Leach v. Stockport Savings Bank ( 1929 )

Evans, J.

(dissenting). — I am unable to concur in the majority opinion. The proceeding is one .brought by intervention of the school district, to establish a preference in the receivership proceeding for the full amount of its deposit in the failed bank. The ground of recovery set forth in the petition of intervention was that the deposit of the funds of the district by its treasurer in the bank was unlawful, and known to be unlawful by the bank, in that no bond was given by said bank, “as required by law as a condition to the lawful deposit of said funds in the hands of such treasurers in any bank, but that, notwithstanding said failure to take such bond, the said treasurers unlawfully and wrongfully deposited said funds in Stock-port Savings Bank; that the said Stockport Savings Bank, with full knowledge of the fact that no such bonds had been given by it, wrongfully, unlawfully, and knowingly received said trust funds from said treasurer, and with full knowledge that they constituted and were trust funds and public money, and impressed with a trust as such.” These constitute the two elements of the intervener’s case. The detailed facts upon which these allegations are predicated are comparatively simple. On July 24, 1921, the board of directors adopted a resolution authorizing deposits in this bank to the amount of $10,000,-and requiring that a bond be given therefor by the bank. On August 3, 1921, the bank gave a good and sufficient bond, which is in no manner questioned in the evidence. The sequence of events from this point forward becomes involved in darkness, under the direct testimony of the officials of the school district. The president testified that he remembered nothing about receiving the bond; likewise the treasurer; likewise the secretary. And yet the president was compelled- to admit that he found the bond in his own possession, in an envelope which had been addressed to the secretary. Though the secretary denied that he had any recollection of receiving the bond or delivering it to the president, yet he admitted, that he knew a bond had been given, and that he had previously insisted that one should be given, and that the bond found by the president in his own possession was written by the secretary. Though the treasurer testified that he had never approved the bond, and though one of the directors testified that the board had not approved the bond, yet all the moneys claimed in the 'intervention had been deposited by the treasurer in regular manner after the giving of the bond, and in the belief that his deposits were lawful. The conceded circumstances appearing in the record leave room for no other inference than that all these officers believed that their deposits were legal. The conduct of these various officers is evidence of the most satisfactory character of the fact of acceptance and approval of the bond. The one thing wanting, to make a perfect case on paper, was the failure of the treasurer and of the board of directors to enter a formal approval, either upon the bond or by formal resolution. The brief for the State is full of citation of authorities to the effect that the approval of such a bond may be established as a matter of fact by other satisfactory evidence than the formalities required by statute. How can it be said, therefore, that the bank officers received these deposits in bad faith, knowing them to be illegal? And yet this is one of the elements of the intervener’s case. It is true, the board was under the duty of noting its formal approval. It was also under the statutory duty to note its disapproval within five days. It did not note, such disapproval, nor is it now contended that there were any grounds for such disapproval. All these officers did, in fact, approve this bond, although they failed to furnish any written evidence of such approval by a formal indorsement or resolution. It will be noted that the claim of the intervener is established by the evidence of its self-stultifying officers. It is now to the interest of these officers of the school district to contend that their official acts were all illegal. To now accept their testimony, which is so thoroughly contradicted by their conduct, is to open a wide door to collusive conduct of officers to establish preferential claims as against other creditors, who could have no other means to contradict the witnesses than the inconsistency involved in their testimony. The substance of merit in this case, as distinguished from its mere formalities, weighs very strongly in favor of the finding of the district court. I think it ought to be affirmed.

I am directed to say that Justices Faville and Morling join in this dissent.