Black v. Special School District No. 2

• Decision Date: 25 January 1915
• Docket Number: 138
• Citation: Black v. Special School District No. 2, 173 S.W. 846, 116 Ark. 472 (Ark. 1915)
• Parties: BLACK v. SPECIAL SCHOOL DISTRICT NO. 2
• Court: Arkansas Supreme Court

173 S.W. 846

116 Ark. 472

BLACK v. SPECIAL SCHOOL DISTRICT NO. 2

No. 138

Supreme Court of Arkansas

January 25, 1915

Appeal from Miller Circuit Court; Jacob M. Carter, Judge; affirmed.

Judgment affirmed.

E. F Friedell, E. B. Buchanan and Carmichael, Brooks, Powers & Rector, for appellant.

1.Neither a special school district, nor its board of directors is authorized by the statute to sue.Kirby'sDig., § 1990.Being a penal statute and in derogation of the common law, it must be strictly construed.59 Ark. 356;65 Ark. 532;82 Ark. 251.

As between the special school district and the trust company the relation of lender and borrower existed.Appellee stands in the same relation to the trust company as any other individual and is entitled to no greater or different protection.98 Ark. 294;69 Ark. 43.

2.The appellee had no vested right in a remedy given by the statute which could not be taken away from it by the Legislature.43 Ark. 420;48 Ark. 187;Id. 519;83 Ark. 344;56 Ark 152;93 U.S. 108;10 Wis. 481;36 Wis. 344;109 U.S. 285;113 U.S. 646;31 Ind. 219;2 Peters 386, 413; 9 Bush (Ky.) 351;101 U.S. 433; Cooley, Const. Lim. (7 ed.) 544;2 Sutherland, Stat. Const., (2 ed.) 285; Endlich, Int. Stat., par. 479.

3.Act 113 of the Acts of 1913, was intended to cover the entire liability of stockholders, and was passed after the decision of Warren v. Nix,97 Ark. 374, and it must have been intended to repeal section 1990, of Kirby's Digest.92 Ark. 600;100 Ark. 504;101 Ark. 238;88 Ark. 234;80 Ark. 411;82 Ark. 302;105 Ark. 77;72 Ark. 8;76 Ark. 443;Id. 32;70 Ark. 25;Sutherland, Stat. Const., § 140.

A. S. Gibson, Louis Josephs, John N. Cook, Pratt P. Bacon, Webber & Webber and W. H. Arnold, for appellant stockholders.

No provision is made in the statute for a suit against the stockholders other than in favor of collectors of taxes, county treasurers and treasurers of cities and towns, and the courts can not amend it by extending its provisions to apply to school districts or any other class of depositors.46 Ark. 163;75 Ark. 542;71 Ark. 561;82 Ark. 247;74 Ark. 306.

Gustavus G. Pope, for appellee.

1.This being a deposit of public funds, the stockholders are primarily liable.Kirby'sDig., §§ 1990-1993;139 F. 114;97 Ark. 385.If they are primarily liable, it can make no difference, so far as they are concerned, whether the funds belonging to the special school district were deposited in the name of the county treasurer or in the name of the district.84 Ark. 520.

The deposit in the name of the district carried with it notice to the stockholders that it was a public fund, as much so as if it had been deposited in the name of the coun'ty treasurer.The statute, section 1993, Kirby's Dig., defines public funds, and its definition is broad enough to include the proceeds of the sale of bonds, or any other funds belonging to the district; and this definition applies to the amendment of 1903. 91 Ark. 243;89 Ark. 598;73 Ark. 600;55 Ark. 389.

2.The court will not confine itself to a mere literal construction of the statute, but will look to the intention expressed in it.109 Ark. 556;102 Ark. 373.

3.The fund in this case was unquestionably a deposit, credited on the pass book as such, and payable on demand.98 Ark. 385.

4.The banking act, Acts 1913, could not affect the liability of the stockholders, because the trust company never complied with that act, and because it went into the hands of a receiver before the act went into effect.110 Ark. 161.

It does not repeal the public fund act by implication or otherwise.92 Ark. 600.

SMITH, J. MCCULLOCH C. J., dissenting.

OPINION

SMITH, J.

Special School DistrictNo. 2, of Miller County, Arkansas, by its directors, sued the stockholders of the Texarkana Trust Company, to recover the sum of $ 3,217.66, which had been deposited with the trust company prior to October 1, 1913, by the directors of the school district, the character of the funds being known at the time the deposit was received.The trust company was placed in the hands of a receiver on November 12, 1913, and its affairs are now being administered under the insolvency laws of this State.This deposit was derived principally from the sale of bonds, although the amount was credited by interest allowed, and by the proceeds of the sale of a certain lot, and by some insurance collected.It is sought to charge the directors of the trust company with liability for this deposit under the provisions of sections 1990-1993, of Kirby's Digest, and this appeal involves the applicability of those sections to the facts of this case, the trial court having directed a verdict in favor of the school district.

It is said, too, that ActNo. 113, of the General Assembly approved March 3, 1913, page 462, supersedes the above numbered sections of the Digest, as it undertakes to cover the entire subject of the liability of shareholders in a banking corporation.It is urged that section 36 of this banking act of 1913 accomplishes this result.That section reads, as follows:

"Section 36.The stockholders of every bank doing business in this State shall be held individually responsible equally and ratably, and not one for another, for all contracts, debts and engagements of such bank, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such stock; provided, that persons holding stock as executors, administrators, guardians or trustees shall not be personally subject to liability as stockholders, but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward or person interested in such trust fund would be, if living, and competent to act and hold the estate in his own name."

It is unnecessary to decide here the liability of shareholders in banking corporations where that liability accrues after the banking act of 1913 became effective.The facts here are that this banking act of 1913 was not in force at the time the liability of appellants became fixed.The deposit in this case was made and the trust company had failed and been placed in the hands of a receiver before this banking act was in force.The presumption is that all legislation is intended to act prospectively, and not retrospectively.Sections 19901993, of Kirby's Digest, were intended for the protection of the custodians of the public funds therein named, and we find nothing in the banking act to indicate any purpose to change the liability of shareholders of banking institutions in which public funds had been deposited where that liability had become fixed by the failure to pay over as required by those sections.And we need not, therefore, consider the power of the Legislature to change this liability, had such purpose been manifested by the banking act.

By an act numbered 137 of the General Assembly of 1891, found at page 230, of the acts of that year, it was enacted that "It shall be unlawful for any officer of this State, or of any county, township, city or incorporated town in this State, or any deputy clerk or other person employed by any such officer, having the custody or possession of any public funds, by virtue of his office or employment, to use any of such funds in any manner whatsoever for his own purpose or benefit, or to loan any of such funds to any person or corporation whomsoever or whatsoever, or to permit any person or corporation whomsoever or whatsoever, to use any of such funds, or to pay or deliver any such funds to any person or corporation, knowing that he is not entitled to receive it, or for any such officer to wilfully fail or omit to pay over any such funds to his successor in office at the expiration of his term of office."

The Legislature of 1903 amended this act by the addition of the following proviso:

"But collectors of taxes, county treasurers and treasurers of cities and incorporated towns may deposit the public funds in their custody in incorporated banks for safekeeping; and the said officers and the sureties on their official bonds, the bank and the stockholders of the bank shall be liable for all funds that such bank on demand shall fail to pay to the person entitled to receive the same."

Section 1993 of Kirby's Digest, is a portion of the above-mentioned act of 1891, and it provides:

"For the purpose of this act'public funds' shall be construed to mean all lawful money of the United States, and all State, county, city, town, or school warrants or bonds, or other paper having a money value, belonging to the State, or to any county, city, incorporated town or school district therein."

It is thus seen that by the act of 1891, it was made unlawful for the custodian of public funds to make a general deposit of such funds with any bank or trust company; but by the act of 1903, (Kirby's Digest, § 1990), collectors of taxes, county treasurers and treasurers of cities and incorporated towns were permitted to deposit funds in their custody in incorporated banks for safekeeping.And, when so deposited, the stockholders of such bank were made liable for the deposit, upon the failure of the bank to pay the deposit on demand to the person entitled to receive it.

It is said that this act should be strictly construed and that, when so construed, it can have no application to this deposit, for the reason that it was made by school directors, and not by a collector of taxes, nor by the treasurer of any county, city or town, and that this act inures only to the benefit of collectors and treasurers, and that no other persons depositing public funds can claim the benefits of its provisions.

The majority of the court are of the opinion that only collectors and the...