Waterworks Improvement District of Ashdown v. Rainwater

• Court: Arkansas Supreme Court
• Writing for the Court: HART, C. J.
• Citation: Waterworks Improvement District of Ashdown v. Rainwater, 292 S.W. 989, 173 Ark. 523 (Ark. 1927)
• Decision Date: 11 April 1927
• Docket Number: 344
• Parties: WATERWORKS IMPROVEMENT DISTRICT OF ASHDOWN v. RAINWATER

292 S.W. 989

173 Ark. 523

WATERWORKS IMPROVEMENT DISTRICT OF ASHDOWN v. RAINWATER

No. 344

Supreme Court of Arkansas

April 11, 1927

Appeal from Little River Circuit Court; Otis Gilleylen, special Judge; reversed.

STATEMENT BY THE COURT.

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, Arkansas and to the board of commissioners of Sewer District No. 1 of Ashdown, Arkansas, to become the depository 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 five per cent. And also states that if its bid is accepted 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 four and one-fourth 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.

Judgment reversed and cause remanded.

A. P. Steel and Norwood & Alley, for appellant.

Shaver, Shaver & Williams and A. D. DuLaney, for appellee.

OPINION

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

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 demand, and that the granting of the extension of the time of payment for one year by the commissioners constituted a new contract between the bank and the improvement districts which released the...