Fremont County v. Fremont County Bank

• Decision Date: 09 April 1908
• Citation: 115 N.W. 925,138 Iowa 167
• Parties: FREMONT COUNTY, IOWA, Appellant, v. FREMONT COUNTY BANK, J. H. MCDONALD, CLARK CAREY, JERRY LOCKET, A. v. PENN, C. J. EDSEN, Appellees
• Court: Iowa Supreme Court

115 N.W. 925

138 Iowa 167

FREMONT COUNTY, IOWA, Appellant, v. FREMONT COUNTY BANK, J. H. MCDONALD, CLARK CAREY, JERRY LOCKET, A. v. PENN, C. J. EDSEN, Appellees

Supreme Court of Iowa, Des Moines

April 9, 1908

Appeal from Fremont District Court.-- HON.W. R. GREEN, Judge.

ACTION at law upon a bond given by defendants to hold the plaintiff's county treasurer harmless from all loss by reason of deposits made by him in the Fremont County Bank. The case was tried to the court without a jury, resulting in a small judgment for plaintiff, and plaintiff appeals.-- Reversed.

Reversed.

W. H Norcutt, County Attorney, and T. S. Stevens, for appellant.

W. E Mitchell and William Eaton, for appellees.

OPINION

DEEMER, J.

On January 4, 1904, pursuant to previous election, H. C. Byars became treasurer of Fremont county, succeeding H. E. Hawley, the retiring treasurer. Hawley had, during his term of office, deposited county funds in the Fremont County Bank, and these funds were secured by a bond similar to the one upon which this action is bottomed; one of the sureties upon this bond having signed the previous one. Plaintiff's board of supervisors made a settlement with the retiring treasurer, Hawley, and found that he had on deposit in the Fremont County Bank on January 5, 1904, a balance of $ 1,095.99. Hawley thereupon made his check for that amount to Byars, his successor, and upon the 7th of that month, and after the bond in suit was given, Byars turned his check back into the bank receiving credit therefor, and later made deposits amounting to $ 686.70. The treasurer drew out all but $ 1,348.89 of the amount of these deposits, and, owing to financial difficulties of the bank, was unable to get this balance. Failing to get it, this action was brought, which resulted in a judgment for plaintiff in the sum of $ 167.20. Plaintiff contends upon this appeal that it should have had judgment for the balance of the funds deposited in the bank, or in any event for the sum of $ 1,000, by reason of facts hereafter to appear. Many defenses were interposed, most of which must be considered upon this appeal. Among other things it is contended (1) that the bond was and is invalid because the plaintiff's board of supervisors had not selected and designated the Fremont County Bank as a depository at the time the bond was executed or when the check was deposited by Byars; (2) that the check from Hawley to Byars was absolutely worthless, and that the amount represented thereby was lost to the county before Byars was elected or took his seat as treasurer; (3) that nothing ever came into the hands of the Fremont County Bank after Byars became treasurer, save the amount for which defendants were held responsible; (4) that in no event can defendants be held liable for more than $ 1,000; and (5) that defendants cannot be held liable for any deposit made in the bank prior to May 3, 1904.

It appears that in January of the year 1898 the board of supervisors passed a resolution authorizing the county treasurer to deposit county funds to any amount not exceeding $ 25,000 with such bank or banks in the county as he might designate, upon compliance with section 1457 of the Code. And in April of the year 1900 the Fremont County Bank, with McDonald, Penn and others, executed a bond similar to the one in suit whereby they undertook to save Hawley, the then treasurer of the county, harmless from loss by reason of any deposit he might make in the said bank. This bond was for $ 10,000, and it was approved in May of the year 1900. The bond in suit was executed January 5, 1904, and bears the approval of Byars, treasurer, and of the chairman of the board of supervisors, each of date of January 5, 1904. It is in the penal sum of $ 2,000, and is conditioned as follows: "The conditions of this obligation are such that, if the said Fremont County Bank, as depository of public funds, shall properly account and pay over on proper demand all public money which may be deposited with the said Fremont County Bank by H. C. Byars, as treasurer of Fremont County, and shall hold the said treasurer harmless from all loss by reason of all deposits which he may make with the said Fremont County Bank, then this obligation to be void and of no effect; otherwise, to remain in full force and virtue in law." The board of supervisors of plaintiff county also passed a resolution on the 6th day of January, 1904, expressly approving the bond in suit. We also find the following resolution of the board passed on May 3, 1904: "Resolved, that the county treasurer is hereby authorized to deposit county funds in the amounts herein stated, to-wit: The Fremont County Bank, $ 1,000; provided, that any of said banks before receiving such deposit shall file a bond conditioned as required by law and in compliance therewith, and bonds filed and approved since January 1, 1904, that are in compliance with the law and this resolution, shall be held good as per such approval. H. C. Vanatta, Chairman, Attest: J. D. McKean, Auditor."

In addition to the Hawley check, Byars, treasurer, made the following deposits: May 23d, 1904, $ 52.18; May 24th, $ 34.52; July 11th, $ 600. The items $ 34.52 and $ 52.18 represent the taxes of McDonald, cashier of the bank for which the treasurer was given credit on the books of the bank without any money passing through his hands. The county treasurer, Byars, as we have said, drew out all but $ 1,349.89 of the total amount which it is claimed was deposited in the bank. The trial court evidently charged the defendants with the amount of the $ 600 deposit, and gave them credit for the amount actually drawn out by the treasurer. Sections 1461, 1456 and 1457 of the Code of 1897 as amended read as follows:

When a county treasurer goes out of office, he shall make a full and complete settlement with the board of supervisors, and deliver up all books, papers, moneys, and all other property pertaining to the office, to his successor, taking his receipt therefor. The board of supervisors shall make a statement of State dues to the Auditor of State, showing all charges against the treasurer during his term of office, and all credits made, the delinquent taxes and other unfinished business charged over to his successor, and the amount of money paid over to his successor, showing to what year and to what account the amount so paid over belongs. It shall also see that the books of the treasurer are correctly balanced, before passed into the possession and control of the treasurer elect.

If the State treasurer or any county treasurer, by himself or through another, discounts auditor's warrants either directly or indirectly, he shall upon conviction be fined in any sum not exceeding one thousand dollars.

A county treasurer shall be liable to a like fine for loaning out, or in any manner using for private purposes, state, county, or other funds in his hands, except that when permitted by the board of supervisors by resolution entered of record he may deposit such funds in any bank or banks in the State, to any amount fixed by such resolution; and the county may receive such rate of interest on the money so deposited as may be agreed upon by the treasurer, board of supervisors, and the bank; but before such deposit is made such bank shall file a bond with sureties, to be approved by the treasurer and the board of supervisors, in double the maximum amount permitted to be deposited, conditioned to hold the treasurer harmless from all loss by reason of such deposit or deposits. Said bond shall be filed with the county auditor and action may be brought thereon either by the treasurer or the county, as the board of supervisors may elect. And the State treasurer shall be liable to a fine of not more than ten thousand dollars for a like misdemeanor. But nothing done under the provisions of this section shall alter or affect the liability of the treasurer or the sureties on his official bonds.

The case is argued on the theory that the bond in suit was unauthorized, without authority of law, contrary to the statutes quoted, against public policy and therefore void. This is denied by plaintiff and it further insists that defendants are estopped from denying the validity of the bond, and that in any event the bond is good as a common-law obligation, and is not contrary to law or opposed to public policy. In our view of the case it is not necessary to determine this question. Conceding arguendo that the bond when given, was unauthorized and contrary to the provisions of section 1457 of the Code as amended, because the board of supervisors had not by resolution entered an order of record permitting the treasurer to deposit funds in the defendant bank, it yet appears that on the 3d day of May 1904, the board did pass such a resolution, and ratified and confirmed the bond given in this case, and permitted the county treasurer to deposit in defendant bank the sum of $ 1,000. This order was not perhaps retroactive save as it ratified and confirmed the bonds already given, but there is no reason why the county could not accept bonds already given as in compliance with the statute and with its order then entered of record. When so ratified the defendants became liable for all funds then on deposit in the bank and for all that might subsequently be added thereto to the extent of $ 1,000. Of course defendants could not be held liable on this theory of the case for any sums which had been lost to the county prior to May 3, 1904 -- the date of the resolution referred to -- for the plain reason that the validation of the bond would not make defendants liable for losses which had actually occurred prior to that time. On this theory of the case defendants became liable on their bond for all moneys in the bank,...