25 Haw. 43 | Haw. | 1919
OPINION OF THE COURT BY
This case is before the court upon a writ of error to review a judgment entered in favor of the defendant Solomon Lalakea, administrator of the estate of T. K. Lalakea, deceased, in the circuit court. The facts show that the action was one of assumpsit on a promissory note for $185 made and executed by the defendant C. K. Maguire and T. K. Lalakea to the plaintiff; that although the defendant Maguire was joined as a party defendant he was not served with process and did not appear; that H. Y. Patten was the cashier and treasurer of the plaintiff corporation in December, 1907, and had charge of its business at that time; that on December 18, 1907, defendant Maguire applied to Patten, as cashier and manager of
“For the purpose of securing the payment of our Promissory Note of the above date in favor of The First Bank of Hilo, Ltd., when due, and the interest that may accrue thereon, we do hereby assign, transfer and set over, and herewith deliver, to the said First Bank of Hilo, Ltd., and assigns, the following:
“Salary J. W. Kuaimoku ' December, 31, 1907 45.00
” Y. K. Kaapa ” ” ” 35.00
” K. Kawelu. ” ” ” 35.00
” K. Kupuna ” ” ” 35.00
” G. Kauwe ” ” ” 35.00
185.00;”
that “about the end of the month” Maguire brought to the hank an order, drawn in favor of the First Bank of Hilo, Ltd., on the treasurer of the County of Hawaii, signed by himself as auditor of the County of Hawaii, made out upon a blank of the form adopted for county warrants, and being for the sum of $185, the amount of the loan, which was accepted by the bank, “Bills receivable” was credited with the amount in the books of the bank, and the note stamped “paid” and delivered to Maguire; that the bank did not have any claim against the County of Hawaii in December, 1907, or in January, 1908; that no other payment of the note in question has
The plaintiff in error contends among other things “that Maguire and Laiakea executed a collateral assignment of what purported to be the wages of five officers. This was only an incident to the entire transaction and was not even a principal incident. * * The assignment of the salaries was only secondary and collateral to the principal undertaking.” This theory is mischievous and fallacious. The assignment of the salaries by Maguire and Laiakea was the sole excuse or justification advanced by the bank for receiving from the auditor a county warrant drawn in its favor for any purpose when it knew that the County was not indebted to it in any amount, and they certainly would not have been relieved from responsibility because the unauthorized warrant was drawn to pay Maguire’s individual indebtedness. A very superficial knowledge on the part of the bank of business transactions of this nature would have enabled it to detect the fraud and possibly to have put a stop to this long line of embezzlements in their incipiency.
That these attempted assignments of the unearned salaries of the five policemen were illegal, null and void does not admit of argument, the general principle being well expressed in the', following citation, supported by numerous decisions in the United States and in England :
“It is well settled both in England and the United States that a public officer cannot assign by anticipation the salary and fees paid to him for the purpose of maintaining the dignity of his office and securing the due discharge of its duties. " “ * The protection thus extended to those engaged in the performance of public duties is not based upon the ground of their private interest, but upon the necessity of securing the efficiency of the public service by insuring that the funds provided for its maintenance shall be received by those who are to perform the*49 work, at the periods appointed for their payment. The assignment of snch funds before they are due impairs the efficiency of the public service, and is void both in law and equity as being against public policy.” 2 A. • & E. Ency. L. 1033.
When the plaintiff in error accepted this warrant No. 2071 it took what it knew to be an order upon the treasurer of the County of Hawaii for the alleged interest in the salaries of the officers assigned to it by Maguire and that it could not have any interest in these salaries except by virtue of the assignment by Maguire and Lalakea and it, the plaintiff in error, accepted it (warrant No. 2071) with presumptive knowledge that the assignment by which they acquired possession of it was void as against public policy. This warrant they received in payment of the note sued upon and afterwards converted the warrant into cash. This constituted payment of the note and extinguished the bank’s right to maintain a suit upon said note.
Further — upon the 30th day of October, 1913, the plaintiff in error and the County of Hawaii entered into the agreement herein set forth. This agreement was unquestionably a compromise in the fullest legal sense. “Compromise has been defined as an agreement between two or more persons who, to avoid a lawsuit, amicably settle their differences upon such terms as they can agree upon.” 6 A. & E. Ency. L. 418. “The compromise of a suit neither admits the validity of the claim urged, nor ascertains any amount as being due, and amounts to no more than saying that so much is paid to be rid of the controversy.” 12 C. J. 339. “An offer by a party to pay a sum of money by way of compromise of an existing controversy is not to be used as evidence against him. * * * The reason why the mere offer of money or other thing by way of compromise is not to be evidence against him who makes it is very plain and easily understood.
In the compromise under discussion there was a concession by the bank to the County of the amount of $40,000, and there was a concession from the County to the bank of the difference between $40,000 and the claim of $56,723.20, but there was no admission by either side that there was any merit in the legal contentions of the other or any agreement as to the facts claimed to be involved. This agreement of compromise was a contract -which superseded the preexisting claim, whether such claim was valid or invalid, and when payment was made it was a payment of the contract of compromise and not of the preexisting obligation, or alleged obligation, or of any portion thereof. We are unable to discover any process by which it can be legally deduced that the amount paid by the bank to the County paid any of these illegal warrants or that these Avarrants were ever adjudged illegal in any action instituted by the County against the bank.
There are other questions in the case but Ave deem the foregoing reasons sufficient to show that the judgment must be affirmed.
The judgment is affirmed.