City of Pocatello v. Fargo
| Citation | 242 P. 297,41 Idaho 454 |
| Parties | CITY OF POCATELLO, a Municipal Corporation, Respondent, v. LYMAN FARGO, WILLIAM F. KASISKA, DANIEL W. CHURCH, LILA FRANKLIN, Executrix, and CLARENCE E. FRANKLIN, Executor of the Estate of N. G. FRANKLIN, Deceased, and EARL C. WHITE, Appellants |
| Decision Date | 18 August 1925 |
| Court | Idaho Supreme Court |
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APPEAL from the District Court of the Fifth Judicial District for Bannock County. Hon. B. S. Varian, Presiding Judge.
Action to recover on depositary bond which defendants had signed as sureties. Judgment for plaintiff affirmed on original hearing. Affirmed in part and reversed in part on rehearing.
Cause remanded, with directions. No costs awarded upon this appeal.
B. W. Davis and Frank T. Wyman, for Respondents, file no brief on rehearing.
T. C. Coffin, for Appellants, Lila Franklin, Executrix, and Clarence E. Franklin, Executor.
If the public officer did not have the authority and power in the first instance to do the act which he sought to do or to make the contract which he sought to make, then that act and that contract cannot be ratified, and the municipality or other political subdivision whom the officer sought to represent cannot be bound thereby. (22 R. C. L., p. 460, sec. 122.)
A general deposit creates the relationship of debtor and creditor. It is a relationship established by a civil, legal contract cognizable in a court of law and enforceable in a court of law. By the creation of such relationship the title to the money deposited passes from the depositor to the depositary. (State v. Thum, 6 Idaho 323, 328, 55 P. 858; National Bank of the Republic v. Millard, 10 Wall. (77 U.S.) 152, 19 L.Ed. 897, 899.)
A certificate of deposit is not a special deposit within the meaning of subd. 4 of C. S., sec. 8379. (1 Morse on Banks and Banking, 5th ed., secs. 297-309, pp. 562-581.)
A special deposit is "A deposit for safekeeping to be returned intact on demand, or for some specific purpose not contemplating a credit on general deposit." (3 R. C. L. 517; 1 Morse on Banks and Banking, 5th ed., sec. 183; 7 C. J. 630.)
A special deposit is in the nature of a bailment. The relationship of bailor and bailee is a purely legal relationship and a breach of the duties imposed by that relationship confers no jurisdiction whatever upon a court of equity. (Young v. Mercantile Trust Co., 140 F. 61; affirmed in 145 F. 39, 75 C. C. A. 264.)
An unauthorized or unlawful deposit of public funds in a bank does not create a special deposit. Such unauthorized, and therefore unlawful, action gives rise to a trust ex maleficio. The bank being charged with notice of the officer's authority receives the money not on contract but charged with a trust. (C. S., sec. 8379; Myers v. Board of Education, 51 Kan. 87, 37 Am. St. 263, 32 P. 658; State v. Midland State Bank, 52 Neb. 1, 66 Am. St. 484, 71 N.W. 1011; State v. Thum, 6 Idaho 323, 55 P. 858; Board v. Wilkinson, 119 Mich. 655, 78 N.W. 893, 44 L. R. A. 493; San Diego County v. California Nat. Bank, 52 F. 59; Independent School Dist. v. King, 80 Iowa 497, 45 N.W. 908; Watts v. Cleveland, 21 Okla. 231, 95 P. 771, 16 L. R. A., N. S., 918; First National Bank v. Bunting & Co., 7 Idaho 27, 59 P. 929, 1106; Yellowstone County v. First Trust & Sav. Bank, 46 Mont. 439, 128 P. 596; Franklin Nat. Bank v. The City of Newark, 96 Ohio St. 453, 118 N.E. 117; Page County v. Rose, 130 Iowa 296, 106 N.W. 744, 5 L. R. A., N. S., 886; Board of Commrs. v. Strawn, 157 F. 49, 84 C. C. A. 553, 15 L. R. A., N. S., 1100.)
O. O. Haga and H. B. Thompson, for Appellants.
The defendants merely bound themselves to repay public funds deposited in a bank that was in no sense an official bank or an official depositary under the statutes having certain public duties to perform by reason of the deposit. ( Illinois Surety Co. v. United States, 226 F. 665, 141 C. C. A. 421.)
"It follows that the relation between the depositary and the county is that of debtor and creditor; that the depositary does not occupy the relation of a public officer having charge of public funds, which he may not use, and that the bond in suit is not, in a strict sense, an official bond." (Henry County v. Salmon, 201 Mo. 136, 163, 100 S.W. 20; Barrett v. Stoddard County, 246 Mo. 501, 511, 152 S.W. 43; Brown v. Wyandotte Co., 58 Kan. 672, 50 P. 888; Colquitt v. Simpson & Ledbetter, 72 Ga. 501.)
On January 23, 1925, a petition for rehearing was granted, and thereafter a reargument was had and the case again resubmitted. We have carefully re-examined the record and have reached the conclusion that the former opinion is correct in so far as it affects the liability of the appellant bondsmen for the moneys held by the Bannock National Bank on general deposit, viz.: the sum of $ 42,335.04. We will consider whether the obligation of the bond extends to a time deposit of $ 32,000 waterworks fund money made by the city treasurer March 26, 1919, evidenced by a time certificate of deposit issued by the bank on that date and renewed by succeeding city treasurers.
The depositary bond signed by the principal and sureties on July 7, 1915, contains the following conditions; "Now, therefore, if said Bannock National Bank shall at the beginning of each and every month (1) render to the city treasurer and city clerk a statement in duplicate showing the daily balance of the monies of the city of Pocatello held by it during the month next preceding and the interest thereof, and (2) shall well and truly keep all sums of money so deposited or to be deposited, as aforesaid, and the interest thereon subject at all times to the check and order of the city treasurer of said city of Pocatello, as aforesaid, and (3) shall pay over the same and any part thereof, upon the check or written demand of said city treasurer, and to her successor in office as shall be by her demanded, and (4) shall calculate, credit and pay said interest, as aforesaid, and shall in all respects save and keep the city of Pocatello, Idaho, and the treasurer thereof harmless and indemnified for and by reason of making such deposit or deposits, then this obligation shall be void and of no effect, otherwise to remain in full force and virtue."
On July 26, 1915, an ordinance was passed by the city of Pocatello, designating certain banks then doing business in said city as depositaries for all funds of the city of Pocatello. The ordinance provides that there shall be charged to the said banks designated as depositaries interest at the rate of three per cent per annum, payable quarterly to the said city on the average daily balances of the moneys of the city held in said banks, which said interest shall be credited quarterly to the account of said city of Pocatello. It requires that each bank shall render to the city treasurer and city clerk a statement in duplicate showing each day's balance of all funds belonging to the city and held in said banks, together with the interest thereon, for the month within which the statement is rendered. It stipulates that all deposits shall be subject to increase or decrease as shall be determined by the city treasurer, and the banks shall pay par value for any draft or warrant drawn by the city treasurer at date of maturity, provided there are sufficient funds on deposit belonging to said city to meet the draft or warrant. This ordinance further directs the city treasurer to deposit in equal and like proportion any and all funds in her possession or under her control and belonging to the city, or any funds which may come under her control, with the banks named in the ordinance, in like amount, upon the passage of the ordinance and the execution by the banks of the bonds therein specified, to make future deposits in like proportion and that she shall check on said banks in like proportion, and keep as nearly as practicable at all times an equal division of the funds in said banks. The ordinance then requires that each bank therein named shall give to the City of Pocatello a bond in the penal sum of not less than $ 50,000 to be approved by the council, which bond shall be conditioned upon the payment of interest and the full and faithful performance of the trust imposed by the ordinance. The bond of July 7, 1915, before referred to, was the bond furnished by the Bannock National Bank as one of the designated depositaries, and is the bond upon which this suit is brought. The trial court found, upon sufficient evidence, that the bond was accepted and approved by the city council at a meeting held July 29, 1915.
On February 7, 1918, there was passed by the council and on February 12, 1918, approved by the mayor of the City of Pocatello, an ordinance re-enacting the provisions of the ordinance of July 26, 1915, before referred to, but adding the provision that there might be deposited equally in the depositary banks on time deposit such amounts of money as should be determined upon by the finance committee of the city council, which said sums so deposited should draw interest at the rate of four per cent per annum, credited quarterly, and be withdrawn only upon the signatures of the city treasurer and two members of the finance committee of the council.
On March 26, 1919, the city treasurer, presumably under such authority as the revised ordinance gave, by check signed by herself and countersigned by the mayor, withdrew from the Bannock National Bank $ 32,000 of waterworks fund money then on general deposit, and...
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