Miller v. Henry Ins. Com'r, 103 So. 203

103 So. 203 | Miss. | 1925

Lead Opinion

^* Headnotes 1. Accounts Accounting, 1 C.J., sections 1, 3; 29 Cyc., p. 1439; 2. Insurance, 32 C.J., section 12 (1926 Anno.); 3. Insurance, 32 C.J., section 12 (1926 Anno.); 4. States, 36 Cyc., p. 863. This case come up from the chancery court of the first district of Hinds county. Appellant's predecessor in office, Stokes V. Robertson, filed his bill against appellee T.M. Henry, insurance commissioner, and the surety on his official bond for various amounts alleged to have been collected by appellee as such insurance commissioner and not paid in to the state treasury by him as required by law. There was a trial on original bill and amendments thereto and answers and proofs resulting in a decree for appellant in the sum of five hundred seventy-three dollars and seventy-nine cents, from which decree appellant prosecutes this appeal.

We will consider first the question whether appellee was liable for interest on the amounts which he failed to pay in to the treasury at the times required by statute, but paid in during the progress of this cause for which he received credit by decree of the court. The statute provides that the insurance commissioner shall furnish the auditor, on or before the tenth of each month, a statement in detail of the license taxes received by him during the previous month, and shall pay to the treasurer the full amount so received. Section 2628, Code of 1906 (section 5094, Hemingway's Code). It was shown that in the aggregate a large sum in license taxes collected by appellee was not paid in to the treasury as required by the statute. Appellant concedes, as contended by the appellee, that interest in this state is a creature of statute, and without a statute authorizing it, interest as such is not recoverable. But appellant contends that under our statute, section 2678, Code of 1906 (section 2075, Hemingway's Code), which allows six per cent. interest on accounts, interest is recoverable in this cause upon the ground that the dealings between the state and appellant in his official capacity, as evidenced by the books and records in his office in connection with those in the auditor's office and the office of the state treasurer, showing collections by him and payments into the state treasury, simply constitute an account between appellee and the state in the meaning of that statute. Appellee contends that such dealings do not constitute an account in the sense of the statute, and there being no other applicable provision of the statute authorizing interest, therefore none is recoverable.

One thoroughly well-established definition of an account is that it is a detailed statement of items of debit and credit arising either out of contract between the parties or some fiduciary relation. 1 C.J. 596, 597, sections 1 and 3. Chief Justice SHAW in Whitwell v. Willard, 42 Mass. (1 Metc.) 216, in defining what an account was, said among other things: "It implies that one is responsible to another for moneys or other things, either on the score of contract or of some fiduciary relation, of a public or private nature, created by law, or otherwise."

A public officer, required to collect and pay over public funds who makes default in payment at the time required of him, is liable for interest upon the amount so retained from the time when it should have been paid over. Mechem on Public Officers, p. 911; 29 Cyc. p. 1489; McPhillips v. McGrath, 117 Ala. 549, 23 So. 721.

Appellee lays special emphasis on Railroad Co. v. Adams,78 Miss. 895, 29 So. 996, as decisive of this question in his favor. That was a case in which the revenue agent sought to collect, from the Illinois Central Railroad Company, delinquent taxes. The court held that interest on delinquent taxes was not recoverable, since interest was not allowed at the common law, and there was no statute allowing interest in a case of that kind. We do not think that case is in point. It certainly is not decisive of the question here involved. There was no contract between the railroad company and the state by which the railroad company undertook to pay the taxes it was justly due. And neither was there any fiduciary relation between the railroad company and the state by virtue of which it became the duty of the former to pay the latter the taxes it was justly due.

In the present case there was such a fiduciary relation. Appellee was a state officer empowered to collect certain license taxes. He occupied a relation of trust toward the state. In fact, the predominant feature of his office was one of trust. His dealings with the state, evidenced by items of debit and credit required to be shown by the records of his office, constituted an account growing out of that relation. He was required by section 2628, Code of 1906 (section 5094, Hemingway's Code), to render monthly, on the tenth of each month, an accounting to the auditor showing in detail the "taxes and licenses received by him." The auditor of the state is denominated by the Constitution (section 134) and the statutes on the subject of his duties as "auditor of public accounts." And section 239, Code of 1906 (section 3498, Hemingway's Code), prescribing in part his duties, is in this language:

"It shall be the duty of the auditor to examine, state, settle, and audit all accounts, claims or demands whatsoever against the state, arising under legislative authority, and to issue to every claimant authorized to receive the same a warrant on the state treasury, under his hand and seal of office, making due entry and registry of all proceedings in books to be kept for that purpose, and carefully arranging, filing and preserving in his office all accounts, receipts, vouchers and papers touching the same. It shall also be his duty to examine, audit and settle the accounts of all public debtors and collectors of any tax or revenue due to the state; to require such debtors to render accounts and pay into the treasury all sums or balances due, and, on failure so to do, to institute proceedings against them. He shall require any material information, on oath, from any person or persons, party or privy to any matter relative to any account under examination. And he shall state and keep his accounts so as to show the amount of all warrants drawn by him on the treasurer, and for what service or item of public expense they were given; and he shall submit his accounts and books to the inspection of the legislature or the Governor when required."

Appellee also relies on Clay County v. Chickasaw County,64 Miss. 534, 1 So. 753. But there is no support for him in that case. As to interest, that case simply held that Chickasaw county could not recover interest from Clay county for two reasons: First, because the statute creating the liability on which interest was claimed made no provision for interest, and second, because counties were not embraced in the general statute on the subject of interest. We hold therefore that the state's claim against appellee consisted of an account coming squarely within the definition of an account given by Chief Justice SHAW quoted above, as well as the other authorities cited.

The trial court found, and there was sufficient evidence to justify the finding, that appellee's defalcation was not brought about by any moral turpitude on his part, but resulted from the fault of a trusted deputy. And as we understand the record, that fact was influential, if not controlling, with the court in relieving appellee from liability for interest for failure to pay over as required by the statute. Interest is not imposed as a penalty for wrongdoing, it is allowed by law on accounts for money overdue, and is allowed as compensation for its detention, whether such detention be in good faith or bad faith.

Charging appellee with interest, when should interest begin to run? Appellant urges that interest was due from the dates at which appellee should have, under the law, collected the license taxes in question. We disagree with appellant in that contention. As held by this court in Eastin v. Vandorn, Walk. (Miss.) 214, Board of Supervisors v. Klein, 51 Miss. 817, andRailroad Co. v. Adams, supra, interest is the creature alone of statute. The legal rate of interest on accounts is six per cent. per annum, and accounts do not bear interest until they are due, unless there be a contract providing otherwise. Under the statute (section 2628, Code of 1906 [section 5094, Hemingway's Code]) appellee was required to make monthly accountings and settlements on the tenth of each month for the license taxes received during the previous month. Therefore his accounts were not due the state until the tenth of each month. And he is not liable on the ground of neglect of duty for interest from the monthly settlement periods on taxes which could and should have been collected by him for the previous months. We hold that interest began to run from the time the monthly settlements were due on collections actually made for the previous month. And we hold that interest should be allowed on what is known in the record as the W.L. Nelson collection of five hundred dollars and the Mississippi Fire Insurance collection of two thousand one hundred thirteen dollars and twenty-seven cents. There is no dispute about the other collections, which should bear interest.

Another question in the case involves the right of appellant to recover his commissions of twenty-per cent of a collection of five hundred dollars, for which appellee made settlement after the suit in this cause was begun. Appellee paid the whole five hundred dollars into the state treasury instead of paying four hundred dollars in to the state treasury and paying to appellant one hundred dollars, his statutory commission or paying the entire five hundred dollars to appellant. The statute governing the compensation of the revenue agent is section 4748, Code of 1906 (section 7066, Hemingway's Code), which is in this language:

"Neither the state nor any county, municipality, or levee board shall be chargeable with any fees or expenses on account of any investigation or suit made or instituted by the state revenue agent; and he shall not receive any salary; but he shall be entitled to retain, as full compensation for his services and expenses, twenty per centum of all amounts collected and paid over by him, and of the purchase money of all lands bid in for the state by him and sold by the land commissioner."

It was held in Adams v. Bolivar County, 75 Miss. 154, 21 So. 608, that the revenue agent, having given the required notice, was entitled to his compensation whether suit had been brought or not, if his investigation was the cause of the money being paid over by the defaulting taxpayer, and that the revenue agent could not be deprived of his commissions, by the defaulting officer paying the money into the treasury. Under the statute, the revenue agent is entitled to recover for the state eighty per cent. of the amount due by the defaulting officer, and for himself twenty-per cent. of the amount. The state has no interest in his commission of twenty per cent. Appellee had no right to pay the five hundred dollars into the state treasury. In fact, it would have been more regular under section 4739, Code of 1906 (section 7057, Hemingway's Code), if the entire amount had been paid over to the revenue agent. He was authorized to collect it with or without suit, and, when collected, his interest in the collection was twenty per cent. of the amount. He was not required to pay the whole amount in to the state treasury, and then make claim against the state, if that could be done for his commission of twenty per cent. Appellee, by paying into the state treasury appellant's commissions, did not acquit himself of his obligation under the law to appellant. He was due to pay that to appellant and no one else.

We find no merit in the other contentions on behalf of appellant. Therefore, in all other respects the decree of the chancellor is affirmed. It is reversed, and remanded alone for the purpose of the ascertainment and allowance of interest in accordance with this opinion.

Affirmed in part, and reversed in part, and remanded.

Affirmed. Reversed and remanded.

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Dissenting Opinion

The writer is so thoroughly convinced that the majority opinion clearly overlooks and fails to meet and recognize the rule in Mississippi on the question of interest, that I feel it my duty briefly to call attention to the position which I assume, as to the decision of this case.

On the facts, the chancellor found that there was no unlawful conversion on the part of Henry, the insurance commissioner, but that the insurance commissioner failed to turn over, at the time required by law, moneys which came into his hands as commissioner; and the lower court held, no doubt upon the apparent authority of the decisions of our own court, that Henry was not liable for interest. Under this state of facts and believing that the Brethren joining in the majority opinion have wholly ignored the decisions of our own court and the position of Mississippi on the question of interest, I shall call attention to these decisions, and not undertake to enter into an argument thereon. In our state, interest is the creature of statute, and the statute imposing interest is in derogation of the common law and must be strictly construed, and in the absence of a specific statute, the common law controls our decisions. The majority opinion is based upon section 2678 of the Code of 1906, which is as follows:

"Legal rate. The regal rate of interest on all notes, accounts and contracts shall be six per cent. per annum; but contracts may be made, in writing, for a payment of a rate of interest as great as eight per centum per annum. And if a greater rate of interest than eight per centum shall be stipulated for or received in any case, all interest shall be forfeited, and may be recovered back, whether the contract be executed or executory. If a rate of interest is contracted for or received, directly or indirectly, greater than twenty per cent. per annum, the principal and all interest shall be forfeited, and any amount paid on such contract may be recovered by suit." Laws 1912, chapter 229. In effect January 1, 1913.

It will be noted that interest is imposed on notes, accounts, and contracts. In my opinion, we do not have to appeal to the lexicon to ascertain the meaning of the word "account," and the meaning which has been placed upon it by our court, and by the legislature almost since Mississippi became a state. We think it is clear that "accounts" here means those items of debit and credit which arise from a contractual relation; and that the word "accounts" here means that character of dealing between parties which would constitute a contract, and not necessarily statutory obligations. I have no quarrel with the dictionary definition of the word "accounts," but I believe it has been clearly settled that there must be a relation of contract between debtor and creditor in order to be able to invoke this statute for the imposition of interest. Interest is not imposed in Mississippi by way of damages, but is imposed under the statutes, and in no other way. In Eastin v. Vandorn, Walk. (Miss.) 214, it is said: "The subject of interest is one of statutory creation. Interest was not allowed by the common law. As judgments, in March, 1806, did not by any statutory provisions bear interest, the clerk erred in issuing his execution for interest on the judgment."

In Hamer v. Kirkwood, 25 Miss. 95, Chief Justice SMITH said, in passing upon the question of interest upon a judgment: "The propriety of this determination of the court on the first question, depends entirely upon the statutes in regard to interest upon judgment debts; as neither debts due by contract, nor by judgment, would bear interest, unless made to do so by positive legislation."

In Board of Supervisors v. Klein, 51 Miss. 807, our court said: "Interest is the creature of statute, and our statute does not embrace county warrants. The common understanding of the community is, that they do not bear interest. . . . It is not in the contemplation of persons to whom warrants are issued that they are to carry interest. Our statute (section 2279, Code), has reference to the contracts of individuals, and not of the state or counties, which are not supposed to be included in any statute imposing burdens, unless specially named or fairly embraced in the language used. Section 2281, as to judgments, embraces only those between individuals, enforceable by execution, and does not include allowances by boards of supervisors, which, though called judgments, are not strictly such in the legal acceptation. The demand of payment of county warrants does not create any right to interest from that date. Not bearing interest, they cannot be made to bear it by a demand of payment."

If Henry shall be said to owe an account to the state, it would be a poor rule that would not work both ways, especially where the legislature has had opportunity to impose interest on this particular official and has not done so, unless it be in the use of the word "account" in the statute here under review. In the case of Clay County v. Chickasaw County, 64 Miss. 534, 1 So. 753, our court said, in passing upon a claim for interest in favor of Chickasaw county as against Clay county: "The claim of Chickasaw county does not arise ex contractu, but it is purely statutory. The statute of May 4, 1872, by which the liability was created, makes no provision in regard to interest."

The word "account" was in the statute when the court delivered this opinion, and yet they held that the account must be excontractu, and not an account created by statute unless interest was positively imposed in that statute. In Railroad Co. v.Adams, 78 Miss. 895, 29 So. 996, the court had under review interest on a judgment for a large amount in favor of the state against the railroad company for taxes, and there the court set this question absolutely at rest. Quoting from the opinion,supra:

"Can interest upon delinquent taxes be recovered upon an injunction bond by designating it as `damages'? If it can be thus recovered, it surely would be recoverable in a direct suit therefor. The basis for recovery must be the same in both instances. Calling interest `damages' could not operate to make that liable which was not liable under the name of interest. Interest is entirely statutory. It was not allowable by the common law, and exists only by positive legislation. Easton v.Foster, Walker Rep. 214; Homer v. Kirkland, 25 Miss. 96.

"Our statute provisions authorizing the recovery of interest are found in sections 2348 and 2350, Code 1892, and they provide as follows: `The legal rate of interest on all notes, accounts and contracts shall be,' etc., and `that all judgments and decrees founded on any contract shall bear interest,' etc., and other judgments and decrees at six per centum. Unless the contractual relation exists or judgment has been obtained, our statutes do not authorize the recovery of interest, and it is clear that that relation does not exist as between the government and the citizen regarding the levy of taxes, in the sense in which the interest statute refers to."

The learned counsel who presented the cause, supra, for the appellee, the state, urged that the judgment statute, as to interest, clearly controlled their right to interest, where the suit was based upon the injunction bond. The point I am calling attention to is that the court again and again declared that the interest must be imposed under the statute by virtue of a contractual relation, or else by direct positive legislation. Of course, there is no positive direct legislation in the instant case, unless it is in the section embracing the word "accounts."

We are simply trying to show that our court has always held that accounts have reference to an account created by virtue of a contractual relation. Our court has announced that taxes are a debt, and section 3747 of the Code of 1892 declares taxes a debt. In the case supra, the court, reannouncing this view, held that no contractual relation existed; that neither the tax, nor the judgment for the tax, was subject to interest under either of the statutes quoted.

The insurance commissioner and all the chapter with reference to him is the creature of a statute. It is not a constitutional office. The legislature created it at its will, and may at any moment destroy it. The legislature saw fit not to create any interest charge as against the insurance commissioner, nor any penalties in the way of damages in lieu of interest. I have endeavored to show, by statement of the decisions of our own court, that we are committed to the doctrine that interest must be imposed by positive legislation, or else be imposed on account of contractual relations. I think the word "account" in our statute has been held to be that kind of an account which arises by reason of the contractual relation between the parties. Where the liability is imposed by statute independent of contract and not by contract then interest must be specifically imposed by that statute.

In early times interest was called usury, looked upon with great disfavor, prohibited by the Mosaic Law, under severe and rigid penalty by the old English laws, the church thundered anathema, and the state declared forfeiture against taking any interest, great or small. John Calvin, the churchman, announced that the true meaning of usury was illegal or oppressive interest, and the allowance was finally sanctioned by statute in 1545 in England. In the United States, from the outset, interest has been viewed with more tolerance and with greater favor than by the English courts. Legislative construction of a statute is persuasive when there is difficulty in its construction, and, if this should be resorted to in the case, it is clear that the legislature has been aware of the clear cut decision in theAdams case, supra, and the other cases cited.

The obligation to pay over and the handling of a sheriff and tax collector is not different from the character of account between the state and the insurance commissioner, yet section 4357, Code 1906, fixes the date, the time of the month when he shall pay over taxes collected by him; imposes thirty per cent. penalty and six per cent. per annum thereon from the time the payment was due to have been made by the tax collector, thus imposing usury in its own favor, if it be called interest, but not so if we term it a penalty. This statute has been in effect since 1904. I think it is a fair inference that the legislature took the view, that money collected by one of its servants was the money of the state, and not subject to interest, but that any reasonable penalty could be imposed.

Another instance where the legislature has construed section 2678 of the Code of 1906 is found in our Depository Laws, where, under section 4247, Hemingway's Code, counsel fees and damages at the rate of one per cent. per month against any county depository failing to pay over any county funds when lawfully demanded, and this statute was approved in the case of Fidelity Deposit Co. v. Wilkinson County, 109 Miss. 879, 69 So. 865.

I might cite other instances of legislative construction of our Interest Statute by imposing interest and damages upon certain officials, and not imposing that or similar damages upon others. In the light of the decision in the Adams and other cases, failure of the legislative branch of the government to act is, by tacit consent, an approval of the opinion in that case that only accounts or debts created by contract are subject to interest in Mississippi.

I think the chancellor was correct in holding that Henry was not subject to pay the state interest upon its own funds, because of a failure to pay over on the day named in the statute, freely admitting that the legislature could, and perhaps ought, to have imposed a penalty upon the insurance commissioner. Having failed to do so, I respectfully suggest that it is beyond the power of the court to thus legislate.

HOLDEN, J., concurs in the above dissent.