Town of Cheney's Grove v. Vanscoyoc

• Decision Date: 20 June 1934
• Docket Number: No. 22030.,22030.
• Citation: 357 Ill. 52,191 N.E. 289
• Parties: TOWN OF CHENEY'S GROVE v. VANSCOYOC et al.
• Court: Illinois Supreme Court

357 Ill. 52

191 N.E. 289

TOWN OF CHENEY'S GROVE

v.VANSCOYOC et al.

No. 22030.

Supreme Court of Illinois.

June 20, 1934.

Suit by the Ward & Prothero Company, in the name of the Town of Cheney's Grove, against Guy P. VanScoyoc and others. From a judgment for plaintiff, the defendants Guy P. VanScoyoc and Hannah VanScoyoc appeal.

Reversed and remanded, with directions.

DE YOUNG, J., dissenting.Appeal from Circuit Court, McLean County; Edward Barry, Judge.

Wirt Herrick, of Farmer City, for appellants.

Costigan & Wollrab, Morrissey & Morrissey, and Will F. Costigan, all of Bloomington (John J. Morrissey and John O. Morrissey, both of Bloomington, of counsel), for appellee.

JONES, Chief Justice.

This case involves the validity of ‘An Act in relation to the liability of treasurers or custodians of public funds, and the enforcement thereof,’ approved May 7, 1932, in force July 1, 1932 (Laws 1931-32 (1st Sp. Sess.) p. 61 [Smith-Hurd Rev. St. 1933, c. 102, § 19]). The contention is that the statute is unconstitutional because it is in conflict with sectional 10 of article 1 of the Constitution of the United States and section 14 of article 2 of the Constitution of Illinois, both of which prohibit the enactment of any ex post facto law or law impairing the obligation of contracts.

The statute provides that no action shall lie against the treasurer or custodian of public funds which have been lawfully deposited in a bank that has closed or failed, for a period of two years after such bank has failed or closed, except, however, he is liable to pay over whatever funds he shall receive from the officials of the closed bank or the receiver thereof, either as dividend payments or from disposition of securties pledged for the repayment of such deposits. It is expressly provided that the act shall not apply unless the sureties upon the bond of such treasurer or custodian shall consent in writing that the provisions of the act shall not operate as a release from or affect the condition of the bond and that the bond shall continue in full force and effect.

The facts which underlie the case are: Guy P. VanScoyoc, supervisor and ex officio treasurer of the road and bridge fund of the town of Cheney's Grove, received the proceeds of a $30,000 bond issue and deposited them in the State Bank of Saybrook. Appellee, the Ward & Prothero Company (herein called the company), became entitled to payments out of said fund for work done and materials furnished under a contract between the company and the township for graveling highways. Three orders payable to the company were duly drawn against the treasuer, as follows: One for $3,000 dated September 26, 1931, another for $3,000 dated September 30, 1931, and the third for $1,071.40 dated February 1, 1932. The declaration filed in this suit avers that the orders were presented for payment first to the State Bank of Saybrook, noted as the place for payment on the face of the orders, and that payment was refused; that they were thereupon presented to the treasurer, who declined to make payment on the ground that the fund was deposited by him in said bank; that it had been closed and was in the hands of a receiver; and that he was thereby prevented from making payment.

The bank closed its doors October 6, 1931. It does not appear from the declaration or the plea whether the orders were presented to the bank before that date or afterward. It does appear, however, that the presentment to the treasurer was subsequent to the closing. Demand was made by the company upon the town clerk to institute suit on the official bond of the treasurer. Upon his refusal to comply with that demand this suit was instituted by the company under the provisions of section 13 of chapter 103 and of section 1 of article 11 of chapter 139 (Smith-Hurd Rev. St. 1933, c. 103, par. 13 and c. 139, § 100, Cahill's Rev. St. 1933, c. 103, § 13 and c. 139, par. 100) against the treasurer and Hannah VanScoyoc and Charles Schureman, sureties on the official bond of the Treasurer. a joint plea was filed by the defendants which set up the abovementioned statute as a defense and averred that the suit was prematurely brought. A demurrer was filed to this plea with several different assignments of cause. Later the demurrer was limited to the fifth assignment, which challenged the validity of the statute on constitutional grounds. The court sustained the demurrer and the defendants elected to stand by their plea. Thereupon judgmentfor $5,004.31 was entered against the defendants. Guy P. VanScoyoc and Hannah VanScoyoc have perfected an appeal to this court.

The act in question is one of a series of laws passed at the first special session of the Fifty-seventh General Assembly. Each bill was intended to meet a distressed financial condition prevalent throughout the state at that period. The statute before us makes no specific reference to the existence of an emergency, but a companion statute (Laws of 1931-32 (1st Sp. Sess.) p. 123 [Smith-Hurd Rev. St. 1933, c. 121, § 58a]) entitled ‘An Act to add section 52a to Article VI of ‘An Act to revise the law in relation to roads and bridges,’' provided that funds in the custody of a supervisor should be deposited in banks to be designated by the board of town auditors. It contained the following emergency clause: ‘Whereas, supervisors and clerks of road districts are having serious difficulty in securing sureties for bonds which they are required to execute as custodians of the road and bridge fund before entering upon the duties of their office, because of numerous bank failures, and this difficulty should be removed as expeditiously as possible, therefore an emergency exists, and this Act shall take effect upon its passage.’ Other instances of such legislation are:

‘An Act to amend section 51 of Article XIII of ‘An Act to provide for the incorporation of cities and villages'’ (Laws 1931-1932 [1st Sp. Sess.] p. 20 [Smith-Hurd Rev. St. 1933, c. 24, § 316]). It contains the following emergency clause: ‘Whereas, it is impossible to secure depositaries for funds of cities under the commission form of government, as banks are unable to pay the rate of interest on monthly balances required by law, and legislation authorizing a lower rate should be enacted immediately, therefore an emergency exists, and this Act shall take effect upon its passage.’

An act to revise the law in relation to county treasurers was amended (Laws 1931-1932 [1st Sp. Sess.] p. 51 [Smith-Hurd Rev. St. 1933, c. 36, § 4b]) and contained this provision: ‘Whereas, County treasurers are having serious difficulty in securing sureties for bonds which they are required to execute before entering upon the duties of their office, because of numerous bank failures, * * * therefore an emergency exists.’

An amendment to the Levee Act (Laws 1931-1932 [1st Sp. Sess.] p. 52 [Smith-Hurd Rev. St. 1933, c. 42, § 33d]) recited that ‘whereas, treasurers of drainage districts are having serious difficulty in securing sureties for bonds and renewals thereof * * * because of numerous bank failures, * * * an emergency exists.’ That law provided that if the commissioners of any drainage district would, at the request of the treasurer thereof, designate a bank or banks in which the funds of the district could be deposited, the treasurer and the sureties on his bond would be discharged from all liability thereon for deposits made in the designated banks. A similar statute was passed with respect to the deposit of funds of sanitary districts.

There were upwards of fifty laws enacted at this special session of the General Assembly and an examination will show that the purpose of nearly every one of them was to meet an emergency due to the financial depression. Without regard to whether the enactment specifically referredto the emergency, the intent to meet that condition is apparent.

The contention is made that the act we are considering conflicts with the state and Federal Constitutions by depriving appellee of a remedy which was available to it under the state laws at the time the contract for road work was entered into and performed. At that time there was no law to prevent the bringing of immediate suit against the treasurer and his sureties after compliance with section 1 of article 11 of chapter 139. (Smith-Hurd Rev. St. 1933, § 100, Cahill's Stat. 1933, par. 100, p. 2711.) It has been held that a remedy subsisting at the place where a contract is made and performed is a part of the contract, and that subsequent laws which substantially impair the contract or lessen its value violate the Constitution of the United States. Bronson v. Kinzie, 1 How. 311, 315, 11 L. Ed. 143;McCracken v. Hayward, 43 U. S. (2 How.) 608,11 L. Ed. 397. It cannot here be contended that the statute is invalid as to all contracts. It is clear that as to contracts subsequently made the statute affects the remedy only and can in no way impair the contract or lessen its value. The assault upon the statute must be directed against its application to contracts in force when the statute was passed. In Bronson v. Kinzie, supra, it was said: ‘If the laws of the state passed afterwards had done nothing more than change the remedy upon contracts * * * they wóuld be liable to no constitutional objection. For, undoubtedly, a state may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future.’

There is a distinct and almost violent conflictamong courts and jurists as to when a law may be said to come within the inhibition of the contract-impairment clause of the Federal Constitution. Much profound discussion and extended historical references have been utilized in the presentation of the different views and philosophies. On the one hand it is held that the contract-impairment clause denies to the several states the power to mitigate hard consequences resulting to debtors from financial or economic exigencies by an...