Thorburn Ross v. State of Oregon

• Citation: 227 U.S. 150,57 L.Ed. 458,33 S.Ct. 220
• Decision Date: 27 January 1913
• Docket Number: No. 75,75
• Parties: J. THORBURN ROSS, Plff. in Err., v. STATE OF OREGON
• Court: United States Supreme Court

227 U.S. 150

33 S.Ct. 220

57 L.Ed. 458

J. THORBURN ROSS, Plff. in Err.,

v STATE OF OREGON.

No. 75.

Decided January 27, 1913.

Messrs. William d. guthrie and Wallace McCamant for plaintiff in error.

[Argument of Counsel from pages 151-154 intentionally omitted] Mr. A. M. Crawford, Attorney General of Oregon, and Messrs. Martin L. Pipes and George J. Cameron for defendant in error.

[Argument of Counsel from page 154 intentionally omitted] Mr. Justice Van Devanter delivered the opinion of the court:

This was a criminal prosecution in the state of Oregon, instituted by an information charging the defendants, of whom the plaintiff in error was one, with having converted to their own use a large sum of money belonging to the state's irreducible school fund, agricultural college fund, and university fund, collectively spoken of as educational funds, then held for safe-keeping in a bank of which the defendants were in control as its officers and directors. Upon a separate trial of the plaintiff in error he was convicted and sentenced to a term of imprisonment and to pay a fine. An appeal to the supreme court of the state resulted in the elimination of the fine and in the affirmance of the judgment in other respects. 55 Or. 450, L.R.A.(N.S.) ——, 104 Pac. 596, 106 Pac. 1022. The plaintiff in error then brought the case here, claiming that rights secured to him by the Constitution of the United States, and specially set up in the supreme court of the state, were denied by the judgment of affirmance.

Briefly outlined, the case, as we must take it to be, is as follows: In June, 1907, the bank became an 'active depository' under a statute of the state presently to be mentioned, and thereupon an account was opened with the bank as such depository in the name of the state treasurer, with the added designation, 'educational.' The deposits going into the account consisted of checks and drafts belonging to the state's educational funds, and the money collected by the bank on these checks and drafts, less what was drawn out by the state, amounted on November 6, 1907, to $288,426.87. On that day the bank failed, and it was then disclosed that on August 21 the total cash in the bank was $296.19 short of the amount called for by the account, and that this shortage had continued and increased until the day of the failure, when it reached $274,882.73. The defendants had not literally appropriated any of the money to their personal use, but, knowing that it belonged to the state's educational funds, and was received and held by the bank as an active depository, had permitted it to be commingled with other deposits and funds, and had sanctioned its use in paying liabilities of the bank.

The prosecution was founded upon § 1807 of Bellinger & Cotton's Anno. Codes & Statutes of Oregon, which declares: 'If any person shall receive any money whatever for this state, . . . or shall have in his possession any money whatever belonging to such state, . . . and shall in any way convert to his own use any portion thereof, . . . such person shall be deemed guilty of larceny.'

By an act taking effect May 26, 1907, Laws of 1907, chap. 135, p. 248, the legislature of the state provided for the designation of 'state depositories for the purpose of receiving on deposit funds of this state, and paying out the same on order or checks of the state treasurer' (§§ 1, 2); made it the duty of the treasurer to 'deposit and at all times keep on deposit' in such depositories the 'money in his hands belonging to the several funds in the state treasury,' excepting a reserve of not to exceed $100,000 with which to pay current obligations (§ 3); required each depository to pay interest on deposits of such funds at not less than 2 per cent per annum (§§ 3, 4), and to give approved security 'for the payment of such deposits and the interest thereon' (§ 5); and made the following declaration relating to educational funds (§16): 'The word 'funds,' used in this act, shall apply to all funds in the state treasury except the common school, agricultural college, and university funds.'

The same act authorized the designation of 'an active depository for the collection of any drafts, checks, certificates of deposit, and coupons that may be received by him [the treasurer] on account of any claim due the state' (§ 6); required such depository to give approved security 'for the prompt collection of all drafts, checks, certificates of deposit, or coupons that may be delivered to such active depository by the state treasurer for collection; also, for the safe-keeping and prompt payment on the state treasurers' order of the proceeds of all such collections' (§ 7); and in that connection provided (§ 8): 'The state treasurer, on receipt of any draft, check, or certificate of deposit, on account of state dues, may place the same in such active depository for collection, and it shall be the

The common school fund and the irreducible school fund appear to have been identical. Or. Laws 1907, chap. 117, § 36 duty of such active depository to collect the same without delay, without charge for its services for such collection, or for exchange, and to notify the state treasurer when collected. The compensation to be paid by such active, depository shall be fixed by the state treasurer upon the best terms obtainable for the state.' The words 'funds' particularly defined in § 16, as before quoted, was not used in any of the sections having special relation to the active depository.

'Before the passage of the depository act the supreme court of the state had occasion to consider and determine, in Baker v. Williams Bkg. Co. 42 Or. 213, 222-225, 70 Pac. 711, whether, in view of § 1807 of Bellinger & Cotton's Anno. Codes & Statutes (then § 1772, Hill's Anno. Laws), the state treasurer lawfully could make a general deposit in a bank of money of the state belonging to its educational funds, and it was held that he could, the court saying:

'It is made a felony by statute for any person having in his possession any money belonging to the state, county, town, or other municipality to convert to his own use or loan the same, with or without interest (Hill's Anno. Laws, § 1772); and while a mere deposit in a bank for safe-keeping is not inhibited by this provision, it is manifest that, in case of the failure of the bank, the officer is not entitled to interest in his own right on the fund so deposited, whatever the right of the state or municipality might be in the premises. If, therefore, the claims are in fact for public money, as the objectors allege, no interest should be allowed thereon. A public officer may not loan, with or without interest, any part of the public funds in his possession, without being guilty of a felony; but he is required to keep such funds safely, and for that purpose may deposit them in a bank, provided they are at all times subject to his order, and there is no fixed period during which he has no right to demand their return. . . . The deposit is made on his own personal responsibility however; and if, in case of the failure of the bank, he makes the loss good, the money deposited must necessarily become his property, and thereafter be considered and treated as such.'

After that decision, and before the transactions here in question, the depository act was passed and put in force, but its construction and operation were not determined by the supreme court of the state until it passed upon the case at bar. It was then held (a) that the act made provision for general depositories, wherein moneys of the state, not belonging to the educational funds, were to be placed as general deposits, with the right in the depository to comingle them with other deposits and to loan them in the usual course of business, and with an absolute obligation on the depository to pay interest on them at not less than 2 per cent per annum; (b) that the act also made provision for an active depository for the collection of checks, drafts, and the like, belonging to any state fund, whether educational or otherwise, and the safe-keeping of the proceeds, subject to the treasurer's order, but with no right in the depository to commingle them with other deposits or to loan them, and with no specific or absolute obligation on the depository to pay interest thereon; (c) that by contrasting the provisions relating to general depositories with those relating to the active depository it was evident that deposits in the latter, unlike deposits in the former, were to be special, the title not passing to the depository, but remaining in the state; and (d) that the act operated, and the legislature intended, to take the educational funds out of the custom or right of the treasurer to make general deposits which was recognized in Baker v. Williams Bkg. Co. supra. Then, coming to apply the act, as so construed, together with § 1807, to the facts of the case as reflected by the verdict of the jury, it was further held (1) that the bank held the money as a special deposit, the title being in the state; (2) that the* defendants, being in control of the bank as its officers and directors, and knowing of the deposit, were to be regarded as having the money in their possession within the meaning of § 1807; (3) that the commingling of the money with other deposits and the using of it in paying liabilities of the bank constituted an unlawful appropriation of it; (4) that as the defendants, as controlling officers and directors of the bank, sanctioned that appropriation, knowing that the money belonged to the educational funds of the state and was held by the bank as an active depository, they thereby converted the money to their own use within the meaning of § 1807, even although the appropriation was for the...