Montgomery County v. Cochran

• Decision Date: 16 November 1903
• Docket Number: 1,296.
• Citation: 126 F. 456
• Parties: MONTGOMERY COUNTY v. COCHRAN et al. COCHRAN et al. v. MONTGOMERY COUNTY.
• Court: U.S. Court of Appeals — Fifth Circuit

126 F. 456

MONTGOMERY COUNTY v. COCHRAN et al.

COCHRAN et al. v. MONTGOMERY COUNTY.

No. 1,296.

United States Court of Appeals, Fifth Circuit.

November 16, 1903

Wm. L Martin, John G. Finley, and Jesse F. Stallings, for plaintiff in error and cross-defendant in error.

Edgar H. Gans, Thomas A. Whelan, Thomas H. Watts, and Alexander Troy, for defendants in error and cross-plaintiffs in error.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge.

This case has been tried twice in the Circuit Court. It is before us for the second time on writ of error sued out by Montgomery county. It is an action brought by Montgomery county, Ala., against John J. Cochran and the Fidelity &amp Deposit Company of Maryland, a corporation chartered under the laws of Maryland. On being elected treasurer of Montgomery county, Cochran gave bond in the sum of $120,000 with condition to faithfully discharge the duties of such office, and the Fidelity & Deposit Company became surety on his bond. With the approval of his surety, Cochran appointed John P. Kohn his agent, with full authority to act for him as treasurer in the receipt and disbursement of money. The Legislature of Alabama passed an act to authorize the board of revenue of the county to issue bonds of the county, for an amount not to exceed $100,000, for improving the public roads. The board was authorized by the act to sell the bonds. The treasurer was made responsible for the safe-keeping of all the proceeds accruing from the sale of the bonds which may come into his hands in his official capacity. the same as for other funds or money in his hands as such treasurer. Under other statutes of the state, it was made the duty of the treasurer to receive and keep the money of the county, and disburse the same according to law. And official bonds are by other statutes made obligatory on the principal and surety thereon for the faithful discharge of any duties which may be required of such officer by any law passed subsequent to execution of such bonds, although no such condition be expressed therein; and the bond is made to stand as indemnity against 'any wrongful act committed under color of his office as by his failure to perform, or by the improper or neglectful performance of those duties imposed by law. ' Under authority of the act referred to, the board issued $100,000 of negotiable coupon bonds, payable to bearer, and sold them January 8, 1901, to Josiah Morris & Co., for $111,109.58. John P. Kohn was an employe of the banking house of Josiah Morris & Co. Charles A. Allen was the clerk of the board which held the bonds, and which was authorized to sell them. Seeking to obtain possession of the bonds, Kohn tendered to the clerk of the board the check of the purchaser of the bonds on the bank of Josiah Morris & Co. for the amount agreed to be paid for them, and the clerk declined to receive the check and deliver the bonds. Kohn then left the presence of the clerk, and later returned and presented to him a receipt, signed by John J. Cochran, county treasurer, by John P. Kohn, his attorney, dated January 8, 1901, acknowledging receipt from the board of revenue of the county of $111,109.58, 'proceeds sale $100,000.00 bonds.' On presentation of this receipt, the bonds were delivered to Kohn, who delivered them to the bank. They were sent out of the state and sold, and are outstanding against the county. All this occurred on the afternoon of the 8th of January, 1901. The check given for the bonds was deposited by the treasurer January 8, 1901, in the bank of Josiah Morris & Co., and placed to the credit of Cochran, as treasurer, who charged himself with the amount of the check on his official account and reports. Seventeen days after these transactions, the bank closed its doors and remained suspended. Before the bank was closed, on and after January 8th, warrants to the amount of $5,769 drawn by the treasurer on this fund were paid at the bank. At the time the check was deposited, the amount of cash in bank was about $35,000.

The Circuit Court held on the first trial that these facts did not constitute a breach of the treasurer's bond, and directed a verdict for defendant so far as the fund in question was concerned. A judgment was had, however, for the plaintiff, on that trial, for other funds, amounting to $36,862.92, about which there was no controversy. The county of Montgomery sued out a writ of error to reverse this judgment, because it did not include the proceeds of the dale of the bonds. It was decided here (a) that the statute having provided that the treasurer should be responsible for the safe-keeping of all of the proceeds accruing from the sale of the bonds which came into his hands in his official capacity, in the same manner that he was liable for other county funds or money in his hands as such treasurer, the words 'proceeds of sale' and 'funds or money,' used in the statute authorizing the bonds to be issued, are not limited in meaning to coin and bank bills, but include any other medium of payment authorized by general usage, and that the treasurer is responsible on his bond where he accepted a check given by the purchaser of the bonds, and receipted for the same as the proceeds of the bonds; (b) that the effect of the transaction disclosed by the evidence was the same as though the treasurer had received coin or bank bills from the board of revenue as the proceeds of the bonds, and had deposited the same, and that he was liable to the county on his bond as for conversion of the money, it being the law of the state that a general deposit of the county funds in a bank by the treasurer is a conversion of the money; (c) and that if it be conceded, on the facts of the case, that the treasurer had no right to accept the check, or that it was found to be worthless, his acceptance of it, and his receipting to the board for the proceeds of the bonds, by reason of which they were issued and became obligations of the county, amounted to an improper or neglectful performance of a duty imposed by law, and that he and the surety on his bond were liable for the loss resulting to the county. Montgomery County v. Cochran, 121 F. 17, 57 C.C.A. 261.

The decision on the former writ of error cannot be re-examined now. 'Whatever has been decided upon one appeal cannot be re-examined in a subsequent appeal of the same suit. Such subsequent appeal brings up for consideration only the proceedings of the Circuit Court after the mandate of this court. ' Supervisors v. Kennicott, 94 U.S. 498, 24 L.Ed. 260. This rule is equally applicable to the United States Circuit Courts of Appeals. Morgan v. Johnson, 106 F. 452, 45 C.C.A. 421; Supreme Lodge v. Lloyd, 107 F. 70, 46 C.C.A. 153; City of Austin v. Bartholomew, 107 F. 349, 47 C.C.A. 327; Board of Commissioners v. Geer, 108 F. 478, 47 C.C.A. 450. The decision of this court, therefore, on the first writ of error, was the law of the case, to control and govern the Circuit Court on the second trial. This appears to have been fully recognized by the learned trial judge. But the controversy on the second trial was on the question of the proper construction of the former decision of this court.

On the second trial, from which this writ of error is prosecuted, there was no material change in the evidence, except that additional testimony was offered to show the insolvency of the banking house of Josiah Morris & Co., in which the treasurer deposited the funds of the county; and, on behalf of the county, the additional fact was proved that the Fidelity & Deposit Company of Maryland knew when it became the surety of the treasurer that the funds that were to be received by him were to be deposited in the bank of Josiah Morris & Co. It was conceded on the second trial that, according to the decisions of this court, there had been a breach of the treasurer's bond. The point of contention was as to the measure of damages. The defendants contended that the measure of damages was the amount which the treasurer, by proper diligence, could have collected on the check which he received and deposited. The trial court sustained this contention, and instructed the jury that the measure of damages was 'the amount which the treasurer could have recovered by due diligence if he had used it in collecting the check. ' 'The issues before you, then,' added the learned judge, 'are, first, having got this check, what could he reasonably have gotten out of it if he had been diligent to collect it next morning, when the bank opened? On that branch of the case, he and his surety are liable for what he could have collected by due diligence-- if the whole amount, he would be liable for the whole amount; if any less amount, he would be liable for that-- because he breached his bond when he put that check on general deposit, instead of trying to collect it. ' Proceeding under these instructions, the jury found a verdict, and judgment was entered for the county, for only $67,103.05. The county claimed that, after allowing all proper credits, the amount due it was $96,154.58, and has sued out this writ of error to reverse this last judgment.

The trial court wholly misapprehended the decision of this court in concluding that it was decided that it was the duty of the treasurer to receive it' (the check for $111,109.58 for the purchase of the bonds). It was not decided that he was required by law to receive the check as money. He certainly would not be required to so receive a check knew to be worthless. He would be guilty of gross negligence if he received a check as money under circumstances that would cause a loss to the county, when he had reason to suspect that the check was not good. It is probable that he would receive any check as money at his peril. We were...