Washington County v. Stephens

• Court: Idaho Supreme Court
• Writing for the Court: BUDGE, J.
• Citation: Washington County v. Stephens, 46 Idaho 224, 267 P. 225 (Idaho 1928)
• Decision Date: 02 May 1928
• Docket Number: 4907
• Parties: WASHINGTON COUNTY, Respondent, v. GEORGE W. STEPHENS, J. W. STIPPICH, A. A. SEAY and H. J. DEVANEY, Appellants

267 P. 225

46 Idaho 224

WASHINGTON COUNTY, Respondent, v. GEORGE W. STEPHENS, J. W. STIPPICH, A. A. SEAY and H. J. DEVANEY, Appellants

No. 4907

Supreme Court of Idaho

May 2, 1928

BANKS AND BANKING - CERTIFICATE OF DEPOSIT - RELATION BETWEEN BANK AND DEPOSITOR-LIABILITY ON DEPOSITORY BOND.

1. While liabilities of sureties on depository bonds under Laws 1921, chap. 256, are to be strictly construed, it is not duty of courts to aid them to escape liability by technical and hypercritical construction.

2. That deposit secured by depository bond was evidenced by certificate of deposit with funds therein described, payable on its return properly indorsed, made deposit, none the less general one under Laws 1921, chap. 42, sec. 19, with relation between bank and depositor merely that of debtor and creditor.

3. Where, by certificate of deposit and bond, funds deposited by county were at all times subject to immediate payment, their deposit in form made and withdrawal otherwise than by check were protected by provisions of depository bond under provisions of which deposits were to be kept and made payable on order and written demand as well as upon check.

4. Provision of public depository law, Laws 1921, chap. 256 sec. 28, that all deposits in public depositories shall be subject to payment when demanded by treasurer on his check does not provide exclusive method of payment, and cannot be basis of escape from liability by sureties, where faith and credit had been given to bond providing for withdrawal of funds other than by check, and it had performed function of obtaining for bank deposit of public moneys.

5. Words "additional depository bond" on defendant's bond securing county's bank deposit construed according to their plain import meant that bond was cumulative, joined with other bonds so as to form an aggregate security for deposits as a whole.

6. Sureties on depository bond, given under Laws 1921, chap. 256, to secure deposit by county, could not limit obligation executed by claiming that conditions attached to delivery of bond, making it effective only in case deposits of county should exceed amount authorized to be deposited under other bonds, and court did not err in not permitting them to show such condition, in action on bond.

APPEAL from the District Court of the Seventh Judicial District, for Washington County. Hon. Dana E. Brinck, Judge.

Action to recover on depository bonds. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

James Harris and George Donart, for Appellants.

A demand by the officers of a depositing unit upon a depository of the funds of a certain depositing unit is a condition precedent to the bringing of an action against the bondsmen on an undertaking executed by said depository to secure the safekeeping of the funds of a depositing unit. (United States Fidelity & G. Co. v. American Bond Co., 31 Okla. 669, 122 P. 142; Henry County v. Salmon, 201 Mo. 136, 100 S.W. 20.)

Funds of a municipality deposited in a public depository which are not placed on general deposit subject to check by the deposit of which is evidenced by a demand certificate of deposit, negotiable in form, are not protected by the terms of statutory depository bond. (City of Pocatello v. Fargo, 41 Idaho 432, 242 P. 297.)

A depository bond may be delivered conditionally or for a specific purpose and when so delivered is subject to the conditions of its delivery when such conditions are made known to the supervising board of the depositing unit at the time of the delivery of the bond. (9 C. J. 18.)

Kate E. Feltham, Frank D. Ryan and Hawley & Hawley, for Respondents.

The deposit evidenced by the demand certificate was a general deposit and within the terms of the bond. (Washington City v. Weiser Nat. Bank, 43 Idaho 600, 255 P. 310; 1921 Sess. Laws, chap. 42, secs. 13, 19, chap. 256, sec. 17; 7 C. J. 650; People v. California Safe Deposit & Trust Co., 23 Cal.App. 199, 137 P. 1111; Hotchkiss v. Mosher, 48 N.Y. 478; Waterworks Improvement Dist. v. Rainwater, 173 Ark. 523, 292 S.W. 989; City of Sisseton v. Western Surety Co., 50 S.D. 205, 208 N.W. 982.)

Neither the personal sureties nor the board of county commissioners could limit or vary the liability fixed by statute and the bond. The appellants are estopped from denying the recitals in the bond. (Pocatello Independent School Dist. No. 1 v. Fargo, 38 Idaho 563, 223 P. 232; State v. McDonald, 4 Idaho 468, 40 P. 312; Jefferson v. McCarthy, 44 Minn. 26, 46 N.W. 140; Board of Commrs. v. State Bank, 64 Minn. 180, 66 N.W. 143.)

The indorsement on the bond of the words "additional depository bond" shows that the bond is cumulative. (Bouvier's Law Dictionary, Rawle's Rev., p. 92; State v. Hull, 53 Miss. 626, 645, 646; Kadderly v. City of Portland, 44 Ore. 118, 74 P. 710, 75 P. 222; 1 Words and Phrases, pp. 105, 107, 178; 18 C. J. 588; United States Fidelity & Guaranty Co. v. City of Pensacola, 68 Fla. 357, Ann. Cas. 1916B, 1236, 67 So. 87.)

The sureties and the county commissioners were without authority to vary the terms of the statutory bond. (Buhl Highway Dist. v. Allred, 41 Idaho 54, 238 P. 298; United States Fidelity & Guaranty Co. v. Poetker, 180 Ind. 255, 102 N.E. 372, L. R. A., N. S., 1917B, 984; 9 C. J. 34; Rankin v. Jauman, 4 Idaho 394, 39 P. 1111; Miller v. Smith, 7 Idaho 204, 61 P. 824; Pocatello Independent School Dist. v. Fargo, supra; Prothero v. Board of Commrs., 22 Idaho 598, 127 P. 175; 21 R. C. L. 1016, 1017.)

No demand by the county other than the one made was necessary. (Wheeler v. Commercial Bank of Moscow, 5 Idaho 15, 46 P. 830; National Surety Co. v. Leflore County, 262 F. 325, 18 A. L. R. 269.)

BUDGE, J. Givens, Taylor and T. Bailey Lee, JJ., concur. Wm. E. Lee, C. J., took no part.

OPINION

BUDGE, J.

Appellants, defendants below, were sureties on a depository bond given by the Bank of Washington County to Washington county to secure the deposit of funds in the county treasury. After the execution of the bond and at a time when the county had on deposit in the bank a considerable amount of money, the bank suspended business. This action was brought by the county against appellants and a number of other defendants to recover upon several depository bonds. The appeal is by the individual sureties from a judgment in favor of the county, entered upon verdict directed by the court.

A portion of the funds deposited for the county was evidenced by a certificate of deposit, the original amount of which has been reduced by some $ 8,000 by reason of drafts drawn against the account and paid by the bank. Appellants contend that because these funds were not placed on deposit subject to check, they were not protected by the terms of the bond signed by them as sureties. This contention is raised by assigning as error the denial of a motion to strike from the record respondent's exhibit 12 (the certificate of deposit) and to withdraw from the consideration of the jury all testimony relative to the existence of the deposit therein described; and, while it is noted that at the time the exhibit was offered in evidence counsel for appellants stated there was no objection to its admission and that they joined in the offer, making it doubtful whether the admission of this evidence is subject to review (State v. Breyer, 40 Idaho 324, 338, 232 P. 560), we will nevertheless dispose of the point on its merits.

The public depository law, Sess. Laws 1921, chap. 256, p. 557 et seq., in force at the time the deposits herein were made and the bond in question executed, provides, sec. 2, that the act is designed to safeguard and protect the funds of all political subdivisions of the state. It has been said that in construing contracts of the kind involved, resort may be had to the same aids, and the same canons of interpretation invoked, as apply in case of other contracts, and courts are not required to put a strained construction on the plain words of a bond in order that the sureties may escape liability. What is demanded is merely that the sureties are not to be bound by implication, or beyond the extent to which they have obligated themselves in the execution of the bond. While the liabilities or sureties are to be strictly construed, it is not the duty of courts to aid them to escape liability by technical and hypercritical construction. (21 R. C. L. 977.)

Pertinent parts of the bond signed by appellants provide: That the Bank of Washington County had made application to receive on deposit funds in the county treasury, the amount whereof should be subject to...