N. Trust Co. v. First Nat. Bank of Buffalo

• Court: North Dakota Supreme Court
• Writing for the Court: BURKE
• Citation: N. Trust Co. v. First Nat. Bank of Buffalo, 33 N.D. 1, 156 N.W. 212 (N.D. 1916)
• Decision Date: 08 February 1916
• Parties: NORTHERN TRUST CO. v. FIRST NAT. BANK OF BUFFALO.

33 N.D. 1

156 N.W. 212

NORTHERN TRUST CO.

v.FIRST NAT. BANK OF BUFFALO.

Supreme Court of North Dakota.

Dec. 28, 1915.

Rehearing Denied Feb. 8, 1916.

Syllabus by the Court.

Evidence examined, and found to sustain the holding of the trial court that said treasurer was short in his accounts at the time of the issuance of each and every one of the checks in question; that the issuance of each of said checks created a shortage to the damage of said county; that the money used by said treasurer to pay his private indebtedness was at all times the money of said county.

Evidence examined, and found to sustain the holding of the trial court that said shortage was never even temporarily made good; that the treasurer deceived the county commissioners and the public examiner, through books which did not show the timely receipt of moneys coming into his hands as county treasurer; said books further showing the payment of funds to certain school districts, which payments were not, in fact, made.

Settlement between an embezzling treasurer and the county commissioners, obtained by concealment of the embezzlement, is not binding upon the county.

Certain books kept by the defaulting treasurer through a deputy, showing the true condition of the county cash, proven by competent testimony to be accurate at the time they were made and without which the true condition of the county cash could not be ascertained, are admissible as evidence in an action of this kind.

Appeal from District Court, Cass County; Pollock, Judge.

Action by the Northern Trust Company, a corporation, against the First National Bank of Buffalo, a corporation. From judgment for plaintiff, defendant appeals. Affirmed.

See, also, 25 N. D. 74, 140 N. W. 705.Lawrence & Murphy and Pollock & Pollock, all of Fargo, for appellant. Pierce, Tenneson & Cupler and Watson & Young, all of Fargo, for respondent.

BURKE, J.

Appeal from a trial to the court without a jury. Although both respondent and appellant insist that there is no dispute as to the material facts, we find that they disagree when it comes to their statements. In the 1906 elections, one McConville, who was serving as deputy county treasurer of Cass county, was elected treasurer. He was, however, short in his accounts as deputy, and to make up such shortage borrowed $2,500 of defendant.

It was agreed by McConville that this $2,500 should be repaid to the bank from his salary as county treasurer at the rate of $100 and interest per month. January 4, 1907, McConville became treasurer and the Northern Trust Company furnished his official bond. January 7, three days later, McConville extracted $112.11 from the cash drawer; January 26, $190.99; January 31, $10; a total of $313.10. January 10th he issued a check upon the deposits of Cass county in favor of the Union Light, Heat & Power Company for $7.46; January 7th, to T. M. Roberts, check for $1.37; a total of $9.83. Thus, upon February 1st, he had used $322.93 of county money as against his salary of $192.90. This fact is material because it shows a shortage from the very beginning. The first check issued in payment of this indebtedness to the Buffalo bank was on April 10, 1907, for $108.66. At this date he had taken from the cash drawer, moneys belonging to the county, $804.69, and he issued county checks to pay his private indebtedness in the further sum of $55.81, a total of $860.55. His salary for January, February, and March amounted to $609.56. He was therefore $250 short before the issuance of the first check to the defendant. From that time on, this shortage continued, until, at the end of two terms, he had extracted from the cash drawer $10,655.11, and had written unauthorized checks in the sum of $9,034.85, a total of $19,689.96. His salary amounted to $9,841.58, leaving a shortage of $9,848.38. He claimed, however, a commission for handling certain funds, which, if allowed, would reduce the shortage to $7,258.28. The county contests the allowance of this commission, but it is not material to this litigation. McConville pleaded guilty to embezzlement and was sentenced to the penitentiary. Cass county recovered judgment against the Trust Company upon the bond in something over $7,500. During the four years in office, McConville had issued checks drawn upon the funds of Cass county to the First National Bank of Buffalo for $2,564.22 upon his private indebtedness to the bank, and now the Trust Company brings action against the bank for said sums, claiming to be subrogated to the rights of Cass county. The bank at first demurred, but in Northern Trust Co. v. Bank, 25 N. D. 74, 140 N. W. 705, this court held that the complaint stated a cause of action. Upon trial below to the court without a jury, findings of fact and conclusions of law favorable to plaintiff were entered. This appeal is from the judgment. Some of the questions which would otherwise arise have been settled in the former appeal.

[1] Appellant no longer questions the right of subrogation, but divides his present defense

into four portions which will be treated in the four paragraphs following:

1. Appellant claims that:

“Plaintiff has wholly failed to establish that the issuance of the checks in question created any shortage or caused any damage to the county of Cass, and that the evidence in the case is undisputed that no shortage was caused or created by the issuance of the checks in question.”

It is his claim that moneys were secured from other sources, partly from school districts to make good the shortage, and that said funds were kept in the county depositaries sufficient at all times to meet any demand that Cass county might have had against McConville. He states in his brief:

“Cass county on any day from the 4th of January, 1907, to February 9, 1909, could have taken Mr. McConville out of his office, removed him before any entry had been made upon the books, appointed a new treasurer, such treasurer over his official signature as treasurer of Cass county could have withdrawn from the vaults of the various banks of Cass county every dollar which was due and owing to Cass county.”

And again:

“Amounts appearing upon the books of the county treasurer were paid over to McConville as school district treasurer by making a record of the same and separating the same in the accounts from the county money. Instead, however, of using this money for school district purposes, McConville placed it in the name of Cass county and gave Cass county the title to it. Whether it was taken by permitting it to remain in the vaults of the county treasurer, or was withdrawn and then replaced manually, is immaterial. * * * He was short actual cash as school district treasurer, not as county treasurer.”

Appellant further states:

“The ultimate and important fact is that when the school districts or other persons from whom McConville had embezzled money to use as county treasurer subsequently received their money, then and not until then, was McConville unable to produce money to fulfill his liabilities to the county, and that is when the first shortage occurred which caused injury or damage to the county of Cass.”

Appellant's position is ingenious, but unsound. A study of the testimony will not bear out his contention.

When McConville was elected treasurer the law authorized the county superintendent of schools to appoint the county treasurer as treasurer of any school district in the county under certain contingencies. McConville thus became the treasurer of four school districts. Section 1472, C. L. 1913, provides:

“All funds of each and every city or school district of this state shall be deposited by the treasurer of the city, county or school district, as soon as received by him, in the name of the city or school district of which he is an officer, in such bank or banks as shall have been designated as city or school district depositaries in accordance with this article, as hereinafter provided.”

One of the ways in which McConville concealed his shortage with the county was to pretend to turn over to himself as school district treasurer moneys for the school district, but, in fact, leave all of said money in the county deposits. Another way was to delay the issuance of tax receipts. The testimony of the deputy, Mayo, follows:

“A. Every time an examination was made, whether by the county commissioners or by the public examiner, there was money on hand to balance the report as they found it. Otherwise, why, there would be a stopper right there.

By the Court: How did that all come about, Mr. Mayo? A. Well, now, I could explain if I had permission to do it my own way. * * * Now, say, for instance, the public examiner comes along in February. The penalty goes on taxes the 1st of March and during the month of February there would be possibly $200,000 that will come into that office that there is not a receipt issued for. There is nothing to prevent the treasurer from taking $100,000 at that time and still have money enough to settle up everything easily.

By the Court: That is, $100,000 money that he has not given a receipt for yet? A. Yes. You know those tax receipts-some people do not get their tax receipts until 60 days after the 1st of March. They cannot be gotten out in one day-cannot be gotten out in a month. * * * Q. He wasn't charged with it in that report which you say he made, was he? A. No; he was not. Q. He was charged with a less amount than he actually had on hand; is that right? A. He wouldn't be charged with any money until receipts of some kind had been issued for that money. Q. So that in the interim and until those receipts were issued, he apparently had more money in the bank than he was charged with; that is correct, isn't it? A. Yes, sir. * * * Q. Now, do you mean, Mr. Mayo, that the depletion of the bank account, which you say was caused by the issuance of each of these checks which was offered in evidence, was made up, or did he continue short? A. It was only- Q. Did he...