County of Dickey v. Gesme

Statement. This is an action to recover upon a depositary bond. Defendants have appealed from a judgment entered upon a verdict in plaintiff's favor. The material facts are: — Defendants were stockholders in the Farmers and Merchants State Bank of Monango, North Dakota. On or about June 21st, 1921, such bank, as principal, and defendants, as sureties, signed a bond in the sum of $10,000 to secure the deposits of funds by plaintiff county in the bank. This bond was given pursuant to its terms, in accordance with the provisions of chapter 56 of the Laws of 1921, enacted on March 8th, 1921 as an emergency act relating to legal depositaries. This bond was approved as to form by the state's attorney on June 27th, 1921, and, as to sufficiency, by the chairman of the board of county commissioners on June 30th, 1921. It was filed in the office of the county auditor on June 30th, 1921. On this last date, plaintiff had upon deposit in such bank about $7,000 which theretofore had not been secured by any depositary bond. Thereafter, until March 20th, 1923, various deposits, aggregating about $43,000, and various withdrawals, aggregating about $39,000 were made from time to time. On March 23rd, 1923, the county funds of plaintiff upon deposit were in amount $10,490.12. On March 29th, 1923, the bank was placed in the hands of the state examiner and state banking board and, in September 29th, 1923, a receiver for such bank was appointed. On April 10th, 1923, plaintiff served written notice upon each of the defendants of a default in, and of a breach of, the bond in which each of them were named as a surety. This action was instituted in November, 1923. Two of the defendants, in their answer, alleged in general effect, that the bond was given upon the condition and with the understanding and agreement of plaintiff that it should be effective only in the event that one Thorn, who was president of the bank, should sign as surety. Defendant Moe alleged, in his separate answer, to the general effect that his signature was procured through false representations by the cashier of the bank that the bond signed was a report of some kind and that no liability would arise from the signing, of all of which plaintiff had notice. In the record there is some evidence as follows: — A former county treasurer had placed on deposit in the bank concerned $8,000 without securing any bond. In May, 1921, when Brennan became county treasurer most of this amount was still upon deposit. Then there were four banks in the county that had not furnished bonds. Brennan consulted the state's attorney; he had some informal talk with the county commissioners; he sent a blank bond to the bank and telephoned to the bank several times to ascertain why the bond was not furnished; finally, the cashier called and explained some difficulties about securing the bond and requested Brennan to go with him; the cashier went to defendant Gesme and secured his signature as surety upon the representation that signatures of defendant Bollinger and Thorn would be secured or the bond would not be used. Brennan and the cashier went to see defendant Bollinger; pursuant to Bollinger's testimony, Brennan stated and promised that if Thorn did not sign the bond it would not be used; also, the cashier promised likewise; Brennan denied making any such statement or promise. Thorn testified that Brennan requested him to sign as guarantor but he refused so to do although he did sign the bond as president of the bank. Moe testified that the cashier presented the bond to him and explained that it was some sort of a report (Brennan was not present). The bond, thus signed, was then, after attestation by a notary public, the assistant cashier of the bank, with the sureties not present, either taken by Brennan or sent to him by mail. Brennan then presented such bond to the state's attorney who approved it as to form. He then presented it to the chairman of the board of county commissioners who approved it as to sufficiency. The county commissioners never took any formal action upon this board. The bond was presented to the board at their regular meeting in July or August, 1921, by the county auditor. The board never made any formal order designating the bank as a legal depositary.

When defendants rested, plaintiff moved to strike out all testimony of defendants with reference to any agreement, or representations made to them when their respective signatures were procured, for the reason that no notice thereof had been brought home to the board of county commissioners. The trial court practically granted this motion by striking out all evidence relating to any conditional delivery or understanding of defendant Moe. The trial court instructed the jury that the sole issues in the case were whether the bond was executed by the sureties; whether it was delivered to the bank and to plaintiff; whether a breach of the conditions thereof occurred and whether the amount of county funds in the bank, when it failed, equalled or exceeded the penalty of the bond.

Opinion. Defendants have made many specifications of error. They will be briefly considered. It is contended that the bond is ineffective because it contains the name of no obligee therein. The caption of the bond recites, "Bond of Depositary Bank to Dickey county;" otherwise, where the name of the obligee should be inserted, it reads, — "are held and firmly bound unto . . . of the county of Dickey, state of North Dakota;" otherwise, the bond in its terms refers to an obligee and to the acting of the bank as a depositary for funds of said obligee pursuant to the law. Obviously, the name of the obligee is identified by the bond; manifestly, the clerical mistake of not striking out the preposition "of" in the clause quoted did not destroy means of identification furnished by the bond.

It is asserted that the evidence was sufficient for the consideration of the jury concerning a conditional agreement and conditional delivery of the bond, and notice thereof to plaintiff. We are satisfied that the trial court did not err in this regard. No notice of any kind was brought home to the county commissioners; the county treasurer possessed neither legal nor authorized duty or power to secure or pass upon the bond to be furnished even if some of the testimony, fragmentary as it is, should be conceded in its full effect.

It is claimed that the burden was upon plaintiff to show lack of knowledge in these respects. This claim is without merit.

It is further contended that the bond was ineffective because not formally approved by the county commissioners and was not signed by five sureties as required by a former law, namely, §§ 3315-3329, Comp. Laws, 1913. This contention is again without merit. The action of the county and its officials certainly show an implied approval which defendants should be and are estopped to deny. Chapter 56, Laws 1921, became effective as a law on March 8th, 1921. It provides that all state banks are declared to be legal depositaries of public funds of counties and it requires various treasurers to deposit funds in such banks. Further, it provides, — "Before any deposit shall be made in any depository by or in behalf of any of the corporations enumerated in § 1 of this act, such depository shall furnish a bond payable to the public corporation making such deposit, in an amount that shall at least equal the largest deposit that may at any time be in such depository; said bond shall be in conformity to a form prescribed by the attorney general and the amount and sufficiency by the board or governing body of such corporation."

It is evident that this law requires neither a formal designation by the county commissioners of a legal depositary nor any particular number of sureties upon the bond furnished.

Further contentions made to the effect that defendants should not be held liable for deposit existing when the bond became effective and for interest upon the demand are without merit. The judgment is affirmed.

CHRISTIANSON, JOHNSON, BIRDZELL, and NUESSLE, JJ., concur.