Sunflower County v. Bank of Drew
| Decision Date | 25 May 1925 |
| Docket Number | 24978 |
| Citation | 139 Miss. 408,104 So. 355 |
| Court | Mississippi Supreme Court |
| Parties | SUNFLOWER COUNTY v. BANK OF DREW. [*] |
Suggestion of Error Overruled June 23, 1925.
APPEAL from chancery court of Sunflower county, HON. E. N. THOMAS Chancellor.
Suit by Sunflower county against the Bank of Drew. From a judgment dismissing complainant's bill, it appeals. Reversed and remanded.
Judgment reversed and cause remanded.
Moody & Williams, for appellant.
On the trial of this case in the court below, counsel for appellees contended that merely because principal was paid into the Treasury by the liquidating agent of the bank, without the payment of interest, the right of the county to collect interest was extinguished, and his contention was accepted by the special chancellor. The question presented by this appeal is: Does the payment of the principal sum due the county which has been withheld for more than two years, extinguish interest on such fund? Our contention is, that on the closing of the bank on January 20, 1922, interest began to run on the funds on deposit at the rate of six per centum per annum until paid.
Even if it be conceded that the county was not entitled to a guaranty certificate, as the banking examiner contends, yet we insist that the deposits should bear interest, payable out of the assets of the bank on which it constitutes a first lien, from the date the bank was closed to the date it was paid. Sec. 2075, Hemingway's Code; 33 C. J. 136. No demand is necessary where a bank is closed by the banking examiner. Richmond v. Irons, 30 L.Ed. (U.S.) 864.
The court there held that the bank, as a bank, was liable for interest on the deposit from the date the bank was closed; and as the liability of the stockholder is based on the liability of the bank, it held that interest shall further run on such liability from the date the bank was closed, and that no demand was even necessary. Counsel for appellees relied almost entirely upon Y. & M. V. R. R. v. W. C. Craig & Co., 111 Miss. 297, 71 So. 561, which case cites with approval Bennett v. Federal Coal & Coke Co., 40 L. R. A. (N. S.) 588. But in the Craig case there was executed a receipt in full, and in the Bennett case there was a receipt executed "in settlement of account." Both cases are clear cases of accord and satisfaction, and in neither case was there a demand made at the time of the payment for interest which was refused. But in the case at bar, when the principal sum was paid, interest was also demanded. See, Shepard v. City of New York, 110 N.E. 433; Devlin v. Mayor, etc., of N. Y., 121 N.Y. 123, 127, 30 N.E. 45, 46. Ib. 436-437.
In neither of the cases cited by counsel for appellees was the party claiming the interest, after the payment of the principal, a county, or a municipality, or any governmental subdivision. In this case the appellant is the county of Sunflower, and neither the doctrine of waiver, nor the principle of accord and satisfaction, can be invoked against it except in cases where contract is made and evidenced by order entered on the minutes of the board of supervisors.
A county can only contract by order duly entered on the minutes of the board. Northern Drainage District v. Bolivar County, 111 Miss. 250, 71 So. 380; Gilchrist-Fordney Co. v. Keys, 113 Miss. 742, 74 So. 619; Lamar County v. Tallay, 116 Miss. 558, 77 So. 299.
This court has held that section 100 of the Constitution prohibits a municipality from remitting taxes due and unpaid. Morris Ice Co. v. Adams, 75 Miss. 410, 22 So. 944.
It is conceded that the interest sued for was a liability in favor of appellant, but it is sought to avoid this liability by the act of the treasurer in accepting a part of the money due, as the argument is made that his act in that respect, although he demanded the balance of the money at the time, and his demand was refused, works a release of the liability. If the board had passed a formal resolution releasing appellees from liability for this interest, it would have been utterly void, because in violation of the Constitution; how then, could the act of the treasurer in permitting the money to be paid into the treasury, and at the same time demanding the balance, work a release?
The legal question involved in this appeal has been settled in our favor by this court, in, Miller, Rev. Agent, v. Henry, Ins. Com., 103 So. 203.
If the contention of counsel for appellees is correct, then any depository would have it within its power to prevent a county in any case from collecting interest on the depository account, by the simple expedient of going to the chancery clerk and obtaining a receipt warrant for the principal sum due, and paying same into the treasury. I cannot believe that the law would permit such a result.
In this case the statute (chapter 177, Laws 1922), creates in favor of the county a first lien on the funds on deposit when the bank failed, and directed the banking examiner, or his agent in charge, out of the first money coming into his hands, to pay over the full amount thereof, as far as possible, and that on failure so to do, the chancery court, or the chancellor, shall, on ten days' notice, require the payment thereof. Yet, although it is admitted that the banking department continued to use the funds of the bank, and collected as much as eight thousand dollars in interest, which was charged at the rate of eight per centum per annum, and withheld payment for nearly three years, it complains that the county sought the recovery of interest at the rate of six per centum per annum, on such funds for that time, and to avoid payment of interest without consulting the board of supervisors, turned the principal sum into the treasury, and now claims that such act extinguishes the interest. We do not think so, and respectfully submit that the decree appealed from should be reversed, and decree entered here for the full amount of interest sued for in this case.
Counsel for appellee argue this case as if the suit had been brought for interest on the deposit for the time it was in the Bank of Drew, and the bank was a going concern. We are not seeking to recover interest for that time. When the bank failed, the county had an account against the bank for a fixed sum, to-wit, the amount of approximately fifteen thousand dollars, as to which the appellant had the right to have same paid over, under the statute at once. This payment was refused, and the money was kept and used by the liquidating agent for the state banking department, and loaned out at the rate of eight per cent per annum, and when payment of the account was finally made, interest was demanded but refused. The case at bar is therefore different from the case argued in the brief for appellee.
Appellee also takes the position that there is no statute in this state giving appellant the right to collect interest on this account; but this court has held in Miller v. Henry, 103 So. 203, that section 2678, Code 1906, section 2075, Hemingway's Code), was applicable to just such a case as this.
Counsel quote from 22 Cyc. 1573, to the effect that acceptance of the principal under protest will bar recovery of the interest. That part of the text quoted is brought forward in Corpus Juris, with the following clauses added: "But this rule has been held not to apply where the claimant does not receipt for the principal sum in full, but on the contrary notified the debtor that the amount was insufficient." 33 C. J. 256. The text cites Devlin v. New York, 30 N.E. 45, and Shepard v. New York City, 216 N.Y. 251, 255, 110 N.E. 435; Ann. Cas. 1917C, 1062.
We are unable to see how the case of Thompson v. Matthews, 56 Miss. 368, helps the case of appellee, or strengthens his position in any respect. As we understand that decision, prior to the Code of 1857, there was no statutory interest on accounts, but since the Code of 1857 there has been a statute requiring such payments. The relation between the bank and the county was clearly that of a fiduciary. The bank had the money that belonged to the county.
We respectfully submit that after taking the money belonging to the county, which had been raised by direct taxation on the property of its citizens, and using it for more than two years, collecting interest on the same at the rate of eight per cent., rather than applying it to the payment of this account in favor of the county, that the state banking department should not be heard to complain if the court requires it to pay over a part of this interest which it has earned by the use of this money.
Ward Allen and Flowers, Brown & Hester, for appellee.
As stated by the court in the former appeal Sunflower County v. Bank of Drew, 101 So. 192, the Bank of Drew was not a public depository. These funds were placed in the bank as a "bank" and not a depository. The funds were in the custody of the county treasurer. There was no contract to pay interest on the deposit. The treasurer could deposit the money in the bank. This record shows there was no county depository since it is charged in the petition, and not denied, that this bank and others in the county failed to make the required bond. "It has never been unlawful in Mississippi for a public officer to deposit public funds in a bank; no more than it has been unlawful for him to deposit such funds under the floor of his dwelling house." Board of Levee Commissioners v. Powell, 109 Miss. 415, 69 So. 215.
The treasurer had no contract with the bank for the payment of interest. It was an ordinary deposit of money, made in the usual course of business, just as any other deposit, with the exception that it was secured by a first and prior lien on all the assets of the bank. There was and is no statute requiring the payment of...
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