Reed v. People

• Decision Date: 12 January 1926
• Docket Number: 1299
• Citation: 34 Wyo. 189,242 P. 319
• Parties: REED, COUNTY TREASURER v. PEOPLE [*]
• Court: Wyoming Supreme Court

242 P. 319

34 Wyo. 189

REED, COUNTY TREASURER v. PEOPLE ^[*]

No. 1299

Supreme Court of Wyoming

January 12, 1926

ERROR to District Court, Campbell County; HARRY P. ILSLEY, Judge.

Action by the people, to the use of Campbell County High School against Ada Reed, Treasurer of Campbell County, and her surety. Judgment for plaintiff and defendant brings error.

Affirmed.

Louis J. O'Marr and Gillette & Clark for plaintiffs in error.

Plaintiff in error proved diligence and care in depositing the money and thereby complied with the conditions of her bond; 2401 C S.; Sections 321 and 324 C. S.; State vs. Foster, 5 Wyo. 199; State vs. Gramm, 7 Wyo. 329; Roberts vs. Commissioners, 8 Wyo. 177; the latter section controls if inconsistency or repugnancy be found between said sections; 2 Sutherland's St. Con. 349; U. S. vs. Jackson, 143 F. 783; plaintiff in error was not an insurer of the funds; State vs. Gramm, supra; Wilson vs. People (Colo.) 34 P. 944; Overton vs. Copeland (Tenn.) 34 S.W. 427; the words, "safely keep" add nothing to the obligations; Roberts vs. Com. supra; the treasurer had no reason to suspect the insolvency of the bank, and acted honestly and with fidelity; 6 C. J. 1119; Wilson vs. People, supra; State vs. Walsen, (Colo.) 28 P. 1119; no depository was ever designated by the school board. All the treasurer could do under the circumstances was to hold the funds and while so holding them her liability was that defined in the Gramm and Roberts cases. The state depository law is inapplicable unless depositories are designated; the Depository Act has not changed the conditions of the treasurer's bond as fixed by Chap. 30 C. S. Section 2969 C. S. refers to funds in excess of what the legally designated depository may receive, and is a part of the Depository Act. The notice referred to in 2969 C. S. is only required (a) when a depository has been designated by the board, and (b) when funds on hand exceed the amount the depository can receive under the Depository Act. It was clearly established in the present case, that the liability of the treasurer was governed by the rule announced in the Gramm and Roberts cases.

C. A. Kutcher and Elwood Anderson for defendant in error.

The Foster, Gramm, and Roberts cases do not apply. The Gramm case turned on a statute that did not require the treasurer to "safely keep" the public funds. The present statute, Section 321 C. S., was enacted thereafter to supply the defects in the former law. The Roberts case was decided after Sections 321 and 324 C. S. were enacted, but arose under the earlier law, and was decided in harmony with the Gramm case. The depository law effectuating Art. XV Section 7 Const., was subsequently enacted. See Section 2964 C. S. defining the duties of the treasurer and section 2965 and 2970 C. S. These laws, so far as material, are as much a part of the bond in question as if written therein; 7 C. J. 34; the treasurer was negligent and violated her official bond in depositing the funds in an insolvent bank not, designated by the depository law, and in failing to receive security for such deposits. She was negligent in failing to notify the chairman of the governing board that she had funds of the district which could not be placed in banks under the Depository Law, but on the contrary allowed the bank to hold $ 10,000.00 of the school moneys for its accommodation, and by falsely advising the board that she had no funds of the school district on hand; she failed to make any inquiry concerning the safety of the bank, which was insolvent during all of the time the money was there on deposit, and for a year prior to its failure; 2965 C. S. 2969 C. S. She violated her duty in holding this money as a "reserve" for the accommodation of an insolvent bank; 2401 C. S. The loss was directly attributable to the failure of the county treasurer to perform her official duties as treasurer thereof. Failure to perform a legal duty is negligence; 29 Cyc. 436; failure to avail one's self of opportunity for investigating the conditions of a depository is negligence; 22 R. C. L. 227; State vs. Reed (Tenn.) 95 S.W. 809; Mecklenburg vs. Beals, 69 S.E. 1032; the evidence established wilful negligence and a violation of the treasurer's official bond. The judgment should be affirmed.

BLUME, Justice. POTTER, C. J., and KIMBALL, J., concur.

OPINION

BLUME, Justice.

This action was brought on behalf of the Campbell County High School District in the county of Campbell, against Ada Reed County Treasurer of said county, and the United States Fidelity and Guaranty Company, her surety on her official bond. The facts are practically undisputed and are substantially, as far as pertinent here, as follows: Mrs. Reed was duly elected to said office at the election of November, 1920, and thereafter and on December 18, 1920, qualified as such and executed a bond, with said surety company as surety, in the sum of $ 40,000. The bond is in the usual form, in conformity with section 324, W. C. S. 1920, and provides, among other things, that said Ada Reed should, as such county treasurer, perform all the duties of said office and should "with all reasonable skill, diligence, good faith and honesty safely keep and be responsible for all funds" coming into her hands as such officer. The bond was duly approved by the board of county commissioners of Campbell county and Mrs. Reed assumed charge of said office on the first Monday in January, 1921. She was exofficio custodian of the funds of said high school district (Sec. 2401, W. C. S. 1920), and from time to time received, by virtue of her office, money belonging to said district, which she deposited in the Citizens State Bank of Gillette, which, however, had not been designated by the board of trustees of said high school district as a depository of such funds; nor was any bond or security ever demanded of it or given by it to said district. During January, 1921, she collected about $ 13,500 as taxes that belonged to said district. Part of that was disbursed in the payment of warrants. The balance which she had on hand on March 31st, 1921, was $ 10,068.86. But about or before that time she discontinued the payment of warrants issued by said district. A number of warrants were issued thereafter up to August 21, 1921. These were presented for payment but were merely registered and not paid, for the alleged reason of want of funds. The amount of these warrants so issued and registered was about $ 6,648. Part of these were paid before August 21, 1921, but how many of them does not appear. It seems that the district had borrowed $ 10,000 in 1920 from the Citizens State Bank, with which to defray the expenses of the district during that time. Warrants were issued in that amount. The Citizens State Bank sold these warrants to the First National Bank of Cheyenne, which for some reason, not explained by the record, failed to present them for payment when the taxes came in during January, 1921, and did not in fact present them until after the Citizens State Bank failed and went into the hands of a receiver on August 21, 1921. But the latter bank had evidently some interest in protecting the First National Bank, for Beitler, the cashier, who was also chairman of the board of trustees of the high school district, told Mrs. Reed to keep $ 10,000 on hand for the purpose of meeting these warrants and she complied with that request. She told three members of the board of trustees of said district, in March, 1921, upon inquiries made of her by them, that the district had no funds, and explains that in her testimony by stating that she treated $ 10,000 of the money belonging to the district as a special fund to meet the payment of the warrants just mentioned. No bank whatever had been designated as a depositary for the funds of the district by its board of trustees. Mrs. Reed, notwithstanding the fact that she had $ 10,000 or more on hand, never asked that such designation be made, and did not notify any member of said board that she had funds making it necessary for that to be done. Some of the members of the board testified that the reason why such designation had not been made, was because the $ 10,000 of warrants held by the First National Bank of Cheyenne were outstanding; that the funds of the district would, upon presentation for payment thereof, be practically exhausted, and that the board accordingly did not deem it necessary to make such designation in January, 1921, and that none was made up to August 21, 1921, because of the statement by Mrs. Reed that no funds were on hand, and because the board, relying on that statement, believed that the warrants held by the First National Bank of Cheyenne had been paid. The Citizens State Bank, as heretofore mentioned, failed on August 21, 1921. Mrs. Reed testified that the bank had a good reputation and that its officers were men of good standing; that she made, however, no inquiries in regard to it or them, and made no investigation of any kind as to the condition of the bank, not deeming that necessary by reason of her actual knowledge of the circumstances. There is evidence tending to show that the bank was insolvent for a year previous to August 21, 1921. It had on deposit, when it failed, $ 10,128.32 which belonged to said district. This amount was later reduced to $ 7,089.83 by reason of dividends paid by the receiver of...