JAMES H. KERBY and HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation, Appellants,
STATE OF ARIZONA, ex rel. ANA FROHMILLER, State Auditor, Appellee
APPEAL from a judgment of the Superior Court of the County of Maricopa. Gordon Farley, Judge.
Judgment affirmed as modified.
Messrs. Struckmeyer & Struckmeyer, for Appellants.
Mr. Phil J. Munch, for Appellee.
Morgan, J. Stanford, C. J., and LaPrade, J., concur.
[62 Ariz. 297] This is an appeal by defendants from a judgment in favor of plaintiff, State of Arizona ex rel. Ana Frohmiller, State Auditor.
For a proper understanding of the issues it is essential to make some reference to the laws out of the administration of which the litigation arose. The legislature, through chapter 78, Session Laws 1925, placed in the secretary of state the administration of, among other things, the issuance of certificates of title and drivers' permits for motor vehicles. All fees received were to go directly to the secretary of state. All expenses incurred were to be paid by him and the balances remitted to the state treasurer. Section 19 of [62 Ariz. 298] the act provided: "The Secretary of State is hereby given power to incur any additional expense in the enforcement of this Act."
Section 20 provided: "The Secretary of State shall pay out of said fund all expenses which may be incurred in the enforcement and carrying out of the provisions of this Act; to pay for the printing of this Act, and the preparation and printing of the prescribed forms, together with the cost of postage, mailing and other necessary expenses, equipment, clerical and other employees."
This act was approved March 19, 1925, and became effective June 14th of that year. At the fourth special session of the eighth legislature the Highway Code for Arizona was enacted and appears as chapter 2 of the Special Session Laws, 1927. The act was passed with an emergency and became effective on the date of its approval, August 11, 1927. By the terms of this act, the highway commission was required to appoint a highway engineer and within ten days after his appointment and qualification the engineer was required to make a
demand on the secretary of state for the records and other data relating to the registration of motor vehicles, issuance of certificates of title, etc. It was provided that the engineer must be appointed within thirty days.
The admitted facts are: The defendant, Kerby, was the duly elected, qualified and acting secretary of state for the years 1925, 1926 and 1927. Demand was made by the engineer upon him on August 27, 1927, for the books, property and records, in accordance with the terms of the code. A question having arisen as to the validity of the repeal of the former act, the interested parties agreed that Kerby should continue administering the act until the question was settled. During the period from August 17th to the 28th day of October, [62 Ariz. 299] 1927, he continued in the administration of the Motor Vehicle Registration Act.
The defendant indemnity company executed a $ 10,000 bond for the faithful performance of Kerby's official duties and the payment of all moneys which might come to his hands as secretary of state, for the term beginning the 5th day of January, 1925, and ending on the first Monday of January, 1927. A like bond was executed by the defendant indemnity company for the period beginning the 3d day of January, 1927, and ending on the 7th day of January, 1929. These bonds were duly approved and filed.
About the 27th day of November, 1925, defendant Kerby expended and paid out of the funds in his possession collected by him under the terms of this act, the sum of $ 6,053.59 for 200,000 copper license tags. These tags bore on one side the words "If found return to James H. Kerby, Secretary of State," and on the reverse side the words "Operator's License." They were generally distributed throughout the state. Between the 11th day of August and the 17th day of October, 1927, he expended and paid out of the fees aforesaid, $ 1,375 for an audit of the books pertaining to his administration of the act, $ 3,035.85 for printing copies thereof, and $ 765 for envelopes for mailing same. On September 12, 1927, he paid out of said fund the sum of $ 178.68 for traveling expenses to attend the National Secretary of States' conference at Sacramento, California, on September 8th and 9th. On October 17, 1927, he paid out of such funds to himself for traveling expenses within the state of Arizona, during September and October, the sum of $ 176.10. The audit was deemed necessary by Kerby for the protection of public officers concerned with the enforcement of the law. It was approved by the then governor of Arizona. A copy of the audit was delivered to the state highway department, with all records, on the 28th day of October, [62 Ariz. 300] and on or about the same day copies were delivered to all other officials interested in the administration of the Motor Vehicle Registration Act.
The plaintiff, Frohmiller, took office as state auditor on the first Monday in January, 1927, and has since continued in that office. All the records of the defendant Kerby relating to receipts and disbursements by him in the administration of the Motor Vehicle Registration Act have at all times since about the 28th day of October, 1927, been available to the state auditor. The validity and correctness of the receipts and expenditures were never judicially questioned until the institution of this action in the year 1940. At the time of the transfer of the business of the Motor Vehicle Registration Act to the state highway department, and for many years thereafter, Kerby was financially able to meet any demands made upon him in connection with his disbursements under said act. During such period he could have paid any amount that the surety on his bond, the indemnity company, might have been required to pay, if a ...