White v. Pioneer Bank & Trust Co.

• Decision Date: 25 April 1931
• Docket Number: 5652
• Court: Idaho Supreme Court
• Parties: W. C. WHITE, in His Capacity as Assessor of Lemhi County, Idaho, Respondent, v. PIONEER BANK & TRUST COMPANY, a Corporation, E. W. PORTER, as Commissioner of Finance, and A. M. BOYLEN, as Liquidating Agent, Appellants

298 P. 933

50 Idaho 589

W. C. WHITE, in His Capacity as Assessor of Lemhi County, Idaho, Respondent, v. PIONEER BANK & TRUST COMPANY, a Corporation, E. W. PORTER, as Commissioner of Finance, and A. M. BOYLEN, as Liquidating Agent, Appellants

No. 5652

Supreme Court of Idaho

April 25, 1931

BANKS AND BANKING-DEPOSITS OF PUBLIC MONEY-CONSTITUTIONAL LAW.

1. As respects priority on bank's insolvency, moneys collected by county assessor for automobile licenses were "public moneys" while on deposit in bank, before turned over to county treasurer (C. S., sec. 8381; Laws 1925, chap. 43, sec 2).

2. Bank held charged with knowledge of its officers and agents that deposits made by county assessor were public moneys (C. S sec. 8381).

3. Public moneys deposited by county assessor in bank becoming insolvent held properly classifiable for payment as trust fund, though not specially deposited (Laws 1925, chap. 133 sec. 77, subds. 2, 3; Const., art. 8, sec. 4; art. 12, sec 4).

4. Statute providing for classifying deposits of public funds not specially deposited as having same priority as debts due any other depositor held unconstitutional as applied to deposit of moneys collected by county assessor for automobile licenses (Laws 1925, chap. 133, sec. 77, subd. 3; Const., art. 8, secs. 2, 4; art. 12, sec. 4).

5. Constitution prohibiting loaning credit of state applied to deposit of state's share of motor vehicle license fees in banks (Const., art. 8, sec. 2; C. S., sec. 1582, as amended by Laws 1929, chap. 195, sec. 7).

6. Constitutional provisions against loaning credit of governmental agencies apply equally to voluntary and compulsory obligations (Const., art. 8, secs. 2, 4; art. 12, sec. 4).

7. County assessor held proper party plaintiff to regain control of public funds he deposited in bank which became insolvent, by having them declared trust funds.

APPEAL from the District Court of the Sixth Judicial District, for Lemhi County. Hon. Ralph W. Adair, Judge.

Action to have deposit in bank closed for insolvency declared trust fund. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondent.

E. W. Whitcomb, for Appellants.

The money deposits involved in this action were not "public moneys." (Sess. Laws 1925, chap. 45, sec. 2.)

At the time this law was enacted the office of tax collector and public administrator was held by the county treasurer and the legislature at that time never intended, even by implication, to include the county assessor. (State v. Malcom, 39 Idaho 185, 226 P. 1083; Coudert v. United States, 175 U.S. 178, 20 S.Ct. 556, 44 L.Ed. 122.)

"The words 'Public Money' used in . . . . the statute and the expression 'County Funds' employed in the bond, seem to us to be convertible terms. The funds of the county are the moneys and securities in the possession of the County Treasurer." (Myers v. Kiowa County, 60 Kan 189, 56 P. 11.)

No law should be held unconstitutional except it appear clearly so without question or doubt, and under the laws of this state, all "public moneys" are safeguarded except the holder thereof wrongfully converts the same, in which case, he should be personally holden together with his bondsmen for any loss following. (In re Gale, 14 Idaho 761, 95 P. 679; Doan v. Commissioners of Logan County, 3 Idaho 38, 26 P. 167; People v. George, 3 Idaho 72, 76, 26 P. 983.)

The loss of any moneys representing public funds because of the insolvency of the bank, became a liability for which plaintiff and his bondsmen became liable. (City of St. Anthony v. Mason, 49 Idaho 717, 291 P. 1067.)

L. E. Glennon, for Respondent.

The deposit of public funds in other than a designated and duly qualified public depository constitutes a special deposit, and makes the fund resulting from such deposit a trust fund, to which the bank never acquires any title. (C. S., sec. 8379; In re Bank of Nampa, 29 Idaho 166, 157 P. 1117; State v. Thum, 6 Idaho 323, 55 P. 858; Bellevue State Bank v. Coffin, 2 Idaho 210, 125 P. 816; First Nat. Bank v. C. Bunting & Co., 7 Idaho 29, 59 P. 929-1106; Independent School Dist. v. Porter, 39 Idaho 340, 228 P. 253; Fidelity State Bank v. North Fork Highway District, 35 Idaho 797, 31 A. L. R. 781, 209 P. 448.)

A forced donation of the county's funds by an act of the legislature is in violation of the constitutional inhibition and is just as invalid as if voluntarily assumed and made by the county officials. (Board of Lake County Commrs. v. Rollins, 130 U.S. 662, 9 S.Ct. 651, 32 L.Ed. 1060; Eaton v. Mimnaugh, 43 Ore. 465, 73 P. 754; Grand Island & N.W. R. Co. v. Baker, 6 Wyo. 369, 71 Am. St. 926, 45 P. 494, 34 L. R. A. 835; Conlin v. Board of Supervisors, 114 Cal. 404, 46 P. 279, 33 L. R. A. 752.)

BUDGE, J. Lee, C. J., and Givens, Varian and McNaughton, JJ., concur.

OPINION

BUDGE, J.

The Pioneer Bank & Trust Company of Salmon, Lemhi county, was closed for insolvency May 20, 1929, and its affairs and assets taken in charge by the state department of finance represented by a liquidating agent. At that time there was on deposit in said bank to the credit of an account designated as "Assessor of Lemhi County, by W. C. White," the sum of $ 2,814.48, which sum or an amount in excess thereof was represented by actual cash on hand and went into the hands of the commissioner of finance by virtue of his office and of his taking charge of the affairs and assets of the bank for the purpose of liquidation. This money was "public funds," representing automobile license fees collected by the assessor in his official capacity as assessor of Lemhi county and in the performance of his duty as agent of the department of law enforcement of the state of Idaho. It appears to have been the custom of the assessor to make deposits in the bank, under the account designated as above stated, of motor vehicle license fees collected by him, and on the 20th of each month to draw a check in favor of the county treasurer in remittance of the fees. Checks drawn by the assessor on this account were honored and paid by the bank and the amounts thereof charged to the account of the assessor.

In due time following the closing of the bank the assessor presented to the commissioner of finance a claim requesting that the amount so on deposit as aforesaid be classified as a trust fund payable according to the priority accorded by the provisions of the Bank Act, Sess. Laws 1925, chap. 133, sec. 77, subd 2. The claim was disallowed as to the classification requested, and was instead classified for payment under the provisions of subd. 3 of sec. 77, supra.

This action was commenced by W. C. White, in his capacity as assessor of Lemhi county, against the Pioneer Bank & Trust Company, E. W. Porter as commissioner of finance, and A. M. Boylen as liquidating agent of the bank, to vacate the order of the commissioner of finance as to classification of the claim for payment, and to have the deposit declared a trust fund and the amount thereof impressed with a trust until such time as the same be fully discharged by payment. After disposition by the court of various preliminary motions, etc., the defendants filed a joint answer to the complaint and the cause came on for hearing before the court. The evidence introduced consisted of the testimony of the plaintiff assessor, duplicate copies of deposit slips, creditor's claim against the bank, and an agreed statement of facts entered into by the parties to the action stipulating most of the facts hereinabove recited. The trial court found in favor of the plaintiff, the judgment vacating the order of the commissioner of finance classifying the funds as a common deposit under subd. 3 of section 77 of the Bank Act and declaring the same to be trust funds, impressed with a trust and payable as such from the assets of the bank. A payment of twenty-five per cent of the amount claimed has been received during the course of the liquidation of the bank's assets, under the classification made by the department of finance. The defendants have appealed from the judgment.

We are unable to follow appellants' contention that these moneys collected by the assessor did not become public moneys until turned over to the county treasurer. As we view it, they became public moneys the instant they were collected by the assessor, a public officer of the state charged with the duty of accepting them in payment of automobile licenses as agent of the state department of law enforcement. Certainly these funds are within the general definition of public moneys, stated in C. S., sec. 8381, to include "all moneys belonging to the state, or any city, county, town or district therein, and all moneys . . . . received or held by the state, county, district, city or town officers in their official capacity." (See, also, 50 C. J., p. 854, sec. 40.) The definition of public moneys in Sess. Laws 1925, chap. 45, sec. 2, has reference to public moneys coming into the hands of the treasurer of a depositing unit or, in the case of a county, money coming into the hands of its tax collector or public administrator, and relates only to the officers named in respect of their duty in safeguarding and protecting the funds of political subdivisions received by them.

The appellant bank had accepted these funds and placed them on deposit to the credit of an account designated "Assessor of Lemhi County, by W. C. White." Its officers and agents knew they were not deposited in compliance with any public depository law, and from the handling of numerous transactions under the account they were acquiescent with the fact that these deposits by the assessor represented collections made by him in payment for motor vehicle licenses. Accordingly the bank stands charged with knowledge of its officers and...