Board of Levee Com'rs v. Powell

| Miss. | Mar 15, 1915

Seed, J.,

delivered the opinion of the court.

Appellant, the board of levee commissioners of the Yazoo-Mississippi Delta, filed a petition in chancery against appellee, W. H. Powell, the receiver of the Bank of Tunica, and prayed the court to decree that the levee board had a prior claim and lien upon all of the assets of the bank to enforce the payment of the balance due on funds of the board deposited in the bank. The bank failed on April 26, 1913, and its business and affairs are being administered and settled through the chancery court of Tunica county. The Bank of Tunica was on June 20, 1912, selected as a depository for the funds of the levee board in the amount of twelve thousand five hundred dollars. It then fully complied with the statute (section 3, chapter 97, Laws of Mississippi of 1908) by depositing with the treasurer of the board of commissioners nine bonds of the Yazoo-Mississippi Delta levee board of the par value of one thousand dollars each as collateral security, and filing with, the treasurer an indemnifying bond, with proper sureties, in an amount equivalent to seventy-five per cent, of twelve thousand five hundred dollars, the estimated maximum amount which would be kept on deposit in the bank, and thereupon qualified and became such depository. At the time of the bank’s failure, April 26, 1913, there was on deposit in the bank funds of the levee board to the amount of twelve thousand one hundred and twenty-four dollars and forty-eight cents. Appellant alleged in the petition that the funds on deposit were trust funds, being public moneys and not liable to be taken by the general creditors of the depository. Prom a decree by the chancellor sustaining a demurrer filed by appellee to the petition, an appeal was granted.

It is contended by appellant that the funds of the levee board on deposit in the Bank of Tunica at the time of its failure were protected by section 3485' of the Code of 1906, which reads:

i£All money deposited in bank, or with any other depository, by or for a tax collector, or other officer having the custody of public funds, state, county, municipal, or levee board, whether the same .be deposited in the name of the officer as an individual or as an officer, or in the name of any other person, is prima facie, public money and a trust fund, and is not liable to be taken by the general creditors of the officer or by the creditors of the depository. ’ ’

Counsel for appellant 'concedes that there is no other statutory law than section 3485- which provides that public money shall be a trust fund, and they further concede that no right of priority is given such funds by the Common law. Counsel admit that the question of right to priority of public funds in a state depository has been fully settled in this state by the decisions of the court in the case of Potter v. Fidelity & Deposit Co., 101 Miss. 823" court="Miss." date_filed="1911-10-15" href="https://app.midpage.ai/document/potter-v-fidelity--deposit-co-7991188?utm_source=webapp" opinion_id="7991188">101 Miss. 823, 58 So. 713. In that case it was decided that funds placed by the state in a depository provided by the statute (chapter 96, Laws of Mississippi 1908) are not trust funds within any meaning or purpose of section 3485', Code of 1906.

Counsel claim, however, that the decision in .that case will not control here because of a provision, in chapter 97 of the Laws of 1908, being the statute providing for the establishment of depositories for the funds of the levee board, not contained in chapter 96 of the Laws of 1908 establishing the state depositories. The provision referred to is the following sentence in section 3 of chapter 97:

“It is further provided that the creating of this additional security and the acceptance of the collateral hereinbefore mentioned shall not be construed as waiving any rights,, benefits, or privileges conferred by law upon the commission in the matter of recovering public moneys or trust funds from banks in which they may be deposited.”

We find in the opinion in Potter v. Fidelity & Deposit Co. a very full and clear discussion of this subject. We quote from the opinion in that case delivered by Mates, C. J., as follows:

‘ ‘ The law of 1908, in intent and purpose, is the reverse of section 3485 of the Code in every particular, and intended to cover a different'state of affairs. It is complete in itself, and furnishes its own measure of Ifegal right. Both laws accomplish an important, but altogether different, purpose. Neither has any bearing on the other, and both may operate at the same time without any conflict. Section 3485 was not repealed, or intended to be repealed, by the laws of 1908. Section 3485 still stands as security, to the state for all deposits of its money made by any person, in case of the insolvency of the institution where the deposit is made, in all cases where any deposit is not made by virtue of its authority as evidenced by the depository law of 1908. But when the state itself disposes of its public funds as is required by tbe depository laws, the relation of debtor and creditor is established between the state and the depository merely, and the state must make its money, in the event of the insolvency of the depository, out of its securities, and, failing in this, it must take its place in the line of general creditors and share the- assets pro rata with such creditors. When the funds are placed by the state in the depository, they are not ‘trust funds’ within any meaning or purpose provided for by section 3485 of the Code. ’ ’

In the case of Powell v. Board of Supervisors of Tunica County, 65 So. 499" court="Miss." date_filed="1914-03-15" href="https://app.midpage.ai/document/powell-v-board-of-supervisors-7991819?utm_source=webapp" opinion_id="7991819">65 So. 499, we applied the holding of the court in Potter v. Fidelity & Deposit Company to a case' where funds were placed in the county depository in accordance with chapter 194 of the Laws of 1912, and therein held that section 3485 did not apply to funds placed in a regularly qualified county depository to the amount fixed by the board of supervisors when establishing it, and that only funds on deposit in excess of such amount would come under the protection of that section.

We do not see that the provision in chapter 97 of the Laws of 1908, which we have above quoted, will avail to render the reasoning and conclusions in the case of Potter v. Fidelity & Deposit Co. inapplicable to the case at bar. The state, by chapter 97, furnished a way for the disposition of the levee funds by placing same in de* positories established according to the statute. When money is so deposited, it is in the place made for it by the statute; it is legally there and is protected in the way and to the extent provided in the statute.

Section 3485 was intended to protect funds which had gone out of the actual possession of the legal custodian and into a bank, not in the way provided by law, but in a manner which under the statute was unlawful. There is no necessity for the operation of section 3485 in cases where the funds are placed in the jnanner provided by law in a depository and protected by sufficient security in the statutory way, and there is no reason for the application of the statute to protect funds so deposited. When the commissioners deposited the levee funds in the levee depository, there were no “rights, benefits, or privileges conferred by law upon the commission in the matter of recovering” the funds so deposited, by section 3485 of the Code of 1906, for that section is only operative to protect funds placed in a bank without authority of law.

The reasons stated in Potter v. Fidelity & Deposit Co. for holding that funds deposited in a state depository were not trust funds within the meaning of and protected by section 3485 are to us sufficient to sustain our holding now that the deposits in the levee depository in this case are not trust funds and protected by that statute.

Affirmed.