157 N.W. 664 | N.D. | 1916
This is an action at law to recover of the treasurer of the Kugby School District and sureties on his official bond, a balance of $2,521 and interest, due the district from the defunct Eirst National Bank of Bugby. That institution failed holding a deposit of school moneys of $4,260 of a sinking fund with a deposit of some $2,300 of other moneys of this district, but against which that bank held approximately $3,000 of unpaid school warrants, which were offset against the deposit, leaving a balance of $2,521 due over dividends credited. Defendant Nelson was treasurer from 1906 to 1910. Before his election the school board had designated the Merchants and First National Banks of Bugby as school depositaries. Defendant’s predecessor-had deposits in both of them when taken over by Nelson, who allowed deposits on account to remain as they were. The Eirst National Bank had furnished the school board with a depositary bond in the sum of $5,000, dated October 30, 1905, and which bond had been accepted by the board, and deposits made in said institution. The treasurer-continued depositing in both depositaries throughout all times in question. During the last few months of 1908 the sinking fund was on order of the board deposited wholly with the Eirst National. On June 12, 1908, Nelson received a letter bearing that date, addressed to-him as school treasurer, and signed by the clerk of the district, and reading: “At an adjourned meeting of the Bugby School District No. 5 the following motion was made, seconded, and carried: Tt is moved that the school treasurer be directed to deposit all of the sinking fund now in his hands, less the amount required to pay interest on bonds July 1st, next, in the Eirst National Bank of Bugby, North Dakota, on time deposit for six months.’ ” And the minutes of the meeting of said school board of said city, among other matters, contained the-
School Board in Special Session.
Moved by director Erickson, seconded by director Monson, that whereas there is a necessity of providing money for the payment of teachers’ wages, and whereas the First National Bank has offered to pay the teachers’ wages until funds are received, upon condition that the First National Bank be declared the depositary of the school funds, Now therefore it is hereby ordered that the treasurer of the Bugby School District from this date will’deposit all the funds belonging to the Bugby School District Number 5 in the First National Bank.
(Signed) Ed. Erickson, President.
(Signed) P. A. Monson.
(Signed) Fred H. McBride.
This order was prepared at the usual meeting place of the board with a majority of the board present in session, and transcribed upon a typewriter by the person who had for some time acted as the board’s clerk pro tern and stenographer, and was there signed by the first two members, the third signing at his place of business soon afterwards, and before it was delivered by the members of the board in person to the treasurer. But this order was not fully complied with, as the treasurer deposited with the First National Bank only the sinking fund and other funds subsequently coming into his hands, leaving with the Merchants Bank the other funds deposited there, but transferring the sinking fund from that bank to the First National. This resolution as a proceeding of the board was not spread upon its minutes at that
By chap. 105 of the Session Laws of 1905 a complete and comprehensive depositary plan was enacted. Whether prior to that date the liability of city and school district treasurers was absolute as insurers ■of moneys received or less limited under the several rules prevailing-in the absence of depositary statutes is foreign to this inquiry. It is •certain that under this enactment the officer is no longer an insurer against loss where he has complied with the statute requiring the deposit of public funds in the depositary bank. Comp. Laws 1913, § 1486. Instead of the old relationship of liability of the official to the municipality, the legislature has seen fit to declare it to be the better policy to substitute a relation of debtor and creditor as between the bank and the municipality. By § 1481, Comp. Laws 1913, “all funds ■of the city or school district shall be deposited in the name of the city or school district, by the city treasurer or treasurer of the school district, as soon as received by him, in such bank or banks as shall have been designated as city or school district depositaries.” Such deposit must be made in the name of the school district, and in harmony therewith § 1484 provides that “all checks drawn upon the city or school district depositaries shall be signed by the city or school district treasurer in the name of the city or school district, by himself as treasurer.” And a penalty for violation of these statutes shall be imposed under § 1482 if he “shall deposit any of the funds of his city or school district, or loan the same in any manner except according to the provisions of this article.” And § 1488 makes a violation “of the provisions of this article” also a misdemeanor. If this money has been deposited in a depositary, the school district has, in the language of’ the opinion in 51 Neb. 116, in legal effect, made “a loan of such moneys to the bank; and the relation of debtor and creditor is thereby created, not between
That this bank had been regularly designated as depositary in 1905 conclusively appears. It is admitted that in 1907 no new designation of depositaries was made. No steps were taken to that end by the board or its clerk. It was the duty of the clerk to advertise for bids for designation as depositary for at least two weeks prior to the first regular meeting of the board in July of each odd-numbered year, i. e., in 1907; and it was the duty of the board at said meeting to designate the depositaries for the two years from July, 1907, to July, 1909, and during which period this bank failed; but the same was not done. This was its duty, however, only as to depositaries in which current or ordinary deposits are required to be made. It does not apply to time deposits under the express provisions of §§ 1478, 1479, because depositaries for time deposits can be designated after advertisement at any time, and need not be the depositary in which money on call is deposited. It is unnecessary to determine whether the statute, § 1479,-is permissive only or mandatory as to advertising for time depositaries. It is sufficient that the school board did, by its resolution of June 12th, direct the treasurer “to deposit all of the sinking fund now in his hands, less the amount required to pay interest on bonds July 1st, next, in the First National Bank of Rugby, North Dakota, on time deposit for six months.” So far as time deposits are concerned, the order of date September 80, 1908, “that the treasurer of the Rugby School District from this date will deposit all the funds belonging to the Rugby School District No. 5 in the First National Bank,” may be disregarded and assumed to be irregular. The treasurer had the right to assume that it was a step toward enforcement of compliance with the resolution of June 12th, directing the deposit of the sinking fund in the First National Bank, as it was in fact. This resolution is a sufficient designation of that bank to answer the requirements of the statute. It is no objection thereto that no advertisement for bids had been had, as the treasurer had the right to assume, certainly in the absence of knowledge to the contrary, the regularity of the designation. The board, and not the treasurer, had the disposition of the school funds. It was the latter’s duty to comply with the directions
But it appears that the treasurer, though not bound to do so under circumstances disclosed in the evidence, did nevertheless attempt to insist upon an additional hond being given by said bank before or after the sinking fund was deposited and with reference thereto.
He testifies:
Some time in the latter part of June I think I spoke in regard to' the additional bond for the sinking fund.
The clerk said: “They had a bond up, the Hirst National Bank. . . . I just spoke to them different times in regard to the bond. . . . (The board) said they had a bond up from the Hirst National as a depositary.
Q. You went to Lander, the clerk, and suggested the propriety of an additional bond in June, 1908?
A. I did.
Q. And that was in the event that the deposit should exceed the amount of the depositary bond?
A. Yes, sir.
The duty to require additional bonds was upon the board. Section 1115, Comp. Laws 1913, in part reads: “If at any time the amount of funds on deposit in any of such depositaries shall exceed one half of
That the relation of debtor and creditor arose from the deposit with the bank, no matter how irregular the designation or without a designation, so long as the deposit was made upon the order of the board, there can be no doubt. The bank by accepting the money would be estopped to deny its liability to return it to the district in any event, and there can exist no valid ground upon which to charge the treasurer with any responsibility for this loss. Becent cases under depository statutes are elucidating on this subject. Stephens v. Ludlow, 159 Ky. 729, 169 S. W. 473; Bath v. McBride, 163 App. Div. 714, 148 N. Y. Supp. 836.
But the treasurer is exonerated from liability upon another ground sufficient in itself. The designation in 1905 of depositaries, one of which was this bank, continued under the terms of § 1475, Comp. Laws 1913, without a new designation in 1907, so long as the board and the bank continued such relationship. It was a least a do facto depositary, and as such so far as all persons interested in this suit are concerned, at all times a legal depositary of the public funds of said school district, and as such it was the duty of the treasurer to deposit said funds therein at the order of the board. Such is the intent of the statute, § 1475 providing that such relationship “shall continue as such until such time as the . . . school board shall advertise for
General depositary provisions are also found in § 168 of chapter 263 of the Session Laws of 1911, or subdivision 2 of § 1297 of the Compiled Laws of 1913, having been carried forward from § 983 of the Code of 1905, in turn a codification of chapter 190, Session Laws 1901, greatly amending and enlarging § 820, Bevised Codes 1899, orig
The complaint being for recovery of a balance of funds of the district coming into the hands of its treasurer, he and his bondsmen have