Bragg City Special Road Dist. v. Johnson
| Decision Date | 13 September 1929 |
| Docket Number | No. 29372.,29372. |
| Citation | 20 S.W.2d 22 |
| Parties | BRAGG CITY SPECIAL ROAD DISTRICT v. EVERETT L. JOHNSON ET AL., Appellants. |
| Court | Missouri Supreme Court |
Appeal from Dunklin Circuit Court. — Hon. W.H.C. Walker, Judge.
AFFIRMED.
Charles P. Williams for appellant, Independence Indemnity Company.
(1) Plaintiff had complete power to prescribe all duties of treasurer. Among his duties, the most obvious was the custody and disposition of the funds. Under such power, the plaintiff could prescribe the duty of the treasurer. (2) Disobedience to regulations prescribed by competent authority would, in itself, involve plain liability. Murfree on Official Bonds. sec. 327; Yohe v. Commonwealth, 13 Atl. (Pa.) 546; B. & O. Railroad Co. v. Gaulter, 165 Ill. 239. On the other hand, obedience to such regulations absolves. Ex parte Morris. 76 U.S. 607. (3) There was in legal and necessary effect, a duty prescribed to deposit the funds in the designated bank. Where that was complied with, it is municipal fraud and bad faith, under the facts of this case, to hold the surety liable for such compliance. (4) The occasion is proper, as a matter of right and justice, to invoke as against the plaintiff the doctrine of estoppel. Town of Montevallo v. School Dist. 268 Mo. 217; Mountain View v. Tel. Exchange, 294 Mo. 623; Cole County v. Trust Co., 302 Mo. 222. Independent of estoppel, the duty was prescribed. (5) The existence of power to prescribe a depository may be implied, as well as express. 18 C.J. 583. Title "Depositories;" Hevens v. Ludlow, 169 S.W. (Ky.) 473; City of Newburgh v. Dickey. 164 App. Div. (N.Y.) 792; Pocatello School Dist. v. Fargo, 38 Ida. 596. (6) The peculiar form of the deposit had nothing to do with the loss, or its causation. Johnson v. Bank, 56 Mo. App. 257; 2 Michie on Banks & Banking, 957: Meridian Nat. Bank v. Hanser, 145 Ind. 496: Smith v. Essex County, 48 N.J. Eq. 627.
Ward & Reeves for respondent.
(1) Even though a depository of the funds in controversy was authorized and legally selected by the board of commissioner of the road district, and the funds were placed therein by the legal authority and direction of the board, yet the defendants are liable in this action on this official bond, because they are insurers, of this money and they are required at any and all events to account for and pay over the money as provided in the bond. Fayette v. Silvey, 290 S.W. (Mo. App.) 1019; University City v. Schall, 275 Mo. 667; State ex rel. Mississippi Co. v. Moore, 74 Mo. 413; State ex rel. v. Powell, 67 Mo. 395; United States v. Prescott, 3 How. 578, 11 L. Ed. 734; 15 C.J. 520. sec. 197. (2) The board of commissioners was not authorized by any law to designate or appoint a depository for the funds of the district, and therefore such attempt to appoint a depository amounted to a nullity, especially insofar as liability on the bond is concerned. There is no statute authorizing such a depository. University City v. Schall, 275 Mo. 667. (3) The board of commissioners had no implied authority to appoint or designate a depository. A political subdivision of the State has no implied authority to designate a depository for public funds. State ex rel. v. Wilson, 151 Mo. App. 723; University City v. Schall, 275 Mo. 675. (4) This court has decided the matter adversely to the contention of appellants respecting fourth class cities and we can see no reason for a different ruling with reference to road districts. University City v. Schall, 275 Mo. 667. (5) Even though it be admitted that the depository was legally selected, yet the defendants are liable on the bond as insurers of the safekeeping of the money. The bond on its face specifically provides that the treasurer should pay and account for all funds coming into his hands by virtue of his said office as treasurer, as required by law. The surety was one for hire or compensation and there is no condition of the bond relieving the surety of liability in event the treasurer placed the funds in a depository. The treasurer and his surety must account for these funds because under the very nature of the treasurer's official responsibility and his surety's like responsibility under the conditions of the bond, they are insurers against loss to the road district. Fayette v. Silvey, 290 S.W. 1019: State ex rel. v. Powell, 67 Mo. 395: State ex rel. v. Moore, 74 Mo. 413; 15 C.J. 520-521; United States v. Prescott, 3 How. 578, 11 L. Ed. 734. (6) A municipality or subdivision of the State cannot be estopped by any acts or conduct of its public officers. The public concern and public welfare could not be properly conserved if the acts and conduct of its officers could work an estoppel. There can be no estoppel in such cases. School District v. Correll, 286 S.W. (Mo. App.) 136; St. Joseph v. Railroad, 268 Mo. 47; Town of Montevallo v. School District, 268 Mo. 217; Hannibal, etc., Railway Co. v. Marion County, 36 Mo. 307; Simpson v. Stoddard County, 173 Mo. 464; Sparks v. Jasper County, 213 Mo. 243; Cole County v. Trust Co., 302 Mo. 222; Dunklin County v. Chouteau, 120 Mo. 577. (7) The bond in this case, in legal effect, is an insurance contract, which stipulates without condition or reservation that the treasurer shall pay over and account for all moneys coming into his hands as treasurer. Goffe v. Natl. Surety Co., 9 S.W. (2d) 929.
The respondent, plaintiff below, is a special road district in Pemiscot County, organized under the provisions of Article VII, Chapter 98, Revised Statutes 1919. This is a suit upon the bond given by defendant Johnson, treasurer of said district, as principal, and the Independent Indemnity Company as surety, brought in Pemiscot County. The venue was changed to Dunklin County, and judgment went for plaintiff. The cause was submitted upon the pleadings and an agreed statement of facts. Johnson became treasurer of the district on May 1, 1925, and on June 11, 1925, the bond sued on was executed and delivered by him as treasurer, and the Indemnity Company as surety, in the sum of $25,000, whereby the makers bound themselves for the payment of said sum "unto John M. McTeer, president, and R. Nelson, Secretary, acting for and on behalf of" plaintiff. The bond recites that it was to cover the official term of said Johnson from May 1, 1925, to May 1, 1926, or until his successor should be elected and qualified. The condition of the bond is: "That if the above bounded Everett L. Johnson shall faithfully perform all the duties of his office, and shall pay over and account for all funds coming into his hands by virtue of his said office of treasurer as required by law, then this obligation to be void: otherwise to be and remain in full force and virtue."
It is admitted that the successor of Johnson was appointed and qualified on July 22, 1926, and demand was made on Johnson that he account for and pay over to his successor, or to the district, the funds then in his hands as such treasurer, and that he has made no accounting or payment: that between May 1, 1925, and May 1, 1926, Johnson as treasurer had in his hands the funds of the district and that as treasurer he deposited said funds, being all the money in controversy, in the Bragg City Bank, and that said moneys were on deposit in said bank on May 1, 1926, at the time at which said bank failed and closed its doors. It is further admitted that said bank has not paid any dividends to its creditors, and will never pay any dividends; that Johnson as treasurer had the sum of $14.760.97 deposited with said bank during the time covered by his bond: that the Bragg City Bank never gave any bond as depository of the funds of the district and that by failure of the bank, there is a total loss of the funds of the district.
The statement further shows that on November 9, 1923, as appears by the minutes of the board of commissioners of the district, it was ordered that the Bragg City Bank be designated as depository of all funds of the district for a term of three years, and the recital was that the president and secretary of the board were authorized and ordered to enter into a contract with the bank to act as depository for said funds, on condition that the bank act as clearing house for all warrants drawn on the district, and keep an accurate statement of the financial affairs of the district and be able and ready to make a report of the financial standing of the district when called for by the board of commissioners. It is further admitted that the premium, or compensation to the Indemnity Company for issuing and delivering the bond, was paid by the district, and that before delivery of the bond the Indemnity Company, on June 10, 1925, received from the president and secretary of the plaintiff district a communication certifying that said president and secretary had audited the accounts of the treasurer (the predecessor of Johnson) and found the same correct; and, by said communication it was further certified: "The board passed a resolution designating the Bragg City Bank as depository of the Special Road Funds." It is also admitted that the bank never gave a bond as depository, and that the Indemnity Company had no knowledge of such fact, and never made requirement of the giving of a bond by the bank as depository. It is admitted that J.M. McTeer and R. Nelson were respectively president and secretary of the board of commissioners of the district at the time the bond was executed, and prior thereto, and were such at the time of the failure of said bank; also, that J.M. McTeer was the president and active managing officer of the bank for at least two years prior to the time of the execution of the bond, and was such for some months thereafter, and was succeeded as president of the bank by defendant Johnson, who continued as president until after the failure of the bank. It is agreed that the Indemnity Company had no knowledge of the connection of McTeer or of Johnson, with the bank.
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