State v. Grand forks County
| Decision Date | 22 November 1941 |
| Docket Number | 6740 |
| Citation | 300 N.W. 827,71 N.D. 355 |
| Court | North Dakota Supreme Court |
Rehearing Denied December 4, 1941.
Syllabus by the Court.
1. A county treasurer, in collecting taxes and rentals of school lands for the state, does not act as the agent of the county but as an individual designated by his official name to collect for the state. Sections 2156 and 326, C.L. 1913.
2. Statutes directing county treasurers to collect taxes and school land rentals for the state and providing for remittance thereof to the state treasurer contemplate that county treasurers shall, after collection, hold such funds as individuals in their official capacity subject to the orders of designated state officers.
3. An allegation in an answer that a county treasurer deposited funds belonging to the state in a depositary for public funds does not warrant an implication that such funds were deposited in the name of the county.
4. Statute which declares that each county shall be responsible for all state taxes levied imposes a condition of potential liability or accountability and a county's duty to account for state taxes may be met by a showing that the county officers have adhered strictly to the statutory directions of the State Legislature and have acted with honesty, prudence and diligence.
5. Where a county treasurer was required by state statute, under a penalty of a misdemeanor, to deposit the proceeds of state tax collections in a depositary for public funds and was exempted from all liability for losses resulting from the failure of such depositary, an answer by a county, in a suit brought by the State to recover state taxes collected by the county's treasurer, alleging that such taxes had been deposited by the treasurer in a duly designated depositary for public funds and had been lost through the insolvency of the depositary, stated a sufficient accounting for the state taxes collected and a defense to the action.
Appeal from District Court, Grand Forks County; P. G. Swenson Judge.
Action by the State of North Dakota against Grand Forks County, a quasi municipal corporation, to recover taxes collected by defendant and also school land rentals which defendant had failed to pay to the state treasurer. From an order overruling plaintiff's demurrer to defendant's answer, plaintiff appeals.
Affirmed.
Alvin C. Strutz, Attorney General, and C. E. Brace and P. O. Sathre, Assistant Attorneys General, for appellant.
The county treasurer in receiving and paying over state taxes to the state is the agent of the county. Nothing relieves the county from liability but actual payment to the State Treasurer. Com. v. Philadelphia County, 157 Pa 531, 27 A 546; People v. Supervisors, 30 Mich. 387; Hamilton County v. State, 122 Ind 333, 24 NE 347; McQuillin, Municipal Corporations, 2d ed 926, § 2340; Fargo v. Cass County, 36 ND 372, 160 NW 76.
Where there is an authorized general deposit of public funds in a depository, the transaction is in effect a loan creating the relationship of debtor and creditor, and such public funds are not entitled to preference under the claim that they constitute a trust. 18 CJ 579; 3 RCL 223; 98 Kan 383, 158 P 23; 74 Mont 152, 240 P 812; State ex rel. Warrensville Heights v. Fulton, 128 Ohio St 192, 190 NE 383; Behm v. Baird, 59 ND 733, 231 NW 876; Conway v. Starry, 51 ND 399, 200 NW 505.
Public moneys deposited by county treasurer and lost by insolvency of depositary is loss of county. State v. McGraw (Mont) 240 P 812.
Agency is a voluntary relationship and as a general rule is contractual. 2 CJS 1024.
Milton Moskau, State's Attorney, and W. B. Arnold and Dan Letnes, Assistant State's Attorney, for respondent.
Where the county treasurer is relieved from liability upon his bond for the loss of funds deposited in legally designated depositories, the county itself is free from liability to the state and the various municipalities for which it has collected taxes in the capacity as trustee. Lancaster County v. State, 97 Neb 95, 149 NW 331.
In the absence of statutory liability the county cannot be held liable unless it (the county) actually received funds diverted. Fargo v. Cass County, 35 ND 372, 160 NW 76.
The complaint in this case sets forth two causes of action. For its first cause of action the plaintiff state alleged that the officers of the defendant county, in March 1933, had collected $ 18,711.07 of general taxes due to the state and had failed, after proper demand to remit to the State Treasurer the full amount thereof. For its second cause of action the plaintiff alleged that the officers of the defendant had collected school land rentals belonging to the state in the sum of $ 705, and had failed to pay to the State Treasurer the full amount of such rentals. Judgment was demanded for an unpaid balance upon each cause of action. In its answer to both causes of action, the defendant county admitted the collection, by the county treasurer, of the sums set forth in plaintiff's complaint, alleging that the collections had been made during the month of February and the first three days of March, 1933, and that the proceeds thereof had been deposited in the First National Bank of Grand Forks, a duly designated and bonded depositary for public funds. The defendant alleged further that such depositary bank had been closed by the Executive Order of the President of the United States on March 4, 1933, and thereafter had gone into receivership without reopening for business; that as a result of the closing of the depositary bank, the amount of such collections, which still remained unpaid, had become "unavailable" and, under the provisions of § 2183, Comp Laws 1913, the liability of the county therefor had ended. Defendant also alleged that the county treasurer had made such collections as the agent of the state and demanded judgment for the dismissal of the action. Plaintiff demurred to defendant's answer. The trial court overruled the demurrer and this appeal is from the order overruling the demurrer.
Questions of statutory construction are presented. The statutes which are involved are as follows: Section 2156, Comp Laws 1913: "The county treasurer shall be the receiver and collector of all taxes extended upon the tax lists of the county, whether levied for state, county, city, town, school, poor, bridge, road or other purposes, notwithstanding anything in the charter of any city, or town, or in any other act heretofore passed to the contrary, including the special taxes of local improvements in cities as provided for by law. . . ."
Section 3255, Comp Laws 1913: "The state auditor shall immediately after receiving the statement provided for in the preceding section draw and deliver to the state treasurer an order on each county treasurer for the amount so certified as collected for the state, and charge the state treasurer with the same, giving the county credit for the amount and sending to the county auditor of each county a duplicate of such order or draft."
Section 326, Comp Laws 1913, chapter 229 Laws of North Dakota 1931:
Section 714a3, 1925 Supplement to Comp Laws 1913: ...
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