nor-walk, Huron County, Ohio, do hereby certify that an issue of. Bonds of the said City of Norwalk dated as of the 1st day of June, 1922, aggregating in amount $53,720, numbered from one to fifty-three inclusive and issued for the purpose of paying for the city’s portion of paving of East and West Main Street has been taken up and paid for by the purchasers thereof in full accordance with the terms of the contract therefor, at a price not less than par and accrued interest.

“In witness whereof I have hereunto set my hand at Norwalk, Ohio, this 18th day of April, 1923.

“(Signed) A. B. Terry,

* * T T QQjS'WT

“(Seal of the City of Norwalk.)”

Said purchaser then took possession of the receipt and the next day delivered the bonds and receipt, with a transcript of the proceedings relative to issuance of the bonds, to a bona fide purchaser from him of said bonds, received full value therefor, and left for parts unknown.. The checks which he gave were worthless.

This suit was begun by the city to recover on the bond of the treasurer, and upon the trial, after all of the evidence had been introduced, the court directed a verdict in favor of the city and against the treasurer and his bondsman.

The condition of said bond is as follows:

“The Condition of the Foregoing Obligation Is Such, That, Whereas, the said Alvin B. Terry was on the Eighth Day of November, 1921, elected to the office of City Treasurer for the term of two years, beginning January 1, 1922, and ending December 31, 1923.

“Now, Therefore, if the said Alvin B. Terry during the said term of office shall well and truly perform the duties thereof, and account to the said City of Norwalk, for all money and property coming into his hands as such Treasurer, then this obligation shall be void, otherwise to be and remain in full force and effect.”

It is contended in this court that the judgment is erroneous because the signing of the receipt was not an official act of the treasurer; that it was not an act which he was required by law to do and therefore not within the terms of the bond.

We hold that said proposal of said purchaser having been accepted, there was a “debt due” the city from said purchaser, and that under the statutes of Ohio, the treasurer having undertaken the collection of the same, it was the duty of said treasurer to “demand and receive” proper payment of the same and to keep an accurate account thereof (Sections 4294, 4297, 4298 and 4300, General Code), and that his giving a receipt therefor was one of the “ordinary duties of such” treasurer. (Section 4297, General Code.) When the treasurer gave his receipt, without demanding the money represented thereby, and permitted the auditor to receive and hold the checks instead of the money, in payment for the bonds, the treasurer thereby adopted the acts of the auditor as his acts in receiving the checks in payment for the bonds, and the holding of said checks by said auditor became his holding, therefore the acts of the treasurer were within the scope of his bond, and having receipted for the funds it was the treasurer’s duty to account for the same, and having failed to do so, or establish that the city was not entitled to the funds, he and his bondsman were liable on the bond.

The treasurer’s claim that the acts of other officials of the city contributed to cause the loss to the city, or that said purchaser would have been successful in defrauding the city even if the treasurer had not committed the acts complained of, did not present a defense embracing an issue which under the record in this case he was entitled to have submitted to a jury.

What did happen and not what might have happened fixes the liability of the parties. Under the evidence in this case the potency of the acts of the treasurer as a contributing cause of the loss to the city is apparent, and reasonable minds cannot differ in reference thereto.

Judgment affirmed.,

Pardee, P. J., and Punk, J., concur.

Judges of the Ninth Appellate District, sitting in place of Judges Richards, Williams and Young, of the Sixth Appellate District.  