Independent Consol. Sch. Dist. v. Bank

An opinion herein will be found in 298 N.W. 667. Petitions for a rehearing were filed by both appellant Crawford County Trust and Savings Bank and appellee Independent Consolidated School District of Dow City, Iowa, requesting a re-examination of that decision. Reconsideration of the record impels us to file this as a supplemental opinion. For convenience, plaintiff will be treated as sole appellee and the Crawford County Trust and Savings Bank as sole appellant.

The facts are as stated in the opinion above noted and need not be repeated. We hold that the first division of that opinion is sound and in keeping with our previous pronouncements. It is reaffirmed.

[6] II. Appellee argues vigorously against the reference to Andrew v. Farmers' Tr. Sav. Bk., Iowa, 226 N.W. 714, urging that that case is not an authority because a rehearing was granted and because it is not officially reported. This argument is lacking in weight because predicated on a decision not at all parallel or analogous. We quote from appellee's petition for rehearing:

"The reasons why this Court granted a rehearing in the Andrew case are very apparent. Two days before it was granted, and on the 14th day of April, 1930, this Court handed down its decision in the case of Runyan v. Farmers Bank of Liberty Center, 210 Iowa 147, 230 N.W. 418."

That case is manifestly not like the one before us and is so little calculated to have moved the court to grant a rehearing in the Andrew case, supra, that we do not take the time to analyze it. At any rate, the principles announced in the Andrew case have the support of our previous decisions and the weight of authority generally. The case before us presents no reason for announcing a different rule.

We find that the decree of the trial court, with reference to the questions presented by counts 2 to 6, inclusive, of the petition, is right. Appellee's argument that various sections of the Code entered into the contract of deposit so as to compel the bank, before honoring a check, to ascertain to a certainty that the proceeds of the check were being applied to proper purposes, is not persuasive. The statutes as we read them do not lead to such result. Section 7420.01 (formerly section 7420-d1, Code, 1935), appearing in chapter 352.1 of title XVI, Code, 1939, deals with the deposit of public funds and does not purport to fix the liability of banks which honor checks drawn against such public funds. The same may be said of sections 4316 and 4317. These deal with the duties of the treasurer and not with those of depositories. The last-quoted sections appear in chapter 220 of title XII of the Code, which has to do only with education.

It may be conceded that, as an abstract proposition, appellant was bound to know the law; but we find no warrant for the conclusion appellee would have us draw that such knowledge imposes upon a depository the responsibilities of the officers who make deposits of public funds. Such a rule would make the bank the surety of such public officer.

The second division of our former opinion, dealing with the question of liability of the bank for transfer of funds from one account to another, is withdrawn and the following substituted as a supplement to our original opinion:

Re-examination of the problem presented by the issues on count 1 and the amendment thereto, having to do with the liability of the bank because of the transfer of funds from one account to another, compels the conclusion that the trial court was in error here. There were involved in this case no cash transactions. None of appellee's fund left the bank except through the medium of checks which we have held in division I hereof to have been properly honored by the bank. It is apparent, therefore, that transfer of funds from one account to another could not have caused a loss to appellee. Whether in one fund or in the other, in one account or another, it still belonged to the school district.

It follows that the trial court was wrong in awarding judgment against appellant because of transfers from one fund to another. For convenience, we set out some of the authorities cited by the parties, but if there be anything in them which demands a result different than here announced we have overlooked it. Grebe v. First State Bk., 136 Tex. 226, 150 S.W.2d 64; Hartford Accident Indemnity Co. v. Farmers Nat. Bk., 24 Tenn. App. 699,149 S.W.2d 473; Colby v. Riggs Nat. Bk., 67 App. D.C. 259, 92 F.2d 183, 114 A.L.R. 1065; State National Bk. v. Dodge,124 U.S. 333, 8 S. Ct. 521, 31 L. Ed. 458-462; Shull v. Town of Avant, 159 Okla. 271, 15 P.2d 49; Campion v. Big Stone County Bank, 177 Minn. 51, 224 N.W. 258; Georges Twp. v. Union Trust Co., 293 Pa. 364, 143 A. 10; People v. Home State Bk., 338 Ill. 179,170 N.E. 205; White-Dulany Co. v. Craigmont State Bk.,48 Idaho 100, 279 P. 621; 7 Am. Jur. 374, section 520; 9 C.J.S. 700, 715, section 353; German Sav. Bk. v. Citizens Nat. Bk., 101 Iowa 530, 70 N.W. 769, 63 Am. St. Rep. 399; Hanby v. First Sav. Bk.,197 Iowa 150, 197 N.W. 51; Gillett v. American Sav. Bk., 219 Iowa 497, 258 N.W. 99.

We conclude that the trial court was right in its decision of the questions involved in division I and wrong as to division II.

The motions to dismiss these appeals are overruled.

The case is, accordingly, — Reversed on appellant's appeal; affirmed on the appellee's appeal; and remanded for a decree in conformity herewith.

BLISS, C.J., and MILLER, MITCHELL, and HALE, JJ., concur in the foregoing opinion of SAGER, J.

OLIVER, STIGER, GARFIELD, and WENNERSTRUM, JJ., dissent from the second division of the opinion of SAGER, J.