#### The Trustees of the Village of Bath, Respondent, *v.*Daniel J. McBride and George W. Peck, Appellants. The Trustees of the Village of Bath, Respondent, *v.*Daniel J. McBride and Susan C. Sutton and Frederick C. Sutton, as Executors, etc., of Orlando W. Sutton, Deceased, Appellants.

Fourth Department,

July 7, 1914.

Municipal corporation—bond — liability of treasurer for loss of village funds upon failure of depository—-application of section 81 of Village Law requiring board of trustees to designate depository — estoppel of village board from, attacking legality of deposits.

Where the charter of a village incorporated under a special act does not deal with the deposit of village funds, section 81 of the Village Law governs and the treasurer must deposit funds in banks designated by the board of trustees and withdraw only on their order or that of a court.

Where a village board of "trustees by formal resolution accepted a bank’s written offer fixing an interest rate on village funds deposited with it, the board thereby in effect designated such bank as depository under section 81 and no change having been made, such designation is presumed to continue even after the election of a new village treasurer.

Hence, where a depository so designated by a village board has failed and village funds lost, a recovery cannot be had upon the bond of the village treasurer which created a liability only in ease the treasurer failed to perform some act or duty imposed upon him by law, where it is found that the loss was not due to any neglect or default on the part of the treasurer.

Furthermore, where the village board had knowledge of the place of deposit for several years, credited the bank with interest and after the *715failure by resolution directed the filing of a claim in bankruptcy in the name of the village and received a dividend thereon, the board is estopped in good conscience from repudiating the deposit and asserting the rule of strict liability.

Appeal, in the first action, by the defendants, Daniel J. McBride and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Steuben on the 6th day of October, 1913, upon the decision of the court after a trial before the court at the Steuben Trial Term, a jury having been waived.

Appeal, in the second action, by the defendants, Daniel J. McBride and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Steuben on the 8th day of October, 1913, upon the decision of the court after a trial before the court at the Steuben Trial Term, a jury having been waived.

*James O. Sebring,*for the appellants McBride and Sutton.

*H. V. Pratt,*for the appellant Peck.

*Monroe Wheeler*and *James McCall,*for the respondents.

Lambert, J.:

The plaintiff respondent, is incorporated under a special act (Laws of 1895, chap. 785, as amd.) and these actions are properly brought in the name of the trustees.

The appellant McBride was elected treasurer of the village of Bath, March 5, 1912. He accepted such office, filed the undertakings upon which these actions are brought, and continued in office until June 18, 1912, when he resigned.

The other appellants are sureties upon the official -undertakings of this treasurer. Such undertakings were given for the sums of $10,000 and $15,000 respectively, and upon them judgment has been rendered for the plaintiff for upwards of $20,000.

McBride was a teller in the George W. Hallock Bank, of Bath. This institution was a private bank, conducted by the copartnership of William N. Hallock and Louise 1ST. Hallock. During all the times here involved, William N. Hallock was one of the trustees of the village.

*716McBride was preceded in office by one Davidson, and it is undisputed that throughout the term of office of Davidson, and, in fact, for some years prior thereto, the funds of this village were deposited in this private banking institution with the knowledge and acquiescence of the village trustees. When McBride entered upon his office there was no formal transfer of the funds .to him. The bank merely continued Davidson’s account as treasurer, in the name of McBride, as treasurer, and during the time that McBride held office there was slight change in the account, either by way of withdrawals or accretions.

On May 31, 1912, the banking copartnership filed its voluntary petition in bankruptcy and was adjudged bankrupt, and on the following day the village board made formal demand upon the treasurer for the balance appearing upon the bank books to his credit. Upon his failure to pay, these actions followed.

The appellants make some question as to the form and legality of the bonds, but the conclusion we have reached herein renders unnecessary the determination of those questions, and we may assume those instruments to be valid, both in form and effect. Their conditions are such, however, as to create a liability only in case McBride failed to perform some act or duty imposed upon him by law, as a consequence of which the loss resulted. The trial court has made the finding of fact that the loss to the plaintiff through the failure of the bank “was not due to any neglect or default of the defendant McBride; ” and this conclusion of fact has both the support of evidence and the concession of the plaintiffs. With this conceded finding there seems to be no room to predicate liability, except for omission to obey some legal requirement.

There are various provisions of the special charter of the plaintiff (Laws of 1895, chap. 785) and of an ordinance of the village adopted thereunder, relating to the duties of the treasurer, but inasmuch as they do not even purport to deal with the subject of the deposit of the village funds, their recital here can serve no useful purpose.

In this connection our attention is directed to the following provision of section 81 of the Village Law (Consol. Laws, chap. *71764; Laws of 1909, chap. 64): “He [treasurer] shall deposit all moneys received by him in the banks designated by the board of trustees, subject to his check, as treasurer. Interest on village money belongs to the village * * 3STo money shall be paid from the treasury of the village, except in pursuance of a judgment or order of a court, or an audit and allowance by the board of trustees and an order designating the fund * * *. The treasurer shall not draw any money so deposited by him, except in pursuance of such judgment or order.”

While the respondents question the application of such provisions, by reason of the fact that the village of Bath is incorporated by special charter, their application seems clear. Such application is expressly declared (once it is determined that they do not conflict with the special act) by section 380 of the Village Law. That section provides: “A village incorporated under and subject to a special law, and each officer thereof, possesses all the powers and is subject to all the liabilities and responsibilities conferred or imposed upon a village incorporated under this chapter, or upon an officer thereof, not inconsistent with such special law.” And even if it was not so expressly declared, the general rule is that a purely local law will not be deemed to control a general one unless such intention is clearly evinced by appropriate language. *(Johnson Home*v. *Village of Seneca Falls,*37 App. Div. 147, 151; *Matter of Water Commissioners*v. *Clark,*3 N. Y. Supp. 347, 349.)

We conclude, therefore, that section 81 of the Village Law has application here in its provisions as to the depository to be used by the treasurer, and that, thereby, the State established a policy of requiring the board of trustees to designate a bank or banks, and that the treasurer deposit the village funds therein.

Liability herein has been predicated upon a line of authorities illustrated by *Tillinghast*v. *Merrill*(151 N. Y. 135). It was there held that the supervisor of a town was, by virtue of his office, the insurer of the moneys in his hands. But an examination of that and similar authorities discloses that such strict rule of liability has its foundation in the fact that such officer is made by statute the depositary of the public *718moneys. In the *Tillinghast Case (supra)*the distinction in the rule of liability, where the depository is fixed by statute, is pointed out in the reference therein to *United States*v. *Thomas*(15 Wall. 337). It would not apparently admit of question but that had thé village hoard of Bath designated this Hallock Bank, prior to its failure, no liability would or could exist against appellants, and such would seem to be the just and equitable rule of liability to be applied.

Nowhere does the statute indicate in what manner or with what formality such designation must be made, although no doubt such designation must be made by the hoard acting as a body, and not by the individuals as such.

The parties differ as to where the burden of proof lies in these actions, in connection with such designation, and appellants urge, with great persuasiveness, that, inasmuch as such designation is required by the statute and is necessarily precedent in time to compliance therewith by the treasurer, before the treasurer can be put in default it must be made to appear that the board did make a designation and that he failed to observe it. But, while the record does not present very conclusive proof upon such question, it does disclose a situation which we conclude is sufficient to establish a designation of the Hallock Bank.

It appears that on October 20,1911, the bank wrote the hoard of trustees the following letter: “Referring to the matter of interest on account of deposit of Village Hall Funds, I beg to advise you that we will pay you three per cent for funds of this account left with us for a period of six months or longer; furthermore, in consideration of the above, we will date the interest on amount so left, back to the time of the original deposit.”

Following the receipt of such letter, the board, formally resolved, “That said offer for interest be accepted.” A legal justification for such action by the board is to be found in section 81 of the Village Law, and the arrangement made necessarily embodied in it a designation of this bank as the place of deposit. So far as appears, such designation is the only one ever made and we must assume that it continued until a change is shown. Such designation was made by the board as a body. It was made by virtue of the authority conferred by law and *719was attended by all the formality of a formal resolution, spread upon the records of the meeting. By such official action the board took from the treasurer the control of the depository and he cannot, nor can his bondsmen, be held liable for' the resulting loss, in view of the findings of the trial court exculpating McBride from all negligence and bad faith.

And we think further that the plaintiff is estopped from asserting the rule of strict liability upon which it has recovered, and from denying a designation by the board of this Hallock Bank. It conclusively appears that the board had had knowledge of the place of deposit of the village funds for several years; that it had had credited upon its account an installment of the interest provided for by the letter of October 20, 1911; and that following the bankruptcy of the banking firm the board, by resolution, directed the filing of a claim upon such account and in the name of the village. Such claim was thereafter made and the ownership of the village to the account was therein asserted. A dividend was paid to and received by the village thereon. All such matters are repugnant to the strict rule of liability applied by the trial court and upon which the judgment herein is founded. And finally, the filing of the claim and the receipt of the dividend thereon was a complete adoption of and acquiesence in such deposit. And after having so placed its stamp of approval thereon, both before and after the failure, and after having dealt with such depository with reference to such deposit and the interest to be paid thereon, the village should not be permitted, in good conscience, to now repudiate it, or to attack the propriety or legality of same. 1ST or should it be permitted to assert that the law recognizes no depository except the treasurer, and at the same time take possession of a contract in relation thereto and hold a deposit so made. The two positions are inconsistent and cannot be reconciled.

That an estoppel can arise against a municipality is well settled *(Abells*v. *City of Syracuse,*7 App. Div. 501; *Moore*v. *Mayor,*73 N. Y. 238, 248; *North River Electric Co.*v. *New York,*48 App. Div. 24), and this appears to be a proper situation to apply the rule of estoppel.

The judgments appealed from should be reversed, with costs *720to the appellants to abide the event of the action, and a new trial should be ordered.

All concurred.

In each case judgment reversed and complaint dismissed, with costs, including costs of this appeal, and certain findings of fact disapproved and other findings in lieu thereof made by this court.