Northern Trust Company a Corporation v. First National Bank of Buffalo, a Corporation

• Decision Date: 28 December 1915
• Court: North Dakota Supreme Court

156 N.W. 212

33 N.D. 1

NORTHERN TRUST COMPANY a Corporation, v. FIRST NATIONAL BANK OF BUFFALO, a Corporation

Supreme Court of North Dakota

December 28, 1915

Rehearing denied February 8, 1916.

Appeal from the District Court of Cass County. Pollock, J.

Affirmed.

Lawrence & Murphy and Pollock & Pollock, for appellant.

In legal effect, this action is by Cass county against the defendant. The cause of action accrues when consequential injury has followed official nonfeasance or misfeasance, and not before. Northern Trust Co. v. First Nat. Bank, 25 N.D. 74, 140 N.W. 705; 3 Sutherland, Code Pl. p. 2828; Brooks v. The Governor, 17 Ala. 806; Johnson v Marshall, 34 Ala. 526.

"The procurement of the money by one from his friends, and placing it in the vaults of the bank, was a payment of the money he had before taken out for his own purposes. It thus became the property of the defendant." Ingraham v. Maine Bank, 13 Mass. 208; Independent School Dist. v Hubbard, 110 Iowa 58, 80 Am. St. Rep. 271, 81 N.W. 244; Pine County v. Willard, 39 Minn. 125, 1 L.R.A. 118, 12 Am St. Rep. 622, 39 N.W. 72.

Sureties on the last bond are liable also for moneys paid to their principal during the term covered by the bond, but because of transactions which took place during the preceding term, even if such moneys are used to cover up defalcations occurring during a preceding term of the officer. 29 Cyc. 1458, 1459; Mechem, Pub. Off. § 287; Throop, Pub. Off. § 219, pp. 235, 236.

Where state officers fail to perform their duties in requiring settlements from the treasurer, and of suing promptly on default, the surety is not discharged from liability. Crawn v. Comp. 84 Va. 282, 10 Am. St. Rep. 839, 4 S.E. 721; Lauderdale County v. Alford, 65 Miss. 63, 7 Am. St. Rep. 637, 3 So. 246; Linville v. Leininger Twp. 72 Ind. 491, and cases cited; Bocard v. State, 79 Ind. 270; Brown v. State, 78 Ind. 239; Goodwine v. State, 81 Ind. 112; Ingraham v. Maine Bank, 13 Mass. 208.

When money was in the treasurer's hands, there was nothing to identify it, or to distinguish it from other funds under his control, or rightfully belonging to him. Colerain v. Bell, 9 Met. 499; Gwynne v. Burnell, 7 Clark & F. 572, West, 342, 1 Scott, N. R. 711, 6 Bing. N. C. 853; State v. Sooy, 39 N.J.L. 539; Com. ex rel. Mechanicsburg v. Knettle, 182 Pa. 176, 38 A. 13; Pine County v. Willard, 39 Minn. 125, 1 L.R.A. 118, 12 Am. St. Rep. 622, 39 N.W. 71; Crawn v. Com. 84 Va. 282, 10 Am. St. Rep. 839, 4 S.E. 721; Rogers v. State, 99 Ind. 218; Stone v. Seymour, 15 Wend. 19; Hecox v. Citizens' Ins. Co. 9 Biss. 421, 2 F. 535; State use of Buchanan v. Smith, 26 Mo. 226, 72 Am. Dec. 204; American Bonding & Trust Co. v. Milwaukee Harvester Co. 91 Md. 733, 48 A. 74.

Where an officer holds for several, or more than one term, and it is afterwards discovered that he was in default, it will be presumed, in the absence of proof to the contrary, that the default took place during his last term, and the sureties on his last bond would be liable. United States v. Earhart, 4 Sawy. 245, Fed. Cas. No. 15,018; Heppe v. Johnson, 73 Cal. 265, 14 P. 833; Kagay v. Trustees of Schools, 68 Ill. 75; Pape v. People, 19 Ill.App. 24; Fox Dist. Twp. v. McCord, 54 Iowa 346, 6 N.W. 536; Bernhard v. Wyandotte, 33 Kan. 465, 6 P. 617; Stoner v. Keith County, 48 Neb. 279, 67 N.W. 311; Clark v. Douglas, 58 Neb. 571, 79 N.W. 158; Kelly v. State, 25 Ohio St. 567; Vaughan v. Evans, 1 Hill, Eq. 414.

If the contrary position is taken, the burden of proof is upon them to show that the default occurred before their bond was given. Weakley v. Cherry Twp. 62 Kan. 867, 63 P. 433; Readfield v. Shaver, 50 Me. 36, 79 Am. Dec. 592; Pine County v. Willard, 39 Minn. 125, 1 L.R.A. 118, 12 Am. St. Rep. 622, 39 N.W. 71; Board of Education v. Robinson, 81 Minn. 305, 83 Am. St. Rep. 374, 84 N.W. 105; State v. Bobleter, 83 Minn. 479, 86 N.W. 461; Hetten v. Lane, 43 Tex. 279; Parsons v. Miller, 46 W.Va. 334, 32 S.E. 1017; Parker v. Medsker, 80 Ind. 158; Com. ex rel. Mechanicsburg v. Knattle, 182 Pa. 176, 38 A. 13; Custer County v. Tunley, 13 S.D. 7, 79 Am. St. Rep. 870, 82 N.W. 84.

Where money is in any manner brought into the treasury, even though it was intended to be and was afterwards again abstracted, the surety would be liable, and this is true even though such money was abstracted to pay liabilities incurred by the officer during his first term, where the money was received by the county treasurer in good faith. Pine County v. Willard, 39 Minn. 125, 1 L.R.A. 118, 12 Am. St. Rep. 622, 39 N.W. 72; State use of Buchanan County v. Smith, 26 Mo. 226, 72 Am. Dec. 204; People v. Hammond, 109 Cal. 384, 42 P. 36; Throop, Pub. Off. § 219; Anaheim Union Water Co. v. Parker, 101 Cal. 483, 35 P. 1084.

The doctrine is that the officer, when he enters upon a second term, must be presumed, in the absence of evidence to the contrary, to have on hand all the funds with which he is chargeable. Fox Dist. Twp. v. McCord, 54 Iowa 346, 6 N.W. 537; Rogers v. State, 99 Ind. 218; 15 Decen. Dig. p. 754.

Where the same person holds the offices of county treasurer and of school district treasurer, and leaves school moneys to the credit of the county, to keep his county funds proper, he is short as school treasurer, and there and so liable, and there was no default as county treasurer. The county had its money, and it was not injured. Butte County v. Morgan, 76 Cal. 1, 18 P. 115.

Where the funds of a municipality are actually produced and accounted for as required by law, and settlement is effected, in the absence of fraud or mistake, this is conclusive, and no inquiry will be tolerated concerning the source whence any of the necessary money was derived. Boone County v. Jones, 54 Iowa 699, 37 Am. Rep. 229, 2 N.W. 987, 7 N.W. 155; Morley v. Metamora, 78 Ill. 394, 20 Am. Rep. 266; Gage v. Chicago, 2 Ill.App. 332; Independent School Dist. v. Hubbard, 110 Iowa 58, 80 Am. St. Rep. 271, 81 N.W. 242.

It being a payment and settlement, it was no concern of the county where or how the money was procured. Fremont County v. Fremont County Bank, 145 Iowa 8, 123 N.W. 782, Ann. Cas. 1912A, 1220.

The presumption of the law is against defalcation. Independent Dist. v. King, 80 Iowa 500, 45 N.W. 908; District Twp. v. Hardinbrook, 40 Iowa 130; Independent School Dist. v. Hubbard, 110 Iowa 58, 81 N.W. 243.

It is presumed that an officer, succeeding himself in office, pays over to himself, as his own successor, the moneys on hand at the end of his prior term. Custer County v. Tunley, 13 S.D. 7, 79 Am. St. Rep. 870, 82 N.W. 84; State ex rel. Causey v. Causey, 93 S.C. 300, 76 S.E. 707.

A report made by a treasurer as part of his official duty, showing the amount of funds in his hands at the execution of his second bond, is binding on the sureties thereto. Cawley v. People, 95 Ill. 249; 11 Cyc. 449, note; Cowden v. Trustees of Schools, 235 Ill. 604, 23 L.R.A. (N.S.) 131, 126 Am. St. Rep. 244, 85 N.E. 924; Roper v. Sangamon Lodge, 91 Ill. 518, 33 Am. Rep. 60; Longan v. Taylor, 130 Ill. 412, 22 N.E. 745; Boone County v. Jones, 54 Iowa 699, 37 Am. Rep. 229, 2 N.W. 987, 7 N.W. 155; Chicago v. Gage, 95 Ill. 593, 35 Am. Rep. 199; Strong v. United States, 6 Wall. 788, 18 L.Ed. 740; State v. Sooy, 39 N.J.L. 539; Seymour v. Van Slyck, 8 Wend. 403; Stone v. Seymour, 15 Wend. 19; Sandwich v. Fish, 2 Grey, 298; Morley v. Metamora, 78 Ill. 394, 20 Am. Rep. 266; Roper v. Sangamon Lodge, 91 Ill. 518, 33 Am. Rep. 60; Cawley v. People, 95 Ill. 249; Lauderdale County v. Alford, 65 Miss. 63, 7 Am. St. Rep. 637, 3 So. 246; Ingraham v. Maine Bank, 13 Mass. 208.

The fact that the county commissioners knew, when they accepted his bond, that the treasurer had been chargeable with conversion of funds during the prior term, does not avoid the bond. Pine County v. Willard, 39 Minn. 125, 1 L.R.A. 118, 12 Am. St. Rep. 622, 39 N.W. 71; Gwynne v. Burnell, 7 Clark & F. 572, West, 342, 1 Scott, N. R. 711, 6 Bing. N. C. 853; Colerain v. Bell, 9 Met. 499.

No specific personal property is involved in this action. It is solely a question of money--not specific money, but a liability in money. And the identity of such cannot be established by a person's books of account, used as evidence upon issues between third parties. As to the party against whom they are sought to be used in such an action, such books are private books. Powers v. Hazelton & L. R. Co. 33 Ohio St. 436; Pittsburgh & L. E. R. Co. v. Cunnington, 39 Ohio St. 327; Kerns v. McKean, 76 Cal. 87, 18 P. 122; Ridgeley v. Johnson, 11 Barb. 527; Pittsburgh, C. & St. L. R. Co. v. Noel, 77 Ind. 110; State Bank v. Brown, 53 L.R.A. 513, and note 11, 165 N.Y. 216, 59 N.E. 1.

Pierce, Tenneson, & Cupler, and Watson & Young, for respondent.

Defendant's persistent assertion that there was no shortage as far as the county was concerned, and that if there was any embezzlement it was that of school district money, is wholly beside the question. The money was collected by the officer as county treasurer; it belonged to the county until there was a distribution to, and setting apart of the funds to, the school district. Walker v. State, 176 Ind. 40, 95 N.E. 353.

Under such conditions the abstracting of any part of it was an embezzlement of the funds of the county. Armstrong v. State, 145 Ind. 609, 43 N.E. 866; Hollingsworth v. State, 111 Ind. 289, 12 N.E. 490; Kennedy v. Miller, 97 Cal. 429, 32 P. 558; Gridley School Dist. v. Stout, 134 Cal. 592, 66 P. 785; Detroit v. Weber, 29 Mich. 24.

The burden of proof is on defendant to show shortage repaid. Dickinson v. White, 25 N.D. 523, 49 L.R.A. (N.S.) 362, 143 N.W. 754.

The cashing of the checks in question created a shortage in the bank accounts of Cass county, and that such shortage was never made good. Oakland...