State v. Ruth

• Citation: 9 S.D. 84,68 N.W. 189
• Parties: STATE OF SOUTH DAKOTA, Plaintiff and appellant, v. THOMAS H. RUTH, Defendant and respondent.
• Decision Date: 18 July 1896
• Court: Supreme Court of South Dakota

9 S.D. 84

68 N.W. 189

STATE OF SOUTH DAKOTA, Plaintiff and appellant, v. THOMAS H. RUTH,

Defendant and respondent.

South Dakota Supreme Court

Appeal from Circuit Court, Hughes County, SD

Hon. Loring E. Gaffy, Judge

Reversed

Coe I. Crawford, Attorney General

Attorney for the state.

John E. Carland

Attorneys for respondent.

Opinion filed July 18, 1896

HANEY, J.

In this action a demurrer was sustained, on the ground that the complaint does not state facts sufficient to constitute a cause of action. Plaintiff elected to stand upon its complaint, and appealed from a judgment in favor of defendant.

The complaint contains the following material facts, after eliminating legal conclusions and unnecessary repetitions: First cause of action: Defendant was the commissioner of school and public lands during the term which began January 3, 1893. June 15, 1893, there was in the hands of the state treasurer $68,443.72, in cash, to the credit of the interest fund of each class of public lands, the interest fund of the 5 per centum paid by the United States, and the amount received from leases of school and public lands. This amount appeared on the books in defendant’s office, and he was notified of the fact by the treasurer on or about the last-mentioned date. Prior to July 1, 1893, the county superintendents of the state reported to the defendant the enumeration of persons in their respective counties of school age. Defendant willfully, and without cause, neglected to apportion the aforesaid fund, or take any action in respect thereto, until October 31, 1893, when an apportionment was made. By reason of such neglect, it is claimed, plaintiff and its beneficiaries, the public schools, sustained a loss equal to the interest on the aforesaid sum, at 6 per cent per annum, from June 15, 1893, to October 31, 1893, amounting to $1,539.99, and that they have been damaged to that extent. Second cause of action: Defendant, as commissioner of school and public lands, without cause, willfully and negligently failed to make any estimate on or before May 10, 1893, of the amount of permanent school and other educational funds which would be in possession of the state treasurer and uninvested July 1st thereafter. He further, negligently, and without cause, failed to notify the county auditors of the state of any apportionment of such estimates. In consequence of such negligence, no application for loans of such funds were received prior to July 1, 1893. June 30, 1893, $75,526.93, belonging to said funds, was in possession of the treasurer, and wholly uninvested July 1, 1893. There were numerous demands for the loan of said funds, upon good security in the state, and opportunity for loaning the same. By the exercise of reasonable diligence and care in the performance of defendant’s official duties, said fund could have been loaned in the manner and upon the security required by law on July 1, 1893. Defendant willfully neglected to do anything whatever in reference to the apportionment and distribution of the aforesaid funds until October 3, 1893, when the entire amount was apportioned, and notice thereof sent to the county auditors. By reason of such negligence, it is claimed the public schools sustained a loss, equal to the interest on the aforesaid sum, at 6 per cent per annum, from July 1, 1893, to October 3, 1893, amounting to $1,158.08, and that plaintiff has been damaged to that extent. Third cause of action: On June 15 and 30, 1894, there was in possession of the state treasurer, to the credit of the interest and income fund, the sum of $123,833.59. On June 15, 1894, the treasurer gave a certificate to defendant, as commissioner of school and public lands, showing the amount of funds in his possession, and to the credit of the interest and income fund of each class of lands, the interest fund of the 5 per centum paid by the United States, and the amount received from leases. This amount, also appeared on the books kept by defendant in his official capacity. Prior to July 1, 1894, defendant had in his office, reports showing the enumeration of persons of school age in the several counties of the state. Defendant willfully and negligently failed to apportion all the aforesaid sum, but on July 10, 1894, apportioned the sum of $101,430, leaving unapportioned $19,404.59. January 8, 1895, the state treasurer defaulted with the aforesaid unapportioned balance in his possession, and the entire amount thereof has been lost to the state. It is claimed plaintiff has been damaged to the extent of such balance and interest thereon, at 6 per cent per annum, from July 10, 1894. Fourth cause of action: Defendant, as commissioner of school and public lands, without cause, neglected to make any estimate whatever on or before May 10, 1894, of the amount of permanent school and other educational funds which would be in possession of the state treasurer, and uninvested, July 1st, thereafter, and failed to notify the county auditors of the state of their apportionate share of the apportionment. And to make any such estimate whatever. In consequence of such negligence, applications for loans of such funds were greatly delayed and restricted during the period prior to July 1, 1894. June 30, 1894, $18,567.45, belonging to the aforesaid funds, were in possession of the treasurer and not invested until July 12, 1894, when defendant apportioned of the above amount $16,360 only, and willfully and without cause failed and neglected to apportion $2,241.45, remaining uninvested in said funds, and he failed to notify county auditors that such balance was on hand, In consequence of such failure and neglect, no applications were received for the loan of said balance, and it was subsequently lost through the defalcation of the state treasurer, in January, 1895. It is claimed plaintiff has been damaged to the extent of such balance, with interest thereon, at 6 per cent per annum, from July 10, 1894.

For convenience, the school funds involved herein will be designated as the “permanent” and “income.” The state constitution provides what shall constitute the permanent fund and that it shall be deemed a trust fund held by the state. The principal shall forever remain inviolate. It may be increased, but shall never be diminished, and the state shall make good all losses thereof which may in any manner occur. The interest and income of such fund, together with net proceeds of all fines for violation of state laws and all other sums which may be added thereto by law, shall be faithfully used and applied each year, for the benefit of the public schools of the state, and be apportioned among the several school corporations, in proportion to the number of children of school age. No part of either the permanent or income fund shall ever be diverted, even temporarily, from, or used for any purpose other than, the maintenance of the public schools, for the equal benefit of all the people of the state. All losses to the permanent school or other educational funds which shall have been occasioned by the defalcation, negligence, mismanagement or fraud of the agents or officers controlling and managing the same shall be...