Court Opinion

ID: 3437003
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:09:25.932641+00
Date Added: 2024-06-11T14:03:52.287470
License: Public Domain

II. Code section 4177 authorizes the holding of a special election upon the question of voting a tax or authorizing the issuance of bonds, or both, to secure, repair, and improve a school building and grounds, etc.:
"* * * All moneys received for such purposes shall be placed in the schoolhouse fund of said corporation and shall be used only for the purposes for which voted." *Page 517 
Code section 4317 provides that the money received from the sale of bonds and taxes levied to pay the same, etc.:
"* * * shall be called the schoolhouse fund and, * * * may be used only for the purpose for which originally authorized or certified. All other moneys received for any other purpose shall be called the general fund. The treasurer shall keep a separate account with each fund, paying no order that fails to state the fund upon which it is drawn and the specific use to which it is to be applied."
These and all other pertinent statutes regulate the powers and duties of a depository bank as well as those of a school district and its treasurer. They are read into and become a part of the deposit agreement between a school district and its legal depository. Among the statutory provisions here involved are those providing for two separate funds, a general fund and a schoolhouse fund, that the schoolhouse fund shall be used only for the purposes for which voted and that the treasurer shall keep a separate account with each fund. Priest v. Whitney L. 
Tr. Co., 219 Iowa 1281, 1287, 261 N.W. 374, 378.
Count 1 and the amendment to count 1 of the petition are founded upon alleged wrongful transfers from the schoolhouse fund to the general fund. The record shows that on March 23, 1936, the general fund became exhausted and there were certain unpaid checks on said fund then in the hands of the bank. This deficit resulted from Leslie's misappropriations. To replenish said fund, the bank, with the consent of Leslie, by debit memorandum, on March 23, 1936, transferred $2,000 from the schoolhouse fund to the general fund. On May 8, 1936, after the general fund had been built up from tax receipts, the $2,000 was restored to the schoolhouse fund by a check on the general fund.
In 1937, the bank transferred from the schoolhouse fund to the general fund, on February 20th, $2,000; on March 8th, $50; on March 10th, $1,000; and on March 20th, $157.30 to cover overdrafts in said general fund. These transfers totaled $3,207.30. On April 22, 1937, the general fund received a substantial sum from tax collections, and on that date Leslie gave the bank a check on the general fund for $3,207.30, which was *Page 518 
deposited in the schoolhouse fund in replacement of the amounts withdrawn. Shortly thereafter, on May 25, 1937, Leslie and the bank transferred to the general fund the balance of $365.19 then remaining in the schoolhouse fund.
Various propositions are raised by the bank in argument. It is suggested the statute does not require the treasurer to keep separate bank accounts and thus increase not only the work of the bank but also its responsibilities. One answer to that suggestion is that the treasurer did maintain separate bank accounts. A consideration of said statutory requirements or of the bank's liability under a different factual situation is, therefore, unnecessary.
The bank also contends there is a distinction between the schoolhouse fund and the schoolhouse-fund account in the bank. This distinction does not appear substantial. The statutes require that all school funds be deposited in the bank and contemplate that all schoolhouse payments be made therefrom. Therefore, where the two accounts are maintained, the schoolhouse-fund account in the bank is the actual schoolhouse fund (except for checks or orders temporarily in transit). Strictly speaking, any erroneous or wrongful withdrawals reduce the schoolhouse fund accordingly, notwithstanding the figures in the treasurer's books.
Along this same line is the argument of counsel for the bank that there is no showing the transfers were not made to meet checks properly chargeable to the schoolhouse fund. Counsel overlook the fact that in each year the exact total transferred from the schoolhouse fund was retransferred to the schoolhouse fund upon receipt of new tax money in the general fund. We think the retransfers of the identical amounts previously transferred fairly indicate that the original transfers to the general fund were not made to meet checks properly chargeable to the schoolhouse fund or to make adjustments between the two accounts.
In this case the bank was required to know (and knew) that the two funds were separate and distinct and that the schoolhouse fund could be used for that special purpose only. Obviously, the use of this fund to cover overdrafts in the general *Page 519 
fund was improper. The conduct of the bank in transferring the money from the schoolhouse fund to the general fund and in participating in the subsequent retransfers was wrongful. The statutes forbid the juggling of these funds. I believe, as did the trial court, that the bank should be held liable for the loss resulting from said wrongful acts.
The $2,000 transferred from the schoolhouse fund to the general fund in 1936, and the $3,207.30 transferred in February and March 1937, resulted in losses in said amounts to the funds of the district. The effect of these transfers was to use schoolhouse-fund money to restore in part misappropriations by Leslie from the general fund and to furnish the means for additional misappropriations. Thus said transferred funds were lost to the district. Had the money so diverted from the schoolhouse fund been replaced with funds secured from outside sources the district would have sustained no ultimate loss in the transfers. But the money later repaid the schoolhouse fund, in each case came from tax moneys belonging to the school district which had just come into the general fund. Said repayments were wrongful and reduced the general fund accordingly. The transfers also enabled Leslie to conceal and continue his misappropriations. The $365.19 transferred from the schoolhouse fund to the general fund on May 25, 1937, was not retransferred. On June 30, 1937, the entire balance in the bank was $2.39.
The trial court awarded the school district judgment against the bank for $3,572.49 on account of the 1937 transfers. In my opinion, the school district should also have judgment against the bank on account of the 1936 transfer in the sum of $2,000 with interest at 5 per cent per annum from May 8, 1936.
STIGER, GARFIELD, and WENNERSTRUM, JJ., join in this dissent. *Page 520