234 N.W. 594 | Minn. | 1931
1. On November 7, 1925, the defendant bank, with the other defendants as sureties, executed a bond in the sum of $8,000 to secure the deposits of the plaintiff in the defendant bank, which was designated as the school district's depository. G. S. 1923, § 2836, as amended, 1 Mason, 1927, id. The condition of the bond was as follows:
"The condition of this obligation is such, that whereas the said Farmers State Bank of Bronson has been designated as a depository for the fund of the said school district, and the funds of said school district are to be deposited in said bank from time to time both as commercial deposit and on time deposits drawing interest.
"Now therefore if the said bank shall safely keep said moneys and pay all time deposits as they become due and all commercial deposits upon demand of the school district, then this obligation shall be void, otherwise to remain in full force and effect."
The school district later decided that it must have liberty bonds. The bank deposited bonds in the amount of $10,000, and they were put in Minneapolis banks for safe-keeping. Later the bank deposited $3,000 in liberty bonds. The defendants contend that the bonds were deposited in lieu of the $8,000 bond and that thereby the bond was discharged. On November 9, 1928, the bank failed and was taken in charge by the commissioner of banks for liquidation. There *383 was a resolution of the school board looking to the designation of the Midland National Bank Trust Company of Minneapolis as depository. It was not designated as required by the statute. G. S. 1923, § 2836, as amended, 1 Mason, 1927, id. It did act as custodian, but it was not a depository.
To make a legal substitution of the liberty bonds for the personal bond of the sureties a contract was necessary. See State v. Wood,
At times the deposits exceeded $20,000. The personal bond was quite insufficient to meet the requirements of the law. So were the liberty bonds, though they might stand as security for an amount 10 per cent less than their face. Both together were insufficient. G. S. 1923, § 2836, as amended, 1 Mason, 1927, id. Taking all the facts presented, it cannot be held that the evidence sustains a finding that there was a substitution of liberty bonds for the personal bond or the designation of another bank as depository in lieu of the defendant bank. More money was coming into the school district, and the officers naturally wanted more security. They were honest and acted in good faith. They were pitifully inefficient and without *384 an adequate appreciation of the governing law, as also were the bank officers; but the school district has stumbled out of loss not more serious than such as attends this involved litigation.
2. The designation of the bank as depository was made on November 7, 1925. The time of its continuance was not specified. It expired by construction on November 7, 1928, for three years is the longest period for which a depository can be designated. G. S. 1923, § 2836, as amended, 1 Mason, 1927, id. The bank failed on November 9, 1928. There is no direct showing that it was insolvent on November 7, 1928. It had not failed to respond to any calls of the school district. Between November 7, 1928, and November 9, 1928, there was no change in the deposit account of the school district in the bank. It is now the contention of the defendants that there is no liability on the bond because no default is shown.
This position is not well taken. The depository was bound to keep safely all deposits and pay upon the demand of the school district. When the bank closed the sureties' liability became absolute. City of Ortonville v. Hahn,
3. It is claimed by the defendants that the school district had no right to make time deposits and take certificates of deposit and therefore there can be no recovery. It may be conceded that they had no such authority. The statute provides that interest shall be computed on monthly balances. G. S. 1923 (1 Mason, 1927) § 2838. This seems to exclude certificates of deposit. But it does not follow *385
that there can be no recovery. If the certificates of deposit were not valid as obligations such as they purported to be, the moneys which they represented should be taken as demand deposits. Commrs. of St. Louis County v. Security Bank,
The defendants claim that they were overcharged interest. We have examined this claim. It was not made in the court below. We find no error, and a discussion of the claim is unnecessary.
Order affirmed.