Hunt v. Hopley

• Decision Date: 26 May 1903
• Parties: C. R. HUNT, Appellant, v. WM. HOPLEY
• Court: Iowa Supreme Court

95 N.W. 205

120 Iowa 695

C. R. HUNT, Appellant, v. WM. HOPLEY

Supreme Court of Iowa, Des Moines

May 26, 1903

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

THE plaintiff alleged that his term of office as school treasurer was about to expire, and A. W. Dickerson, then the cashier of the Cass County Bank, inquired of the plaintiff if he would be re-elected as his own successor as school treasurer, and plaintiff then informed said Dickerson that if he was re-elected he would remove the school funds from said Cass County Bank unless he was indemnified against loss; that thereafter he was re-elected as such school treasurer, and then demanded that the Cass County Bank give him some indemnity against loss, or he would demand and take the funds of the school district away from the said bank; that thereupon the said Dickerson inquired if a written indemnity signed by Isaac Dickerson, J. C. Yetzer, and William Hopley would be sufficient, and if it would satisfy the plaintiff to leave the said funds then in the bank, and further deposit such additional sums of school funds as might come into his possession as such treasurer; that the plaintiff informed said Dickerson that he would accept the indemnity, and thereupon a written contract in words following was executed "Atlantic, Iowa October 23, 1893. We hereby guarantee C R. Hunt, Treas. Washington Township, Cass County, Iowa from any loss that he may incur by reason of depositing money with the Cass County Bank of Atlantic, Iowa. Isaac Dickerson. William Hopley, J. C. Yetzer." The guaranty was accepted by plaintiff, and in reliance thereon the funds already in the bank left there, and additional funds deposited. "All the said funds were deposited in the said bank in the name of the plaintiff as treasurer of said district township, and not in his individual name. That no other funds were commingled therewith in making the said deposits, and all of the said funds were the property of the said district township. That the said bank received and retained all of the benefit arising out of the deposit of said school funds therein, as contemplated in the execution and delivery of the said bond or written guaranty for the purpose of keeping the said funds then on deposit therein, and the deposit of all future sums coming into the hands and possession of the plaintiff as such school treasurer, and that the plaintiff has performed his part of the said contract and agreement, by the deposit in said bank of all the school funds which came into his hands prior to the said failure of the said bank and by leaving on deposit therein the funds already deposited by him in the said bank at the date of the said bond or written guaranty." The bank failed, and part of the moneys so deposited was lost, which plaintiff has made good to the district, and now demands recovery on the guaranty. There were some other allegations in the petition, not necessary to set out. The defendant's demurrer, to the effect that the deposit was wrongful, and that the taking of security to indemnify an officer against loss which may result from his wrongful act is against public policy, was sustained. Plaintiff elected to stand on the ruling, the petition was dismissed, and he appeals.

Reversed.

DeLano & Meredith for appellant.

Swan & Bruce for appellee.

OPINION

LADD, J.

The defendants' guaranty was against any loss plaintiff, as school treasurer, might incur by reason of depositing money with the Cass County Bank. If he had the right to so deposit the public money, the instrument is valid. The contention of appellee is that the law forbids such an officer from making a general deposit of public money, even though in his name as such, for the reason that thereby the title to the fund passes to the bank, and a technical conversion results, and that any contract having a tendency to induce an officer to swerve from the line of duty is, of necessity inimical to the principles of sound public policy. Were this position correct, it would be a matter of profound regret, for nearly every county, city, and school district treasurer in the state has interpreted the law otherwise, and, according to this view, placed the funds of the public in jeopardy, and exposed himself to criminal prosecution. For, if depositing with a bank for safe keeping amounts to conversion, they would seem to be open to the charge of embezzlement, and might have difficulty in regaining the moneys from the depositories participating in the wrong by receiving the funds. Common prudence seems generally to have dictated the deposit of public moneys with solvent banking corporations for safe keeping. To require the officer to retain these in his personal custody would impose an exceedingly onerous burden, so out of keeping with what is deemed essential for the safety of the funds that one so proposing would experience difficulty in procuring sureties on his official bond. We have discovered nothing in the statutes of this state forbidding the deposits in solvent banks by school treasurers. The only section which might be so construed is section 1747 of the Code of 1873, providing that "he [the treasurer] shall hold all moneys belonging to the district and pay out the same on the order of the president, countersigned by the secretary." But "hold," as there used, ought not to be construed as exacting the physical retention of the money. All intended is that the officer retain control, and keep it subject to the payment of orders when properly signed. That is precisely what is done with money deposited. It cannot again be regained in kind, nor is this essential. Its equivalent answers every purpose, and this is returned on demand. The transaction differs essentially from a loan. That is for the benefit of the borrower, while a deposit is for the benefit of the depositor. The depositary may obtain an incidental advantage, but that is seldom the original object contemplated. In a loan the borrower promises to return the money at a future time; in a deposit, whenever the money is demanded. True, the technical relation of creditor and debtor springs from the making of deposits, but few of the many people who daily leave money with banks for safe keeping, and exact the return of an equivalent amount, ever think of the transaction as a loan, or ever speak of it as such. In Independent School District of Sioux City v. Hubbard, 110 Iowa 58, 81 N.W. 241, the settlement of the treasurer with the board of directors was involved; and, with respect to certificates of deposit actually representing money payable on demand, this court said: "We are of opinion that, if certificates actually represented cash within the control of the treasurer, which could and would have been produced had the board of directors so demanded, they should be treated as money in a suit on the official bond. To hold otherwise would ignore business usages, and give undeserved importance to an irregularity which could not have affected the rights of any one concerned."

The distinction between a deposit and a loan is illustrated in that case, for, while demand certificates of deposit on solvent banks were treated as equivalent to cash, time certificates bearing interest were denounced as private loans of public money, amounting to conversion. In Law's Estate, 144 Pa. 499 (22 A. 831, 14 L.R.A. 103), the difference was pointed out: "deposit is where a sum of money is left with a banker for safe keeping, subject to order, and payable, not in the specific money deposited, but in an equal sum. It may or it may not bear interest according to the agreement. While the relation between the depositor and his banker is that of debtor and creditor, simply, the transaction cannot, in any proper sense, be...