Independent District of Pella v. Beard

• Decision Date: 17 September 1897
• Citation: Independent District of Pella v. Beard, 83 F. 5 (S.D. Iowa 1897)
• Parties: INDEPENDENT DISTRICT OF PELLA v. BEARD.
• Court: U.S. District Court — Southern District of Iowa

83 F. 5

INDEPENDENT DISTRICT OF PELLA v. BEARD.

United States Circuit Court, S.D. Iowa, Central Division.

September 17, 1897

Earle &amp Prouty and P. H. Bosquet, for plaintiff.

Cummins Hewitt & Wright, for defendant.

WOOLSONDistrict Judge.

The bill herein in substance avers that the treasurer of the plaintiff district from time to time deposited in the First National Bank of Pella funds belonging to plaintiff, and that on the 1st day of June, 1895, the said funds so deposited amounted to $4,676.25, said funds being taxes duly collected for plaintiff, and by said treasurer paid into said bank which funds were credited on the books of said bank to said district treasurer; that on said June 1st said bank was declared insolvent, and taken possession of by the government; that defendant, Beard, was duly appointed receiver, and took possession of the assets of said bank, including the said funds so paid in by said district treasurer; that, under the laws of the state of Iowa, said district treasurer had no authority to so deposit said funds with said bank, as the officers of said bank at the time well knew, and said officers also knew said funds to be public funds, the property of plaintiff at the time said funds were so received and paid into said bank; that it was the duty of said officers of said bank, under said recited facts, not to mix said funds with the general funds of said bank, but said bank, by its said officers, did unlawfully convert said funds to its own use, and did unlawfully increase its assets by mixing said funds therewith; that ever since said funds were so left with said bank by said district treasurer the amount thereof was in the possession of said bank up to the time said bank was so closed and taken possession of by the government; that at said closing there was on hand in said bank the sum of $8,000, which was composed in part of said $4,676.25, to wit, said funds so deposited by said district treasurer; that the whole of said cash came into the hands of the defendant receiver; that said funds, so deposited by said district treasurer, became and were, in the hands of said bank, a trust fund, and, as such, passed into the hands of said receiver; that said trust funds are the property of plaintiff, and never became the property of the said bank, and plaintiff has a preferential claim thereto, and is entitled to, and prays, decree establishing same, and ordering said receiver to pay same as such.The receiver, in his answer, substantially admits all the facts pleaded in the bill,-- that is: The deposit by the treasurer of plaintiff of funds belonging to plaintiff.That the officers of said bank knew such funds to be public funds, belonging to plaintiff.That on June 1, 1895, and at the date when the receiver took possession, said bank was indebted to plaintiff in the said sum of $4,676.25, as balance due on deposit account.The alleged insolvency and closing of said bank on said June 1st, and the appointment of, and taking possession by, said receiver.But said receiver denies any unlawful conversion of said funds; denies said funds so deposited by said district treasurer were in said bank at its said closing, or that any part thereof came into his hands as receiver; avers the methods of depositing in said bank, by said treasurer, of plaintiff's funds, had, for many years prior to said June 1, 1895, been continuously the same, and the account of said funds had by said bank been entitled 'Treasurer of Independent School District,' and said funds had been so deposited generally, and not specially, and had been continuously mingled with the general funds of said bank, and checked therefrom by said treasurer as a general account.That all the funds so paid in and deposited by said treasurer had, at time of said closing, been checked out, and the cash then on hand contained no part of the funds which had been so deposited by said treasurer.

The issues of fact herein are very few.The main contentions arise on the law applicable, and its application.The following facts appear, either in the agreed statement of facts, or the evidence supplementing the same: The First National Bank of Pella was duly organized and acting under the statutes providing for such banks, with its place of business at Pella.Said bank was insolvent for more than a year prior to June 1, 1895.On said June 1st said bank was closed, and possession thereof duly taken by the government.Defendant, Beard, was duly appointed receiver thereof, and took possession of its assets.On said June 1st, the cash assets of the bank were $8,729.93, which passed into said receiver's hands.The Independent District of Pella is a duly-organized school district, and, under the laws of the state of Iowa, competent to sue.For years prior to said June 1st, the treasurer of said district, as the same came into his hands.Such deposits were not made as special deposits but were paid into said bank as general deposits, and intermingled with the bank's general funds.The account of said deposits was kept in the books of said bank under the heading of 'Treasurer of Independent School District.'The treasurer from time to time checked against this account, as is the custom of depositors generally, and at times, by an arrangement between said treasurer and the bank officials, funds were paid from the bank on warrants of the district signed by the president and secretary, addressed to the district treasurer; these warrants, by such agreement, being regarded, when presented to the bank, as checks by the treasurer, and being accepted by him as vouchers for payment by the bank.No interest was paid on the account of said funds so deposited or remaining on hand.No request was ever made that any of such deposits be held as special deposits or funds.No resolution or action of the board of directors of plaintiff authorized or directed said deposits to be made by said treasurer.The officers of said bank knew, at the time said deposits were being made, that the same were the funds of plaintiff.Said deposits were not always made in money, but some portion--how much is not shown-- was made in checks or drafts, which were received by said bank, and credited in the treasurer's said account as cash.During the entire period covered by said deposits by said district treasurer, and up to the closing of said bank, there was in said bank in cash more than the said sum of $4,676.25, and the daily balance of cash on hand in said bank, as shown by the cash register of the bank for each day, exceeded the balance so shown as due the district treasurer on that day.The balance, as shown by the books of the bank, owing by said bank on said June 1st, on the said account of 'Treasurer of Independent School District,' and when said receiver took charge, was $4,676.25, which sum is due from said bank to plaintiff.On May 11, 1895, the balance due from said bank on said account was $707.45.On May 13, 1895, a deposit was made by said treasurer of $4,340.30, which was carried on the books of the bank, and credited to him, in the said account whose heading is given above.At the trial it was agreed by the parties that no part of this deposit of $4,340.30 was made in cash, but that the same was made by the deposit of a check or order of the county treasurer, whereby a charge of said sum was made to such county treasurer's account, wherein the bank was owing him, and a corresponding credit placed in the account of the district treasurer.Evidence was offered showing that the two deposits (May 6, 1895, $614.40, and Feb. 14, 1895, $310.11) next preceding the said deposit of May 13th were not made in cash, but were also made by transfer of credits, through check, etc.The bank was open and doing business each week day from said May 13th up to its said closing, on June 1st.The treasurer drew against this account, viz.: on May 15th, $58.70; May 17th, $51.50; May 18th, $37.70; May 20th, $8.50; and on June 1st, $215.The balance of cash assets on hand in the bank on said May 15th was $8,838.82.Between that day and the closing of the bank, the largest daily balance of cash assets in the bank was, on May 28th, $10,967.46, and the smallest daily balance June 1st, $8,729.93.On said May 13th, according to the daily cash register of the bank, there was deposited in said bank $8,297.43, which includes the treasurer's deposit of $4,340.43.Other transactions of that day are entered in said cash register, amounting to $977.05-- a total cash assets or receipts of $9,274.48.Said cash register shows on said May 13th, as paid out to depositors, $7,987.92, and other transactions charged as $800, making a total of, apparently, cash paid out on said May 13th of $8,787.92.The next day, May 14th, said cash register shows, received from depositors, $5,565.40, and from other sources, $1,920.36,-- a total of $7,485.76; and on same day, paid out to depositors, $3,066.20, and to others, $5,027.42,-- a total paid out of $8,093.62.From said May 13th to the following June 1st, inclusive, the largest total shown on the cash register as paid out to depositors is on May 13th, as above given, while the smallest amount as shown is on May 21st, where such amount is $468.50.The next smallest is May 28th, $1,065.90.The daily receipts from depositors shown during that entire period aggregate $41,580.18, or average daily receipts of $2,445.89.During the same period, the payments so shown to depositors aggregate $43,123.39, or average daily payments of $2,536.67.The cash receipts, as shown by said cash register, from other sources than depositors, aggregate, during said period, $32.895.18, being a daily average of $1,935.01; while the cash payments to others than depositors aggregate, as so shown, $30,569.51, being a daily average...