Court Opinion

ID: 6739483
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:51.809829+00
Date Added: 2024-06-11T16:01:54.889477
License: Public Domain

Grace, J.
(dissenting). The Medina State Bánk, in pursuance of the provisions of article 11 of the Political Code, Comp. Laws 1913, was duly designated a depositary of the county funds of -the county of Stutsman, and this, we presume, by reason of proceedings taken by the county commissioners, in pursuance of article 11, and the advertisement *232liy the comity auditor, in the manner prescribed by law, for sealed proposals for the deposit of the funds of the county, and the proposal, by this bank, to act as depositary for the money of the county. It was agreed a compensation of 3 per cent per annum should be paid monthly by the bank, on the average daily balances. The above constituted a contract between the parties.
There never has been any modification of that contract. The liability of the defendant must be measured by the conditions of the bond, which it executed and delivered to secure the performance of the contract.
The county treasurer, in the manner prescribed by law, could issue his check against the county funds, and the funds in the bank were at all times subject to his check, issued in the discharge of his lawful duties.
By law, he can deposit the county money in such banks only as are lawfully designated county depositaries. The contract was in full force and effect at the time the bank became insolvent. The question before us is: Can the plaintiff, without the consent of the defendant, change the terms and conditions of the bond ? And the question for this court is: Can it, by its decision, impair it, by changing materially its terms ?
Section 6072, Comp. Laws 1913, provides, 'that all contracts shall bear the same rate of interest after they become due as before, unless it clearly appears therefrom that such was not the intention of the parties.
The conditions of the bond, so far as material here, are as follows:
“Whereas the Medina State Bank of Medina has made application, or is about to make application, or proposal, to the board of county commissioners of Stutsman county, to become one of its depositaries, under provisions of §§ 2435-2437 of the 1905 Revised Codes of North Dakota.
“Now, therefore, if the said bank is designated one of the depositaries of said county, under the provisions of said section, and shall safely keep and pay according to the letter and intent of said sections, any and all funds deposited with it, subject to draft on demand, together with interest thereon, at the rate specified in said application, or proposal, then this obligation to be null and void, but otherwise to be and remain in full force and effect
This action is brought to recover from the defendant, upon its lia*233bility on the bond. That is what determines the extent of its liability. It did not bind itself to become liable in any way, otherwise than as specified therein. Its liability would be an amount of money equal to the amount of the deposits of the county the bank failed to repay, together with interest, as specified in the bond, and not otherwise. The amount of the bond was $5,000, and the amount of the deposits which the bank failed to repay the -county was $3,035.30. For this amount the bank was liable, together with interest, as specified in its bond.
The entire transaction between the county and the bank amounted, in fact and in law, to a loan by the county to the bank, of the money which remained on deposit in the bank each day, the amount thereof varying from day to day, all of which was contemplated by the contract, the bank to pay 3 per cent interest for the loan of such money, while it was on deposit.
The duty of the bank at all times was to pay the money on lawful check of the county treasurer, and the latter could, in a laAvful manner, check out the Avhole account, or issue his check for the whole account, and demand that it be paid, and could redeposit it, as authorized by law, Avith another laAvful depositary.
We will assume that a lawful demand was made upon the bank for the money on deposit, and the same Avas not paid. This would, no doubt, constitute a default in its contract, and it, and those liable Avith it, would become immediately liable for the amount on deposit at the time of the demand, together with interest thereon at the rate specified.
The defendant’s liability, of course, Avould be upon the conditions specified in the bond. The decision of the majority, hoAvever, makes a new condition in the bond, by adding a different term therein, to wit, a new, different, and largely increased rate of interest. This is an impairment of the terms of it, nothing less.
In E. J. Lander & Co. v. Deemy, 46 N. D. 273, 176 N. W. 922 (the writer dissenting) those aaFo iaoav sign the majority opinion, with the exception of Justice Robinson, held that a remedy prescribed by the legislature for the cancelation of certain land contracts, different from the remedy Avhich existed at the time of making the contract, was an impairment of the contract, though, in the remedy later prescribed, every property right of the owner seeking to cancel it Avas amply protected, and reasonable provision made for the enforcement of it.
*234In that case, § 8122, Comp. Laws 1913, as amended by chapter 180 of the Laws of 1915, and as again amended by chapter 151 of the Laws of 1917, were before this court for construction. Those sections relate to the time in which the vendee who is in default, in a contract for the purchase of land, may cure the default by performance after notice of cancelation is served upon him.
Section 8121, as amended by the 1915 Law, provided that the vendee should have thirty days in which to perform the conditions, or comply with the provisions upon which the default occurred, and, upon compliance, the contract would be reinstated.
The 1917 Law extended the time from thirty days to six months, and though no right of the vendor was taken from him thereby, and though the law related only to the remedy, and though it afforded a reasonable remedy and reasonable time in which to exercise it, this court held that the extension of the time to six months was an impairment of the vendor’s contract.
There is no doubt but that construction of the law is erroneous, but it became the law of that case There is no doubt that the contract was not there impaired, for a reasonable remedy had been provided for its enforcement. (See decisions of United States cited there in the writer’s dissenting opinion.) That is all that is required, and when such reasonable remedy is provided, no impairment of the contract results.
This case, however, is entirely different to that. Here, the contract, that is the bond, is impaired by a change of its very terms. The rate of interest specified in the application, or proposal, was 3 per cent.
The money having become due on demand, and the bank having detained the money thereafter, it was liable to pay interest, but only at 3 per cent.
Section C070, Comp. Laws 193 3: “Interest is the compensation allowed for the use, or forbearance, or detention of money, or its equivalentThe money was detained by the. bank, but that constituted only a default, making defendant liable for the amount so detained, with interest at the rate specified.
There is another view of this case that would seem material. Section 3322, Comp. Laws, prohibits the board of county commissioners from appointing any bank a depositary, offering to pay more than 3 per cent per annum on deposits subject to check.
*235Section 3323 requires that all funds of the county shall be deposited, in the name of the county, by the county treasurer, as soon as received, in the designated county depositary. If the rate provided for in the bond may be changed, what, then, is the measure of damage for interest, by reason of the county not receiving its money upon demand? Is it not the rate at which, under the law, it could redeposit the same with another county depositary, to wit, 3 per cent ? We are so inclined to believe.
If the county treasurer, upon demand, had received the money from the bank, he was required, by § 3323, Comp. Laws, to redeposit the same in another depositary bank. In what way, then, so far as the record here shows, has the county lost any money by reason of the detention of the deposits here involved?
The highest legal rate of interest permitted to be received upon county deposits, subject to cheek, is not I per cent, nor 6 per cent, as stated in the majority opinion, but 3 per cent, as fixed by law.
The authority cited in the majority opinion is not in point; for we have the impression that, in those cases, there was not, as here, a special law, or special contract, fixing the rate of interest for the deposits in question.
The defendant, at all times since the commencement of suit, has been able, ready, and willing to perform the terms of its contract, and to pay the rate of interest on the deposits detained, as specified in its contract, which is also the highest rate permitted by law for deposits of that character. It should not bo mulcted in damages for the excess rate of interest, nor should it be required to pay any costs in any court. Nor it duly offered to do all that its contract and the law required of it.