van Vlissingen v. Board of County Com'rs

Vanderburgh, J.

The plaintiff was appointed receiver of Thomas C. Kurtz and H. A. Bruns, who were together operating a bank at Moorhead as partners, under the name of the Merchants’ Bank of Moorhead, and sues to recover from the county certain securities claimed to be part of the assets of the insolvent bank, — a mortgage for $6,000, and 20 shares of corporate stock. This bank was the lawful depository duly designated of the county funds, and its bond as such, in the penalty of $25,000 or $30,000, (it does not distinctly appear which,) was approved by the county board on or about February 10, 1891, and from that date to the appointment of the receiver the bank held funds of the county averaging $15,000, increasing in the fall of 1891 to the sum of $20,000 or more, which indebtedness continued when the insolvency proceedings were instituted. The bank was the owner of the securities in question, and the defendant claims to have acquired the same as additional security for the indebtedness of the bank on account of the deposit of the public funds therein; and whether there was a seasonable delivery to and acceptance thereof by the defendants, as against the claim of the receiver, is the principal question in this case, and the one upon which it was decided in the court below.

The county treasurer and his bondsmen are primarily absolutely liable for the safe-keeping of the public moneys coming into his hands, and, except upon the terms and conditions allowed by the statute, he has no authority to deposit the same in banks or with any person or firm. Statutory provisions are made for designating a depository, upon compliance with which the treasurer may relieve himself and sureties from liability for the safety of the moneys deposited. The designation of a depository, which is to be some bank, is made by the board of auditors of the county, which consists of the chairman of the board of county commissioners, the county auditor, and clerk of the district court. The statutory provisions for the selection and designation of depositories are found in 1878 G. S. ch. 8, §§ 150-153; Laws 1881, ch. 124; Laws 1883, ch. 51; Laws 1887, ch. 84. It will be observed by reference to the statutes mentioned that, as a condition precedent to the lawful deposit of the public funds by the county treasurer, a bond is to be executed and deposited with the treasurer, signed by five freeholders, and approved by the board of county commissioners, and the bond is to be in an amount at least double the amount of the funds to be deposited with such bank. The bond is to run two years, but if the board of auditors, at any time after baying made sucb designation, for good and sufficient cause, deem the security given insufficient, it may require a new bond, and if, in its opinion, the public interest requires it, may vacate, revoke, or modify its designation of a depository in any way. The designation requires the exercise of the judgment of the board of auditors, and the acceptance and approval of the bond requires that of the board of commissioners, and the nature of the security is specifically pointed out by the statute. Its provisions are mandatory. It is thereby expressly “made the duty of the officers designated and also of the board of county commissioners to comply with all the provisions of this act.” Laws 1881, (Ex. Sess.) ch. 43, § 1.

The kind of security which a bank is required to give as a condition of receiving a deposit of funds from the county treasury must be of the character above described, and neither the board of auditors nor the board of commissioners have any discretion or authority under the statute to accept any other; and the deposit is not permitted to exceed one-hálf of the amount of the bond. The facts are not specifically found by the court, but the court (a jury having been waived) finds generally that the defendant is the owner of the securities, on the ground, as appears from the memorandum annexed, that they were assigned to the defendant before the rights of the plaintiff attached, and that a delivery to the county attorney was of itself sufficient. Kurtz, who was one of the partners and managers of the bank, was also chairman of the board of county commissioners, and ex officio a member of the board of auditors. The following facts were stipulated at the trial: “That, at the commencement of this action, the board of commissioners of Clay county claimed the securities in question, and still claim them, and that they claim the ownership of them by reason of a transfer, assignment, or delivery from Thomas C. Kurtz to the county attorney, who claimed to act for and in behalf of the county in regard to the transaction. It is further stipulated that no record of any kind was or has been made of any action on the part of the board of county commissioners either demanding or asking for the securities in question, or instructing any person to obtain these securities for the benefit of the county, except that the board of county commissioners of Clay county, during the month of February, 1892, and subsequent to the appointment of the plaintiff as receiver of the property of the Merchants’ Bank of Moorhead, authorized W. B. Douglas, county attorney of Clay county, to sell and transfer the property replevined in this action at a price to be not less than the face value thereof, and, subsequent to the beginning of this action, authorized and directed the county attorney of Clay county to resist this action, and procure, if possible, judgment of this court returning the same to the board of commissioners of Clay county.”

It also appears from the evidence of the county attorney, which is not disputed, that, previous to the assignment of the securities by Kurtz in behalf of the bank, he consulted with the county attorney in respect to furnishing additional security to the county, and suggested that, inasmuch as the deposits were increasing, it might be better to turn over securities of the bank to the county, instead of raising the bond, and it might be necessary to raise the bond unless this was done; and he said he would fix a package for the county attorney, which was done, and afterwards delivered to him, who delivered it to the county auditor after the failure of the bank, and then reported the matter to the county board, which thereupon ordered the sale.

Conceding, without stopping to consider or discuss, the question that, as between the county and the bank and its assignee, the county might hold and enforce these securities, if a seasonable and completed transfer had been made, there are very good reasons why the delivery to the county attorney was insufficient in this case to effect such transfer. The evidence tends very strongly to prove that the assignment was intended to secure a contemplated excess of deposits over and above the amount which the bank was entitled to receive by virtue of its bond. Such an arrangement the law will not sanction. And it will not be presumed that the board of county commissioners would have accepted the securities for such purposes.

And it is not at all clear that the bank would have consented to any other arrangement. It was not a matter for the county attorney to determine or act upon. As to additional deposits, the statute referred to points out the authority and the procedure; and, if the proposition was general- and uncertain in its character, then it should, at least, have been brought before the board itself, that its purpose and propriety might have been inquired into, and the proper official action taken. In dealing with the depositories, any other rule would tend to encourage looseness and irregularity in the management of the county finances, which it is very clear the legislature intended sedulously to guard against.

(Opinion published 56 N. W. Rep. 251.)

The court will not therefore, in this case, presume an acceptance of the assignment on the voluntary delivery of the securities to a third person. Besides, there is not the slightest intimation in the evidence, as there can be no presumption in law, that the county was not already abundantly secured by the bonds which the law requires in such cases. It is not, we think, a case for the application of the rule contended for.

Order reversed.