Court Opinion

ID: 3543764
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:55:15.679358+00
Date Added: 2024-06-11T13:42:04.102456
License: Public Domain

During all the time involved in this controversy, our depositary law required every county treasurer to deposit public funds in his possession or under his control in banks in the county designated by the board of county commissioners. It provided that the deposits should draw interest and should be secured by such surety bonds, personal bonds, or public securities, warrants, etc., as the board of county commissioners might prescribe, approve and deem sufficient for the purpose intended. (Sec. 4767, Rev. Codes 1921, as amended by Chap. 89, Laws of 1923.)
Early in 1923, the American Bank  Trust Company of Missoula, which had been designated a depositary, had on deposit some of the public funds, and it had an effective depositary bond upon which the Maryland Casualty Company was surety. On March 24, 1923, the bank procured an additional bond (the bond in controversy), upon which the individual defendants Gibson, Peterson, Dragstedt and La Casse were sureties, and this bond was tendered to the board. When it came into the possession of the county treasurer about April 5, it bore the indorsement: "Examined, approved, and ordered filed, April 5, 1923. R.W. Angevine, Chairman Board of County Commissioners."
A meeting of the board was held on July 21 and the minutes of that meeting recite: "The board examined the personal bonds of the banks acting as depositaries of Missoula county and ordered same returned as the deposits were fully covered by surety bonds." At the same time the bond in controversy was indorsed: "Canceled and returned. R.W. Angevine, Chairman of the Board," and was delivered to the treasurer, with directions to return it to the bank, which was done. The bond with this indorsement upon it was exhibited by the bank to each of the sureties who was informed that he was released, or to that effect, but some time thereafter the bond *Page 373 
was returned to the treasurer by the bank without the knowledge or consent of any of the sureties.
The bond of the Maryland Casualty Company expired on November 15, and immediately before that date the bank was informed that the treasurer would withdraw his entire deposit, unless satisfactory security was forthcoming. Thereupon the bank delivered to the treasurer county warrants of the value of $21,181.68, and the deposit was permitted to remain in the bank.
On November 28 the county commissioners held a meeting, and the following proceedings were had, as disclosed by the minutes:
"The board examined the bond of the American Bank  Trust Company, one of the depositories of Missoula county, and accepted said bond and approved the same, as to the sufficiency of the sureties thereon, and the minute entry of July 21, 1923, is corrected to conform hereto.
"It was moved by Chairman Angevine, and seconded by Commissioner Watson, that the said bond be accepted and approved.
"Motion carried."
It is conceded that these entries refer to the bond in controversy, and that the action taken by the board was without the knowledge or consent of the sureties.
On December 12 the chairman of the board addressed to defendant Dragstedt the following letter:
"Dear Sir: This is to give you notice that the county of Missoula, acting through its board of county commissioners, on the 28th day of November, 1923, formally approved and accepted that certain bond of date March 24, 1923, on which you appear as surety and which was given by the American Bank  Trust Company to the treasurer of Missoula county, and that by reason of said action in approving the same you *Page 374 
are therefore held liable and fully responsible for the amount thereon for which you have signed.
"Yours very truly,
"R.W. ANGEVINE,
"Chairman Board of County Commissioners."
On January 22, 1924, the following notice was served upon each of the sureties:
"Mr. G.F. Peterson, Mr. A.J. Gibson, Mr. J.T. La Casse, Mr. Chas. R. Dragstedt:
"Gentlemen: It has been called to the attention of the board of county commissioners of Missoula county that the bond furnished by the American Bank  Trust Company, a corporation of Missoula, Montana, covering the deposit of county money made in said bank, which bond was dated March 24, 1923, and expires on the 31st day of March, 1925, upon which you have signed as a surety in the sum of $25,000 each, that official notice was not properly served upon you of the action taken by the board of county commissioners upon said bond.
"Now, therefore, you are hereby given a notice that said bond, together with sureties thereon, in the amounts above named, was finally approved on the 28th day of November, 1923, and that each and every one of you are held by said Missoula county as such sureties in the amount for which you have individually signed.
"By order of the board of county commissioners of Missoula county.
"[Seal]                            W.J. BABINGTON,
"Clerk of the Board of County Commissioners."
Three days later (January 25, 1924), the bank failed in business, was closed by the proper authorities and thereafter a receiver was appointed to wind up its affairs.
This action was instituted to recover on the bond the amount of the public funds in the bank on the day it closed. In the complaint plaintiffs allege that the bond in controversy was *Page 375 
approved by the board on April 5 and November 28, 1923. In the answer defendants deny that it was ever approved at any time. The trial court concluded that it was not approved prior to November 28 and that it never became a binding obligation. A judgment was rendered and entered in favor of the defendants, without prejudice, however, to the right of the plaintiffs to proceed against the bank and receiver in an appropriate action. From that judgment plaintiffs appealed.
The authority to approve a depositary bond is lodged[1]  exclusively in the board of county commissioners — the entity (Commissioners v. McCormick, 4 Mont. 115, 5 P. 287;Williams v. Board, 28 Mont. 360, 72 P. 755; O'Brien v.School District, 68 Mont. 432, 219 P. 1113), and the approval by the chairman alone would be ineffective for any purpose (Commissioners v. McCormick, above).
The statute which prescribes the general duties of the board provides: "The board of county commissioners must cause to be kept: A `minute book' in which must be recorded all orders and decisions made by them, and the daily proceedings had at all regular and special meetings." (Sec. 4461, Rev. Codes 1921.) In addition thereto, the depositary law (Chap. 89, Laws of 1923, above) provides: "It shall be the duty of the board of county commissioners * * * upon the acceptance and approval of any of the above mentioned bonds or securities, to make a complete minute entry of such acceptance and approval upon the record of their proceedings."
The record discloses that the board was in session on April 5 but the minutes of that meeting do not make mention of this bond or its approval; indeed, the only reference to its approval is found in the minutes of the meeting of November 28 and subsequently.
At the trial, and over the objections of defendants, parol evidence was admitted pro forma, to the effect that the bond was approved by the board on April 5; the court reserving its final decision as to the admissibility of the evidence until *Page 376 
the close of the trial. The record fails to show any specific ruling, but from the conclusion reached by the court it is made manifest that the oral testimony touching the approval was rejected either upon the theory (a) that it was not admissible, or (b) upon the theory that the evidence in its entirety preponderates in favor of the conclusion that the bond was not approved prior to November 28.
(a) It is the contention of defendants that parol evidence was[2, 3]  not admissible to show that the bond was approved on April 5, and the decision of this court in State v. StateBoard, 56 Mont. 413, 460, 185 P. 708, 186 P. 697, to that effect is cited. It is insisted that, if the rule is properly applicable to the state board of examiners, it should be applied with full force and vigor to the board of county commissioners in approving a depositary bond, in view of the specific requirement of Chapter 89, Laws of 1923. However, the language of this court referred to above was employed in a case in which there was a minute entry concerning the subject of the controversy, and it is unquestionably the rule that, where a record is made, parol evidence is not admissible to vary or contradict it. (MontanaOre Pur. Co. v. Maher, 32 Mont. 480, 81 P. 13.)
Whether, in view of the command of Chapter 89, Laws of 1923, it is competent to introduce oral testimony to show an approval, where the minutes of the board meeting are altogether silent upon the subject, is a matter we need not stop to consider further than to observe that the authorities appear to be in hopeless conflict with respect to the matter. For the purpose of this appeal only we adopt the contention of plaintiffs, and assume that the evidence was admissible.
But it does not suffice for plaintiffs to say that the trial[4]  court may have rejected the oral evidence upon the theory that it was not admissible, they must assume the burden of showing that the record will not sustain the conclusion of *Page 377 
the court upon any admissible theory. (Dover Lumber Co. v.Whitcomb, 54 Mont. 141, 168 P. 947.)
(b) Assuming that the court gave due consideration to the oral[5]  testimony, the question then arises: Will the record sustain the conclusion that the bond in controversy was not approved prior to November 28, 1923?
When the court came to formulate its conclusions, it was confronted with this situation: Each of the three commissioners had testified that the bond was approved by the board at its meeting on April 5. The trial of this cause commenced on April 24, 1925, so that more than two years had elapsed, and thirty or more meetings of the board had been held, between April 1, 1923, and the date of the trial. The court's conclusion does not imply that any of the commissioners willfully testified falsely. In weighing the testimony the court could properly consider the fallibility of human memory and the improbability that the commissioners could remember, with any degree of accuracy, every transaction had in the numerous board meetings, or any particular transaction had in a meeting held more than two years prior to the time when the testimony was given. At best, the witnesses could speak only from their recollection, and, as opposed to their recollection of what transpired, were these circumstances:
If the bond were approved on April 5, the law imposed upon the board the duty to make a complete record of the approval in the minutes, and the law raises the presumption that whatever duty was present was performed. (Sec. 10606, Rev. Codes.) Hence, when it was disclosed that the minutes of April 5 were silent upon the subject, the court might well treat the omission as strongly indicative of the fact that no action upon the bond had been taken at that time.
The treasurer testified that deposits were made between April 5 and July 21 in reliance upon this bond, but the record discloses that the amount of the deposit on April 5 was decreased constantly thereafter by withdrawals, until on July *Page 378 
21 it amounted to less than $16,000, and was amply secured by the Maryland Casualty Company bond.
On July 21 the board ordered all personal bonds of depositaries returned, and the bond in controversy was marked "Canceled and returned," and was, in fact, returned to the bank. The minutes of that date indicate a board policy, disclosed more fully in the evidence, to require surety company bonds or public securities, and to reject personal bonds. But with respect to this particular bond in controversy, the commissioners testified that the security was not satisfactory; that is to say, that the property statements required of the sureties were not satisfactory; that this was one reason for returning this bond; and that it was the intention of the board not to rely upon it as security for the public funds deposited in the bank. The evidence discloses further that all deposits made after July 21 and up to November 14 were made in reliance solely upon the Maryland Casualty Company bond; that the deposits made between November 15 and November 21 were in reliance solely upon the security furnished by the county warrants; and that at no time between those dates did the total deposit amount to as much as the value of the warrants.
On November 28 the board solemnly declared by its record that it had approved this bond on that day, and the statement was reiterated on December 12 by the chairman of the board in his letter to defendant Dragstedt, and again reiterated by the board on January 22, 1924, in the notice served upon the sureties. It is especially worthy of note that there is not a reference in any of these documents to the meeting of April 5; no pretense that the bond in controversy had ever been approved prior to November 28.
This is an action at law, and it is the rule in this[6]  jurisdiction that the judgment of the trial court will not be reversed for insufficiency of the evidence, if there is any substantial evidence to support it. (Torgerson v. Stocke,72 Mont. 7, 230 P. 1096.) *Page 379 
In view of this record evidence, it cannot be urged seriously[7]  that the trial court was not justified in concluding that the bond was never approved prior to November 28, 1923.
But plaintiffs insist that, even though the bond was not approved, it was nevertheless binding upon the sureties, or, if not binding upon all of them, it was at least binding upon defendants Peterson and La Casse.
Upon the first proposition counsel for plaintiffs cite section 484, Revised Codes of 1921, as follows: "Whenever an official bond does not contain the substantial matter or conditions required by law, or there are any defects in the approval or filing thereof, it is not void so as to discharge such officer or sureties; but they are equitably bound to the state or party interested; and the state or such party may, by action in any court of competent jurisdiction, suggest the defect in the bond, approval, or filing, and recover the proper and equitable demand or damages from such officer and the persons who intended to become and were included as sureties in such bond."
This statute has been in effect since 1895 (sec. 1066, Pol. Code 1895), and by its terms applies only to official bonds. A depositary of public funds is not an officer, and a depositary bond is not an official bond within the meaning of that statute.
In Compton v. Marengo County Bank, 203 Ala. 129, 82 So. 159, it is said: "It is manifest, we think, that a depository, qualified as the Act prescribes, is not a public officer; is not merely a county treasurer by another name. Under that Act a depository is but a contractee. The depository pays the county interest on the daily balances, and engages to keep and pay out the funds lawfully committed to its care. The depository can receive no compensation other than the advantage derived from having the deposit. In fact. the theory of the Act in this respect is that the depository pays the county for the privilege of having the deposit. No term is *Page 380 
provided for an office or officer. * * * Indeed, in the light of our governmental history, it is not perceivable how a corporation could be constituted a public officer. The bond exacted by the Act contemplates only the `safety of said deposits.' It is not an official bond in the sense such assurances are exacted and given to secure generally the performance of all the official duties a public officer is required to perform or discharge." Other authorities sustaining this view will be found cited in 18 C.J. 579.
But counsel for plaintiffs insist that the provisions of[8]  section 484 above are made applicable to a depositary bond by the terms of section 503, Revised Codes of 1921.
Section 503 appeared originally as section 1084, Article IX, Chapter VII, Political Code of 1895, and read: "The provisions of this article apply to the bonds and undertakings of receivers, executors, administrators and guardians." Article IX was entitled "Bonds of Officers." In 1899 an attempt was made to amend section 1084 by adding the following: "and to all bonds and undertakings required by law to be given and approved by any court, judge, board, person or body, and, except as to requirements of such approval, the provisions shall apply to all bonds given or required by law to be given in attachment proceedings, criminal actions or proceedings, bail bonds, appeal bonds, and all bonds given or required to be given in any legal proceedings or action in any court of this state" (Laws of 1899, p. 79); but the amendment was declared to be invalid by this court in Russell
v. Chicago, B.  Q. Ry. Co., 37 Mont. 10, 94 P. 488, 501. While the decision in that case dealt only with an appeal bond, the same reason for holding the amendment of 1899 invalid as to an appeal bond would apply equally to a depositary bond.
In 1907 the legislature authorized the appointment of a commissioner to codify the then existing laws of this state, but expressly withheld from the commissioner the authority to include any Act or part of Act declared invalid by the supreme court. (Chap. 85, Laws of 1907.) In the preparation *Page 381 
of the Codes of 1907 the commissioner inadvertently included the amendment of 1899 above, which had been declared invalid, and the section with the invalid amendment appeared as section 412, Revised Codes of 1907. In 1909 the legislature declared: "The division and arrangement into Codes, parts, titles, chapters, articles and sections of the Revised Codes of Montana of the year 1907, as reported by the code commissioner, appointed under the authority of Chapter 85 of the Laws of the Tenth Legislative Assembly of the state of Montana, are hereby approved, confirmed, legalized and made effectual and valid," etc. (Chap. 1, Laws of 1909.)
Bearing in mind that the legislature of 1907 had declared that any provision held to be invalid should not be included in the Codes; that the amendment of 1899, above, had been declared to be invalid before the compilation was completed, and that the invalid provision was included through inadvertence, it cannot be assumed that by the very general language employed in adopting the Codes of 1907 the legislature intended to approve a provision which the commissioner had been forbidden to include in the Codes.
There is not anything in the language employed in Wheeler Motter Merc. Co. v. Moon, 49 Mont. 307, 141 P. 665, inconsistent with the views here expressed. An entirely different situation was presented in that case. It dealt with the codification of 1907 only so far as it comprised statutes which were in full force and effect at the time the Codes of 1907 were reported to, and acted upon by, the legislature of 1909.
In 1919 the legislature authorized the appointment of a commissioner to codify the laws in force at the conclusion of the seventeenth session of the legislative assembly, and required the commissioner to report all "inconsistencies, ambiguities, omissions, contradictions and imperfections" in the Codes of 1907, etc. (Chap. 195, Laws of 1919; Chap. 109, Laws of 1921.) In reporting the Codes of 1921 the commissioner included section 412, Revised Codes of 1907, as section *Page 382 
503, Revised Codes of 1921, but with the notation that so much of it as was comprised in the amendment of 1899 had been declared to be invalid.
By Chapter 54, Laws of 1925, it is declared:
"Section 1. That the Revised Codes of Montana of 1921 as compiled, numbered and arranged by the Code commissioner appointed by authority of Chapter 195 of the Laws of the Sixteenth Legislative Assembly of 1919, and as certified to by said Code commissioner are hereby, as to both form and substance, approved, legalized and adopted as the laws of Montana," etc.
"Section 2. All changes made by said Code commissioner in the language or arrangement of any law of the state embodied in said Codes and all additions of new sections made by said commissioner to said Code, are hereby legalized, approved and given validity."
It follows that so much of section 503, Revised Codes of 1921, as includes the amendment sought to be made in 1899 was never in effect prior to the approval of Chapter 54, Laws of 1925.
But there is ample reason for holding that the bond in[9]  controversy must have been approved in order to fix liability upon the sureties. The depositary law declares that a depositary bond must be approved by the board of county commissioners, and prescribes the manner in which the approval shall be evidenced. It then provides that, until such a bond is approved, no deposit shall be made in the depositary offering the bond. This is a special statute governing a particular subject, and, even if there were general statutes inconsistent with it, the special Act would control. (Stadler v. City of Helena,46 Mont. 128, 127 P. 454; State v. Certain IntoxicatingLiquors, 71 Mont. 79, 227 P. 472.)
Under the very terms of the depositary law a depositary bond is not effective until it is approved, and this is the construction placed upon similar provisions elsewhere. (Commonwealth v. Caldwell, 224 Pa. 103, 73 A. 219; St.Louis *Page 383 County v. American L.  T. Co., 67 Minn. 112, 69 N.W. 704;Franklin Bank v. Cooper, 36 Me. 179; 18 C.J. 586.)
Since the bond in controversy had not been approved, the[10]  return of it on July 21 amounted to a rejection, and, after the sureties had been informed thereof, it was not within the power of the board on November 28 to approve it and bind the sureties. A bond is a contract, and requires the assent of both parties to the same thing at the same time. (Polich v.Severson, 68 Mont. 225, 216 P. 785.)
In the reply plaintiffs undertook to plead an estoppel as[11]  against the defendants Peterson and La Casse. It is alleged that they were directors of the bank, and as such knew that the county "treasurer was depositing money in said bank in reliance upon said bond, and said defendants made no objections thereto and made no effort to terminate their obligation thereon."
When defendant La Casse was upon the witness-stand, he was asked on cross-examination whether he was a director of the bank in the fall of 1923. An objection to the question was sustained, and counsel for plaintiffs then made the following offer of proof: "Let the record show that we offer to prove, by this witness, as a part of his cross-examination, that he was, during the year 1923, a director of the American Bank  Trust Company, and acted as such and participated in the meetings of that board, held from time to time during the year 1923, and particularly, that he participated in meetings held on the 30th of November, 1923, and on such occasions the affairs and conditions of the bank were discussed by the board of directors." The same proceeding was had with reference to the defendant Peterson and substantially the same offer of proof was made as to him.
We are of the opinion that the pleading is not sufficient to constitute an estoppel; but, in any event, the offered evidence falls far short of the allegation. It does not go further than to show that these two defendants were directors of the bank and attended meetings of the bank directors during 1923. *Page 384 
Later, during the trial, the evidence narrated in the offers was admitted as a part of the testimony of the witness Harrah, assistant cashier of the bank. It is elementary that error cannot[12]  be predicated upon the exclusion of evidence at one stage of a trial, if the same evidence is admitted thereafter. (Ackley v. Phoenix Ins. Co., 25 Mont. 272, 64 P. 665;Taylor v. Malta Merc. Co., 47 Mont. 342, 132 P. 549.)
The judgment is affirmed.
Affirmed.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES GALEN, STARK and MATTHEWS concur.
Rehearing denied February 23, 1926.