Common School Dist. No. 61 in Twin Falls County v. Twin Falls Bank & Trust Co.

• Decision Date: 26 May 1931
• Docket Number: 5685
• Citation: 50 Idaho 711,4 P.2d 342
• Court: Idaho Supreme Court
• Parties: COMMON SCHOOL DISTRICT NUMBER 61 IN THE COUNTY OF TWIN FALLS, STATE OF IDAHO, Respondent, v. TWIN FALLS BANK & TRUST COMPANY, a Corporation, Appellant

4 P.2d 342

50 Idaho 711

COMMON SCHOOL DISTRICT NUMBER 61 IN THE COUNTY OF TWIN FALLS, STATE OF IDAHO, Respondent, v. TWIN FALLS BANK & TRUST COMPANY, a Corporation, Appellant

No. 5685

Supreme Court of Idaho

May 26, 1931

SCHOOLS AND SCHOOL DISTRICTS-FORGED ORDERS-LACHES-ESTOPPEL.

1. School district is agency of state created solely for operation of school system, and derives all of its powers from statute.

2. Officers of school district and county performing statutory duty for district act only in public and governmental capacity

(Laws 1921, chap. 215, secs. 35, 55, 69, and sec. 46, subd. 26; C S., secs. 905-911, 913-915).

3. Acts of officers in performance of duties in regard to funds of school district cannot estop district from maintaining action to recover back money wrongfully taken (Laws 1921, chap. 215 secs. 35, 55, 69, and sec. 46, subd. 26; C. S., secs 905-911, 913-915).

4. No laches can be imputed to school district in public and governmental capacity as to bar it from recovering money wrongfully taken (Laws 1921, chap. 215, secs. 35, 55, 69, and sec. 46, subd. 26; C. S., secs. 905-911, 913-915).

ON REHEARING.

5. Acts of county officials in acceptance, approval, redemption, and payment of forged school district's order held "governmental functions" as respects recovery of moneys paid by school district (Laws 1921, chap. 215, secs 35, 55, 69, and sec. 46, subd. 26; C. S., secs. 905-911, 913-915).

6. Voluntary payments illegally made by school district can be recovered.

7. Moneys of school district can only be paid out on valid order.

8. Act of county officials in paying out moneys of school district on forged order held not voluntary payment which would preclude recovery by school district.

APPEAL from the District Court of the Eleventh Judicial District, for Twin Falls County. Hon. Wm. A. Babcock, Judge.

Action by Common School District Number 61 in the County of Twin Falls against Twin Falls Bank & Trust Company for conversion. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

Frank L. Stephan, for Appellant.

Respondent school district in the transaction in question herein is subject to the same rules as individuals in similar transactions. Orders for common school district warrants are assignable non-negotiable instruments in the drawing of which the trustees of such district are performing a business or contractual function. (C. S., sec. 824, amended by chapter 215 of the 1921 Sess. Laws, p. 429; Fenton v. Board of County Commrs., 20 Idaho 392, 119 P. 41; Barton v. Alexander, 27 Idaho 286, Ann. Cas. 1917D, 729, 148 P. 471; Strickfaden v. Greencreek Highway Dist., 42 Idaho 738, 248 P. 456, 49 A. L. R. 1057; 1 McQuillin, Municipal Corps., sec. 113; 5 McQuillin, Municipal Corps., sec. 2434; Argenti v. City of San Francisco, 16 Cal. 255; Slayton & Co. v. Panola County, (D. C.) 283 F. 330; Boise City v. Wilkinson, 16 Idaho 150, 102 P. 148; City of Twin Falls v. Harlan, 27 Idaho 769, 151 P. 1191; Robinson v. Lemp, 29 Idaho 661, 161 P. 1024; State v. Twin Falls-Salmon River Land & Water Co., 30 Idaho 41, 166 P. 220; Jefferson County v. McGrath, 205 Ky. 484, 266 S.W. 29, 41 A. L. R. 586.)

By acceptance, approval, redemption and payment of the forged order in question by and through the county auditor and the county treasurer (treasurer of respondent) respondent adopted said order as its genuine and valid obligation and ratified and consented to the cashing of the warrant issued thereon by appellant and may not now recover the payment. (United States v. Bank of New York, etc., 219 F. 648; Bank of United States v. Bank of Georgia, 10 Wheat. (U. S.) 333, 6 L.Ed. 334; United States v. Chase Nat. Bank, 252 U.S. 485, 40 S.Ct. 361, 64 L.Ed. 675; United States v. National Exchange Bank of Baltimore, 270 U.S. 527, 40 S.Ct. 388, 70 L.Ed. 717; Cooke v. United States, 91 U.S. 389, 23 L.Ed. 237; American Hominy Co. v. Milliken Nat. Bank, 273 F. 550; note, 10 L. R. A., N. S., 68 and 70.)

Even though negligence on the part of a cashing bank is established, so as to enable the drawer to recover, conduct of the drawer may again intervene to bar recovery. Negligence or long delay in discovering the forgery, or lack of promptness in notifying the cashing bank after discovery of the forgery, or if the forgery should, in the exercise of reasonable diligence have been discovered, will bar recovery, particularly if the position of the cashing bank has in the meantime been changed to its damage. (12 A. L. R. 1105, 1107, 1113; State v. Abramson, 57 Ark. 142, 20 S.W. 1084; United States v. Central Nat. Bank of Philadelphia, 6 F. 134; United States v. Clinton Nat: Bank, 28 F. 357; note, 12 A. L. R. 1105, 1107, 1108, 1109; Neal v. Coburn, 92 Me. 139, 69 Am. St. 495, 42 A. 348, as is cited at page 1109 of 12 A. L. R.; 7 C. J. 691, note 8-A.)

Where a party has been prevented by conduct of another from taking prompt action for the collection of a debt, that constitutes such a change of position for the worse as to meet the requirements of the law creating estoppel, and the change of position rule. A right to pursue timely remedy against a forger is a valuable right, which if jeopardized in any manner by negligence or delay on the part of a plaintiff, constitutes a change of position, sufficient to act as a bar to such plaintiff's recovery. (C. S., secs. 6064 and 6415; Leather Manufacturers' Nat. Bank v. Morgan, 117 U.S. 96, 6 S.Ct. 657, 29 L.Ed. 811; Bank of United States v. Bank of Georgia, supra; Smith v. Mercer, 6 Taunt. 76, 128 Eng. Rep. 961, cited in 12 A. L. R. 1107; Johnson v. Commercial Bank, 27 W.Va. 343, 55 Am. Rep. 315; Weinstein v. Nat. Bank, 69 Tex. 38, 5 Am. St. 23, 6 S.W. 171.)

Sweeley & Sweeley, for Respondent.

In exercising its powers and performing its duties, including the issuance of orders, a school district acts only in a governmental capacity and is not estopped by any mistakes or acts of negligence or misconduct of any of its officers or agents or other public officers over whom it has no control, from maintaining an action to recover back money wrongfully taken. (24 R. C. L., pp. 564, 565, sec. 7; Antin v. Union High School, 130 Ore. 461, 280 P. 664, 66 A. L. R. 1271; Spencer v. School Dist. No. 1, 121 Ore. 511, 254 P. 357; Bank v. Brainerd, School Dist., 49 Minn. 106, 51 N.W. 814; Freel v. School City of Crawfordsville, 142 Ind. 27, 41 N.E. 312, 37 L. R. A. 301; School District No. 48 of Maricopa County v. Rivera, 30 Ariz. 1, 243 P. 609, 45 A. L. R. 762; Howard v. Tacoma, 88 Wash. 167, Ann. Cas. 1917D, 792, 152 P. 1004; Wiest v. School Dist. No. 24, 68 Ore. 474, 137 P. 749, 49 L. R. A., N. S., 1026; 19 R. C. L. 1124, sec. 402; Consolidated School Dist. v. Wright, 128 Okla. 193, 261 P. 953, 56 A. L. R. 152; 6 McQuillin, Mun. Corp., sec. 2675; School District No. 45 v. Correll, 220 Mo.App. 322, 286 S.W. 136.)

SUTPHEN, District Judge. Budge, Givens, Varian and McNaughton, JJ., concur.

OPINION

SUTPHEN, District Judge.

On or about the fourteenth day of September, 1928, there was presented to appellant bank a forged order purporting to have been drawn by the respondent school district, in the sum of $ 250, bearing the purported signatures of the chairman and clerk of said school district and the counter signature of the county superintendent of public instruction. Upon the back of said order appeared two indorsements: that of "Bessie Lakey," the payee, a fictitious person, and that of "C. Pond, V. L." The "C. Pond" representing Charlotte Pond, the then county superintendent, and the "V. L.," the initials of one Viola Lowe, who was her assistant at that time. The appellant bank purchased the said forged order and on the twentieth day of September, 1928, presented it, with its indorsement on the back thereof, to the county auditor, who, upon said date, issued a warrant payable to said bank. That thereafter said warrant was paid by the county treasurer, as treasurer of the district, out of the funds of said respondent district. This appeal is from a judgment in favor of the respondent school district for the amount of money so taken.

The complaint, demurrers and motions in this action are similar to those in the case of Common School District No. 27 in the County of Twin Falls, State of Idaho, v. Twin Falls National Bank, a Corporation, filed May 19th, raising identically the same questions and in that connection this case is governed by the decision of this court in the above-mentioned case.

The decisive question in this case is whether or not the respondent is estopped and barred from recovery herein by the acts of the various county officials in the acceptance, approval, redemption and payment of the forged order in question, or by its own negligence is guilty of laches in the discovery of the forgery and in giving notice to the appellant bank of the same.

The courts have universally held that a school district is an agency of the state, created by law solely for the operation of a school system for the public benefit and derives all of its powers from statute, being limited to such as are deemed necessary for that purpose. By mandatory statutes it is prescribed in just what manner its funds can be paid out (Secs. 35, 46 (subd. 26), 55 and 69, chap. 215, 1921 Sess Laws; secs. 905 to 911, inclusive, and secs. 913 to 915, inclusive, C. S. 1919; Common School District No. 27 in the County of Twin Falls, State of Idaho, v. Twin Falls National Bank, a Corporation, supra), and the officers of the district and county, designated by law to perform such acts, exercise a public function for which the district receives no private or corporate benefit, and in the performance of such duties they act for the district only in a public and governmental capacity. The rule of...