State v. Thum

• Decision Date: 16 December 1898
• Citation: 6 Idaho 323,55 P. 858
• Parties: STATE v. THUM, RECEIVER
• Court: Idaho Supreme Court

55 P. 858

6 Idaho 323

STATE
v.
THUM, RECEIVER

Supreme Court of Idaho

December 16, 1898

PUBLIC MONEY-TRUST FUND, WHEN DEPOSITED IN BANK-BELONGS TO TRUE OWNER.-Public money deposited by a public officer in a bank becomes a trust fund, and not part of the estate of the bank, and, in case of the insolvency of the bank, its receiver must treat such fund as the property of the true owner, and not of the bank.

INSOLVENT BANK-CREDITORS OF.-The creditors of an insolvent bank are not entitled to share pro rata in public money deposited in such bank.

PLEADING.-A defect in a complaint may be cured by allegation in the answer.

(Syllabus by the court.)

APPEAL from District Court, Bingham County.

Reversed and remanded, with instructions.

R. E. McFarland, Attorney General, and Hawley & Puckett, for Appellant.

The money belonging, as it did, to the state, and being deposited in the bank by the treasurer, made it a trust fund and gave the state, as the true owner, the right to recover the amount from the bank assets, regardless of the fact that it had mingled with other funds, and that such amount of money had not been kept on hand. (Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590; Van Alen v. American Nat. Bank, 52 N.Y. 1; Merrill v. Bank of Norfolk, 19 Pick. 32; National Bank v. Insurance Co., 104 U.S. 67, and cases cited.) When a public treasurer, without authority of law, deposits public moneys in bank as treasurer, the title of the moneys does not pass to the bank, although there is no agreement that the identical bills shall be returned, and they are mixed with the bank's general funds, and the county is entitled to recover an equal amount from a receiver of the bank prior to the payment of the general depositors. (San Diego County v. California Nat. Bank, 52 F. 59; Hot Springs School Dist. v. First Nat. Bank, 61 F. 417; Myers v. Board of Education, 51 Kan. 87, 37 Am. St. Rep. 263, 32 P. 658, 662; Foster v. Rincker, 4 Wyo. 484, 35 P. 470; Hubbard v. Alamo Irr. Co., 53 Kan. 637, 36 P. 1053-1055, 37 P. 625; City of Larned v. Jordan, 55 Kan. 124, 39 P. 1030, 1031; Ryan v. Phillips, 3 Kan. App. 704, 44 P. 909, 910; State v. Midland State Bank, 52 Neb. 1, 66 Am. St. Rep. 484, 71 N.W. 1011; Shepherd v. Meridian Bank, 149 Ind. 20, 48 N.E. 352; Kimmel v. Dickson, 5 S. Dak. 221, 49 Am. St. Rep. 869, 58 N.W. 561, 25 L. R. A. 309; hem on Public Officers, sec. 922; Farmers' Bank v. King, 57 Pa. St. 202, 98 Am. Dec. 215; Boone on Banking, sec. 285; Baker v. New York Nat. Bank, 100 N.Y. 31, 53 Am. Rep. 150; People v. City Bank, 96 N.Y. 37; Burnett v. First Nat. Bank, 38 Mich. 630; Skinner v. Bank, 4 Allen, 290; Allen v. St. Louis Bank, 120 U.S. 40, 7 S.Ct. 460; Boone on Banking, sec. 62; Slate v. Midland State Bank, 52 Neb. 1, 66 Am. St. Rep. 484, 71 N.W. 1011; Independent Dist. of Boyer v. King, 80 Iowa 497, 45 N.W. 909.) Sureties--subrogation of to rights of obligee. (Murfree on Official Bonds, sec. 671; 2 Brandt on Guaranty and Suretyship, 465, 479, note; City of Keokuk v. Love, 31 Iowa 119; Appeal of Lebanon Co. (Pa.), 19 A. 303; Blake v. Traders' Nat. Bank, 145 Mass. 13, 12 N.E. 414, 418; Livingston v. Anderson, 80 Ga. 175, 5 S.E. 49.) Separate accounts of a party kept in distinct characters at a bank must be kept distinct, and a trust account cannot be applied to pay a debt due on a personal account. (Morse on Banking, 40; Boone on Banking, secs. 65, 66, 285, 289; National Bank v. Insurance Co., 104 U.S. 54, 68; Union Stockyards Bank v. Gillepsie, 137 U.S. 422, 11 S.Ct. 118; International Bank of Chicago v. Jones, 119 Ill. 407, 59 Am. Rep. 807, 9 N.E. 886; Coates v. Preston, 105 Ill. 470, 473, and cases cited; Pennell v. Deffel, 4 De Gex, M. & G. 383, 390.)

Lyttleton Price, for Respondent.

The deposit being a general deposit, is, in legal effect, a loan to the bank. The state treasurer may not loan public moneys. If he does so, the state cannot seek to recover the money loaned without ratifying the loan. This could be done only by legislative authority, if at all. (State v. Keim, 8 Neb. 63; Approved in First Nat. Bank v. Gandy, 11 Neb. 431, 9 N.W. 566; State v. Bartley, 39 Neb. 353, 58 N.W. 172, 176.) When a depositor makes a general deposit in a bank the relation of debtor and creditor is established. (Janin v. London etc. Bank, 92 Cal. 14, 27 Am. St. Rep. 82, 27 P. 1100; State v. Buttles, 3 Ohio St. 309; Bank v. Windisch etc. Co., 50 Ohio St. 151, 40 Am. St. Rep. 660, 33 N.E. 1054; Henry v. Martin, 88 Wis. 367, 60 N.W. 263; McLain v. Wallace, 103 Ind. 562, 5 N.E. 911; Alston v. State, 92 Ala. 124, 9 So. 732; State of New York v. Mechanics' etc. Institution, 1 Am. & Eng. Corp. Cas. 573; Balbach v. Frelinghuysen, 15 F. 675; 5 Thompson on Corporations, secs. 7098, 7101; Story on Bailments, Bennett's ed., sec. 88; Ruffin v. Board Co. Commrs., 69 N.C. 498, 509; Brahm v. Adkins, 77 Ill. 263; Keene v. Collier, 1 Met. (Ky.) 415). The addition of Storer's official title does not affect the character of the deposit nor change his relation to the bank as its creditor. (Alston v. State, 92 Ala. 124, 9 So. 732; Otis v. Gross, 96 Ill. 612, 36 Am. Rep. 157, 159; McLain v. Wallace, 103 Ind. 562, 5 N.E. 911; Citizens' Bank v. Alexander, 120 Pa. St. 476, 14 A. 402; Eyrman v. St. Louis Bank, 84 Mo. 408; Swartout v. Bank, 5 Denio, 555; German Bank v. Heinstedt, 42 Ark. 62; Lowry v. Polk Co., 51 Iowa 50, 33 Am. Rep. 114, 115, 49 N.W. 1049.) Where the deposit is not special there is no trust relation. (5 Thompson on Corporations, secs. 7102, 7104; 2 Story's Equity Jurisprudence, sec. 1259; 2 Pomeroy's Equity Jurisprudence, sec. 1058; Multnomah Co. v. Oregon Nat. Bank, 61 F. 912; St. Louis etc. Assn. v. Austin, 100 Ala. 313, 13 So. 908; Bank v. Smith, 15 F. 858; Ind. Dist. Pella v. Beard, 83 F. 5-17.)

Petition by the state, on the relation of J. H. Anderson, state auditor, and R. E. McFarland, attorney general, in an action by the First National Bank of Pocatello against C. Bunting & Co. The respondent, C. E. Thum, was appointed receiver of C. Bunting & Co., bankers, an insolvent corporation, on the fifteenth day of February, 1897, by order of the district court of the fifth judicial district, made in the action brought by the First National Bank of Pocatello against said C. Bunting & Co., bankers. On February 8, 1898, the state ex rel. J. H. Anderson, state auditor, and R. E. McFarland, attorney general, pursuant to order of said district court granting leave so to do, filed its petition in said action, in which it is alleged: That one George H. Storer, was duly elected at the regular November election in 1896 state treasurer of the state of Idaho and duly qualified as such officer, and assumed the duties of said office; that said Storer, as such treasurer, has deposited in and with said C. Bunting & Co., bankers, large sums of money, belonging to the state, and which came to his hands as such treasurer; that said moneys were received by said C. Bunting & Co., bankers, and credited on its books to said George H. Storer as treasurer, with full notice and knowledge that said moneys belonged to and were the property of the state; that said corporation is insolvent, and has suspended payment, and is unable to pay its indebtedness, and that there came to the hands of the respondent, C. E. Thum, as receiver of said banking corporation, the sum of $ 11,101.16, money of the state; that the state has demanded payment of said sum from said receiver, but said receiver fails and refuses to pay same to the state; that said receiver has disbursed large portions of the assets of said banking corporation, and threatens and intends to pay out and distribute the remaining assets of said banking corporation remaining in his hands, and said money of the state, to the creditors of said corporation; that said receiver claims that said money deposited by said Storer as treasurer belongs to, and is a part of, the estate of the said corporation, and will, unless otherwise directed by the court, pay out said money to the creditors, whereby same will be lost to the state. To this petition the respondent made answer, in which he denies that said Storer deposited any sum or sums of money belonging to the state; that there is a credit on the books of said C. Bunting & Co., bankers, to the credit of said Storer, state treasurer; that said credit is the result of deposits of checks made by said Storer; that when said Storer came into office as such treasurer there were, to the credit of C. Bunting, state treasurer, his predecessor, large sums of money deposited in said bank by his predecessor; that said Storer received from his predecessor a check for such sum; and that said Storer continued to keep, as state treasurer, with said bank, an account based upon credit received from checks from his predecessor, and other checks, and that said Storer deposited no money or cash in said bank. The evidence shows that C. Bunting, former treasurer, gave to his successor, George H. Storer, state treasurer, January 6, 1897, a check for $ 32,702.58, and which check was credited by said bank to said Storer, state treasurer; that C. Bunting, as state treasurer, deposited funds of the state with said bank, and there was to his credit, as such treasurer, in said bank, on January 6, 1897, more than $ 32,702.58. Said Storer, state treasurer, deposited other checks in said bank, and drew his checks thereon, leaving, on February 15, 1897, a balance to his credit as state treasurer of something over $ 11,101.16. On the trial, after the above facts had been proven, the respondent moved for a nonsuit, which the trial court granted, whereupon judgment was entered dismissing the appellant's petition. From this judgment the state appeals. The evidence is set forth in appellant's bill of exceptions. Reversed.

QUARLES, J., HUSTON, C. J. Sullivan, C. J., Huston, J., and Quarles, J., concurring. SULLIVAN, J., Dissenting.

OPINION [55 P. 859]

[6 Idaho 327] QUARLES, J.

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