State v. Thum

55 P. 858, 6 Idaho 323, 1898 Ida. LEXIS 74

Opinions

QUARLES, J.

(After Stating the Facts.) — The contention of the respondent that public money deposited in a bank on general deposit, by a public officer, in violation of law, becomes the estate and property of the bank, the owner of the money so deposited, contrary to its will, becoming a mere creditor of the bank, raises the principal question in this case. The district court sustained this contention. We are unable to do so. The position of the state in this case is unlike that of an ordinary depositor in a bank. A party who deposits money in a bank on general deposit voluntarily becomes the creditor of such bank, and, impliedly at least, agrees that the bank may commingle such money with its own, and use it until called for by such depositor. The relation of debtor and creditor arises by mutual consent. Not so in the case at bar. The state never consented to become the creditor of C. Bunting & Co., bankers. It never deposited, or consented that the funds in question should or might be deposited, with said bank on general deposit. On the other hand, the state absolutely prohibited the making of such deposit. Sections 6975-6977 of the Bevised Statutes, are as follows:

“Sec. 6975. Each officer of this territory, or of any county, city, town, or district of this territory, and every other person charged with the receipt, safekeeping, transfer, or disbursement of public moneys, who either:

“1. Without authority of law, appropriates the same or any portion thereof to his own use, or to the use of another; or,

“2. Loans the same or any portion thereof; or, having the possession or control of any public money, makes a profit out of, or uses the same for any purpose not authorized by law; or,

“3. Fails to keep the same in his possession until disbursed or paid out by authority of law; or,

“4. Deposits the same or any portion thereof in any bank, or with any banker or other person, otherwise than on special deposit; or,

“5. Changes or converts any portion thereof from coin into currency, or from currency into coin or other currency, without authority of law; or,

“6. Knowingly keeps any false account, or makes any false entry or erasure in any account of or relating to the same; or, “7: Fraudulently alters, falsifies, conceals, destroys, or obliterates any such account; or,

“8. Willfully refuses or omits to pay over, on demand, any public moneys in his hands, upon the presentation of a draft, order, or warrant drawn upon such moneys by competent authority; or,

“9. Willfully omits to transfer the same, when such transfer is required by law; or,

“10. Willfully omits or refuses to pay over to any officer or person authorized by law to receive the same, any money received by him under any duty imposed by law so to pay over the same; is punishable by imprisonment in the territorial prison for not less than one nor more than ten years, and is disqualified from holding any office in this territory.

“Sec. 6976. Every officer charged with the recipt, safekeeping, or disbursement of public moneys, who neglects or fails to keep and pay over the same in the manner prescribed by law, is guilty of felony.

“Sec. 6977. The phrase 'public jnoneys/ as used in the two preceding sections, includes all bonds and evidence of indebtedness, and all moneys belonging to the territory, or any city, county, town, or district therein, and all moneys, bonds, and evidences of indebtedness received or held by territorial, county, district, city or town officers in their official capacity.”

The former treasurer, C. Bunting, had no authority to deposit public money in the bank of C. Bunting & Co., bankers, on general deposit. The bank had, and was charged with express notice that the state treasurer had, no authority to make such general deposit. More than that; the bank, nor the officers of said bank, after receiving said money, could mingle it with the funds of the bank, or loan it, or make profit out of it, or appropriate it, without committing a felony. If a bank receives public money, it must do so on special deposit. It must keep such money separate from its own funds. It must not use it or loan it. If any of these acts are committed, the persons or officers who participate are guilty of a felony. Now, it must necessarily follow that, the state treasurer, having no authority to deposit public money with a bank on general deposit, but he being authorized to deposit such money with a bank on special deposit, the instant that C. Bunting & Co. received public money from the state treasurer, it did so on special deposit, and that if the officers or any officer of said bank thereafter used said money, or commingled it with the money of the bank, or loaned it, such officers or officer, by such act, committed a felony. The bank could not appropriate it. Hence it did not become the estate or property of the bank. If the bank was still doing business, it could not claim the money in controversy, or any part thereof, as its own. It could assert no claim adverse to the state to such money, or any part thereof. The respondent, as receiver of said bank, can assert no claim to said money which the bank could not itself assert if it was still doing business. The' creditors of the bank have no interest or claim upon said money. The joint wrong and criminal act of the agent of the state and of the officers of the bank does not redound to the financial interest of the creditors of the bank. The bank received the money in trust for the true owner, the state. It must be regarded as a trustee. (Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590; Bank v. Hummel, 14 Colo. 259, 20 Am. St. Rep. 257, 23 Pac. 986; State v. Midland State Bank, 52 Neb. 1, 66 Am. St. Rep. 484, 71 N. W. 1011; Foster v. Rincker, 4 Wyo. 484, 35 Pac. 470; Kimmel v. Dickson, 5 S. Dak. 221, 49 Am. St. Rep. 861, 58 N. W. 561; Meehem on Public Officers, sec. 922; Winslow v. Iron Co. (Tenn. Ch. App.), 42 S. W. 698; Hubbard v. Manufacturing Co., 53 Kan. 637, 36 Pac. 1053, 37 Pac. 625; Ryan v. Phillips, 3 Kan. App. 704, 44 Pac. 909; City of Larned v. Jordan, 55 Kan. 124, 39 Pac. 1030.) We could cite many other authorities to the same effect. In Vane v. Towle, 5 Idaho, 471, 50 Pac., we said, at page 1008: “Trustees must, in dealing with trust funds, and with the beneficiaries thereof, show the utmost good faith and fair dealing. They can make no profit out of the trust funds, nor obtain any advantage over the beneficiaries of such funds ; and a trustee cannot assert an adverse claim to funds which he receives in his fiduciary capacity.” The respondent, as receiver, is in the same position as the bank. He -can assert no adverse claim against the state to the money in question. That fund, being a trust fund, is no part of the insolvent bank’s estate. It must be paid to the state before the bank’s estate is distributed. Creditors of a bank need not expect, under the laws of this state, to have public funds in the bank distributed among themselves in case of the failure of such bank. Could it be contended that if A robbed B of a large sum of money, and then went into insolvency, that that money should be distributed among A’s creditors? Certainly not. We cannot give our consent to the doctrine or theory that if two persons, in handling a particular fund, commit a felony with reference to such fund, their criminal act devests the owner of title, or creates the relation of debtor and creditor between the true owner of such fund and the parties who commit the criminal act.

(January 11, 1899.)

The respondent insists that the motion for nonsuit was properly granted on the ground of variance between the allegation and proof. It is true that the evidence shows that some or all of the money in question was deposited with C. Bunting & Co., bankers, by the former treasurer, and not by the present one. In this respect the petition is defective. But such defect is cured by the allegations of the answer, wherein it is alleged that such money was placed in said bank by C. Bunting, former treasurer, who gave his check therefor to Treasurer Storer. The judgment- appealed from is reversed, and the cause remanded to the district court, with instructions to enter judgment in favor of the state as demanded in the petition, and to direct the respondent, C. E. Thum, as receiver, to pay the said judgment out of assets of the said C. Bunting & Co. in his hands before any distribution of such assets among the creditors of said banking corporation. Costs of appeal to be paid out of funds in the hands of said receiver.

Sullivan, C. J., and Huston, J., concur.