State ex rel. Johnson v. Atchison

• Citation: 135 A. 456,105 Conn. 315
• Parties: STATE EX REL. JOHNSON ET AL. v. ATCHISON, TOWN TREASURER.
• Decision Date: 16 December 1926
• Court: Supreme Court of Connecticut

135 A. 456

105 Conn. 315

STATE EX REL. JOHNSON ET AL. v. ATCHISON, TOWN TREASURER.

Supreme Court of Errors of Connecticut.

December 16, 1926

Appeal from Superior Court, Fairfield County; John R. Booth, Judge.

Application for mandamus by the State, on the relation of Charles Johnson and others, to require Irwin Atchison, Treasurer of the Town of Sherman and Custodian of the Town Deposit Fund, to honor an order of the Board of Selectmen and pay it to the estate of his predecessor in office. A motion to quash the alternative writ was denied, and, from a judgment for petitioners, respondent appeals. No error.

Raymond E. Baldwin, of Bridgeport, for appellant.

J Moss Ives, of Danbury, for appellee Rogers.

Henry C. Wilson, of Danbury, for appellees Johnson, Platt, and Woodward.

HAINES, J.

Under an act of Congress approved June 23, 1836 (5 Stat. 52), the town of Sherman, in common with other towns of the state received from the state of Connecticut $2,432.23 as its portion of a " school fund" provided by that act and otherwise known as " town deposit fund." The money was turned over to the town as a trust fund only, and the Legislature of this state, by statute, provided in detail how it should be maintained and used. Being a trust fund, it at once became and has since remained the legal duty of the town and its agents to preserve, hold, invest, and use the fund strictly in accordance with these statutory provisions.

" The preservation of that fund inviolate was specially guarded in the Constitution (art. 8, § 2), which declares that it shall ‘ remain a perpetual fund, the interest of which shall be inviolably appropriated to the support and encouragement of the public, or common schools, throughout the state, and for the equal benefit of all the people thereof,’ and that ‘ no law shall ever be made, authorizing said fund to be diverted to any other use than the encouragement and support of public, or common schools, among the several school societies, as justice and equity shall require.’ " State v. Kilburn, 81 Conn. 9, 12, 69 A. 1028, 1029 (129 Am.St.Rep. 205).

The history of this town deposit fund in the town of Sherman, so far as it relates to the present controversy, dates from 1878 when one Hawley became town treasurer and 1882 when he became agent for the town deposit fund. When Hawley became treasurer in 1878, the fund was represented to him as consisting of six loans to individuals amounting to $914, and loans to the town of Sherman amounting to $1,347.28, a total of $2,261.28. Between 1878 and 1882 three of the individual notes were paid, and the money ($475) came into his hands. In the ten years ensuing, the remaining individual notes, amounting to $439, were paid, and he received the money from two of them, while the town of Sherman took the land on which the third was secured by mortgage. Hawley turned the cash so received over to the town. From 1892 no record or written account of either the principal or interest of the fund was kept by Hawley. The finding further discloses that Hawley, during the whole period of this service for more than 40 years, kept the town fund and his personal fund mingled in the same bank account. He did not keep a separate account of this fund--although it appears that he never appropriated any of these funds to his own use.

In 1887 he reported the fund in behalf of the town to the secretary of the state board of education as $2,432.23. This was the amount of the original fund, and, whatever may have been the condition of the fund in his hands at that time, the town must be held responsible for that sum, so, in effect, alleged to be on hand. It is not important in this connection, that in 1881 and 1882 the town report shows an item of $811 interest in this fund, and that the item disappeared from the report without explanation the following year; nor that $144 per year was received for several years; nor that the same report showed only $1,247.28 in the town deposit fund in 1887; nor that the amount reported to the state board of education in 1897 was but $2,261.28; nor that only $1,786.28 was reported to the state board of education in 1908. These facts in no way change the responsibility of the town to the state for the full amount of the original fund. These were, in effect, matters of bookkeeping between the town and its agent. There is an item of $170.95 said to belong to the fund, which was unaccounted for when Hawley became the agent of the school fund, and this apparent deficit occurred during the administration of his predecessor in office. It is fair to assume, however, that when Hawley, as agent for the town, reported the fund intact in 1887, this item of $170.95 had been in some way accounted for or made good. At any rate, the statement of 1887, that the fund was then intact, must be assumed to be correct, in the absence of any evidence to the contrary.

Coming to 1922-1924, when the respondent was made town treasurer and agent of the town deposit fund, respectively, in succession to Hawley, the attention of the state authorities having been brought to the matter, notice was sent to Hawley of his dereliction, and he then turned over to the respondent from his own personal funds, when infirm, mentally and physically, and in a condition of panic, and in the belief that he was in duty bound to do so, an amount equal to the whole fund as originally deposited with the town; namely, $2,432.23. The finding states that on May 12, 1924, the respondent was appointed by the town, as agent of its town deposit fund, " to receive the sum of $2,432.23."

The management of the fund was not in accordance with statutory requirements. These have remained from that date to the present substantially unchanged, and are, in brief, that the fund should remain on deposit with the town on the terms hereinafter specified. The town is required to keep this money in trust for the state and account for the same when called for, and, until called for, the entire income thereof is appropriated for the support of the public schools of the town. The treasurer of the town was to have the custody of the fund and be the treasurer thereof; he was required to keep separate accounts of the fund, and at each annual town meeting to present an account showing the amount of the fund, how it was invested, the amount of the income, to whom the income was paid and for what it was paid, and the balance remaining in the treasury; this account was to be recorded and kept on file by the town clerk; no payments could be made from the fund except upon orders drawn by the agent of the fund, and these orders were required to specify whether they were to be paid from the principal or the income of the fund. Immediately upon his appointment, it became the duty of the town agent to execute a bond to the town, with surety, to the acceptance of the selectmen, for the faithful execution of his office. It was also made the duty of the town treasurer to report to the comptroller of the state any illegal or improper management or application of the income of the fund as soon as it came to his attention, and his failure in this regard subjected him to a penalty of $20 for every week of such neglect. It was the further duty of the agent of this town deposit fund to keep the fund invested by lending it on notes payable to the town, which notes must be secured by mortgage of real estate in value double the amount loaned, and upon payment of any such loan, to release the mortgages, when he could deposit the proceeds at interest in any bank or trust company incorporated under the laws of this state. The statute further provided that the town could authorize the manager of the fund to invest that fund, or any part of it, in the stock of any bank in this state, in the bonds or securities of any town, city, or borough of this state, or in the bonds, loans, or securities of this state or of the United States. There is a further provision which has much significance in the present case, touching the responsibility for the maintenance of this fund.

" Each town shall make good any deficiency which may occur in such fund, and on failure to make such deficiency good within one year after it shall occur, shall forfeit to the state a sum equal to the amount thereof." General Statutes, § § 430, 432, 433, 434, 435, 436.

It thus appears that the town of Sherman has never owned this money but has always been and now is simply a trustee in possession of it. As such trustee, it...