State ex rel. Bank of Brookston v. Stout
| Decision Date | 02 April 1901 |
| Docket Number | 3,407 |
| Citation | 59 N.E. 1091,26 Ind.App. 446 |
| Parties | THE STATE, EX REL. BANK OF BROOKSTON, v. STOUT ET AL |
| Court | Indiana Appellate Court |
From the Tippecanoe Superior Court.
Affirmed.
J. E Rose and J. H. Rose, for appellant.
J. F Hanly and W. R. Wood, for appellees.
This was an action upon the official bond of Thomas G. Stout as trustee of Grant township, Newton county. A demurrer of the principal and a demurrer of the sureties to the complaint, for want of sufficient facts, were sustained. Omitting portions of the complaint not requiring notice, it appeared in its averments that on the 15th of December, 1896 Stout, as such trustee, and while discharging the duties of the office, purchased of George M. Ray certain school supplies, being seven atlases of the world, seven American Standard dictionaries of the English language, and seven pictorial views; that there were then in the township seven district schools, and Stout purchased one of each of the articles for use in each of these schools. The pleading described the articles and stated their intended use for purposes of instruction and reference in the branches of study required by law to be taught in the schools, and their suitableness for such use, one of each of the articles being designed for use by the entire school. It was alleged that these articles were at the time of the purchase thereof delivered by Ray to Stout as such trustee, who immediately thereafter placed one of each of the articles in each of the schools of the township; that "said supplies were used by said schools for the purposes aforesaid continuously from that time hitherto;" that Stout as such trustee purchased these supplies for the price of $ 420, and they were at that time reasonably worth that sum; that he did not pay for them at the time of the purchase, but bought them on the credit of the township; that to evidence the indebtedness of the township to Ray therefor, Stout, as such trustee, on the same day executed to Ray the warrant, or promissory note, of the township, whereby it promised to pay Ray on the 15th of June, 1898, $ 420, with eight per cent. per annum interest thereon from the date thereof until paid, and attorneys' fees; that upon the face and in the body of the note, or warrant, Stout, as such trustee, certified in writing that the aggregate amount of indebtedness incurred on behalf of the township by the purchase of these supplies did not exceed the funds in his hands at the time out of which said indebtedness was payable and of the funds to be derived from the taxes assessed against the township for the year in which the debt was incurred, and signed the certificate in the name of the township and of himself as the trustee thereof; that this certificate was false and was so known to be by Stout at the time he made it, and he at the time well knew that Ray would offer the note, or warrant, for sale to third persons, and particularly to the relator, and would sell it, if he could procure a purchaser; that at the time of the purchase, and as an inducement to Ray to sell the goods and accept the note, or warrant, Stout, as such trustee, represented to Ray that there were at the time no outstanding warrants, notes, orders, or indebtedness of any kind against the township or against the special school fund thereof, out of which the note to Ray was made payable, and that the township was not indebted to any person in any manner or to any amount; that, at the time, Ray well knew that Stout would thereafter receive from the December, 1896, disbursement of taxes assessed against the township for that year an amount of special school funds equal to the amount of said order, or warrant, but had no knowledge of the falsity of said certificate or representations of Stout, but relied upon the same and believed them to be true, and in reliance upon the truth thereof he sold the goods to Stout as trustee as aforesaid, and accepted the warrant in payment thereof; that the records and files in the office of the trustee did not disclose the existence of any other warrants or notes against the school township or that it was indebted in any manner or to any amount, but contained no record of any such outstanding indebtedness and showed and disclosed the fact to be that the school township was not indebted to any person; that while Stout theretofore, during the year 1896, had issued a large number of notes payable out of the special school fund of the township, and the aggregate thereof was largely in excess of the special school funds then in the hands of Stout and of the funds to be derived from the taxes assessed against the township for the year 1896, Stout had wholly failed and neglected to make any record or memorandum thereof, as by law in duty bound to do, although he at all times during the year had in his office proper records and files for that purpose; that Ray had no knowledge of the issuance of said notes or warrants or the existence of said indebtedness, but relied wholly on said records and files and the representations of Stout aforesaid, and at all times herein referred to believed that said purchase did not create a debt against said school township and the special school funds thereof in excess of the special school funds in the hands of Stout at the time of the purchase and of the special school funds to be derived from the taxes assessed against the township for the year in which the debt was incurred; that Stout executed the certificate contained in said warrant with full knowledge that intending purchasers might, and in all probability would, rely on the truth thereof, and with the intent of having the same relied upon as true; that thereafter, and prior to the 11th of March, 1897, the relator purchased said warrant from Ray and paid him therefor at the time of the purchase $ 400; that prior to the purchase of the warrant, the relator made inquiry of Stout, as the trustee of the township, at his office in the township, as to the financial condition of the school township, and as to whether there was any outstanding indebtedness against said fund, and as to the necessity for the purchase of said supplies, and as to whether the purchase thereof created a debt against the school township and the special school fund thereof in excess of the funds then in the hands of Stout as such trustee and of the funds to be derived from the taxes assessed against the township for the year in which the debt was incurred; that thereupon Stout, as such trustee, well knowing that the relator was negotiating for the purchase of the warrant and was making such inquiries of him for the purpose of determining the validity of the warrant, and that the relator was wholly ignorant with reference to said facts, stated and represented to the relator that, at the time said supplies were purchased and said warrant was issued, there were no other notes, warrants, orders, or indebtedness due from or outstanding against the school township or the special school fund thereof except said notes, or warrant, for $ 420, for the purchase of which the relator was at the time negotiating, and another order, note, or warrant for the same amount, issued at the same time, given for other and different school supplies purchased by Stout, and that he had special school funds on hand at the time of said purchase and issue of said warrant nearly equal to the aggregate amount of said two orders, and that the aggregate amount of said two warrants was not in excess of the special school funds in his hands at the time of the issuance thereof and of the special school funds derived from taxes assessed against his township for the year 1896, and received by him during that year, after the purchase of said supplies and the issuance of said notes, and that the taxes so received by him during the year 1896, and after said purchase and issuance of said orders, were in excess of the aggregate amount of said two warrants; that at the same time, and prior to the purchase of said note, and with a view to determining the validity of said warrant and the indebtedness thereby evidenced, the relator examined the records and files in the office of Scout, as such trustee; that these records and files disclosed the fact to be that Stout had received from the June, 1896, disbursement of taxes more than $ 1,000 of special school funds belonging to his township, and that he had on hand on the 15th of December, 1896, nearly sufficient of said funds to equal the amount of said two warrants, and that he had received after the last mentioned date, from the December, 1896, disbursement of taxes, an amount of special school funds sufficient to equal the aggregate amount of said two warrants, and that at the time of purchasing said supplies and issuing said warrants there was no other warrant or order payable out of the special school fund of the township then outstanding, nor had any such warrant been issued during the year 1896; that Stout, as such trustee, represented to the relator at said time that the facts disclosed by said record and files were true, and that they correctly stated the financial condition of the school township and its special school fund, and the indebtedness against the same. It was alleged that said statements and representations of Stout were wholly false and were so known to be by him at the time he made them; that on the 15th of December, 1896, there were outstanding and unpaid against said school township and against its special school fund, exclusive of said two notes, or warrants, a large number of notes, or warrants, payable out of the special school fund of the township, issued by Stout, as such trustee, during the year 1896, for maps, charts, and other school supplies suitable and necessary for...
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