The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-02-06
Custodians Of the Peoples Money
Must Not Take Common
Risks.
THE CONSTITUTION Is QUOTED.
Taxes Are Levied to Pay Government
Expenses, Not for the Benefit of
Spectators.

SANTA CRUZ, CAL, Feb. 5.-The ques-
ton of the right of City Treasurer to
make q general deposit of the funds of the
city in clearinghouse was acted upon by
Judge Logan this afternoon in the decision
delivered upon overruling the demurrer in
the case of Robert Effey, Mayor, against
Charles E. Williams, City Treasurer. The
Mayor brought suit to stop the deposits OF
city money in the City Bank. The defend
ant demurred to the complaint with the
view of stopping the proceeding by that
legal method, but Judge Logan holds that
the complaint is at least good enough to
stand in court, and the defendant has ten
days to answer. The substance of the
decision follows:
Two questions were presented. First,
has the plaintiff legal capacity to sue Z
Second. does the complaint state facts suf-
fcient to constitute a cause of action?
Upon the first point it is claimed that
the defendant is violating the law appli-
cable to such cases in the disposition and
safe keeping of the public funds. and i
am of the opinion that the Mayor, being
charged by the charter with the execution
of the laws, has a right to maintain, in
Upon the second point it is claimed that
the defendant is unlawfully depositing the
city funds in the City Bank on general
deposit. A general deposit in bank is a
deposit that permits the bank to use the
money deposited to pay it out to its cred
itors or to loan it for interest.
When the treasurer permits this to be
done he parts with the possession of the
money, valves the right to regain the
same money specifically from the bank,
has the same privilege as any other de-
positor of drawing on the bank for the
amount deposited in any lawful money
takes the same chances as any other de-
positor in the solvency of the bank; and
if it fails, to lose the money like any one
else. In other words, it is loan from the
city treasurer to the bank, that the bank
may profit out of it, as return for the
safe keeping thereof for the treasurer. I,
is one of the legitimate branches of bank.
ing business.
A bank prepares itself for the business
of taking care of other peoples money
provides vaults for its safe keeping and
employees for the transaction of its bust
ness, in order that they may make profit
III t1C LIN CoGACilb VI 6uCI
idle money as may be intrusted to their
care ~
The constitution prohibits the making
of profit out of city money, or the use Of
the same for any purpose not authorized
by law. Certainly the deposit of the city
funds in bank permits the bank to make
profit out of it, and it is equally certain
that such was not the purpose of raising
money in this city by taxation. It il
raised for paying the expenses of the city
not to loan to bank. It would seem te
be equally plain that the act complained
of in the complaint was within the pro-
hibition of section 424 of the Penal Code
forbidd:ng the unlawful depositing O.
money in any bank and making it a felony
We have seen that said deposits are for the
purpose of making profit out of the
money, and are prohibited; hence they
are unlawful.
The Supreme Court, however, in Yarnel
VS.. City of Los Angeles, passed upon thi,
question directly, namely: that the de
| posting of money in bank is making
profit out OF it, under violation of section
", Article II, of the constitution, and thai
such deposit is prohibited by section 424 O
the Penal Code, 81 California, sos. TIL.
court held that, cit seems clear, there
fore, that a scheme which places publ,
moneys in the possession and control of
private corporation is entirely inconsisten
with the provisions of section 424 of thu
Code above quoted"
The question as to whether special de
posts of public moneys can be made il
banks is not presented in this case and n,
opinion is expressed thereon.