Bockoven v. Board of Com'rs of Okl. County

• Decision Date: 06 March 1928
• Docket Number: 17895.
• Citation: 267 P. 1053,131 Okla. 114,1928 OK 152
• Parties: BOCKOVEN et al. v. BOARD OF COM'RS OF OKLAHOMA COUNTY.
• Court: Oklahoma Supreme Court

267 P. 1053

131 Okla. 114, 1928 OK 152

BOCKOVEN et al. v. BOARD OF COM'RS OF OKLAHOMA COUNTY.

No. 17895.

Supreme Court of Oklahoma

March 6, 1928

Rehearing Denied May 22, 1928.

Application to File Second Petition for Rehearing Denied June 19, 1928.

Syllabus by the Court.

By sections 8572 and 8580, C. O. S. 1921, as they existed on December 2, 1920, a county treasurer had the authority to invest sinking funds in his hands in public securities of the classes therein enumerated, provided that the purchased securities matured prior to the maturity of the obligations for the payment of which such funds were collected. And where a purchase was made of any of such securities maturing subsequent to the maturity of the securities for the payment of which the funds so invested were collected, such investment was unauthorized and illegal, and constituted a breach of official duty in the administration of the sinking fund, for which breach the county treasurer and his surety will be civilly liable.

Commissioner's Opinion, Division No. 1.

Appeal from District Court, Oklahoma County; William H. Zwick Judge.

Action by the Board of County Commissioners of Oklahoma County against Arleigh E. Bockoven, former county treasurer, and his surety, the United States Fidelity & Guaranty Company. Judgment for plaintiff, and defendants appeal. Affirmed.

Ames Lowe & Cochran, of Oklahoma City, for plaintiffs in error.

J. K Wright, W. F. Smith, and L. W. Harrod, all of Oklahoma City for defendant in error.

TEEHEE C.

On May 15, 1926, the board of county commissioners of Oklahoma county recovered a judgment of $41,850, with interest at 6 per cent. per annum from December 2, 1920, against Arleigh E. Bockoven, former county treasurer of Oklahoma county. and his bondsman, the United States Fidelity & Guaranty Company, a corporation, under an amended petition filed November 23, 1925.

The petition in substance alleged that on December 2, 1920, Bockoven was county treasurer of Oklahoma county with two fidelity bonds by the United States Fidelity & Guaranty Company, one for $150,000 dated June 27, 1919, and the other for $210,000 dated September 13, 1920, copy of both of which bonds were by exhibit made a part of the petition; that on said date of December 2, 1920, Bockoven in his official capacity, invested for the account of Oklahoma county its sinking funds in the amount of $41,850 by the purchase of $45,000 par value of certain 6 per cent. waterworks bonds of the town of Pershing, Okl., dated August 1, 1920, and maturing August 1, 1945; that said sinking funds consisted of moneys theretofore collected on account of certain bonds of Oklahoma county theretofore issued and maturing on divers dates prior to the maturity date of the bonds purchased; that by virtue of the maturity date of the purchased bonds being subsequent to the maturity dates of the bonds for the payment of which the sinking fund moneys were collected, said investment was unauthorized and void; that no part of said funds so invested have been accounted for by Bockoven to his successor in trust as by law required, by reason whereof the conditions of the fidelity bonds were breached. Whereupon the county prayed judgment against the said parties principal and surety for the amount of the unauthorized and illegal investment.

Defendants, by separate answer, though identical, admitted the relationship of the parties defendant and the purchase of the bonds alleged, but otherwise denied the material allegations of the petition, and further pleaded settlement of the accounts of the defendant Bockoven in January, 1921, by the board of county commissioners of Oklahoma county upon the succession in trust, which settlement included the purchase of said bonds, and that by reason thereof the county was estopped from maintaining the action. New matter in the answer was by the plaintiff denied.

The cause was tried to the court without the intervention of a jury. The court made findings of fact affirmative of plaintiff's allegations on which the action was predicated, and specifically finding that the sinking fund moneys invested were collected for the purpose of retiring certain bonds of the county maturing in the years from 1923 to 1936, and that all of said bonds matured prior to maturity of the purchased bonds, and further specifically found from the evidence that there was no fraud or negligence on the part of the defendant Bockoven in the purchase of the town of Pershing bonds. Upon the findings of fact the court entered its conclusions of law as follows:

"The court concludes as a matter of law that the purchase of the bonds of the town of Pershing, made by Bockoven as county treasurer on the 2d day of December, 1920, was illegal, for the reason that the bonds so purchased matured subsequent to the maturity of the bonds to retire which the sinking fund of Oklahoma county in Bockoven's possession as county treasurer was collected and was being collected, and that under the law in force and effect on said date Bockoven as county treasurer was not authorized to invest sinking fund moneys in his hands as county treasurer in bonds which matured subsequent to the maturity of the bonds to retire which the sinking fund was created and was being collected,"

-and thereupon entered its judgment against the defendants, to which there was exception, and in due course the cause was lodged in this court for review. Further reference to the parties will hereinafter be made in accordance with their status in the trial court.

Defendants state the case on appeal as follows:

"There is only one question for this court's determination: Was Bockoven, under the law in force and effect on December 2, 1920, authorized to invest sinking fund money in waterworks bonds of the town of Pershing? If the investment was legal, then there is no liability on the part of Bockoven or on the part of the surety on his official bond. The court below held the purchase to be illegal on the sole ground that on the 2d day of December, 1920, Bockoven, as county treasurer, was not authorized to invest sinking fund moneys in his hands as county treasurer in bonds which matured in 1945, when all of the bonds to retire which the sinking fund was being collected matured prior to 1945. If under the law in force on that date Bockoven was authorized to invest sinking fund moneys in his hands as county treasurer in municipal bonds, regardless of maturity and regardless of the maturity of the bonds to retire which the sinking fund was being collected, then the judgment of the court below is erroneous and should be reversed."

Thereunder, the effect of defendant's contentions are that section 8572, C. O. S. 1921, was the controlling provision of law, and as construed by this court in National Surety Co. v. State, 111 Okl. 180, 239 P. 257, in that it authorized purchase of bonds regardless of their maturity date, determines the validity of the transaction involved, and, though the investment resulted in misfortune to the county by reason of the bankruptcy of the town of Pershing, that under the construction by this court placed upon the statute, defendants are relieved of all liability, since, as found by the trial court, the investment was made in good faith and without negligence.

Plaintiff's response in effect is that the provision of law relied on by defendants must be read and interpreted with section 8580, Id., which authorized purchase of bonds maturing prior to the maturity date for the payment of which the funds were collected, and in the light of sections 26 and 28 of article 10 of the state Constitution, and that so construed the judgment of the trial court must be sustained. To this defendants rejoin that section 8580 was repealed by implication by section 8572, and that the sections of the Constitution cited by plaintiff are without application, as they have no reference to the investment of sinking funds.

These conflicting views require judicial ascertainment of the relevant provisions of law and the proper construction thereof.

The provisions of law contained in the statutes at the time of this investment, in point of their date of enactment, were section 1 of chapter 12, S. L. 1913, now designated as section 8580, C. O. S. 1921, and section 1 of chapter 207, S. L. 1919, now designated as section 8572, C. O. S. 1921. For convenience these provisions will hereinafter be referred to under their designated numbers in the Compiled Statutes. Section 8580 then provided as follows:

"The county treasurer, the treasurer of cities, towns, boards of education and township boards, shall invest all sinking fund money now in the respective treasuries, or that may hereafter be paid into said treasury, in county warrants, township warrants and school district warrants, school district bonds, township bonds, county bonds, road bonds, and town and city bonds; provided, said bonds shall first be approved by the Attorney General, and shall mature before the maturity of the bonds for which said sinking fund money was collected, and said warrants must have been issued within the limit as fixed and approved by the county excise board, for the fiscal year during which such warrants are issued; provided further, such officer or officers shall not pay for such bonds or warrants more than par with accrued interest."

This was a legislative direction to trust officers having charge of certain sinking funds to invest the same in certain enumerated securities recognized by the Legislature as being appropriate in which to invest these trust funds, but limited such investment to those securities which matured prior to the maturity date of the obligations of the purchasing subdivision of the state for the payment of which at their maturity...