81 Kan. 660 | Kan. | 1910
The opinion of the court was delivered by
This action was brought by the state against the United States Fidelity and Guaranty Company on a bond given by the First National Bank of Topeka, as a depositary of state funds, and signed by the defendant company as surety. At the general election in 1902 T. T. Kelly was chosen as state treasurer, and he took possession of the office on January 12, 1903. Among his first official acts he designated the First National Bank as a state depositary, and on January 20, 1903, the bank gave to the state a bond in the sum of $250,000, signed by the defendant company as surety, which was approved by the executive council on January 28, 1903. This bond recited that the bank had been designated “as a depositary for the collection of drafts, checks and certificates of deposit that may come into his [the state treasurer’s] hands on account of any claims due the said state of Kansas,” and it provided that if the bank “shall promptly collect all drafts, checks and certificates of deposit that may be delivered to it by the state treasurer for collection and shall safely keep the proceeds of all such collections, and promptly pay the same on the state treasurer’s order, and if all drafts that may be issued to said state treas
The state made a motion to dismiss the proceeding on the ground that the company had not taken an appeal, writ of error or supersedeas within sixty days after the rendition of the judgment against it. The motion was denied some time ago, but the writing of an opinion disposing of it was deferred until the final decision on the merits of the case. The motion was based on section 535 of the General Statutes of 1901, which provides that the neglect or refusal of a bonding company to pay a judgment rendered against it on its bond, from which no appeal is taken within sixty days, shall operate to forfeit its right to do business under the act. The appeal in the present case was not taken within the prescribed time. While the act does not in express terms deny the right of appeal to a company which fails to
The decision in Modern Woodmen v. Heath, supra, pushed interpretation to the limit, and while that decision and the one which followed it are adhered to, the court does not feel justified in extending them farther, under a different and more limited statute. The language in the insurance statute, “any court in this state,” clearly means “any court of this state,” because just preceding it in the same section there is a provision relating to the removal to the federal court of a suit commenced “in any of the courts in this state.” The same language is used in section 534 in the same connection. The insurance statute was enacted in 1898 and the bonding company act in 1895. The difference in the language is significant. In one case it refers to a final judgment óf a state court, in the other to a final judgment in any court. The legislature can restrict the period within which steps may be taken to review a judgment in a state court, but can not regulate appellate procedure in the federal courts. It can reasonably be supposed that the legislature intended a limit
In behalf of the appellant it is contended that its demurrer to the evidence should have been sustained, and that its motion, made at the close of the testimony, to direct a verdict in its favor should have been allowed. Several reasons are urged why these rulings are erroneous. One is that under the national banking laws the bank was without corporate power to assume the obligations written in the bond to pay the state the full amount of all collections it should make. Another is that under the depositary act, which it contends must be read into the contract of the surety, provision was only made for the collection of paper due the state for taxes, and that as other deposits were made and mingled with the money derived from taxes and no showing was made as to the particular amount due for taxes there was no basis for a verdict. Another reason urged for reversal is that the deposits were not for collection, but were allowed to remain in the bank in
It appears that when checks, drafts and other paper were received by the treasurer they were deposited in the bank, with the understanding that the bank should have about ten days to make the collection, and if not then notified to the contrary the treasurer could assume that the collection had been made, and the amount was then charged against the bank and a receipt sent to the party from whom the paper was obtained. The money collected remained in the bank until the treasurer drew orders for such sums as were necessary to meet the expenses and demands of the state. The contention is that the arrangements and practices in respect to these state funds, as between the treasurer and the bank, were illegal, and therefore not binding on the surety. If instead of depositing the money for collection, as the law contemplates, it was in fact allowed by the treasurer to remain in the bank for long periods, and a consideration was paid for its use, as appellant sought to show, may the bank set that up as a defense when the state demands payment of the money which the bank has collected and holds, or is it ahy reason why the appellant should escape liability on the obligations written in the bond which it signed ? The depositary bank was an official agent of the state — an agent which has been designated as a quasi-public official. (Snattinger v. Topeka, 80 Kan. 341, 345.) The bond was given to protect the state as against official delinquency. The extent of the obligation of the surety is written in the
“The government can transact its business only through its agents; and its fiscal operations are so various, and its agencies so numerous and scattered, that the utmost vigilance would not save the public from the most serious losses, if the doctrine of laches can be applied to its transactions. It would, in effect, work a repeal of all its securities.” (U. States v. Kirkpatrick, 22 U. S. 720, 735.)
The case of Manley v. City of Atchison, 9 Kan. 358, was an action against a defaulting city treasurer. He had been appointed under an agreement with the city council that he should serve without compensation and pay seven per cent interest on the current funds of the city in his hands. On the trial the sureties on his bond set up the excuse, and tried to show, that the city was in complicity with the treasurer in an unlawful arrangement, and that, the council having authorized the treasurer to use funds in his private business with their knowledge, they were not held for any loss. The court ruled that the illegal acts of the council did not excuse the illegal acts of the treasurer; that the.law
“He got his power by his appointment; but his duties-were defined by law, and were not a subject of bargain and trade between himself and the mayor and council. Their consent or agreement that he should use the-funds in his business gave him no right so to do. An illegal contract could not enlarge the power of the city treasurer; neither could it limit his responsibility. That the illegal contract was made with the other-agents of the city does not change the principle, nor alter the duties and obligations of the treasurer. They remained the same, and were defined by law. Any other conclusion would lead to endless confusion, and often end in ruin to cities. The whole fallacy of the argument of the plaintiffs in error lies in confounding-the mayor and council of the city with the city itself. Although their powers are greater, they are no more the city than is the city marshal, or the city attorney;, and either of these officers would have had as much right to make the contract with the treasurer, such as-was attempted to be proven in this case, as had the mayor and council; . . . the contract or agreement sought to be proven in nowise lessened the obligation of the treasurer; neither did it affect the liability of his sureties.” (Page 865.)
The same question was involved to some -extent in. Loper v. The State, 48 Kan. 540, where an illegal arrangement was made as to the deposit of county funds- and the county commissioners had contributed to it by failing to designate a depositary. The sureties on the-bond of the defaulting treasurer, who under the arrangement had the use of the public funds, set up as a defense the neglect of the commissioners. In response-to this the court said:
“Parties can not make an arrangement favoring the violation of a statute regulating the duties of a public:*669 officer, and, having obtained an advantage or profit thereby, ask that thfeir liability upon the official bond of such officer be lessened or discharged because the statute was not complied with.” (Page 553.)
(See, also, Rose v. Douglass Township, 52 Kan. 451; Hart v. United States, 95 U. S. 316; Board of County Commrs. v. Security Bank, 75 Minn. 174; Estate of Ramsay v. The People, 197 Ill. 572; Stoeckle, et al. v. Armstrong, et al., 8 Del. Ch. 150; Anderson v. Blair, 121 Ga. 120; State v. Pederson, 135 Wis. 31; Commonwealth v. Tate &c., 89 Ky. 587; 27 A. & E. Encycl. of L. 544.)
The bank knew the scope of the duties and powers of the state treasurer, knew that lie had power to deposit drafts, checks and other paper for collection only, and it could not by its methods of bookkeeping or of handling the deposits, or by any arrangement it might make with the treasurer, limit its responsibility to the state; and the surety is in no better position. It is argued that only drafts, checks and certificates of deposit for taxes were in the contemplation of the parties; that the provision for the appointment of a depositary is part of an act relating to taxation, and that because of the restricted title of the act its provisions can only apply to drafts, checks and certificates of deposit derived from taxes, and if any of the provisions are broad enough to cover more than these it is necessarily unconstitutional. These contentions, however, are hardly open to appellant. The recitals in the bond, as we have seen, do not limit the deposits to be made with the bank to drafts and other paper of the state arising from taxes. These recitals are binding on those who signed the bond, and the appellant is therefore estopped to deny that the bank had been designated “as a depositary for the collection of drafts, checks and certificates of deposit that may come into his [the state treasurer’s] hands on account of any claims due the said state of Kansas.” After reciting that the bank had been so designated for
The effect of a recital in a bond was before the supreme court of Minnesota in Jefferson v. M’Carthy, 44 Minn. 26, where it was said:
“It is well settled that an allegation or recital in a bond, which is certain in its terms and relevant to the matter in hand, is conclusive between the parties to a controversy growing out of the instrument itself, or the transaction in which it was executed.” (Syllabus.)
In Board of Co. Commrs. v. American L. & T. Co., 75 Minn. 489, the bond recited that a trust company had been duly designated as a depositary of county funds. A question arose as to whether there had been a legal designation. The bond, however, was approved, and the treasurer deposited the funds of the county ■With the trust company. It was held that , the recital, in,the bond was an admission that the company had' been designated as a depositary, and it was further-said that , “if the bond was approved, and thereupon the money of the county was deposited .... under the bond, the sureties, as against the county, would beestopped to deny that the trust company had been des
“The general rule is that sureties are • estopped to deny the facts recited in the obligations signed by them, and this whether the recitals are true or false in fact. Having once solemnly alleged the existence of the facts they can not afterward be heard to deny it.”
In Blaco v. State, 58 Neb. 557, sureties who signed an official bond attempted to show that the office to which their principal had been appointed was unconstitutional, and that court held that “having by their voluntary act secured to Hilton the fruits of the law, which was constructively incorporated into the bond, they are now, by a plain principle of justice, forbidden to deny that the law was constitutionally enacted.” (Page 562.) The same question was raised in Thompson v. Rush, 66 Neb. 758, where it was stated that “the rule seems to be settled, upon authority, that sureties upon a bond will not be permitted to deny facts recited in the instrument which they have signed.” (Page 763.)
(See, also, Simpson v. Greeley, 8 Kan. 586; Sponenbarger v. Lemert, 23 Kan. 55; Haxtum v. Sizer, 23 Kan. 310; Red Wing Sewer Pipe Co. v. Donnelly, 102 Minn. 192; County of Meeker v. Butler, 25 Minn. 363; Greengard v. Fretz, 64 Minn. 10; Board of County Commrs. v. State Bank, 64 Minn. 180; Gray et al. v. The State, ex rel. Mills, 78 Ind. 68; Buhrer v. Baldwin, 137 Mich. 263; 32 Cyc. 69.)
Under the rule of the authorities appellant is precluded from denying the authority of the bank to execute the bond or that it is binding according to its terms. It is contended, however, that estoppel was not sufficiently pleaded to make the principle available to the state as against appellant. While the state did not explicitly aver that the facts stated operated to estop
The point insisted on that the bank was only a collector and that moneys when collected should be withdrawn at once and held in the state treasury is hardly supported by either the provisions of the statute or the recitals in the bond. In addition to the requirement that the depositary shall promptly collect the paper delivered to it by the state treasurer the statute provides for the “safe-keeping” (Laws 1891, ch. 41, § 2) of the funds which it collects. It also provides for the prompt payment of the same on the state treasurer’s order, but it does not specify when such order shall be drawn. The bond in' terms stipulated that the bank should safely keep the collections made, and this condition is as important as the one providing for prompt collections. It contained no limitations upon the time the funds collected by the bank should be safely kept, and the ordinary interpretation of such language would be that the bank should safely keep the moneys until they were withdrawn under the state treasurer’s order. If that officer transgressed the law by failing to withdraw such moneys when collected, that fact, as we have seen, does not avail the surety. It may also be said that if the bond does not strictly follow the requirements of the statute it has the elements and binding force of a common-law obligation. It was voluntarily given, upon sufficient consideration, and is not prohibited by statute or against public policy, and when the bank by means of the bond secured possession of the state funds neither it nor the surety can well escape liability for nonperformance of the conditions of the bond.
There is complaint, too, that the court advised the jury that as there were partial payments they should compute interest under the mercantile method rather than under the United States rule, which has received the sanction of this court. (Christie v. Scott, 77 Kan. 257.) The rule applied by the court, however, operated to reduce the amount of the debt, and having resulted
A number of objections to rulings upon the admission of evidence have been argued, but the view which has been taken of the case renders them immaterial, and the same may be said of other objections to the instructions. All have been examined and none found to be prejudicial, nor do we discover any grounds for a reversal of the judgment. It is therefore affirmed.