City State Bank v. Wellington Independent S. Dist.

• Decision Date: 16 February 1944
• Docket Number: No. 8181.,8181.
• Citation: 178 S.W.2d 114
• Parties: CITY STATE BANK IN WELLINGTON v. WELLINGTON INDEPENDENT SCHOOL DIST. et al.
• Court: Texas Supreme Court

Page 114

178 S.W.2d 114

CITY STATE BANK IN WELLINGTON v. WELLINGTON INDEPENDENT SCHOOL DIST. et al.

No. 8181.

Supreme Court of Texas.

February 16, 1944.

Rehearing Denied March 15, 1944.

Error to Court of Civil Appeals of Seventh Supreme Judicial District.

Action by City State Bank in Wellington, Tex., against Wellington Independent School District and others. Judgment for defendants was affirmed by the Court of Civil Appeals, 173 S.W.2d 738, and plaintiff brings error.

Judgments of the Court of Civil Appeals and of the trial court affirmed.

R. H. Cocke, of Wellington, and John D. McCall, Millard Parkhurst, and Clarence E. Crowe, all of Dallas, for plaintiff in error.

C. C. Small, of Austin, amicus curiae.

Luther Gribble, of Wellington, and Mahan & Broughton, of Childress, for defendants in error.

BREWSTER, Commissioner.

This is a suit by petitioner, City State Bank in Wellington, against Wellington Independent School District, respondent, and others, in which a trial court judgment for the district was affirmed by the Court of Civil Appeals. 173 S.W.2d 738.

The bank's suit was for $6,474.60, the total of a number of checks drawn by the district from June 30, 1942, to August 31, 1942, against its state and county available fund to pay teachers' salaries for the scholastic year 1941-1942. The bank alleged that these several checks were indorsed by their payees and paid by it as the district's depository, although the district had no money on deposit from which the checks could be paid. It alleged, however, that the district had a maintenance tax of 50 cents on each $100 of taxable property in the district; that delinquent taxes due that fund for 1941-1942 and prior years exceeded $15,000; and that it was entitled to have its demand satisfied from that fund. To that end, it asked that the district and its officers be enjoined "from using any part of the delinquent maintenance taxes * * * for any current or future purposes" until its demand "and other valid and unpaid maintenance obligations be paid in full" and that mandamus issue to compel the district and its officers to prosecute suits for these taxes and to deposit all collections therefrom with it as depository.

Among other allegations, the district answered that at the time the checks sued on were issued against its state and county available funds for 1941-1942 that fund was completely expended because of unlawful withdrawals therefrom by the bank as hereinafter detailed; that the bank, as its depository, well knew that fact as well as the fact that no additional moneys would become available for that fund; that the bank further knew, when it cashed the checks, that they were wholly void because issued in violation of the statutes of Texas prohibiting a school district from contracting obligations for payment of teachers after the state and county available funds for that scholastic year have been exhausted; that the district deposited more money to the credit of its state and county available fund during the year 1941-1942 than the checks drawn by it against the fund during and for that year amounted to. It also answered specially that since all the checks sued on were issued against the state and county available fund of the district and were not issued against its local maintenance fund, they could not constitute a claim against the latter fund.

By stipulation made during the trial, the parties agreed that the checks sued on were issued by the district, as alleged by the bank, to pay the former's superintendent and teachers for the scholastic year 1941-1942, except that three of them were to pay teachers' retirement fund assessments due by the district for that year; that they were signed by the district's secretary and countersigned by the president of its trustees; that they were duly indorsed by their respective payees and paid by the bank; that there was no money on deposit with the bank to the credit of the district's state and county available fund, either when the checks were paid or at the time this suit was filed, with which to reimburse the bank. They agreed, further, that the budget estimate of receipts to the state and county available fund for 1941-1942 was $39,440, but that only $38,096.71 was actually so received; that the total of all checks issued by the district for the scholastic year 1941-1942 against its state and county available fund for that year, including those sued on, was only $36,587.75; that disbursements from that fund for that year, however, totaled $38,066.18, which was explained by the fact that $7,813.90 of the disbursement "was used by the depository bank in paying checks dated prior to September 1, 1941, said checks having been issued for teachers' salaries and teachers' retirement fund assessments accruing prior to said date of September 1, 1941, and said checks showing on their face the month for which such salaries were paid by such check, all of said months being prior to September 1, 1941,"—in other words, this $7,813.90 had been applied by the bank out of the 1941-1942...