City of Hillyard v. Carabin

• Decision Date: 18 May 1917
• Docket Number: 13762.
• Citation: 96 Wash. 366,165 P. 381
• Parties: CITY OF HILLYARD ex rel. TANNER, Atty. Gen., v. CARABIN et al.
• Court: Washington Supreme Court

165 P. 381

96 Wash. 366

CITY OF HILLYARD ex rel. TANNER, Atty. Gen., v. CARABIN et al.

No. 13762.

Supreme Court of Washington

May 18, 1917

Department 2. Appeal from Superior Court, Spokane County; E. H Sullivan, Judge.

Action by the City of Hillyard, on the relation of W. V. Tanner Attorney General, against John A. Carabin and the Massachusetts Bonding & Insurance Company. From a judgment for plaintiff, defendants appeal. Judgment modified.

W. C Donovan and Chas. E. Swan, both of Spokane, for appellants.

W. V. Tanner, Atty. Gen., Scott Z. Henderson, Asst. Atty. Gen., C. C. Upton, of Hillyard, and L. L. Thompson, of Olympia, for respondent.

HOLCOMB J.

This action was brought on behalf of the city of Hillyard to recover from appellants Carabin and Massachusetts Bonding & Insurance Company, the surety on his official bond, certain sums of money which the city claims to have lost by reason of alleged fraudulent acts committed by Carabin, while acting as the city treasurer, together with his alleged coconspirators, the city engineer and city clerk.

The record shows that during Carabin's terms of office a great many men were employed by the city in constructing a water system, and that, instead of paying these men by warrant as provided in Rem. & Bal. Code, § 7687, they were paid in cash by Carabin when they presented a time certificate to him, signed by the foreman of the works, at which time they signed a voucher for the same. During the first part of the work this was the only record kept of these men. Later on pay rolls were kept, but the men were still paid by cash, instead of warrants. At the end of the month a warrant to relieve cash would be issued to Carabin by order of the city council. Carabin would then take this warrant to the bank, where it would be cashed, and the cash deposited to the credit of the city of Hillyard. The bank would hold the warrant until it was presented and paid. On April 1, 1913, Carabin, the city engineer, and the city clerk were charged with conspiracy, and later pleaded guilty to conspiring to defraud the city out of certain money by forging the names of fictitious persons on the pay roll. The evidence of handwriting experts was introduced also tending to show that the names on the receipts, vouchers, and pay roll were forged by Carabin, the city engineer, and the city clerk; it being respondent's theory that the alleged payees were fictitious persons, and that the moneys purported to have been paid to them were wrongfully retained by the conspirators.

From an adverse judgment in the sum of $4,015.93, appellants appeal, and urge that, since the gravamen of this action is fraud, in order for respondent to recover, it must establish by a preponderance of the evidence that Carabin was guilty of fraud as alleged, and also that the men whose names were alleged to have been forged to the pay roll and vouchers were fictitious persons, or had not worked for the city as pretended, and that such money was retained by Carabin and his coconspirators.

In considering this question, the evidence shows that Carabin might have incurred a prima facie liability on the ground of illegally paying out the city's money, irrespective respective of the question of active fraud, for Rem. & Bal. Code, § 7687, specifically provides that all demands against cities of the third class shall be paid by warrants which shall specify the purpose for which they are drawn. From this statute it is apparent that the action of Carabin in paying claims against the city in cash without warrant was an illegal act. McCormick v. Bay City, 23 Mich. 457. And it also created a shortage, as:

'All district funds once in the hands of the town treasurer must in law be regarded as continuing in his official custody until lawfully drawn out. Payments made otherwise are made in his own wrong, and cannot diminish the fund for which he is responsible.' People ex rel. Burns v. Bender, 36 Mich. 195; Seymour v. Ellensburg, 81 Wash. 365, 142 P. 875.

By his illegal act Carabin created a shortage in the fund of the city treasurer and illegally paid out the money of the city. Because of these facts we do not think that, in order to recover in this action, respondent must show also the manner of the misappropriation, which in this case would be impossible, for respondent could not show that men whose names were signed to the pay roll and time certificates did not work for the city at the time the cash was paid out. By ostensibly paying out the money, but in a wrongful manner, Carabin rendered it impossible for respondent to make this proof; and to now hold that respondent must so do would be to render ineffective the statute which requires that claims against the city must be paid by warrants, and place a premium upon its violation. Nor is the issuance of a warrant by the council to relieve the cash of any consequence, inasmuch as the council itself could not pay the city's current indebtedness by cash, and could not ratify Carabin's illegal act in so doing.

As it was not necessary for respondent to show that these men whose names were signed to the pay roll did not work...