City of Pocatello v. Fargo

• Court: Idaho Supreme Court
• Writing for the Court: ADAIR, District Judge.
• Citation: City of Pocatello v. Fargo, 41 Idaho 432, 242 P. 297 (Idaho 1924)
• Decision Date: 05 August 1924
• 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

242 P. 297

41 Idaho 432

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

Supreme Court of Idaho

August 5, 1924

DEPOSIT OF PUBLIC MONEYS - TERM OF DEPOSITARY - POWERS OF CITIES-INVESTMENTS-TIME DEPOSIT OF FUNDS-TRANSITION IN CLASS OF CITIES-SURETIES-LIABILITY-IMMATERIAL DEPARTURES-ESTOPPEL.

1. A public depositary is a quasi-public official and its bond is an official bond, the statutes under which same is given being an integral part thereof.

2. Where neither the statute, ordinance nor bond fix the term of office of a depositary, the relation continues during the will of the parties, the designation of such depositary being subject to revocation by the obligee at any time.

3. The pronoun "her" used in the ordinance designating the depositary and the bond given pursuant thereto, referring to the incumbent in the treasurer's office, who was at the time a woman, does not limit the obligations of the bond to the term of that particular treasurer, the bond being the official bond of the depositary, and not of the treasurer.

4. A city has only such powers as are expressly conferred by its charter or by statute, and such as are clearly implied for the carrying out of the powers expressly granted.

5. A city must keep its funds on general deposit, or invest them only as authorized by law, and cannot dispose of or keep its funds in any other manner.

6. The taking of a time certificate of deposit for city funds already on deposit and protected by the depositary's bond is an unauthorized investment, and the money continues to be protected by the depositary bond. In case of the insolvency of the de- positary, the sureties on its bond are liable for the funds evidenced by such a certificate of deposit.

7. Where deposits have been made on the faith and credit of a bond, the sureties, being stockholders of the bank, cannot invoke immaterial variances and departures from the contract to escape liability.

8. The City of Pocatello became a city of the first class on May 6 1921, and on May 13, 1921, the bank being insolvent closed. After the transition of said city in class, the sureties on the bond are not relieved from liability by reason thereof, a reasonable length of time being allowed for adjustment to new conditions and the taking of a new depositary bond conditioned as required by the law affecting cities of the first class.

9. A public depositary law governing deposit of funds of the various political subdivisions of the state became effective May 4, 1921, and the bank which had given a depositary bond under the prior law became insolvent and closed May 13, 1921 no new bond having been given in accordance with the new statute. Held, that the city had a reasonable time within which to procure a new bond and the lapse of nine days was not such an unreasonable delay as would release the sureties from the obligations of the bond.

10. The designation of the bank as a depositary being recited in the bond, the sureties are estopped to deny that the ordinance making such designation was legally passed.

11. Where certain stockholders of a bank have signed a depositary bond as sureties, and the bank has for many years received large deposits of public funds on the strength thereof, they are estopped, after the insolvency of such bank, to question their liability.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. B. S. Varian, Presiding Judge.

Action to recover on a depositary bond which defendants had signed as sureties. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondent.

O. O Haga and H. B. Thompson, for Appellants.

The liability of a surety is Strictissimi juris and cannot be extended by implication. He has the right to stand on the exact words of his contract, and his liability is limited to the exact language of his bond, and if the words will not make him liable, nothing can. (Dobbin & Evans v. Bradley, 17 Wend. (N. Y.) 422; State v. McFetridge, 84 Wis. 743, 54 N.W. 1, 20 L. R. A. 223; Miller v. Stewart, 9 Wheat. U.S.) 680, 6 L.Ed. 189.)

Where sureties have consented to be bound to a certain extent only, their liability must be found within the terms of that consent strictly construed. (21 R. C. L. 975, 976.)

Where power or authority is given to a municipality it carries with it by implication the doing of those things necessary to make such things effective and complete, and a discretion as to the manner in which the power is to be carried out is not specifically provided. (Veatch v. Gibson, 29 Idaho 609, 160 P. 1112.)

An ordinance or resolution which is in effect an offer by a municipal corporation, upon acceptance by the party to whom it was addressed becomes a contract. (Vincennes v. Citizens Gas Light Co., 132 Ind. 114, 31 N.E. 573, 16 L. R. A. 485; Argus Co. v. Albany, 55 N.Y. 495, 14 Am. Rep. 296.)

When an offer has been made to a municipal corporation, a vote of the municipal council accepting the offer will constitute a contract. (Note to 49 L. R. A., N. S., 380.)

"Her" is a personal pronoun referring exclusively to females. (21 Cyc. 433; 29 C. J. 347.)

Words are construed according to the context and approved usage of the language, and not otherwise. (C. S., sec. 9455; Howard v. Grimes Pass Placer Min. Co., 21 Idaho 12, Ann. Cas. 1913C, 284, 120 P. 170.)

Under C. S., sec. 9456, "words used in the masculine gender, include the feminine and neuter," but the converse is not true, either under the statutes of Idaho or any other state, or under the accepted rules of ordinary good English. When words that have a definite meaning have been used, "we have no authority to pronounce any of them meaningless, if in the preceding language anything may be said which serves to fix its character or determine the office it was intended to perform." (Kephart v. Buddecke, 20 Colo. App. 546, 80 P. 501.)

It is fundamental that any agreement or dealing between the creditor and the principal which essentially varies the terms of the contract without the consent of the surety will release the surety from liability. (21 R. C. L. 1004; Sprigg v. Mt. Pleasant Bank, 14 Pet. 201, 10 L.Ed. 419.)

And if the parties to the original contract think proper to change the terms of it without the surety's consent, he is thereby discharged. (Reese v. United States, 9 Wall. (U.S.) 13, 19 L.Ed. 541; Schuster v. Weiss, 114 Mo. 158, 21 S.W. 438, 19 L. R. A. 182.)

"Generally, the surety is a favorite of the law, and should be held only where his liability is fixed by the most strict law. That is to say, what is known as the rule of strictissimi juris applies." (City of Topeka v. Federal Union Surety Co., 213 F. 958, 130 C. C. A. 364; United States Fidelity & Guaranty Co. v. Poetker, 180 Ind. 255, 102 N.E. 372, L. R. A. 1917B, 984; Whitestown v. Title Guaranty & Surety Co., 72 Misc. 498, 131 N.Y.S. 390; 148 A.D. 900, 132 N.Y.S. 1149; Atlantic Trust & Deposit Co. v. Town of Laurinburg, 163 F. 690, 90 C. C. A. 274; George A. Hormel & Co. v. American Bonding Co., 112 Minn. 288, 128 N.W. 12, 33 L. R. A., N. S., 513; Board of Commissioners v. Greenleaf, 80 Minn. 242, 83 N.W. 157.)

Rev. Codes, sec. 2261, did not authorize a general deposit when construed in harmony with C. S., sec. 8379. (Fidelity State Bank v. North Fork Highway Dist., 35 Idaho 797, 209 P. 449; Libby v. Pelham, 30 Idaho 614, 166 P. 575, 31 A. L. R. 781.)

B. W. Davis and Frank T. Wyman, for Respondent.

Where neither statute nor agreement fixes the term of the depositary, the relation continues during the mutual will of the parties. (18 C. J. 591, 592; Snattinger v. City of Topeka, 80 Kan. 341, 102 P. 508.)

No effect can be given an unlawful attempt to take public funds out from under the protection of the depositary law and place them in the same bank without the security of the depositary bond. (Blaine County v. Fuld, 31 Idaho 358, 171 P. 1138; Board of Commissioners v. Security Bank, 75 Minn. 174, 77 N.W. 815; Board of Commrs. of St. Louis Co. v. American L. & T. Co., 75 Minn. 489, 78 N.W. 113; Scott v. Whipple, 119 Ga. 485, 46 S.E. 663; McCormick v. Hopkins, 287 Ill. 66, 122 N.E. 151.)

The statutes of this state authorized a general deposit by a city of its public funds in a bank where the safekeeping and return of those funds are under the protection of a depositary bond. (Sec. 65, Sess. Laws 1893, p. 111; Critchfield v. Nance Co., 77 Neb. 807, 110 N.W. 538; Caldwell v. King, 84 Iowa 228, 50 N.W. 975.)

The transition of Pocatello from a city of one class to another did not relieve from liability sureties upon depositary bonds. (Snattinger v. City of Topeka, 80 Kan. 341, 102 P. 508; National S. & D. Co. v. Wilkinson Co., 109 Miss. 879, 69 So. 865; State Nat. Bank v. Commonwealth, 129 Ky. 637, 112 S.W. 678; Zimmerman v. Chelsea Savings Bank, 161 Mich. 691, 125 N.W. 424; Commonwealth v. Caldwell, 224 P. 103, 73 A. 219; Board of Commissioners v. American L. & T. Co., 75 Minn. 489, 78 N.W. 113.)

A public depositary is a quasi-public official and its bond an official bond. (Maryland Casualty Co. v. Pacific Co., 245 F. 831; State v. United States Fidelity & G. Co., 81 Kan. 660, 106 P. 1040; St. Louis Co. v. Security Bank, 75 Minn. 174, 77 N.W. 815; Hennepin Co. v. State Bank, 64 Minn. 180, 66 N.W. 143; Matter of Rothschild, 109 A.D. 546, 96 N.Y.S. 372; State v. Pederson, 135 Wis. 31, 114 N.W. 828.)

The statute becomes a part of an official bond given in pursuance of it. (In re Fidelity State Bank, 35 Idaho 797 209 P. 449, 31 A. L. R. 781; Southwestern S. Ins. Co. v. Davis, 53 Okla. 332, 156 P. 213; Henry...