Thunder Hawk Sch. Dist. v. Western Sur. Co.
| Decision Date | 13 April 1931 |
| Docket Number | 7129 |
| Citation | 235 N.W. 921,58 S.D. 312 |
| Parties | THUNDER HAWK SCHOOL DIST., Appellant, v. WESTERN SURETY CO., Respondent. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Corson County, SD
# 7129—Affirmed
Charles G. Carrell, Lemmon, SD
Jacobsen & Murray, Mott, SD
Attorneys for Appellant.
Tom Kirby, Sioux Falls, SD
Attorney for Respondent.
Opinion filed Apr 13, 1931
One Mack was treasurer of plaintiff school district, and defendant surety company executed and delivered to plaintiff school district its bond in the penal sum of $9,000, conditioned, so far as material to this proceeding, as follows:
“The condition of the foregoing obligation is such, that whereas, the ‘Principal’ has been duly elected or appointed Treasurer in and for the Thunder Hawk School District No. 8, for the term beginning August 1, 1924, and ending July 14, 1927,
“Now, therefore, if the said ‘Principal’ shall, during the period beginning August 1, 1924, and ending July 14, 1927, well and faithfully discharge all the duties and trusts imposed upon him by reason of his election or appointment as said treasurer, except as hereinafter limited, and honestly account for all monies coming into his hands as said Treasurer, according to law, then this obligation shall be null and void; otherwise to be and remain in full force and virtue.
“This bond is executed by the ‘Surety’ upon the following express conditions, which shall be conditions precedent to the right of recovery hereunder: ...
“Third, That the ‘Surety’ shall not be liable hereunder for the loss of any public monies or funds occurring through or resulting from the failure of, or default in payment by, any banks or depositories in which any public monies or funds have been deposited, or may be deposited by, or placed to the credit, or under the control, of the “Principal,’ or for any public monies or funds heretofore or hereafter placed in any banks or depositories of which public monies and funds he is or may be the custodian by virtue of his office, whether or not such banks or depositories were or may be selected or designated by the ‘Principal’ or by other persons.”
The treasurer, Mack, during his term of office was also president and managing officer of Farmers’ State Bank of Thunder Hawk. The bank was closed and taken over for liquidation by the superintendent of banks on March 24, 1926, at which time Mack, as school treasurer, had on deposit therein school funds to the extent of $3,779.48. The bank had not been designated as a depositary by the electors of the school district pursuant to section 7461, RC 1919, and at the time Mack deposited said school funds therein the bank was in an extremely dangerous financial condition and in imminent danger of the insolvency which ultimately ensued, and Mack had full knowledge thereof. The situation was such that Mack, as school treasurer, is undoubtedly liable for the full amount of the deposit. See Murdo Twp. v. Townsend, 229 N.W. 935; Board of Education v. Whisman, 229 N.W. 522; Edgemont, etc., District v. Wickstrom, 223 N.W. 948; Ind. School District v. Flittie, 223 N.W. 728; Onida, etc., District v. Groth, 221 N.W. 49; Ind., etc., District v. Scott, 212 N.W. 863.
Plaintiff school district instituted this action against the surety company upon its bond to recover the full amount of said deposit, the personal liability of the treasurer therefor being admitted by all. The matter was tried to the court upon stipulated facts, and judgment was in favor of the defendant for the dismissal of the complaint upon the merits and for costs, from which judgment plaintiff has appealed.
The fact situation in all relevant particulars is parallel with that disclosed in the case of Murdo Township v. Townsend, 229 N.W. 935, above referred to, and the conditions of the bond herein involved are the same as those of the bond in the Murdo Township Case. In the Murdo Township Case this court held that the surety was not liable although the treasurer very clearly was. The judgment appealed from must be affirmed upon the authority of that case, unless there is some distinction between the two cases, or unless this court shall now hold that the decision in the Murdo Township Case was wrong and ought to be overruled.
Appellant points to the fact that the bonded officer in the Murdo Township Case was a township treasurer, while in the instant case he is a school district treasurer. Section 6098, RC 1919 ( Laws 1925, c. 292), relating to the official bond of a township treasurer, provides in part as follows:
Section 7461, RC 1919, relating to the bond of a school district treasurer, provides in part as follows:
Appellant seeks to distinguish the cases by arguing that the statutory requirement for the official bond of the school district treasurer specifically requires that the bond be conditioned that the officer will render a true account of all funds and property that shall come into his hands and pay and deliver the same according to law; whereas, the statute does not require this condition in the official bond of a township treasurer. We can see no force in this argument. The statutory requirement with reference to the conditions in the bond of a school treasurer is perhaps more detailed and specific than the statutory requirement for the conditions in the bond of the township treasurer, but it is no broader. The official bond of the township treasurer is required to be conditioned “for the faithful performance of his duties as such treasurer.” Language more inclusive could hardly be used. Certainly the faithful performance of the duties of a township treasurer requires that he will render a true account of all funds and property that shall come into his hands and that he will pay over and deliver the same according to law. The situation is in no manner strengthened by adding an affirmative recital to that effect, as was done with reference to the bond of the school treasurer.
Under further provisions of section 6098, above referred to, the township treasurer is relieved from liability for loss by insolvency of a depositary bank if such depositary was selected by the electors of the township and he in good faith deposited therein. Under further provisions of section 7461, above referred to, the school district treasurer is relieved from liability upon the insolvency of a depositary if he in good faith deposited in a bank designated, either by the electors of the district, or by the district school board, under the circumstances provided by the statute. Also, since the effective date of chapter 335, Laws 1921, in the event no depositary is designated by the electors or the school board, it is the duty of the township treasurer or the school treasurer himself to select a depositary, and if he acts in good faith and with due prudence in selecting such depositary and maintaining his deposit therein he is excused from loss by reason of the insolvency thereof. Edgerton, etc., District v. Volz, 208 N.W. 576; Board of Education v. Whisman, 229 N.W. 522, and cases therein cited. Except in the case of such lawful deposits, however, both the township treasurer and the school district treasurer are liable for funds coming into their hands in their official capacity and not lawfully disbursed, and it is entirely plain, both under section 6098 and under section 7461, that the law intends that the liability upon the official bond, as well of the township treasurer as of the school district treasurer, should be coextensive in this respect with the liability of the officer himself. The officer should not furnish and the approving body should not accept or approve an official bond, which, by its terms, purports to lessen or diminish the liability of the surety. In the instant case, however, and in the Murdo Township Case, the...
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