Henry County v. Salmon

• Decision Date: 22 February 1907
• Parties: HENRY COUNTY v. SALMON et al.; GAINES et al., Sureties, Appellants
• Court: Missouri Supreme Court

100 S.W. 20

201 Mo. 136

HENRY COUNTY v. SALMON et al.; GAINES et al., Sureties, Appellants

Supreme Court of Missouri

February 22, 1907

Appeal from Greene Circuit Court. -- Hon James T. Neville, Judge.

Affirmed in part and reversed in part.

C. C Dickinson, Parks & Son, C. A. Calvird and A. B. Lovan for appellants.

(1) The contract of a surety must receive a strict construction and cannot be extended beyond the fair scope of its terms. Blair v. Ins. Co., 10 Mo. 559; Fisse v Emstein, 5 Mo.App. 78. The liability of a surety cannot be extended by implication beyond the plain terms of his contract. State ex rel. v. Sandusky, 46 Mo. 377; Leavel v. Porter, 52 Mo. 632; Erath v Allen, 55 Mo.App. 107; State ex rel. v. Weeks, 92 Mo.App. 359. A surety is the favorite of the law and has the right to stand on the strict terms of his obligation. Springfield Lighting Co. v. Hobart, 98 Mo.App. 227. (2) (a) To constitute a deposit, there must be a delivery of the res to the depositary. 13 Ency. Law & Proc., 795. (b) The deposit is complete upon the delivery of the res. 13 Ency. Law & Proc., 798. (c) Where a public officer is required by statute to deposit the public moneys in some bank, his mere designation of a bank as depositary confers no obligation nor any right upon such bank in relation thereto until the money is actually deposited with and accepted by it. Lewis v. Park Bank, 2 Daly 85. (d) A designation by the chamberlain of the city of New York, of the bank which is to be the depositary of funds which he may receive in his official capacity, does not confer any right on the bank, and entitle it to an action for damages against another bank which held the funds under an adverse claimant of the office of chamberlain, pending litigation as to the title to the office, since it has no responsibility for or right to any other moneys than such as should be actually placed in its charge. Lewis v. Park Bank, 42 N.Y. 463, affirming 2 Daly 85, which affirms 30 How. Prac. 115, 2 Abb. Prac. 93. (e) In Brown v. Wyandotte County, 58 Kan. 672, it is said: "The county was a general depositor of funds and by the act of deposit the reciprocal relation of debtor and creditor arose." (3) County depositary is pro hac vice a public officer, and its bond is to the public, and an action thereon is to be governed by rules applicable to official bonds. Board of Comrs. v. Bank, 75 Minn. 174; Board of Comrs. v. Bank, 66 N.W. 145. (4) The general rule is that sureties on an official bond are only liable for breaches occurring after the execution of the bond, and are not liable for prior defaults unless made so by the terms of the bond. State ex rel. v. Finn, 98 Mo. 532; State ex rel. v. McCormack, 50 Mo. 570; State ex rel. v. Branch, 151 Mo. 637; State ex rel. v. Elliott, 157 Mo. 609. (5) (a) If neither party makes the application, it devolves upon the court, and will be exercised justly and equitably. Beck v. Hass, 111 Mo. 268; Estes v. Fry, 166 Mo. 85; Ganther v. Kempner, 58 Mo. 570; McCuen v. Belt, 45 Mo. 181; Milan v. Grayston, 83 Mo.App. 425; Goetz v. Piel, 26 Mo.App. 634; Littleton v. Harris, 69 Mo.App. 596; Poulson v. Collier, 18 Mo.App. 583. (b) In the application of payments the rule that they should go to pay the oldest item of account does not apply as against the different sets of sureties on successive bonds of public officers. State ex rel. v. Collector, 8 Mo. 395; State ex rel. v. Smith, 26 Mo. 226; State ex rel. v. Alsup, 91 Mo. 172; U.S. v. January, 7 Cranch 572; U.S. v. Eckford Exrs., 1 How. 263; Mechem on Public Officers (1890), sec. 291; Rogers v. State, 99 Ind. 218; Pine Com. v. Willard, 39 Minn. 125; Chapman v. Commonwealth, 25 Gratt. 721; State v. Sooy, 39 N. J. L. 539; Pickering v. Day, 3 Houst. 474; 1 Brandt on Suretyship (3 Ed.), sec. 372; Myers v. United States, 1 McLean 493; Stone v. Seymore, 15 Wend. 19. (c) As between sureties the rule that payments on even a current account must be applied to the oldest item does not apply. Drake v. Sherman, 179 Ill. 362. (6) (a) Where a collecting officer, who is in default for a prior term, properly pays over in a subsequent term, according to this bond, money received during that term, the government officers cannot, even with the consent of the collector, apply the money so received upon the defalcation of the previous term, and, by thus creating an apparent deficit at the end of the subsequent term, hold the sureties for that term liable for it. U.S. v. Irving, 1 How. 250; U.S. v. January, 7 Cranch 572; Jones v. United States, 7 How. 688; Pickering v. Day, 3 Houst. 474; Boring v. Williams, 17 Ala. 525; Porter v. Stanley, 47 Me. 518; Myers v. United States, 1 McLean 495; State v. Middleton, 57 Tex. 185. (b) The law itself will apply the payments, for the statute, governing the application of public moneys, is mandatory in the requirement that current funds must be applied to the discharge of current expenses. Secs. 6771-6780, R. S. 1899; Andrew Co. ex rel. v. Schell, 135 Mo. 31.

James D. Lindsay for respondent.

(1) The bond is in compliance with the statute. Secs. 6820, et seq R. S. 1899. And is binding upon all who signed it. Wimpey v. Evans, 84 Mo. 144; Newton v. Cox, 76 Mo. 352; State to use v. Cameron, 12 Mo. 376; Graves v. McHugh, 58 Mo. 499; State ex rel. v. O'Gorman, 75 Mo. 370; James v. Dixon, 21 Mo. 538. And the nunc pro tunc order was proper. Farley Bros. v. Camman, 43 Mo.App. 168; Evans v. Fisher, 26 Mo.App. 546; Turner v. Benoist, 5 Mo. 145; Massey v. Scott, 49 Mo. 278; Mann v. Schroer, 50 Mo. 306. (2) The making of the bond, and the deposit of money thereunder, constituted Salmon & Salmon a depositary, de facto. Board of Commissioners v. Gray (Minn), 63 N.W. 635; Board of Commissioners v. American Loan & Trust Company (Minn.), 69 N.W. 704, 78 N.W. 113; In re State Treasurer's Settlement (Neb.), 70 N.W. 532; Board of Commissioners of Hennepin County v. State Bank (Minn.), 66 N.W. 143. (3) The relation between a county depositary and the county is that of debtor and creditor. The money, checks or other credits deposited by the county with its depositary become, eo instanti, the property of the depositary, and cease to be the property of the county. They do not constitute a trust fund, but a general deposit. Brown v. Board of Commissioners of Wyandotte County (Kas.), 50 P. 888; Myers v. Board of Commissioners of Kiowa County (Kas.), 56 P. 11; Board of Commissioners of St. Louis County v. American Loan & Trust Co. (Minn.), 78 N.W. 113; Hall County v. Thomssen (Neb.), 89 N.W. 393; In re State Treasurer's Settlement (Neb.), 70 N.W. 532; McNulta v. West Chicago Park Commissioners, 99 F. 900; Branch v. United States, Thompson Nat'l Bank Cases, 363, 12 Bank Magazine 61; Morse on Banks and Banking (3 Ed.), part 11, 145. (4) The bond being conditioned as provided by statute, it is to be construed as though all the provisions of the statute concerning county depositaries were contained in it. Campbell v. Harrington, 93 Mo.App. 325; State ex rel. v. Rubber Mfg. Co., 149 Mo. 212. (5) Two legal results flow from the deposit of money or credits with a banker: First. It creats the relation of debtor and creditor. Kenneth Investment Co. v. National Bank of the Republic, 96 Mo.App. 125; Arnold v. Sedalia National Bank, 100 Mo.App. 474; O'Grady v. Stotts City Bank, 106 Mo.App. 366. Second. It lays upon the banker the duty of honoring, upon presentation, checks drawn by the depositor upon his bank, within the limits of the indebtedness existing under the relation, and makes the banker liable to respond in compensatory damages for failure to do so. This was, and is, the common law. Zane on Banks and Banking (1 Ed.), sec. 128; O'Grady v. Stotts City Bank, 106 Mo.App. 366; First National Bank v. Shoemaker, 117 Pa. 94. The statute of this State concerning county depositaries is a legislative declaration of the foregoing common law rules, in their application to the relation between a county and a county depositary. The bond is required to secure the performance of the obligations created by the relation, which obligations are identical with those above referred to. (6) The object in requiring such a bond as is sued on in this action was not the safe keeping of a deposit, in specie, nor the preservation of a trust fund, nor protection against defalcations or conversions of moneys by an agent or officer, but it was to secure to the county the payment of an indebtedness accruing to it from the depositary, and to secure the payment of damages to any one injured by a breach of its obligation to pay checks so long as the depositary stood indebted to the county. Brown v. Board of Commissioners of Wyandotte County (Kan.), 50 P. 888; Myers v. Board of Commissioners of Kiowa County (Kan.), 56 P. 11; In re State Treasurer's Settlement (Neb.), 70 N.W. 532; Board of Commissioners of Redwood County v. Citizens' Bank (Minn.), 69 N.W. 912. (7) This liability of sureties on a depositary bond accrues where the depositary, at the time of the approval of the bond, already bore the relation to the county, and was already indebted to the county; and the insolvency of the depositary, before or at the time of the making of the bond is immaterial, so far as concerns the liability of the sureties. Board of Commissioners of St. Louis County v. American Loan & Trust Co., 78 N.W. 113; People v. Shepard, 55 N.Y.S. 1130; Board of Commissioners of Redwood County v. Citizens' Bank (Minn.), 69 N.W. 912; Myers v. Board, 56 P. 11; Brown v. Board, 58 Kan. 72. (8) The act concerning county depositaries contemplated the use of checks and credits, in the usual and ordinary manner of doing business with banks. Secs. 6821, 6824, 6825 and 6826, R. S. 1899. The acts, therefore, of the various county treasurers, beginning with Pinkston, in making the transfer...