Case Name: State of Indiana ex rel Bayless W. Hanna, Attorney General, v. Nathan Kimball et al.
Court: Indiana Superior Court
Jurisdiction: Indiana
Decision Date: 1872
Citations: 1 Wilson 174
Docket Number: 
Parties: State of Indiana ex rel Bayless W. Hanna, Attorney General, v. Nathan Kimball et al.
Judges: 
Reporter: Reports of Cases Argued and Determined in the Superior Court at Indianapolis
Volume: 1
Pages: 174–204

Head Matter:
IN GENERAL .TERM, 1872.
State of Indiana ex rel Bayless W. Hanna, Attorney General, v. Nathan Kimball et al.
Appeal from Newcomb, Judge.
Treasurer of State — liability of—
Bond of — how far liable on—
Sureties on — Bond of how far liable.
The act to provide a treasury system for the State of Indiana, and the act of 1861, entitled “ an act defining certain felonies, and misdemeanors, and prescribing punishment therefor, and providing for certain evidence on the part of the State,” must be construed in pari materia.
The purpose of these acts is to compel the keeping of the money of the State in the safes, and vaults provided for in the first cited act, and to prohibit the use of the funds in the hands of the Treasurer by investing, loaning, or depositing the same.
The last clause of the fifth section of the act of 1859, which requires that all interest, or bonus received by the Treasurer of State, arising out of any money of the State, shall by him be fully accounted for, is not a penalty prescribed for the violation of law.
The penalties prescribed by the act of 1861, for all violations of the provi sions of the set of 1859; a-how an intention on the part of She Legislature to abandon tbe remedy provided by the last clause of the fijtk section ,of the act of 1&5&, and said, clause of said act is no longer operative, tbe legislation of 1861! being inconsistent therewith.
Where all the funds, which by law are properly ia the hands of the Treasurer of State, have been fully accounted for, and paid over, neither h% nor bis sureties are liable on Ms official bond as Treasurer, for other funds acquired by the doing of acts in Violation of law, and which acts constitute a crime, oí misdemeanor.
Baylegg W. Hanna, Attorney General, ¡Solomon Claypoot, Napoleon B. Taylor, W. R, Ha/rrison, for the State.
Gordon, Brown, Sf Lamb, Hanna 8f Knefief, for defendant.
G. & n., 646.
2 G. & H., 466.
1 G. & H„ 046.
2 G. &. H., 460.

Opinion:
Blair,* J.-
This is a suit against the defendant Kimball and his sureties, upon the official bond given by Kimball as Treasurer of State.
At Special Term three breaches of the bond were assigned, but subsequently all were dismissed by the plaintiff but the1 first, which is, that the defendant did not honestly and faithfully discharge his duties as Treasurer of State, nor did he pay, account for, and deliver to the plaintiff, or his surcessor in office, or other person authorized to receive the same, all the moneys, securities, and assets belonging to the plaintiff, but that during his term of office he, as such Treasurer of State, received, and had under his control a large amount of money belonging to the plaintiff, which be used on his own account, and in bis private business, loaned to divers persons at interest, and deposited in banks of deposit at interest, and by reason of such use, loans, and deposits he made, and received interest, profits, and income thereon to a large amount, and which he has failed to account for, or pay over to his successor, but has converted the same to his own use.
Separate, and joint demurrers were filed by the defendants to this assignment of breach. These demurrers were 'sustained on the ground that the assignment did not state facts sufficient to constitute, a cause of action.
Judgment Was then rendered on the demurrer at Special Term, in favor of the defendants, and an appeal Was then taken by the plaintiff to General Term.
The question presented by the assignment of error is the action of the Court at Special Term on the demurrer.
The State, in the breach of the bond set out in the com* plaint, seeks to recover of the defendants, interest, profits, and income alleged to have been received by the defendant Kimball from the use of money of the plaintiff in his private business, and from loans, and deposits of money of the State-.
It is not charged that there has been any failure to pay aver, or account for the principal of moneys that came to his hands as Treasurer.
An examination of the statutes relating to the duties, and •obligations of the Treasurer of State is necessary in the con* sideration of the question presented by this demurrer. In 1859 an act was passed to provide a treasury system for the State of Indiana. 1 G. & H., p. 645. Without citing the act in full, it will be necessary to notice the following provi* sions contained therein :
Section one provides that the room occupied by the Treasurer of State, together with the safes, vaults, etc., "shall constitute the treasury of the State of Indiana," and the Treasurer is required to use the same " as the sole place for the deposit, and safe keeping of the moneys of the State, etc."
The third section specifies what moneys shall be paid into the State treasury.
Section four requires the execution of a bond by the Treasurer, and sets out the conditions it shall contain.
Section five prohibits the Treasurer from leaning, using, or depositing in any bank, or with any person, any of the moneys of the State, and says the same shall be safely kept until directed to be paid out, or transferred by law, and the Treasurer is "expressly prohibited from receiving, in any manner, for his own use, any interest, premium, gratuity, bonus, or benefit whatever by the disposition of, or arising out of any money, or property belonging to the State, or to any county, or any fund of the State, or county, or of any loan obtained for the State, or for any county, but whatever is so received shall by him be fully accounted for.
The sixth section requires every person making payment into the treasury to first furnish the Auditor of State with a-description of the liability on account of which payment is-to be made, this is to be cértified to the Treasurer, and the-Auditor must also " make his draft in favor of the Treasurer upon the person making the payment, and the certificate, and' draft must then be presented to the Treasurer, and he shall-receive the money; and the Treasurer is expressly prohibited' from receiving any money into the treasury except it be thus-paid upon draft."
Section seven expressly prohibits the Treasurer " from paying any money out of, or transferring any money from the-treasury of the State, except upon the warrant of the-Auditor of State," etc.
This act prescribed no penalties for the violation of any of its provisions. It prescribes certain things that shall be done, and the manner of doing them, and prohibits in express-terms the doing of certain other things, and among them the receiving by the Treasurer of any interest, or bonus, or benefit by the disposition of any money belonging to the State,, but says that " whatever is so received shall by him be fully accounted for."
It is evident from the express provisions of this statute,, that it was the intention of the Legislature that the money in the treasury of the State should be kept at all times in the safes, and vaults provided for that purpose. The act was passed for the purpose of preventing the money from being removed for any purpose except upon the warrant of the Auditor of State, drawn in pursuance of law. It is evident that the Legislature was looking to, and legislating to secure the safe keeping of the monies of the State, and intended that no license should be given for the removal of the money, and its deposit in bank, for the reason that it might endanger the safe keeping of the fund. The State does not levy taxes, and cause them to be paid into the treasury for the purpose of being loaned, or deposited for purposes of accumulation, but to be applied to the payment of the current expenses of the government, and to discharge the obligations of the State. It is not expected that large sums of money will accumulate, and lie in the hands of the Treasurer, or be loaned, or deposited by him, and the statute says expressly that the Treasurer shall not so use the money, nor receive any interest, or bonus for his own use, by the disposition made of, or arising out of any money of the State.
To add this provision: that "whatever is so received shall by him be fully accounted for," is an anomaly in legislation.
It is very unusual for a State to prohibit the doing of an act, and at the same time provide that if the act is done, and a profit made, interest, or bonus received, it must be fully accounted for, and paid ovér.
This paying over and accounting for is not provided as a penalty for the violation of the law, but so far as the act under consideration specifies, it simply proposes to the Treasurer that if he should remove the money from the vaults, and loan, or deposit it, and receive therefor any interest, the violation of law will be forgiven if he shall fully account for the amount received.
However unusual this kind of legislation may be, it is perhaps competent for the Legislature to so enact, and if this legislation stood alone, though the mode of the accounting, or authority to call upon him to account is not in any manner defined, nor any remedy specified if there is a failure to account; courts might find a remedy, and enforce it, by •sustaining a suit upon his official bond, or otherwise. But at the next session of the Legislature, in 1861, another act was passed entitled " an act defining certain felonies, and misdemeanors, and prescribing punishment therefor, and providing for certain evidence on the part of the State. 2 G. & H., 456.
The first section of this act says, that if any officer entrusted with money of the State shall use the same by way of investment, or shall loan, or deposit the same, " he shall be deemed guilty of a felony, and upon conviction thereof shall be imprisoned in the State prison, not less than one, nor more than twenty-one years, and be fined not exceeding double the value of the money, etc."
By the third section it is made a misdemeanor for the Treasurer to receive, or pay out any public money in any other manner than as prescribed by law, and on conviction thereof he " shall be fined not less than fifty, nor more than five hundred dollars, and be imprisoned in the county prison not less than one year."
Section five provides that if the Treasurer of State shall receive any fee, bonus, or perquisi+e of any kind, on account of any public money, and shall fail, or neglect to report, and pay the same into the treasury, in the manner, and at the time required by law, he shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined in a sum equal to double the value of the amount so received, and be imprisoned in the county jail not less than one month, nor more than one year.
These acts being expressions of the legislative will upon the same subject, must be construed in pari materia. It is evident that the general intention, and purpose of the last act is the same as that of the first, that is, to compel the keeping of the money in the safes, and vaults provided for in the first recited act, and prohibit the use of the funds of the State in the hands of the Treasurer by investing, loaning, or depositing the same. The act just cited is highly penal-in its character.
The Treasurer is in the first place expressly prohibited from removing the monies from the treasury to use, loan, or deposit the same. In the second place, it is equally unlawful for him to receive any interest, or bonus, for the use, loan, or deposit of the monies. To do the first act is a felony ; to receive any interest, or bonus is a misdemeanor.
Suppose we give force, and effect to every portion of these acts, by holding that the1 interest sued for can be recovered in this suit upon the official bond of the Treasurer by reason of the provision that requires the Treasurer to account for " whatever is so received." The State would in such case-recover the amount of interest of the Treasurer in a civil suit, by virtue of the contract contained and entered into by the Treasurer and his sureties, in the execution by them of the bond.
In addition to this the Treasurer might be convicted of a felony for using, loaning, or depositing the money, and imprisoned in the State prison for not less than one, nor more than twenty-one years.
Again, he might still further be convicted of a misdemeanor for receiving the interest, and failing to account for it, and on conviction the law says he " shall be fined in a sum equal to double the value of the amount so received, and be imprisoned in the county jail not less than one month, nor more than one year."
The act of 1861 is the last expression of the Legislature, and there is no question as to .the validity of its provisions. Does it repeal any of the provisions of the former act, and especially that portion requiring interest illegally received to be accounted for ? Is the last clause of the fifth section of the act of 1859 in force, so as to give the State a right of action in a civil suit against the Treasurer, and his sureties ón the bond ?
Now it is, perhaps, competent for the Legislature, by-express statute, to authorize the taking of an obligation, bond, or .contract from her officer that he will not do an •illegal act that is a felony, and that he will not do another additional act with reference to the same matter that is a misdemeanor, and at the same time contract that if these acts are done, the State shall receive all the profits that may be acquired by the illegal and criminal acts, and give a remedy to recover those profits if they are not voluntarily ;paid over.
Courts would be slow, however, to imply such an intention on the part of the Legislature, from any doubtful, or vague expressions of a statutefor it is an old, well established, and wholesome rule of law, founded on general principles of public policy, that no court will lend its aid to a man whose cause of action is founded upon an illegal or Immoral aet.
If A lets B have a thousand dollars under an agreement that B shall not wager the same in any game of chance, and a further agreement that if he does so wager it, and win, the profits resulting therefrom shall be paid to A, a court will not .permit A to come in, and invoke its aid to assist him in recovering the profits of B.
It is possible, as before indicated, that the State, by her Legislature, may set a bad example — one at variance with all previous rules of public policy — by reserving to herself a .right of action to recover the proceeds of an illegal aet, not as a penalty for a violation of her laws, but because she has •so stipulated in the contract or bond.
But to so hold, there must be no doubt as to the legislative intention, and the same should be clearly, and definitely expressed. So far from the statutes clearly indicating such intention, there is much that leads us to an opposite conclusion.
The act of 1859 was mild in its character. It prohibited in express terms the doing of certain things, but gave no sanction to the prohibitions by providing penalties. It then provided that interest acquired by violations of the law should be fully accounted for. This was not by that act intended to be imposed as a penalty for the violation of law., but seems to indicate that if interest is so received the State shall have a right to call upon him, and compel an accounting, settlement, and paying over of the interest illegally acquired. This would involve a waiver on the part of the State of the wrong done in violating the law, and an adoption of the illegal acts of the Treasurer, by which the interest was'acquired, and. an acceptance of the money in satisfaction of the wrong, and of the contract of, the Treasurer, to account for the same..
While for the purpose of carrying out the intention of the Legislature in protecting the treasury, the above construction, might properly have been given to the section cited in the-act of 1859 when standing alone; the adoption of the act-of 1861 seems to clearly indicate an intention on the part of the Legislature to abandon the remedy which was given, or. allowed by the act of 1859; and without proposing to rely on the contract, obligation,.or. duty to account for the interest illegally acquired, substituted penalties to be inflicted, or. incurred, not only when the first step towards acquiring the interest was taken, but additional ones to be applied when the second step should be taken — that of receiving the interest.
We are strengthened in this conclusion by the fact that one of the penalties in the act of 1861 is measured by the amount of interest received, and the fine can not be less than, double the amount received.
Is it reasonable to conclude that the Legislature in 1861 intended that the State should have a right of action in & civil suit against the Treasurer, and his sureties on their bond to recover interest which he was prohibited from. acquiring, and in addition that he might be convicted of a felony, and imprisoned in the State prison for loaning, or depositing the money by which the interest was acquired, and also that he might be convicted of a misdemeanor for receiving the interest, and not accounting for it, and imprisoned, and fined, as before stated, in a sum not less than double the amount received ?
This would be an accumulation of remedies, the parallel of which can not be found in our statutes, and is not warranted by the spirit of any code not based on the "principles of vindictive justice," and we can not suppose that the Legislature had such intention.
In arriving at these conclusions, we are not letting down the barrier, and opening the door for fraud, and peculation. If the money in the treasury is not fully accounted for, the Treasurer, and his sureties are clearly liable for it. If removed from the vaults to loan, or deposit, the 12th, and 13th Sections of the act of 1859 give a summary, and efficient remedy, in addition to a suit upon the bond if the money is not accounted for.
Again, the provisions of the penal act of 1861 being valid, an enforcement of its provisions would be more efficacious than for the State to say to the Treasurer you must not loan, or deposit the money in your hands, but if you do loan it, I will agree to receive the interest of you, and you, and your sureties must agree in your bond to pay it to me. After making such agreement, it would be bad faith on the part of the State to turn around, and enforce the provisions of the penal act of 1861, and punish the Treasurer for the acts by which the interest was made, which, if the position of the plaintiff is correct, she had before contracted, by taking the bond of the defendants, to receive.
By accepting the office, and entering upon the duties of the same, the Treasurer assumes all the obligations incident to a faithful, and honest discharge of those duties, and the object to be attained by the execution of the official bond is, that the State may have the undertaking of others as sureties for the Treasurer, and while the sureties in such case are liable upon the bond in all cases where the principal is clearly liable, they are nevertheless sureties, and ought not to have their obligations extended by doubtful construction beyond the terms of the law, and the bond, or contract which they have entered into. It is not necessary to cite authorities in support of this well recognized rule of law. When all the funds, which by the terms of the law are properly in the hands of the Treasurer, have been fully accounted for, and paid over, to hold the parties liable for other funds that have been acquired in violation of law, and in acquiring which the Treasurer may be prosecuted in criminal actions, is extending the terms of the bond beyond anything that the parties could reasonably be held to contemplate at the time of its execution.
For these, and other reasons given by Judges Newcomb and Rand, a majority of the Court is of opinion that the latter clause of the fifty-second Section of the act of 1859 is no longer operative, the legislation of 1861 being inconsistent therewith, and that the action of the Court at Special Term should be affirmed.
We all concur in the ruling of the Court at Special Term, that the Attorney General had authority to institute the suit as stated in the opinion of Judge Rand.
Judgment affirmed.
Held: That the State can not maintain a civil suit against an ex-Treasurer of State for interest charged to have been realized by him from loans of State funds, so long as she makes the requirement that he shall not pay such interest into the treasury in any other way than by accusing himself of the commission of an offense against the criminal code, and placing on record evidence to be used against him in case the State should resort to a prosecution for such offense — per Newcomb, J.
Statutes of 1859, and 1861, and Sec. 14, Article 1, Constitution of Indiana, construed.
Note. — The form of "joint resolution" is generally adopted when administrative, local, or temporary laws are to be passed. 1 House J., 1, 20, 816; 1, 32, 679.
This form of Legislation is recognized in most of our constitutions, in which, and in the rules, and orders of our legislative bodies, it is put upon the same footing, and made subject to the same regulations, with bills properly so called. See Art. 4, Sec. 18, Cons. Indiana.
In Congress, a joint resolution is governed by the same rules as a bill. See Wilson's Digest Parliamentary Law, Secs, 1138, 1139, 1140, and notes. — , £Eepoetee.