Perley v. County of Muskegon

• Decision Date: 08 June 1875
• Court: Michigan Supreme Court
• Parties: Jonas H. Perley and another v. The County of Muskegon

32 Mich. 132

Jonas H. Perley and another v. The County of Muskegon

Supreme Court of Michigan

June 8, 1875

Heard April 27, 1875; April 28, 1875; April 29, 1875,

Error to Muskegon Circuit.

Judgment reversed, with costs, and a new trial granted.

Ashley Pond and C. I. Walker, for plaintiffs in error.

A. T McReynolds, Engleston & Kleinhans and D. Darwin Hughes for defendant in error.

OPINION

Campbell, J:

Plaintiffs in error, who are surviving partners of Perley, Palmer & Co. (consisting of themselves and Charles Merrill, deceased), are sued for moneys alleged to have been received by or used for that firm, belonging to the county of Muskegon. The action is under the common counts for money had and received, and items were given under a bill of particulars. The funds are claimed to have been furnished or used by Martin Perley, then county treasurer, out of county moneys in his hands. The case presents many separate questions of law and evidence, the most important of which relate to the legal position of the treasurer as financial officer of the county. There are also questions of partnership and agency, and of evidence. Martin Perley turned out to be a defaulter in office.

He became county treasurer on the 15th of January, 1869. The position of the various parties before and after that time was regarded as important on the trial, and was in some respects undisputed, and in others controverted. Before December 8, 1868, Martin Perley had been in partnership with the three other persons named, and had owned a mill with them in Laketon. On that day he sold out his interest in the mill to Jonas H. Perley, and the partnership was dissolved. When the firm of Perley, Palmer & Co. was formed, does not very clearly appear. Their firm business was not chiefly done in that part of the state. From December, 1868, to the latter part of February, 1869, the mill was not in use, and Martin Perley received a small sum for watching it. About the 22d of February, 1869, Martin Perley made an arrangement, to rent the mill from the owners for 1869, and continued to run it as lessee under that and a new arrangement until he went out of office in June, 1872. At the time of the first arrangement Palmer and Merrill owned a considerable quantity of logs, known as the Little River logs, in which Jonas H. Perley had no concern. These logs Martin Perley agreed to saw for them. During the same year he states that he sawed some other logs for all of them, as well as for other parties. He acted as agent for them in selling their lumber during his tenancy, and the proceeds passed through his hands. During this period he was sometimes in advance, and sometimes they were in advance. The balance against him on the account kept in their name was quite large. During this same period dealings were had in the separate name of Jonas H. Perley, on which the balance was also fluctuating. On the close of the business, and allowing all the Jonas H. Perley account (as claimed by Martin Perley) to have been a partnership business, the balance seems to have been against Martin Perley.

In the course of his business dealings with these various parties, Martin Perley kept all his money indiscriminately in the same bank accounts, including county moneys and the proceeds of business transactions. The deposits were drawn out and renewed, and paper was discounted from time to time by the bankers, and the proceeds deposited. In some cases the accounts were overdrawn and subsequently made good.

The suit is based on the claim that defendants are responsible for all county moneys which entered into these dealings, as moneys which came to their hands unlawfully; and that, although refunded to Martin Perley, such refunding does not discharge the obligation unless used for the county purposes, or in some way applied specifically as county money. If the balance of accounts between Martin Perley and the firm in question was in their favor, it is evident they have reaped no profit, and have had no more in amount than was due them, and that Martin Perley has used up money for other purposes to the full extent of his defalcation; so that in refunding to the county, they simply shift a debt from one creditor to another. The principal inquiry therefore relates to the nature of the county treasurer's powers and functions in dealing with the funds which have come to his possession.

The court below instructed the jury that the county treasurer stands on the footing of a bailee, and that moneys in his hands can never lose their character as a bailment so long as they can be traced, but remain county property throughout, whether deposited or remaining in the treasurer's hands, except when coming into the hands of persons having no knowledge of their origin. Upon the question of constructive knowledge, charges were also given which need not be referred to in this immediate connection.

The position of a public officer is peculiar, and the different systems of statutes show that the responsibility is not by any means uniform. There seems to be nothing at common law which distinguished public treasurers or depositaries from any other financial managers. Where the same person receives and pays out money, the identity of the particular money received must almost necessarily be changed constantly, and it must have been customary for a long time to place such funds in what may be supposed to be safer custody than private premises will always afford. The usual rule in regard to bailments exonerates the bailee who has done all that was in his power to prevent loss or accident, and there are authorities which on this ground discharge public treasurers from any greater liability. There are others which hold them to be debtors, and not bailees, and not exonerated under any circumstances.

It is well settled that in the case of all but special deposits, the money deposited becomes the property of the banker, and he becomes the debtor of the depositor. No depositor can, upon refusal to pay a check, replevy or seize the funds in the bank. His redress must be as a creditor in some form of action to enforce his debt. Statutes sometimes give priority to peculiar debts, but except in such cases, the depositor has no advantage over any other creditors.--Com'l Bk. of Albany v. Hughes, 17 Wend. 94; Marine Bank v. Fulton Bank, 2 Wal. R., 252; Foster v. Essex Bank, 17 Mass. 479; Bank of Kentucky v. Wister, 2 Peters R., 318; Graves v. Dudley, 20 N.Y. 76; Matter of Franklin Bank, 1 Paige R., 249; Chapman v. White, 6 N.Y. 412; Downes v. Phoenix Bank, 6 Hill R., 297; Swartwout v. Mechanics' Bk., 5 Denio 555.

The deposit which creates these contract relations must be either the money of the officer or of the public, but it cannot usually be that of both. If an officer is required or authorized by law to make deposits in any particular place or with any particular person, he is usually, if not universally, protected from any further responsibility, so long as he leaves it there, and is not a guarantor of the safety of the deposit. The ownership and liability appear to be co-extensive. In Swartwout v. Mechanics' Bank, 5 Denio 555, this question came up and was carefully discussed. Swartwout, while collector of New York city, deposited money with the defendant bank in his official name, while he had a separate account in his individual name at the same time. Some time after his removal he signed a check for the balance, by the name of Samuel Swartwout, late collector, which the bank refused to honor on the ground that the money belonged to the United States, and had been applied by the bank, which had been a government depositary, to balance their account with the government. The court held that it would not be sufficient to show this money had been officially received for the benefit of the United States, in order to entitle the government to the money. As the collector was not one of those officers who had been required by authority to deposit in these banks, it was like any other deposit, "liable to be drawn only by the depositor." The court use further this language: "The addition of 'collector,' in the keeping of the account, may have been, and probably was, to distinguish and keep separate the money he received in his official capacity from that which he received in his own individual capacity. But a deposit in this manner can hardly be deemed a payment over of the money in discharge of his official duty, or the execution of his trust. It is placed in deposit ready to be paid over upon his own draft, when called upon by the proper officer or authority. A deposit to the secretary of the treasury would have placed it beyond the control of the plaintiff; but a mere deposit by a collector in his own name, with his official addition, is not accounting for the money received by him in his official capacity. A county treasurer, sheriff, surrogate, or other such officer, opens an account with a bank with his addition, and keeps a separate account in such capacity; most clearly he can collect such deposits in his own name, and the bank would not be permitted to show that the money belonged to the county, etc. The same rule and principle apply to the present case."

The same principle was applied in Sims v. Brittain, 4 B. & Ad., 375, where money had been deposited with an agent in the name of one Gribble in a separate account as managing owner of a ship, he keeping a separate private account. After his death it was held no suit could be brought for this money except by his executors, and that the other owners could not claim it. The court liken it to a bank deposit, and say it was a loan to the agent by Gribble alone, and not enuring to any one else.

The same principle is illustrated by the course of United...