Waterworks Improvement Dist. v. Rainwater

• Court: Arkansas Supreme Court
• Writing for the Court: Hart
• Citation: Waterworks Improvement Dist. v. Rainwater, 292 S.W. 989 (Ark. 1927)
• Decision Date: 11 April 1927
• Docket Number: (No. 344.)
• Parties: WATERWORKS IMPROVEMENT DIST. OF ASHDOWN et al. v. RAINWATER, State Bank Com'r, et al.

Page 989

292 S.W. 989

WATERWORKS IMPROVEMENT DIST. OF ASHDOWN et al. v. RAINWATER, State Bank Com'r, et al.

(No. 344.)

Supreme Court of Arkansas.

April 11, 1927.

Appeal from Circuit Court, Little River County; Otis Gilleylen, Special Judge.

Action by the Waterworks Improvement District of Ashdown and another against Loid Rainwater, State Bank Commissioner, and others. Judgment for defendants, and plaintiffs appeal. Reversed, and cause remanded.

Appellants instituted this action against appellees to recover the sum of $6,687.74, balance alleged to be due them for failure to pay over on demand funds belonging to appellants as improvement districts.

The record shows that, on the 26th day of July, 1922, the Arkansas State Bank made separate bids to the board of commissioners of water district No. 1 of Ashdown, Ark., and to the board of commissioners of sewer district No. 1 of Ashdown, Ark., to become the depositary of the funds of said improvement districts. Each bid contained the following:

"It hereby offers to pay interest upon the daily balance payable monthly or quarterly at the rate of 5 per cent. And also state that if its bid is accepted that it will execute a bond as required by the board of commissioners of said district No. 1."

The bid of the Arkansas State Bank was accepted by both of the improvement districts, and, in compliance with the terms of the contract, the bank executed a bond in the sum of $15,000 to each district with five individuals as sureties. We copy from the body of each bond the following:

"The condition of this bond is such, however, that whereas the board of commissioners of said improvement district has deposited with said bank funds belonging to said districts, which said principal bank shall pay on demand, together with interest on daily balances at the rate of 4¼ per cent. Now, if said bank shall well and truly pay said funds upon demand, and interest as aforesaid, which interest shall be paid each quarter, then this bond shall be void; otherwise, to remain in full force and effect."

At the end of the first year, the bank issued to the commissioners what was termed a certificate of deposit in the sum of $4,170. Of this amount, $4,000 was the amount which had been deposited in the bank by said improvement district from time to time, and $170 was interest. This certificate of deposit was renewed again on August 15, 1924, for $4,347.22. There was a distinct and separate deposit made at the bank by said improvement districts from time to time, which amounted on April 9, 1924, to $2,084.84. A certificate of deposit was also issued for this sum.

Three of the sureties on the bond of the bank were members of its board of directors, and the other two had no interest in the bank. None of the sureties on the bond knew of the issuance of the certificates of deposit extending the time of payment for one year. They never authorized such a course or knew that it had been pursued.

The jury returned a verdict in favor of appellees, and appellants have duly prosecuted an appeal to this court.

A. P. Steel, of Ashdown, and Norwood & Alley, of Mena, for appellants.

Shaver, Shaver & Williams, of Ashdown, and A. D. DuLaney, of Little Rock, for appellees.

HART, C. J. (after stating the facts as above).

It is first sought to uphold the judgment on the ground that the bond, by its terms, made the amounts deposited by the improvement districts in the bank payable on...