Court Opinion

ID: 3491494
Source: CourtListenerOpinion
Date Created: 2016-07-05 21:59:53.304687+00
Date Added: 2024-06-11T14:14:24.188994
License: Public Domain

February 2, 1933, the Plymouth United Savings Bank of Plymouth, Michigan, was closed by the State banking commissioner. On the same day the president of the bank, Charles A. Fisher, was appointed custodian. February 23, 1933, $1,200 of the welfare funds of Plymouth township were released by a court order, leaving a balance of township funds in the bank in the sum of $17,427. Soon after the bank closed, a group of depositors became interested in the reopening of the bank and on April 8, 1933, an order to show cause was issued on motion of the attorney general for a hearing on a plan of reorganization of the bank to be held April 25, 1933. The order provided that depositors might file written objections to the plan of reorganization. On April 11, 1933, another order to show cause was entered, similar in form to the first order and specifying the day of hearing to be April 27, 1933. On April 11, 1933, the township of Plymouth filed petition to intervene as a depositor, which petition was granted April 24, 1933.
On April 11, 1933, the township of Plymouth filed a petition for the release of $8,500 of school funds on deposit. An amended petition was filed April 13, 1933, praying payment of the entire township deposit. The petition as amended avers that prior to the deposit of the funds in the bank by the township treasurer, no resolution was passed by the township board designating said bank as legal depository for the public funds of the township. The answer to this petition shows that at the time this account was opened the bank was informed that the deposit was of township tax funds and that the township treasurer informed the president of the bank that the bank had been designated as the legal depository, for *Page 140 
the township funds. On April 25, 1933, a hearing was had and the township's petition and amended petition were denied.
On April 27, 1933, there was a final hearing on the petition of the State banking commissioner for reorganization of the bank, and at this hearing the township of Plymouth, as a depositor, objected to any further proceedings in the cause for the reason that the petition of the State banking commissioner could not be found in the files, although it was there when the order to show cause was signed by the trial judge. However, more than 85 per cent. of the depositors had consented to the reorganization plan. The trial judge then issued an order permitting a copy of the petition to be filed as of the day of the order and approving the reorganization. The township of Plymouth appealed both from the order denying a preference to township deposits and from the decree for reorganization.
The principal question involved is the right of the township to a preferred claim as against the assets of the bank, when the township treasurer deposited township funds in the bank without a resolution by the township board designating the board as a depository.
Act No. 40, Pub. Acts 1932 (1st Ex. Sess.), authorizes the treasurer to deposit township funds only in a bank which has been designated by a resolution of the township board. Section 1006, 1 Comp. Laws 1929, provides that the township clerk shall keep a record of the proceedings of every township meeting. Under the provisions of the compiled laws above referred to, the official acts of the township board are a matter of public record and as such the bank was chargeable with the knowledge that the township treasurer was depositing money in the *Page 141 
bank without any resolution of the township board designating the bank as a depository.
In 20 R. C. L. p. 346, it is said:
"Whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained. This, in effect means that the notice of facts which would lead an ordinarily prudent man to make an examination which, if made, would disclose the existence of other facts is sufficient notice of such other facts. A person has no right to shut his eyes or his ears to avoid information, and then say that he had no notice; he does wrong not to heed the 'signs and signals' seen by him. It will not do to remain wilfully ignorant of a thing readily ascertainable."
The deposit of township funds contrary to the provisions of Act No. 40, Pub. Acts 1932 (1st Ex. Sess.), was illegal and rendered the bank a trustee ex maleficio, the general rule being that where public moneys are deposited in violation of law in a bank with actual or constructive knowledge of the facts, they are trust funds. Reichert v. United Savings Bank,255 Mich. 685 (82 A.L.R. 33), and authorities cited therein;Page County v. Rose, 130 Iowa; 296 (106 N.W. 744, 5 L.R.A. (N.S.) 886, 8 Ann. Cas. 114), and cases cited therein; and collection of cases in 51 A.L.R. 1342 and 65 A.L.R. 693.
This ruling renders unnecessary discussion of the other points raised.
The order denying preference should be reversed and defendant allowed preference as to such public money illegally deposited by the township treasurer. Costs to appellant. *Page 142