York Cnty. v. Watson

• Decision Date: 21 March 1881
• Docket Number: CASE No. 1005.
• Court: South Carolina Supreme Court
• Parties: YORK COUNTY v. WATSON.

15 S.C. 1

YORK COUNTY

v.WATSON.

CASE No. 1005.

Supreme Court of South Carolina.

Mar. 21st, 1881.

1. There being in this state no statute which imposes upon a county treasurer a higher obligation than that imposed by common law, such officer is not liable for the loss of county funds, occasioned by the failure of a savings bank, which was in good standing at the time the moneys were placed there on deposit.

2. The auditor's duplicate may be used as one of the means by which to ascertain the indebtedness of a county treasurer.

3. Findings of fact, concurred in by referee and Circuit judge, sustained, there being no clear preponderance of testimony to the contrary.

Before WALLACE, J., York, November, 1879.

Action commenced January 26th, 1878, by York county against a former treasurer of that county, John L. Watson, for an accounting of county funds which had passed through his hands. The issues as presented to this court, by the appeal, involved the defendant's liability for a loss occasioned by the failure of a bank, and also the matter of an alleged overcharge against the treasurer.

The case was first argued in this court May 28th, 1880, and being ordered for re-argument, was again heard January 18th, 1881.

Defendant became county treasurer of York county, in March, 1871. Between that date and November, 1873, he made deposits of public moneys in the Yorkville branch of the Citizens' Savings Bank, the parent bank being in Columbia. These deposits were interest-bearing deposits. In November, 1873, defendant had to his credit in the branch bank $4683.33. He went to the parent bank on some day in November and presented his check for about $4000 (the brief nowhere gives the exact amount), which the bank did not pay, alleging as a reason want of knowledge as to his bank account in Yorkville. The next day Watson commenced proceedings against the bank in the state courts, and the bank then filed its petition in bankruptcy in the United States District Court. Watson received in all forty-seven and a half per cent. dividend on his deposits, for which he properly accounted. Interest upon his deposits was, at intervals, credited to him upon his bank account, but he at no time drew upon these interest credits, as such, nor drew any checks for amounts corresponding, although several checks were payable to and drawn by “self.” Under the contract of interest deposits, the bank was entitled to notice of from fourteen to thirty days, according to amount of draft, which might be waived. It does not appear whether notice was exacted from Watson.

The issues of law and fact were referred to James Hemphill, Esq., to determine and report. He reported to the court the testimony taken before him and stated the accounts. His conclusions of fact were as follows:

“On the other question, as to the alleged corrupt and improper conduct of the defendant having caused the bankruptcy of the bank, and thereby occasioned the loss of the county money, I do not see sufficient ground to sustain the charge. There were some circumstances detailed by the witnesses on the part of the plaintiff which were apparently suspicious, but which were denied or explained by the defendant and his witnesses. I hold that there is not sufficient proof to make the defendant responsible for the loss sustained by the failure of the savings bank.

Second. I have given the defendant credit for *** the sum of $971.80, which was allowed to the treasurer as an overcharge by the auditor and county commissioners, and which appears in the report of the county commissioners of November 1st, 1874; ***. ________ allowed on the commissioners' report of 1874, upon the evidence of Col. W. B. Allison, formerly county commissioner and clerk of the board, and of the defendant.

These two witnesses both swear positively that the accounts were carefully and thoroughly examined by the former county auditor, Mr. Enloe, who is now dead, and by Col. Allison, and that upon this investigation they ascertained that the defendant was justly entitled to this credit. *** On the question of fact, I find-

Third. That he was overcharged $971.80.

On the item of commissions, I allowed the defendant four per cent. on all his collections.”

The case came up before Judge Wallace on exceptions to the referee's report. The Circuit judge sustained the findings of the referee as to “the item of $971.80, as an overcharge, the court being satisfied that this amount should be deducted from the aggregate of charges against the defendant, as they shall be compiled according to the directions in this order.” He also held that defendant was “not liable for any loss of the funds of plaintiff (principal or interest) incurred by reason of the deposit of said funds in the Citizens' Savings Bank, the court being satisfied with the findings of the referee upon this point, both as matter of law and fact.” The Circuit decree also contained the following findings:

“5. It is further ordered and adjudged, that the defendant should also be charged with the assessments for county purposes proper, as shown by the auditor's tax duplicate for the years 1872, 1873, 1874 and 1875, after giving proper credits for the pro rata of abatements for those years belonging to the county proper, the court being satisfied that the auditor's books are the proper sources from which to make such charges.

6. It is further ordered that it be referred to Winthrop Williams, Esq., as special referee, to take testimony and report the amount of principal and interest of the county funds proper which were in the bank at the time of the suspension, and, after charging defendant with the interest, to give him credit for fifty-two and a half per cent. of the original principal and interest as the uncollected portion thereof.”

To this decree plaintiff excepted as follows, and appealed to this court:

1. For error in allowing defendant credit for the sum of $971.80, as an overcharge.

2. For error in holding “both as matter of law and fact,”“that defendant is not liable for any loss of the funds of plaintiff (principal or interest) incurred by reason of the deposit of said funds in the Citizens' Savings Bank,” and for ordering that the referee “after charging defendant with the interest,” give him credit for fifty-two and a half per cent. of the original principal and interest as the uncollected portion thereof.

3. For error in holding, as matter of law, “that the auditor's books are the proper sources from which to” charge the defendant for the county taxes, “as shown by the auditor's tax duplicates for the years 1872, 1873, 1874 and 1875,” thereby limiting plaintiff to those sources for making up such charges.

Mr. James F. Hart, for appellant.

The respondent being a receiver of public moneys, under bond for the faithful discharge of his duty as required by law, is absolutely liable for the loss of the funds in his custody, by whatsoever manner this loss occurs. This proposition rests on statute law and public policy. This principle has never been adjudicated in this state, but it has been acted upon. 15 Stat. 287, 465, 805, 819. It has been determined by tribunals of other states. 3 How. 588;11 How. 154;4 Wall. 182;13 Wall. 17;1 Denio 233; 3 Penna. St. 372; 33 N. J. 339;6 Ohio St. 607;1 Woodb. & M. 45;30 Ill. 99;22 Ind. 125;12 Cush. 112;39 Iowa 9;32 Mich. 132. United States v. Thomas, 15 Wall. 337, does not, in its decision, conflict with these cases, although there are dicta which would seem to impair the force of the older cases. See Gen. Stat., pp. 83, 148, 213.

2. If the respondent deposited in bank the trust funds of the county in his custody in such a manner that he did not have immediate control over them, so as to be able to withdraw them on the first apprehension of danger, he is liable for their consequent loss. 2 Russ. & Myl. 215; Perry on Trusts 443; Hill on Trust. 540.

3. Having deposited the public funds in a savings bank, with a view of making interest thereon, he stands in the position of a bailee or trustee who has loaned the fund for profit, and is absolutely liable. 1 Beav. 525; 6 Beav. 239; 29 Beav. 213; Hill on Trust. 540; Perry on Trusts, §§ 429, 446. It was a lending of the funds without authority, and, therefore, at his own risk, and the consequent loss must fall on him. 32 Mich. 132;2 Wall. 256;5 Denio 555;36 Ind. 346; 9 Metc. 499; 12 Cush. 112;4 Vroom 339;26 N. Y. 514.

Mr. G. W. S. Hart, on same side.

Messrs. Witherspoon & Spencer, contra.

The opinion of the court was delivered by

SIMPSON, C. J.

This is an appeal in a case “in chancery,” and it involves questions both of law and of fact.

The respondent was county treasurer for York county, from March, 1871, to March, 1877. It is alleged in the complaint that during the period he held this office he collected large sums of money for the appellant, a considerable portion of which he failed and neglected to account for and pay over to appellant.

This allegation seems to be true, but it appears that this default of respondent resulted from the fact that respondent had deposited this money in the Citizens' Savings Bank; that this bank has failed, and the loss which has occurred was on account of this failure of the bank.

The appellant contends that, even admitting this to be true, yet, as matter of law, respondent should be regarded as an insurer, liable for the whole amount collected, and that the facts set up by him constituted no legal defence.

The Circuit judge declined to enforce this stringent principle, and, holding that respondent's liability was dependent upon negligence and the proper performance of his duties, he decreed, upon the facts, that the respondent was not liable for the loss incurred by reason of his deposit in the Citizens' Savings Bank.

The ground of appeal in this case, involving this point, brings up for the first time in this state squarely the question as to the absolute and unconditional liability of a public officer for public funds collected...