Murphy v. Lumbermens State Bank & Trust Co.

• Decision Date: 03 February 1937
• Docket Number: 6347 and 6356
• Citation: 57 Idaho 311,65 P.2d 154
• Court: Idaho Supreme Court
• Parties: IRA G. MURPHY, in His Official Capacity as Treasurer of Benewah County, Idaho, BENEWAH COUNTY, a Municipal Corporation, and E. E. MCLAUGHLIN, C. S. YOUNG and GEORGE MCLEOD, County Commissioners of Benewah County, Idaho, in Their Official Capacity as Such, Respondents and Cross-Appellants, v. LUMBERMENS STATE BANK AND TRUST COMPANY, a Corporation, BEN DIEFENDORF, Commissioner of Finance of the State of Idaho in Charge of Liquidation of the Lumbermens State Bank & Trust Co., a Defunct Banking Corporation of the State of Idaho, and GEORGE W. WEDGEWOOD, Liquidating Agent Having Charge of Said Bank in Liquidating Its Affairs, Appellants and Cross-Respondents

65 P.2d 154

57 Idaho 311

IRA G. MURPHY, in His Official Capacity as Treasurer of Benewah County, Idaho, BENEWAH COUNTY, a Municipal Corporation, and E. E. MCLAUGHLIN, C. S. YOUNG and GEORGE MCLEOD, County Commissioners of Benewah County, Idaho, in Their Official Capacity as Such, Respondents and Cross-Appellants, v. LUMBERMENS STATE BANK AND TRUST COMPANY, a Corporation, BEN DIEFENDORF, Commissioner of Finance of the State of Idaho in Charge of Liquidation of the Lumbermens State Bank & Trust Co., a Defunct Banking Corporation of the State of Idaho, and GEORGE W. WEDGEWOOD, Liquidating Agent Having Charge of Said Bank in Liquidating Its Affairs, Appellants and Cross-Respondents

Nos. 6347 and 6356

Supreme Court of Idaho

February 3, 1937

Appeal from District Court, Benewah County; Bert A. Reed, Judge.

Action by Ira G. Murphy, in his official capacity as Treasurer of Benewah County, and others, against Lumbermens State Bank &amp Trust Company and others, for preference in payment of claim against an insolvent bank. From a judgment establishing preference for claim in part and denying it in part, the defendants appeal, and the plaintiffs cross-appeal.

Modified and remanded.

BUDGE J., dissenting.

Robt. H. Elder, Attorney for Appellants and Cross-Respondents.

The statutory law of this state definitely determines the classification of plaintiffs' claim. (Subd. 3, sec 25-915, I. C. A.)

The deposit of public funds under the depository law does not constitute loaning of credit or pledging the credit or faith of the district in aid of the bank in violation of article 8 section 4, or article 12, section 4, of the Constitution of the state of Idaho. (Bannock County v. Citizens Bank & Trust Co., 53 Idaho 159, 22 P.2d 674; Limestone County v. Montgomery, 226 Ala. 266, 146 So. 607, 87 A. L. R. 164; State v. Carson Valley Bank, 56 Nev. 133, 47 P.2d 384.)

Deposit of public funds under the public depository law of Idaho is a waiver of any right of preference over common depositors. (Bannock County v. Citizens Bank & Trust Co., supra; National Surety Co. v. Pixton, 60 Utah 289, 208 P. 878, 24 A. L. R. 1487; Re Central Bank of Wilcox, 23 Ariz. 574, 205 P. 915; Cook County Nat. Bank v. United States, 107 U.S. 445, 2 S.Ct. 561, 27 L.Ed. 537; Board of County Commrs. of San Miguel v. McFerson, 90 Colo. 408, 9 P.2d 614.)

Wm. D. Keeton, Attorney for Respondents and Cross-Appellants.

Moneys deposited in the bank not in compliance with the public depository law cannot become the property of the bank, but continue the property of the depositing municipality and in case of liquidation are a preferred claim. The public cannot be compelled to contribute to a private enterprise using taxpayers' money for that purpose. (Sec. 25-915, Idaho Codes 1932, subds, 2 and 3; sec. 55-101 to 55-143, inclusive, Idaho Codes 1932. (White v. Pioneer Bank & Trust Co., 50 Idaho 589, 298 P. 933; Bannock County v. Citizens Bank & Trust Co., 53 Idaho 159, 22 P.2d 674; In re Bank of Nampa, 29 Idaho 166, 157 P. 1117; State v. Thum, 6 Idaho 323, 55 P. 858; Independent School Dist. v. Porter, 39 Idaho 340, 228 P. 253.)

MORGAN, C. J. Holden, Givens and Ailshie, JJ., concur. Budge, J., dissents.

OPINION

MORGAN, C. J.

Respondents and cross-appellants will be referred to hereinafter as respondents, and appellants and cross-respondents as appellants.

Scenic Better Roads Highway District, situated in Benewah county, held an election to decide whether or not it should be dissolved. The election resulted in favor of dissolution and, pursuant thereto, an order was made dissolving the district, whereupon the county commissioners of that county were by law invested with jurisdiction over its property and business affairs. (I. C. A., tit. 39, chap. 20.)

After the district was dissolved moneys acquired by it prior to dissolution were left on deposit in Lumbermens State Bank and Trust Company and remained so deposited when the bank, being insolvent, suspended business and was taken over to be liquidated by the commissioner of finance.

Claim was made by and on behalf of respondents, to the commissioner of finance, that these moneys constituted a trust fund and should be classified pursuant to I. C. A., sec. 25-915, subdivision 2, and paid prior to all claims save those for expenses of liquidation. Classification as a trust fund was disallowed and the claim was classified pursuant to subdivision 3, of that section, as a general deposit.

Section 25-915 provides:

"The order of payment of the debts of a bank liquidated by the commissioner shall be as follows:

"1. The expense of liquidation, including compensation of agents, employees and attorneys.

"2. All funds held by bank in trust.

"3. Debts due depositors, holders of cashier's checks, certified checks, drafts on correspondent banks, including protest fees, paid by them on valid checks or drafts presented after closing of the bank, pro rata. All deposit balances of other banks or trust companies and all deposits of public funds of every kind and character (except those actually placed on special deposit under the statutes providing therefor) including those of the United States, the state of Idaho, and every county, district, municipality, political subdivision or public corporation of this state, whether secured or unsecured, or whether deposited in violation of law or otherwise, are included within the terms of this subdivision and take the same priority as debts due any other depositor; anything in the statutes of the state of Idaho to the...