City of Topeka v. Independence Indemnity Co.

287 P. 708, 130 Kan. 650, 1930 Kan. LEXIS 298
CourtSupreme Court of Kansas
DecidedJune 7, 1930
DocketNo. 28,758; No. 29,327
StatusPublished
Cited by5 cases

This text of 287 P. 708 (City of Topeka v. Independence Indemnity Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Topeka v. Independence Indemnity Co., 287 P. 708, 130 Kan. 650, 1930 Kan. LEXIS 298 (kan 1930).

Opinion

The opinion of the court was delivered by

Jochems, J.:

This was an action brought by the plaintiff to recover on the official bond of the commissioner of finance and revenue of the city of Topeka on account of the loss of city funds which were on deposit in the Peoples State Bank of Topeka at the time it [651]*651became insolvent and was closed. Plaintiff recovered, and defendant appeals.

The plaintiff filed its petition charging neglect of duty against the commissioner of finance and revenue, Frank L. Stevens, and attached to the petition a copy of the bond given by the defendant as surety for the commissioner. Thereafter a motion to strike and a demurrer were filed by the defendant. These were overruled, and the defendant appealed from these orders. This appeal was docketed as No. 28,758 in this court. Subsequently the defendant filed its answer and amended answer. The plaintiff replied, and upon the issues joined the cause was tried to a jury. The jury returned a general verdict against the defendant and made special findings of fact. Upon these the trial court rendered judgment against the defendant, and defendant appeals therefrom. This last appeal is No. 29,327 in this court. They have been submitted together and will be so considered.

The petition charged, in substance, that one Frank L. Stevens, during all of the times complained of in the petition, was the duly elected and qualified ’ commissioner of finance and revenue of the plaintiff city, and that the defendant had executed his official bond, a copy of which was attached to the petition; that during the time the bond was in full force and effect the commissioner had failed, neglected and refused to faithfully perform and discharge the duties of his office. Several grounds of negligence were charged, and it was alleged that through his neglect of duty the city had sustained a loss of approximately $65,000. The petition further alleged that demand had been made upon the defendant to pay the face amount of its bond of $10,000, but that payment had been refused. Judgment was sought against the defendant for the amount of its bond and interest. The commissioner of finance and revenue was not made a party defendant.

Defendant filed a motion to strike and a demurrer to the petition, which were overruled, and subsequently the defendant answered, pleading, among other things, a general denial; admitting execution and delivery of the bond sued upon by plaintiff; admitting that at the time of the execution of the bond the commissioner, Frank L. Stevens, was the duly elected commissioner of finance and revenue of the plaintiff city, but denied specifically that he had performed, or been guilty of any act constituting a violation of the conditions of the bond, and denied that it assumed any liability for any acts alleged in the petition which were required by law to be performed [652]*652by Frank L. Stevens as commissioner of finance and revenue of the plaintiff city.

The evidence showed, in substance, that the Peoples State Bank began business in 1925 and that it became insolvent and was closed on December 3, 1926; that soon after the bank opened, the city of Topeka began to use it as a depository, and according to a report made by a certified public accountant on April 1, 1925, the city had on deposit with that bank $15,049.07; that the bank never was properly designated as a city depository by resolution of the board of commissioners, as required by city ordinance; that detailed written reports were submitted by the city auditor from time to time to the board of commissioners, which showed various sums of money on deposit with the Peoples State Bank, and that the board of commissioners knew the bank was being used as a city depository for more than a year prior to its failure.

The record further shows that about November 15, 1926, one Newell Abrahams came to the office of Frank L. Stevens, who was then commissioner of finance and revenue of the city of Topeka, and told him in substance that he (Abrahams) understood that the Peoples State Bank was in very bad financial condition. He asked Stevens how much money the city had on deposit with the bank. Stevens stated that the amount on deposit at that time was approximately $75,000. Abrahams then said: “Well, Frank, I question very much if you drew a check against that bank for $25,000 if it can be honored.” He stated further that it was “purely a rumor.” Abrahams was in the insurance business and represented the bonding company which executed the bond for the city treasurer which at that time was in effect, and this fact was known to Stevens. The evidence shows that after the interview with Abrahams, Commissioner Stevens studied over the matter. It was late in the afternoon. He knew the city attorney was out of town, so he could not consult him. He went across the hall to see the mayor, but found the mayor was out of the office. He came back to his own office and thought some more; then went across the hall to the city treasurer’s office and told her to check the November pay roll against the Peoples State Bank. This was about the middle of November and the pay roll of the city is made up on the 1st and 15th of each month. The checks which are made up about the 15th are usually delivered about the 20th of the month. The treasurer was working on the November pay roll, and the record shows that the current pay roll [653]*653amounted to $26,374.97, and that an ordinance appropriating that amount for the current pay roll was passed on November 19, 1926. Stevens did not tell the city treasurer why he wanted her to check the November pay roll against the Peoples State Bank. After he returned to his own office he told the city auditor, Clyde Knowlton, that he had directed the city treasurer to check the city pay roll against the Peoples State Bank. The auditor made no comment. The record shows that thereafter Stevens had no further conversation with the city treasurer, the city auditor or any of the city commissioners about the Peoples State Bank until after it was closed on December 3, 1926. The city treasurer testified that when Stevens told her'to check the November pay roll out of the Peoples State Bank she asked him: “Are you leery of that bank, Mr. Stevens?” and he replied: “Oh, no.” She proceeded to carry out his orders and had checked out $5,200 on the pay roll from the Peoples State Bank when Knowlton, the auditor, came to her and told her not to draw any more money out of the Peoples State Bank. After that time, at the request of the city auditor, she deposited $5,200 in the Peoples State Bank, and at a later date, at his request, deposited an additional sum of $10,000 in the Peoples State Bank. She never told Mr. Stevens about these deposits, as she regarded Knowlton as being Stevens’ messenger. She testified further that Knowlton had frequently given her instructions relative to city funds.

On November 18, 1926, the city had on deposit with the Peoples State Bank $76,010.41. On that date the cash and sight exchange of the bank was $36,297.31. When the bank closed on December 3, 1926, the city had on deposit approximately $86,000.

The appellant raises twenty questions on appeal, all of which are interesting, but to keep this opinion within bounds we will not attempt to discuss each in detail. We will endeavor, however, to treat the various grounds urged as error.

With the general verdict the jury returned special findings as follows:

“1. Did Prank L.

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Bluebook (online)
287 P. 708, 130 Kan. 650, 1930 Kan. LEXIS 298, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-topeka-v-independence-indemnity-co-kan-1930.