Bank of Indianola v. Miller

112 So. 877, 147 Miss. 695, 1927 Miss. LEXIS 321

• Court: Mississippi Supreme Court
• Decided: May 9, 1927
• Docket: No. 26112.
• Status: Published

Opinions

Cook, J.,

delivered the opinion of the court.

The appellee, W. J. Miller, state revenue agent, filed separate bills of complaint against the Bank of Indianola and the Bank of Buleville, seeking to recover from these hanks interest on deposits of tax collections of the county tax collector, at the rate of two per cent per annum computed on daily balances, and also the penalty of five per cent per month, or fraction thereof, for the time elapsing between the date when such interest became due and the time of payment thereof, as provided by chapter 174, Laws of 1922.

At the first trial in the court below the two causes were heard together and final decrees were entered dismissing the bills of complaint, and, from the decree dismissing the bills, the revenue agent prosecuted an appeal, and, on the hearing of the appeal, the decree was reversed and the cause remanded; the court holding that — “Under chapter 174, Laws of 1922, a bank which knowingly receives tax collection funds from a sheriff for deposit must keep an account of such funds and the daily balances thereon. If it mingles other funds with such tax collections so that it is unable to separate the same, it will be held liable for the two per cent on daily balances on the whole fund.” 142 Miss. 799, 107 So. 548.

After the cause had been'remanded, the appellants, defendants below, by leave of the court, withdrew the answers formerly filed, and filed in lieu thereof amended answers, specifically attacking the constitutionality of chapter 174, Laws of 1922, and, upon the second hearing of the cause in the court below, decrees were entered in favor of the complainant against each of the defendants for the amount of interest accrued on the sheriff’s account in such bank during the period covered by the demands in the bills of complaint, and for the five per cent per month penalty accrued from the date upon which payment of such interest was shown to be due to the date of said decree, and from these decrees appeals were prosecuted by the defendant banks.

On this appeal the contentions of appellants, as stated by counsel, are:

“First. That, even if the appellants be charged 'with interest on the daily balances, shown by the account, there should be excluded interest on so much of said balances as represent taxes collected for the levee and drainage districts.

“Second. If liable for interest on the daily balances shown by the accounts, which daily balances are proven to be not daily balances of tax collections, the penalty of five per cent per month or fraction thereof does not attach.

“Third. The statute, as the sole basis of the suit, is unconstitutional and void.”

Section 1 of chapter 174, Laws of 1922, provides, in part, that — ‘ ‘ Any bank in this state that now has or that may hereafter have on deposit any of the tax collections of the various tax collectors in the state prior to the payment of such collections into the various funds of the state and county and subdivisions thereof, shall be required to pay interest on such tax collections,” etc.

And the first contention of appellants is that the words “subdivisions thereof,” as used in this statute, refer to subdivisions of the county and not to subdivisions of the state, and consequently, since levee and drainage districts are subdivisions of the state and not of the county, no interest is imposed by this statute upon the levee and drainage district taxes on deposit in the banks of the state. We do not think the language of this statute can be so limited. While, “it is generally true that a statute which treats of things or persons of an inferior degree, cannot, by any general words be extended to those of a superior degree” (Ellis v. Murray, 28 Miss. 129), the application of this rule to the language of this statute does not so limit the meaning of the words “subdivisions thereof.” The words “state and county and subdivisions thereof” clearly mean subdivisions of the state as well as those of the county, and the interest is imposed upon tax collections belonging to levee and drainage dis tricts as well as those belonging to subdivisions of the county.

The second contention of appellants, stated more in detail, is that, under the former opinion of the court in this cause, where it is impossible, on account of the commingling of funds in the sheriff’s account, to show the exact amount of tax collections on deposit in such account, the two per cent per annum computed on the daily balances of the entire account is awarded as damages for the failure to properly keep and separate the accounts, and not as interest on established tax collections, and consequently, since the statute imposes the penalty for failure to pay interest due on tax collections, and not on damages awarded, no penalty follows in this case for the reason that, on account of the mingling of funds, the actual amount of tax collections cannot be shown.

In the former opinion in this case (142 Miss. 799, 107 So. 548), the court said that' — '“The banks, of course, did not have to receive the funds under the statute, but, when they received public funds, knowing them to be public funds, they were under the duty to ascertain what part of such funds were tax collections, and to keep them separate from other funds of the sheriff’s account. They cannot escape the consequences of the statute by commingling the funds in such way, or keep such account, as will not disclose to the proper officer of the state such funds, and escape liability. They are under the duty to show, when called on to account, the amount of money received, and the true daily balances of such account, and, if they commingle the funds in such manner that this cannot be ascertained from their books they must be able to point out and make a correct accounting, or, in default, they would be held liable for interest on the entire account.”

The five per cent per month penalty is imposed for the failure to promptly account for the interest due the respective taxing districts, and, by -commingling the funds so that the proper officers of the state cannot determine from the accounts the exact amount of tax collections, the banks can no more escape this penalty than they can the compensation allowed by law for the use of this ■money, whether it be denominated interest or damages.

The appellants next contend that chapter 174, Laws of 1922, the basis of this suit, violates sections 90(d) and 24 of the state Constitution of 1890, and also the Fourteenth Amendment of the Constitution of the United States, in that it deprives them of their property without due process of law, and denies to them the equal protection of the laws.

Section 90, Constitution of 1890, provides that, “the legislature shall not pass local, private, or special laws in any of the following enumerated cases, but such matters shall be provided for only by general laws, viz.: . . . (d) Regulating* the rate of interest on money” —and the appellants contend that chapter 174, Laws of 1922, is a special law, for the reason that it applies only to banks, and not to individuals, trust companies, corporations, manufacturing concerns, etc., that might have tax collections on deposit.

Section 3578, Hemingway’s Code, which defines what shall constitute a bank, provides that “any corporation (except national banks and postal savings banks) having a place of business within this state, where credits are opened by the deposit or collection of money or currency or negotiable paper subject to be paid or remitted upon draft, receipt, check or order, or sale of drafts or exchange drawn on local or foreign banks, shall be regarded as a bank or banker, and as doing* a banking business under the provisions of this act,” while section 3579, Hemingway’s Code, requires that every person or firm engaged in the banking business in this state, shall incorporate under the laws of the state. It is hardly conceivable that the tax collectors of the state would ever deposit public funds with private individuals, or corporations that do not come under this very broad definition of a bank or banker, or that every character of in stitution which receives deposits of public funds would not become subject to the operation of this act, but, if it be conceded that this law does not rest upon any proper basis of classification and is special, we do not think it is a regulation of the rate of interest in the sense contemplated by paragraph (d), section 90' of the Constitution. The “rate of interest on money” referred to in this section was intended to deal with this subject in the sense that the lawful rate of interest fixed by statute to be contracted for by all persons must be general in its nature, and uniform in its application throughout the state, but it was not intended to prohibit the state from imposing limitations or conditions upon the right of banks or other institutions to become depositories of public funds, for it has been held by this court that — “The state can decline absolutely to permit banks to become depositories of money belonging to the public and it necessarily follows that it can permit them to do so upon such conditions as it may see fit to impose. ’ ’ Fidelity & Deposit Co. v. Wilkinson County, 109 Miss. 879, 69 So. 865.

The appellants next contend that this act violates section 24 of the Constitution of 1890, which provides that “all courts shall be open; and every person for an injury done him in his lands, goods, person, or reputation, shall have remedy by due course of law, and right and justice shall be administered without sale, denial, or delay;” and also the provision of the Fourteenth Amendment of the Constitution of the United States that no person shall be deprived of his property without due process of law. The exact contention of counsel in this regard is that the penalty imposed by this statute for the nonpayment of the interest is so out of proportion to the debt created by the statute as to deter the debtor from resorting to the courts to have his liability and the amount thereof established, and consequently the effect is that the courts are not open to him, and his property, the debt he pays, is taken without due process of law.

For an announcement of the doctrine upon which, they rely, counsel for appellants quote from the case of Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. B. A. (N. S.) 932, 14 Aim. Cas. 764, the following language:

“Now, to impose upon a party interested the burden of obtaining a judicial decision of such a question (no prior hearing having ever been given) only upon the condition that, if unsuccessful, he must suffer imprisonment and pay fines, as provided in these acts, is, in effect, to close up all approaches to the courts, and thus prevent any hearing upon the question whether the rates as provided by the acts are not too low, and therefore invalid. The distinction is obvious between a case where the validity of the act depends upon the existence of a fact which can be determined only after investigation of a very complicated and technical character, and the ordinary case of a statute upon a subject requiring no such investigation and over which the jurisdiction of the legislature is complete in any event.”

The duty or liability which this act imposes upon banks is to pay quarterly a fixed rate of interest on the daily balances of tax collections on deposit in such banks, and no penalty accrues until ten days after this interest is due and payable, and the determination of the amount of interest due is certainly not a fact, the existence of which “can be determined only after investigation of a very complicated and technical character.” The determination of this fact involves simply a calculation from the books of the bank. This 'law imposes interest on the daily balances of such accounts as shown by the books of the bank, and the facts necessary to determine the amount of interest due are peculiarly within the knowledge and possession of the banks, and are established by their own records if such records are accurately kept. If, however, any question of fact, or controversy as to the amount of interest due should arise or if a bank desired to contest the validity of the statute or otherwise chai lenge its liability thereunder, it could avoid the penalty that might be incurred by reason of delay incident to the litigation by paying, under protest, the exact amount of interest shown by its books to be due, and recover such payment if successful in the litigation. The right of the legislature to impose upon banks the duty of paying this interest is clear. This liability was not arbitrarily imposed upon the appellants, but was voluntarily assumed by them by accepting deposits of these public funds, and we are of the opinion that the penalty imposed for a default in the payment of the interest when due does not, in effect, deny to appellants access to the courts or deprive them of their property without due process of law.

Finally, the appellants contend that this statute is void for the reason that it denies to appellants the equal protection of the law, as provided by the Fourteenth Amendment to the Constitution of the United States, the contention of the appellants in this regard being that the interest imposed by the statute is a mere debt due the county, and it imposes a penalty on banks for a failure to pay a debt due by them to the county which is not imposed on any other class of debtors to counties.

Upon this point we think this case is ruled by the case of Fidelity & Deposit Co. v. Wilkinson County, 109 Miss. 879, 69 So. 865, in which was involved the constitutionality of section 10 of the County Depository Law (chapter 194, Laws of 1912; section 4247, Hemingway’s Code), and in which it was held that that section did not violate the Fourteenth Amendment. That section of the .County Depository Law authorizes boards of supervisors to employ counsel to enforce prompt collections from defaulting depositories, and makes such depositories liable for all costs of collection, including counsel fees, and also imposes a cumulative penalty of one per cent per month for any delay in paying over any county funds when lawfully demanded, and also imposes liability upon the surety of such depository for such expense and penalty, and, in disposing- of the contention that this section vio lates the provisions of the Fourteenth Amendment the court said that — “Liability for this penalty and counsel fee is one of the conditions upon which these appellants were permitted to become sureties for the discharge by the Citizens ’ Bank of. Wilkinson county of its obligation as depository for the county of Wilkinson; consequently, liability therefor was not arbitrarily imposed upon appellants, but was voluntarily assumed by them. Since the state can decline absolutely to permit banks to become depositories of money belonging to the public, it necessarily follows that it can permit them to "do so upon such conditions as it may see fit to impose.”

If, as said by the court in the foregoing quotation, “the state can decline absolutely to permit banks to become depositories of money belonging to the public,” and “can 'permit them to do so upon such conditions as it may see fit to impose,” it may likewise prohibit the deposit of public funds in banks which have not qualified as depositories, and may permit them to receive such deposits upon such conditions as it may see fit to impose. The liability for this interest and penalty was not arbitrarily imposed upon the appellants, but was voluntarily assumed by them by accepting deposits of these public funds, and we do not think the imposition of this penalty for failure to pay this interest when due denies to them the equal protection of the laws as guaranteed by the Fourteenth Amendment.

Counsel representing other banks, as amici curiae have filed a.brief covering the points already discussed, and making the further contention that chapter 174, Laws of 1922, was impliedly repealed by chapter 328 of the Laws of 1924; this contention being based upon the well-established doctrine that, where the legislature in a later act covers the entire scheme dealt with in a former act, the former act will be treated as having been repealed by the later act, although there is some difference in the provisions of the two statutes.

Chapter 328, (Laws of 1921, is entitled “An act to preserve public funds, and making all officers and other custodians of public funds liable for any fees or commissions payable to the attorney-general or revenue agent for the collection of any money or property improperly withheld by such custodians,” and sections 1 and 2 of the act provide as follows:

“Section 1. Be it enacted by the legislature of the state of Mississippi, that any officer, state, county, municipal or district, or any other custodian of public funds or property, who shall improperly withhold same from the state or county treasurer or other authority whose duty it is to receive same, or who shall fail to turn property over to the’proper custodian, or who shall in any wise be in default as to any money or property held by him as a public official in this state, or in any other capacity as custodian of such funds or property, shall be liable on ffiis bond for all cost of collection or recovery of money or property, including in such costs the commissions, if any, of the revenue agent or the attorney-general, and all other costs connected therewith, including interest on funds improperly withheld, for such time as such funds have been withheld, and reasonable rental and damages where property belonging to the public is so withheld.

“Sec. 2. It is the purpose of this act to preserve in its entirety the public funds and property in this state, and it shall be so construed that the commissions, if any, and fees of the attorney-general and the revenue agent, and all other costs of collection must be borne by such derelict official or custodian.”

The purpose and proper construction of section 1 of this act is manifest from the language thereof, even if the purpose and proper limitations and construction thereof were not expressly set forth in section 2 of the act. The sole purpose of the act is to render defaulting public officials and other custodians of public funds, and their bondsmen, liable for the costs, and statutory fees al lowed to certain officials, for collecting* any funds, or recovering* any property, improperly withheld from the proper treasury or custodian. We have many statutes imposing penalties for defaults in connection with the public revenues and for failure to perform public duties, and, these penalties are entirely separate from, and have no proper connection with, the subject of costs incurred or fees allowed for collecting public funds, and chapter 328, Laws of 1924, does not in any way x>nrport to deal with the subject of penalties imposed by these numerous statutes for defaults in connection with the public revenues,. and, consequently, it does not by implication repeal chapter 174, Laws of 1922.

The decree of the court below will therefore be affirmed.

Affirmed.