City of Cozad v. Thompson

• Decision Date: 13 February 1934
• Docket Number: 28773
• Parties: CITY OF COZAD, APPELLEE, v. WILLIAM T. THOMPSON ET AL., APPELLANTS
• Court: Nebraska Supreme Court

252 N.W. 606

126 Neb. 79

CITY OF COZAD, APPELLEE, v. WILLIAM T. THOMPSON ET AL., APPELLANTS

No. 28773

Supreme Court of Nebraska

February 13, 1934

APPEAL from the district court for Dawson county: ISAAC J. NISLEY JUDGE. Affirmed.

AFFIRMED.

Syllabus by the Court.

1. When the jury is waived and a law action is tried to the court findings of fact have the same effect as findings of a jury. They will not be set aside unless clearly wrong.

2. A treasurer of a city of the second class, who is also a stockholder, director and officer of a bank, and who deposits moneys of the city in such bank, knowing it to be insolvent, and that the bank has given no bond for the security of such moneys, and who fails to inform the city of the condition of the bank, is guilty of actionable negligence rendering him liable for such moneys remaining in the bank when taken over by the banking department.

3. Likewise, under the facts stated, the treasurer's surety is liable under a bond conditioned that the treasurer will promptly pay over all moneys coming into his hands by virtue of his office and will faithfully discharge all other duties of his office.

4. A municipality is not estopped by the unauthorized acts of an officer of limited authority.

Appeal from District Court, Dawson County; Nisley, Judge.

Action by the City of Cozad against William T. Thompson and another. Judgment for plaintiff, and defendants appeal.

Affirmed.

Cook & Cook, Montgomery, Hall & Young and Harvey M. Johnsen, for appellants.

Halligan, Beatty & Halligan and Milton C. Murphy, contra.

Heard before GOSS, C. J., ROSE and PAINE, JJ., and CHASE and ELDRED, District Judges.

OPINION

GOSS, C. J.

On a trial to the court judgment was rendered against William T. Thompson, former city treasurer, and American Surety Company of New York, surety on his official bond, for principal and interest found due upon the unpaid balance of city deposits made by the treasurer in Farmers State Bank of Cozad when that bank was insolvent, and while Thompson was admittedly a stockholder, director and officer of the bank. Defendants appealed.

Thompson was elected city treasurer for a term of two years commencing May 1, 1928. His official bond for $ 10,000 was executed by himself and by the surety company on April 9, 1928. It contracted to protect the city for "two years from May 1, 1928, and until his successor is duly elected and qualified" and contained the following: "Now, therefore, if the said W. T. Thompson, Jr., shall render a true and just account of his office and doings therein to the proper authority, when required thereby or by law, and shall promptly pay over to the person or officer entitled thereto all moneys which may come into his hands by virtue of said office, and shall faithfully account for all balances of money remaining in his hands at the termination of his term of office, and shall hereafter exercise all reasonable care and diligence in the preservation and lawful disposal of all books, papers and securities, or other property appertaining and belonging to his said office, and deliver them to his successor or to any person or party authorized by law to receive the same; and if he shall faithfully and impartially, without fear, favor, fraud or oppression, discharge all other duties now or hereafter required of him as such an officer by law, then this obligation to be null and void, otherwise to be and remain in full force and effect."

The petition was bottomed upon the theory that the treasurer knew the bank was insolvent and an unsafe depository for city money but, with gross negligence and without regard to the welfare of the city, deposited its money in the bank and allowed it to remain there for his own benefit and for the purpose of assisting the bank financially.

On May 20, 1929, the bank was taken over by the guaranty fund commission as insolvent. When Thompson took office the bank held deposits of city money amounting to $ 3,962.37. On May 20, 1929, these deposits amounted to $ 7,786.54. Pursuant to a reorganization plan agreed to by more than 85 per cent. of depositors and unsecured creditors, under section 8-181, Comp. St. 1929, the bank was reorganized, with the approval of the banking department, and was reopened on July 3, 1929. The old capital stock was canceled, 500 new shares were issued and paid for at $ 120 a share, depositors and creditors scaled their credits 50 per cent. and were allowed the slow and doubtful assets, to be liquidated by a trustee. The plaintiff did not join in the reorganization agreement but was paid 50 per cent. of its deposits. This action was brought to recover from Thompson and his surety the balance due the city, which had been charged off when the bank reorganized. The payment by the bank and smaller payments by the trustee so reduced the balance due from Thompson to the city that it amounted to $ 3,036.78. The court allowed interest at 7 per cent. on this sum from May 1, 1930, and rendered judgment against defendants on September 26, 1932, for $ 3,585.78.

By stipulation of the parties, jury trial was waived and the cause was tried to the court. When a jury is waived and a law action is tried to the court, findings of fact by the court have the same effect as findings of a jury. They will not be set aside on review unless clearly wrong.

Without reciting the evidence, it is sufficient to support the conclusion that at least from May 1, 1929, to the end of his term a year later, the bank was insolvent, and Thompson, as one of its active officers, knew it. See Westbrook v. State, 120 Neb. 625, 234 N.W. 579. What he knew as a banker he knew as a treasurer. Yet, as treasurer, he continued to use the bank as a depository of city funds and failed to inform the city authorities of the unsafe condition of the bank. The city claims this was a violation of the condition of his bond and was actionable neglect of his official duty.

The bank had been designated as a depository of city funds but had not given any bond to secure the city deposits. Under the law then existing state banks were, by statute exempted from the requirement to give bond imposed upon other banks. Comp. St. 1929, sec. 17-515. This exemption was removed in 1931. Laws 1931, ch. 33, Comp. St. Supp. 1933,...