Edgerton Ind. Cons. Sch. Dist. No. 2 v. Volz
| Decision Date | 22 April 1926 |
| Docket Number | 5706 |
| Citation | 208 N.W. 576,50 S.D. 107 |
| Parties | EDGERTON INDEPENDENT CONSOLIDATED SCHOOL DISTRICT NO. 2 OF HANSON COUNTY et al, Plaintiffs and respondents, v. MATT VOLZ et al, Defendants and appellants. |
| Court | South Dakota Supreme Court |
MATT VOLZ et al, Defendants and appellants. South Dakota Supreme Court Appeal from Circuit Court, Hanson County, SD Hon. Frank B. Smith, Judge #5706--Reversed Kirby, Kirby & Kirby, Sioux Falls, SD Attorneys for Appellants. H. G. Giddings, Mitchell, SD Attorneys for Respondents. Opinion filed April 22, 1926
Plaintiff is a consolidated school district of Hanson county. Defendant Volz was its treasurer. The Western Surety Company was the surety on his official bond. On January 25. 1924, the Farmers' & Merchants' State Bank of Farmer, S. D., which had complied with the Depositors' Guaranty Fund Law, suspended and was taken over by the superintendent of banks, and is in process of liquidation. On that day Volz, in his name as such treasurer, had on deposit in said bank funds of plaintiff in the sum of $8,320.26. This action was brought to recover said sum from the treasurer and his bondsman. The court found:
"That at all times while the said Matt Volz as such treasurer was depositing said funds in said bank, said bank was a bank of good repute, believed by him and the public generally to be solvent and able at all times to meet its obligations."
Findings of fact, conclusions of law, and judgment were entered in favor of plaintiff. Defendants appeal.
The broad question before us is whether the treasurer and his bondsman are liable to the school district for the money deposited in said failed bank.
In 1921 the Legislature enacted chapter 335 of the Laws of that session, which reads as follows:
Prior to said enactment, except as otherwise provided by statute, treasurers of public funds were insurers thereof, and the facts above set forth would not have relieved the treasurer nor his bondsman from liability. Clay County v. Simonson, 1 Dak. 387; De Rockbraine School Dist. v. Northern Casualty Co., 36 S.D. 392; State v. Schamber, LRA 1918B, 803. It must be noted that in none of those three cases was the power or duty of the treasurer to deposit in banks involved.
Appellants contend that the act of 1921 authorized and directed the treasurer to deposit said money in a bank or banks in South Dakota; that section 9013, Rev. Code 1919, permitted the treasurer to deposit said money in said Farmers' & Merchants' State Bank without requiring a bond from the bank for the purpose of becoming such depositary, and that neither the treasurer nor his bondsman are now liable to plaintiff for the money so deposited.
Respondent contends that the purpose of the act was merely to forbid the deposit of public funds in banks without the state; that, if such was not the intention, then that it was intended to apply only in those cases where by virtue of some existing statute a governing body was authorized to select a depositary; that, as construed by appellants, the act of 1921 would violate sections 21 and 24 of article 3 of the Constitution, and that, in so far as the terms of the bond exceeded the statutory requirements, the bond created a common-law liability and was valid as a voluntary obligation.
We are of the opinion that appellants' contentions are well founded, and that none of the points made by respondent has merit.
The said act of 1921 is not susceptible of the interpretation that its purpose was merely to forbid the deposit of public funds in banks without the state. There is a positive command that the funds shall be deposited in banks unless otherwise specified by law, and that such deposit shall be made in banks within South Dakota. To say that the act leaves it optional to the treasurer to deposit or not deposit as he sees fit, but that, if he does deposit, it must be in a South Dakota bank, would, in our opinion, constitute judicial legislation of an extreme type.
If the purpose of the act was simply negative, the Legislature would scarcely have used words of affirmative command. It does not seem conceivable from the act that, if the sole purpose of the act was to declare "thou shalt not" deposit the public moneys in banks without the state, the Legislature would have said "thou shalt" deposit the public moneys in banks within the state.
Nor is there merit in the contention that the act applies only to those cases where a governing body had authority to select a depositary. The broad language of the act negatives such a meaning. We do not doubt that the governing bodies that are authorized to designate depositories may still do so, and that the act of 1921 would be complied with if the treasurer deposits accordingly. But, if there is no authority in a governing body to designate a depositary, or if such authority exists but is not exercised, then the act of 1921 requires the treasurer to select the depositary, and, when in good faith and in the exercise of reasonable prudence he selects a depositary in accordance with the provisions of section 9013, Rev. Code 1919, he cannot be chargeable with negligence in making such selection.
Section 21 of article 3 of our Constitution provides: "No law shall embrace more than one subject, which shall be expressed in its title."
The gist of respondent's argument as to the violation of that section by the act of 1921 is that the word "regulating" in the title does not forecast "requiring" in the body of the act. The point is too attenuated to deserve discussion. The word "regulating" in the title necessarily gives notice that something is to be required to be done by the act. We find the title of the act entirely adequate to give notice of the contents of the body of the act, and that it does not violate the constitutional provision.
Nor is section 24 of article 3 of the Constitution violated by the act. That section reads as follows:
"The Legislature shall have no power to release or extinguish in whole or in part, the indebtedness, liability or obligation of any corporation or individual to this state, or to any municipal corporation therein."
A law providing for a depositary of public funds, and exempting the treasurer from liability in case the depositary becomes insolvent, is in no sense an extinguishment of a debt due the state or any of its political subdivisions. It is...
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