Provident Bank v. Wood
| Decision Date | 05 December 1973 |
| Docket Number | No. 73-255,73-255 |
| Citation | 36 Ohio St.2d 101,65 O.O.2d 296,304 N.E.2d 378 |
| Parties | , 65 O.O.2d 296 The PROVIDENT BANK, Appellant, v. WOOD et al., Board of County Commissioners of Hamilton County, Appellees. |
| Court | Ohio Supreme Court |
Syllabus by the Court
Under R.C. 135.14(C), each deposit or redeposit of interim funds takes place pursuant to a separate interim deposit award, which deposit may be rejected by the eligible institution.
This action was instituted in the Court of Common Pleas of Hamilton County by The Provident Bank, Cincinnati, Ohio, as a declaratory judgment action to construe the rights and obligations arising out of an agreement entered into by the parties, under which Provident Bank, appellant herein, was to be a depository for county interim funds under the control of the board of County Commissioners of Hamilton County.
The parties are in agreement as to the facts of the case. On June 21, 1971, all eligible financial institutions in Hamilton County were notified by the board of the availability of interim funds for deposit during a two-year period, beginning August 24, 1971, estimated to be a maximum of $35,000,000. The institutions were requested to submit proposals to be designated depositories for interim funds, specifying the maximum amount of funds desired and the amount of interest they would pay.
On July 16, 1971, Provident made its application, pursuant to R.C. 135.08, to be designated a depository for the interim funds of the county, and offered to accept a maximum deposit of $35,000,000 for the two-year period. Provident offered to pay interest on such funds deposited with it at an annual rate of 6.262 percent on deposits held for six months to one year. 1 This proposal specified that all such deposits would be made and held subject to the terms of R.C. Chapter 135, the Uniform Depository Act. On August 11, 1971, the board adopted a resolution naming Provident the depository of county interim funds for the two-year period.
On August 20, 1971, the parties entered into an 'Agreement for the Deposit of Interim Moneys.' 2 The board's position throughout the present controversy has been that this Agreement represented an award to Provident to $23,000,000 for a period of two years. Pursuant to the Agreements, the sum of $23,000,000 was deposited by the board with Provident, which deposit was evidenced by a six-month certificate of deposit maturing on February 20, 1972, and bearing interest at the rate 6.262 percent per annum as agreed. At the time of maturity of the certificate the board advised Provident that it wished to have the certificate renewed or re-issued on the same terms, i. e., six months at 6.262 percent, contending that the Agreement of August 20 required the bank to do so. This, Provident declined to do, taking the position that neither the Agreement nor R.C. 135.14(C) required it to re-issue the certificate at the initial interest rate of 6.262 percent; that market conditions then prevailing indicated that such a certificate could feasibly be offered only at a substantially lower rate of interest. Provident did offer to continue paying 6.262 percent on the interim funds of the county which it held on deposit until May 8, 1972, but on that date the parties were still in disagreement. Provident then advised the board that henceforth it would pay no interest on county interim funds of which it was an unwilling depository.
The Court of Common Pleas entered judgment for appellees, and that judgment was affirmed by the Court of Appeals.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Keating, Muething & Klekamp, Louis F. Gilligan and Gary P. Kreider, Cincinnati, for appellant. Cincinnati, for appellant.
Simon L. Leis, Jr., Pros. Atty., and Arthur Ney, Cincinnati, for appellees.
In this case, the court is asked to determine whether the term of the award of interim funds was for the entire two-year designation period, or whether the term of the award was limited to the six-months term of the instrument evidencing the deposit executed subsequent to that award. Stated another way, we must decide whether the term of the award of the interim deposit must be for 'not less than thirty days nor more than one year,' the minimum and maximum maturities decreed by R.C. 135.09 for deposits of interim funds.
For the reasons set forth below, we find that the term, 'interim deposit,' necessarily relates to the periodic offer of interim moneys by a political subdivision to a bank for deposit; that R.C. 135.09 limits the term of an 'award' of interim moneys to a minimum of thirty days and a maximum of one year; and that Provident was correct in maintaining that R.C. 135.14(C) granted it the right to refuse to renew or re-issue the certificate of deposit which matured on February 20, 1972. Accordingly, the judgment of the Court of Appeals must be reversed.
R.C. Chapter 135 governs the investment of public moneys held by the state and its political subdivisions. The Act designates three types of deposits which can be made. 'Interim deposits,' the type involved in the instant case, or defined in R.C. 135.01(F) as deposits of:
'* * * public moneys in the treasury of the state or any subdivision after the award of inactive deposits has been made * * *, which moneys are in excess of the aggregate amount of the inactive deposits as estimated by the governing board prior to the period of designation and which the treasurer or governing board finds should not be deposited as active or inactive deposits for the reason that such moneys will not be needed for immediate use but will be needed before the end of the period of designation.'
Once it has been determined that interimmoneys exist, the statutory process for the deposit of those moneys is triggered, culminating in the actual deposit pursuant to R.C. 135.09 and 135.14. The issue before us centers on the meaning of the statutory language at the final stage of the deposit process, particularly R.C. 135.14(C), as it relates to the right of an eligible institution to refuse to accept an interim deposit following an award of interim moneys.
It is the contention of Provident that such an award occurs when the treasurer or governing board of the political subdivision makes the decision to place an interim deposit with a designated depository. Provident contends that the board's attempt to renew the certificate of deposit which matured on February 20, 1972, was a second 'award' of interim moneys for deposit, and that, at that time, it had a right to refuse to accept the deposit.
At this juncture, we turn our attention to the Agreement for the 'Deposit of Interim Moneys' entered into by the parties on August 20, 1971, on which the board relies so heavily. Parenthetically, we note that such a written agreement is not required by R.C. 135.09. Following the statutory guide for the handling of interim moneys, it is to be noted that the award of moneys must be made subsequent to the designation of a depository-the award preceding the deposit. The board takes the position that...
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