Court Opinion

ID: 4723918
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:46:25.713698+00
Date Added: 2024-06-11T08:07:44.921294
License: Public Domain

Scott, C. J.,
(dissenting).—-The re-argument of this case orally and by additional briefs has only confirmed me in my former opinion. The closest re-examination of the record has failed to bring out any new material facts under my view of ‘the law in favor of the appellant, but I think the case has been much emphasized against him. Owing to the great importance of some of the questions previously decided and since set aside by the majority, and having a more thorough understanding of the case, I will undertake to present the substance of it as shown by the record. Before going into the details, several matters which seem to have been given weight in the last decision of the case will be noticed.
The documentary evidence in the record which has led to the change in the decision establishes no' different facts more favorable to the plaintiff than those previously considered. It must be borne in mind that at nó time has it been disputed that the official hooks of the comptroller and the treasurer showed the correct amount of money received and disbursed, except that they showed nothing as to the money being paid out for certain warrants and afterwards replaced upon the negotiation of such warrants. That lists were made out and attached to these warrants and delivered from time to time with certain of them to purchasers is of no significant force. The only record kept of these lists was a letter press copy taken in a private book of the city treasurer. They were no part of the official records, but were private memoranda of the treasurer. Reference is made to the fact that when the warrants were presented the payee was required to indorse, his name on the back thereof, the warrants being payable to the order of such person, and evidently some importance is attached to this, but it clearly has no bearing upon the question of payment, for that is a general custom where warrants are paid by public treasurers *627to stay paid. When a warrant is presented for pay ment and is indorsed “ not paid for want of funds ” and returned to the holder, his indorsement is not required, hut when it is paid, either then or afterwards, he is required to write his name on the back of the warrant, it being in the nature of a receipt, hi either does it tend to show an intention on the part of the treasurer not to pay them at the time, but rather the reverse, if his private or secret intention was of any consequence. The testimony shows that this custom was simply observed here for some of these warrants so required to be indorsed were turned in by him to the comptroller as canceled. They were not all sold by him. There were a few exceptions also to his custom of .giving the money to the holder when they were presented. In some instances they were indorsed “ not paid for want of funds ” and returned to the holder. (Testimony of deputy treasurer, top pp. 23 and 24.)
It cannot be assumed that the city has not been injured if it got back the exact amount of money paid by Mr. Boggs for the warrants. It appears that this warrant dealing extended over a period of several years and warrants representing a large amount of money—$600,000 as is given approximately by Mr. Armstrong, the deputy treasurer, at p. 31—were so handled. It also appears by certain ■ordinances that they bore interest at the legal rate, which was at that time ten per cent., where no rate was specified in the instrument. It also appears by the books that during this time the city had on hand varying, but large, amounts of money, to-wit: July 31, 1892, $132,530.49; August 31, 1892, $231,352.97; September 30, 1892, $243,638.20, in the general fund. (Pp. 68 and 69.) It also had other money in other funds. By the use of this money for the purpose of speculating in warrants, thereby keeping them afloat as interest bearing for the benefit of *628private parties, the city was deprived of its use in taking up outstanding obligations. These warrants were eagerly sought for, as it appears by testimony hereafter given that parties were willing to pay a commission to obtain them in addition to their face value, and wanted all they could get. This commission went to Mr. Boggs. How much it amounted to is not shown. But that, together with the interest upon the city’s money, was sufficient to create a large corruption fund. Mr. Boggs had control of the situation. Ho one else could compete against him, for his indorsement was required to make these warrants interest bearing, and he was a valuable man to have. The ordinary holder would be likely to know nothing of the condition of the funds, and, if the money was offered to him on presentment of the warrant, he would take it. It is not certain he would have the right to refuse city money offered in payment on presentment of a7 warrant, conceding there was none applicable to the payment of the particular warrant when it was presented. The exceptional cases where warrants were indorsed and returned to the holder may have been where they were presented by parties who did know something of the state of the funds. I see no reason why Mr. Bogg’s intention with regard to payment should have any more weight than the intention of the party presenting the warrant. When he presented his claim for payment or indorsement, if he had known it was not being paid but that he was merely being handed the amount it called for, he might have objected. Possibly he might have wanted an investment himself, or, at least, the commission.
Briefly, what are the matters here in issue? The substance of the contention is twofold. It presents two distinct phases as affecting the city, first, loss by way of interest, as aforesaid, and second, some contention as to loss of principal. While the amount in controversy in this action is *629small, the questions involved affect many thousands of dollars, and the whole manner pursued by- Mr. Boggs in dealing with the city’s obligations and funds is pretty thoroughly aired in the trial of this action, which was evidently brought in the nature of a test case.
But now as to the second phase of the contention. Here the record is somewhat confused, and also the briefs as to the exact contention of the defendant. A willingness is expressed on behalf of the city, although it is not a direct party, at least, to this action, to return all of such moneys that the city actually got. It seems to be contended that it is incumbent on the plaintiff, or claimant, to show that the money paid for these warrants upon their re-issuance was thereafter actually used in discharging some valid city obligation, or was turned over by the treasurer to his successor in office; that, if it was simply carried on bank books as a city credit and was eventually lost as is intimated or assumed, that would not be sufficient.
On the trial of the cause the defendant assumed the burden of showing that these particular warrants (with the exception of one salary warrant) had once been paid or taken up by the treasurer with city funds, and had been subsequently sold by him to other parties. The plaintiff undertook to show that the money had been replaced in the city funds when the warrants were re-issued, and was actually in the funds during the times in controversy. Entertaining a radically different opinion, both formerly and now, as to what the record shows from that expressed by the majority, it will be necessary to quote some of the testimony of the deputy comptroller, Mr. Geo. McD. Arkley, and that given by Mr. Gove, the chairman of the finance committee, as this seems to be the particular testimony mostly relied upon. This in part with reference to the moneys being returned, and being on hand in the city funds, and also as *630to the difference of opinion existing as to the knowledge shown of the other city officers respecting Mr. Boggs’ practice of selling warrants, if that is a material fact. It was said by me in my former opinion that there was nothing to show that any of the city officers aside from the treasurer knew the facts in relation to his thus taking up and re-issuing warrants. It was understood then that some of his assistants knew it, but they could not lend the matter any additional strength; but the statement is not strictly accurate, for it appears that one other officer, Mr. Arkley, the deputy comptroller, knew of it, as his testimony hereafter given discloses. I still contend respectfully that it does not appear that Mr. Gove, the chairman of the finance committee, knew it, and to substantiate this his testimony will be given in full. ' I do not understand it to be contended that it appears elsewhere than in his own testimony.
Of course, what the official books of the comptroller and of the treasurer show that he should have on hand in money is one thing, and what he actually did have is another. Now, conceding that the official books balanced and were correct, what is the proof relied upon going to show what he in fact did have? Mr. Arkley was called by the plaintiff. His testimony relating to the comptroller’s accounts with the treasurer and his knowledge of the treasurer’s doings is too long to be given in full; some of it is not relevant and there are many repetitions. The following extracts are given to show its substance:
“PAGE 74. ON DIRECT EXAMINATION.
Q.—Mr. Arkley, whose business was it in the controller’s office to check up the treasurer’s office daily as was testified here was done?
A.—Mine.
Q.—In doing that checking up what items did you charge the treasurer and with what items did you credit him?
A.—I charged him from the stubs of the receipt books. *631I charged him with everything he collected, and we gave him credit for the vouchers he presented marked paid on the dates on which they were paid.
Q.—During the year 1892 was any credit given the treasurer on the controller’s hooks for payment of any warrants excepting those that were marked canceled and paid? A.—No.
“PAGE 76. ON CROSS-EXAMINATION.
Q.—As a matter of fact there were a large number of warrants cashed by him were there not, and which were not turned in and canceled and which he afterwards reissued?
A.—Yes.
Q.—Now, according to your statement I beliéve that you said that the outstanding warrants at that time (July 31, 1892) on the general fund was $419,668.17?
A.—Yes.
Q.—Now, do you know how many of those warrants had been cashed by the treasurer and afterwards re-issued by him?
A.—No, I don’t know that.
Q.—All such warrants as he had cashed and had re-issued and which he had not turned over are included in that sum as outstanding, are they not?
A.—Well, I presume that is—you put your question in a very strange way.
Q.—Well, if there Were any warrants that he cashed and re-issued instead of cancelling them they would be included in this?
A.—Without a question.
Q.—In this amount?
A.—Yes,-sir.
Q.—And the same would he true of each of the other amounts would it not?
A.—Certainly. I could have no knowledge of them unless he canceled them and turned them over to me as paid warrants—couldn’t possibly have it.
Q.—Now, as a matter of fact, Ur. Arkley, was it not true that a large amount of these warrants, these four hundred *632and nineteen thousand dollars worth, had as a matter of fact been cashed by the treasurer?
A.—Well, now how am I going to answer that question? How do I know?
Q.—Well, you know that some of them had, do you not?
A.—I don’t know.
Q.—You checked him up on them?
A.—How, I know I know a whole lot of things, but when it comes down to being evidence in a court I clon’t know them.
Q.—Well, now from your checking up of the treasurer’s office there—you were in there every day, were you not?
A.—Yes, sir, every day.
Q.—How, don’t you know as a matter of fact that-he used to cash warrants as they were presented there right after they were issued?
A.—Yes, I know that, because I saw it done.
Q.—How, don’t you know that those warrants are included in these warrants that you state are outstanding?
A.—Well—
The Court.—You seem to make a distinction between what you know—as deputy controller was it?
Witness.—Yes, sir.
The Court.—And what you know as an individual; but these questions do not go to that. You answer the questions from what you actually know, no matter where you received the information.
Q.—How, have you any doubt—take this four hundred and nineteen thousand dollars in this statement of July 31st—have you any doubt that a large part of that four hundred and nineteen thousand dollars had been cashed by the treasurer?
A.—That the treasurer passed the money over the counter in exchange for those warrants?
Q.—Yes.
A.—I have not any doubt about it—not the slightest doubt.
“on re-direct examination.
Q.—Mr. Arkley, in making your daily checkings in the treasurer’s office did you or did you not find any unindorsed *633warrants in the till or in the safe in the treasurer’s office?
A.—I had nothing to do with what the treasurer had in the safe, not a thing whatever. All my duty consisted of was in charging him up with the amount of his receipts, and giving him credit for the vouchers that he represented paid, marked paid; what there was in the safe or what there was not in the safe did not come within my official cognizance whatever.
“ ON RE-CROSS EXAMINATION.
Q.—What other information did you get from the treasurer?
A.—Then I got from the treasurer—if there was a pressure of business, I got from him.the daily amount of his disbursements if there was a great number; if the disbursements were very small why I might let them run for three or four days and sometimes they run right through to the end of the month, but whether it were daily or whether it were semi-weekly or whether it were at the end of the month we got the original vouchers from him and I took a minute of all he had paid on these different vouchers, distinguishing the record by the fund it was paid on, whether it was warrants or refund of license or whatever it might have been, and I put my own initials on every one of those things when I took the detail off, always seeing the date that they were marked paid, and from that I made up the accounts.
Q.—blow that was the data you got from the treasurer?
A.—Yes, sir.
Q.—You got his disbursements from his own statement of them?
A.—bio, I got his disbursements from the vouchers themselves—from the warrants themselves.
Q.—Such vouchers as he would show you?
A.—Certainly, what he presented me as vouchers.
Q.—And you got the receipts from the stubs of his receipt books?
A.—Yes, sir.
Q.—And those are the items that you took into the controller’s office with which to make up the controller’s books?
A.—Yes, sir.
*634Q.—And that is all there is to it?
A.—Yes, sir, that is the whole statement.
Q.—Now, what was in the safe and the paying out of money for warrants and re-issuing them, you had no account of that?
A.—No knowledge at all, sir.
Q.—Did not participate in it?
A.—No.
Q.—Permitted it to go on?
(No answer.)
“RECALLED, P. 115. ON RE-CROSS EXAMINATION.
Q.—Now, Mr. Arkley, these statements that you testified to, I believe you say, are made up from the controller’s hooks principally?
A.—Yes, principally from them.
Q.—Now, is it not a fact, that the controller’s hooks merely undertake to show what the treasurer should have on hand from time to time, in accordance with the method in which they are kept? In other words, what I want to-get at is this, whether the controller’s hooks’ do not merely show that he ought to have so much on hand, and that he had not accounted for the balance, instead of showing what he actually had on hand?
A.—Why, all that the controller could do, under the charter or in any other way, was simply to state the amount of money that the treasurer should have.
Q.—-And he might have had a less amount on hand than he ought to have had on hand and still the controller’s books would not show it?
A.—He might have a less amount or a greater amount; we could only show what he ought to have had.
“BY THE COURT.
Q.-—-Mr. Arkley, I understand you to say, then, that the extent of your testimony is that the controller’s hooks show what the treasurer ought to have had?
A.—The amount of money that the treasurer is owing to-the city.
Q.—Without knowing, as a matter of fact, whether he did have it or not?
*635A ■—We could not go into the safe nor into the hanks to know what he had.”
The testimony of Mr. Gove is given in full, more for the purpose of showing what he did not testify to than otherwise. The objections and arguments are omitted. He was the only member of the finance committee examined. His' testimony is as follows:
“ P. 93. IDr. Royal A. Gove, a witness for plaintiff, testified:
Q.—What is your name?
A.—Royal A. Gove.
Q.—-What is your residence?
A.—Tacoma.
Q.—What, if any, official position have you ever held in the city of Tacoma?
A.—The only official position I have ever held was member of the city council.
Q.—During what years were you city councilman?
A.— Prom 1891 to 1895, two terms.
Q.—During 1892 upon what committees were you?
A.—I was on the finance and hospital committees. I think those were the only two.
Q.—Who was the chairman of the finance committee?
A.—I was.
Q —How long were you chairman of the finance committee?
A.—Two years.
Q.—What two years were those?
A.—The first two years I was in the council.
Q.—What was the exact time you were first elected?
A.—April 17, 1892, I think I took office if I remember right—that is right.
Q.—Then you were chairman of the finance committee from April, 1892, around to April, 1891?
A.—Yes, sir, that is right.
Q.—During that period what was done by the finance committee with reference to checking up the treasurer’s office and counting his cash?
•K- *•»*****»
*636A.—At different periods of time we examined the treasurer’s books and his accounts, counted his cash, determined if it was the amount that the controller stated he should have.
Q.—In counting the cash did you find any warrants of the city of Tacoma unindorsed by the treasurer’s indorsement, “ Hot paid for want of funds?”
A.—Y es, we found such warrants.
Q.—In checking up the treasurer’s account and counting his cash, when you found such an unindorsed warrant being carried by the treasurer as cash, did you count that as a cash item, or as a voucher for disbursements? I ask you as to the fact, what the finance committee did with regard to it.
A.—We treated it as cash.”
It is apparent they were counted as representing so much money the same as any other voucher would have been béfore being turned over to the comptroller. This witness does not even say the amounts were found to be correct; he was not called for that purpose. The report in question was offered later to show that, and was excluded. He was evidently called to show that he found uncanceled warrants in the treasurer’s cash hox, and that they were counted as so much cash. How does it appear that he knew what became of these warrants thereafter? It appears by other testimony that some of them were afterwards canceled and turned over to the comptroller. The greater part were put afloat as unpaid. A subsequent examination of the cash box would not show what had been done with the warrants there at a previous examination. It does not appear that the finance committee kept any books, or lists of canceled, or uncanceled, warrants. The charter only required them to make yearly examinations. Section 42. From all that was proved they merely took the balance or amount the *637comptroller’s books showed the treasurer should have, and counted his cash with reference to that. Of course the amount of the canceled warrants turned in would enter into the account making up the balance. But it does not appear that they knew anything as to any particular warrant. How it appears that very loose practices prevailed in the treasurer’s office with respect to his cash, and otherwise, aside from his varying practice as to taking up warrants on presentment, or, as he sometimes did, of indorsing them and returning them to the holders, for which no explanation is offered. As to those he took in and subsequently canceled it was not always immediately done; they were carried as cash for an indefinite time, and the testimony shows that there were other documents carried as cash; for instance, some of the employes would occasionally take money from the cash box and deposit their “10 U’s ” therein, drawing against their salaries. (Page 33.) To what extent this was done and how long they remained does not appear. Various other papers, such as receipts, were also carried as cash. How much money the treasurer kept in his cash box or safe does not appear, but judging from the volume of business transacted it must have averaged a considerable sum. Were these other papers also counted as cash by the finance committee? The facts relating to such important matters should be made to fully appear in order to determine whether this examination was really anything more than a sort of old time grand jury examination of public funds and records which were ordinarily made in an hour or two, and nothing found wrong. Even if all the papers alluded to were counted as cash and including them so far as the proof introduced is concerned, he might in fact have been many thousand dollars short. All of this is with reference to the theory that the burden was on the plaintiff to show that the money was actually turned into the city’s funds for these *638warrants when they were re-issued. There was some proof of a general practice to replace it, and that if it was not replaced the books would not have balanced, etc. But it was insufficient to show that the money was actually there. Under the theory upon which the cause was apparently tried as stated, the defendant assumed the burden of showing that these particular warrants (excepting one of the salary warrants) had been once cashed by the treasurer with the city’s money. The plaintiff assumed the burden of proving that the money for these warrants had been replaced. They sought to do this by offering the report of the finance committee which, as they argue, would have established a prima facie case if admitted, showing it agreed with the amount the comptroller said he should have on hand. Being ruled out it was not incumbent on the defendant to go into that matter or to show that the money had not been received. Ho explanation is offered of the fact that the treasurer turned over considerable amounts in warrants to the comptroller as canceled. There is no showing that any system was pursued with regard to it, or that they were of a different class from those he re-issued. It does appear that many of them were on the general fund. It has not been made apparent that they were older warrants as to time of issuance or previously indorsed and entitled to payment on that ground. At least nothing of that kind has been called to our attention. But it is not very material. It has some bearing on the character of the acts of the treasurer as to their being secret or otherwise. But it was his duty under the law to pay out all the money in the general fund in discharge of warrants drawn against it in some manner. This is a matter of common knowledge. And his business methods'would seem to indicate a stealthy course and a desire to conceal his doings in regard to speculating with the funds. But it could not make much difference as to the legality of *639it, if it was open and aboveboard. It is true, if some of the other city officers had been attentive to their duties they might have known that the treasurer was carrying a considerable amount of money continually that he should have paid but; but the mere fact that these officers were neglectful of duty does not tend to legalize the dishonest and criminal acts of the treasurer.
I do not wish to be understood as thinking it at all important as concluding the city’s rights that certain of its officers knew of the treasurer’s doings to some extent in the premises. I think it was immaterial. There may have been more than one in the scheme. If Mr. Boggs wanted the city’s money to speculate with, it being a felony under the laws of the state which will be more particularly referred to later, he should at least have had the express permission of the council, as a body, to do so. It does not follow that that even would have been sufficient. Arnott v. Spokane, 6 Wash. 442 (33 Pac. 1063); Hackettstown v. Swackhamer, 37 N. J. Law, 191; Mayor v. May, 19 Wall. 468.
I have discussed it because it has been relied on by the plaintiff and by the majority of the court. The court directs the cause to be remanded with directions to issue the peremptory writ commanding the defendant to pay the warrants originally issued to Arkley, Bunn and Dautrick. This ought not to follow in any event under the view there taken. One witness testified that the money for one of these warrants (B 1881)—the one issued to Dautrick—was paid to Mr. Boggs as city treasurer, or was subsequently drawn out by him as such, it is true. If this is to be held conclusive, the recovery should at this time be limited to that and the cause simply reversed, as to the warrants originally issued to Arkley and Bunn, there being no such proof as to these warrants. The other warrant that was so testified to was a salary warrant for which no recovery was allowed. *640If a recovery is to be allowed on the ground that the city g’ot the money the defendant should be allowed to show that .the city did not get it, and this after the plaintiff makes a prima facie case, which I do not think was done unless the report of the finance committee is treated here as in evidence. The other side should be given an opportunity to refute this. I do not think what there is here, if regarded as sufficient to make a prima facie case should be treated as conclusive, for it is evident the matters were not fully litigated, and it would not be controlling under my view of the law bearing on this action in any event. There is nothing in the pleadings to support the final judgment rendered. It is alleged that the treasurer has sufficient money now to pay them. The answer also alleges that the warrants were void as being in excess of the constitutional limit. This question has not been tried. The court made no findings thereon, but found against the plaintiff on another ground, and that ground only was considered upon the first trial here. What the books and exhibits would disclose as to this defense would require an extended examination, and I assume that we would not undertake to determine it here in the absence of findings by the lower court. It does not clearly appear that they were such as would not be affected by the constitutional limit. There is an exhibit in the record, purporting to be a decree in an action brought by one Murry against the city and certain of its officers, adjudging a certain class of warrants to be invalid, etc., which it is assumed has a bearing on these warrants. At the most, in the present condition of the case, the judgment should only have been reversed and the cause remanded for a re-trial, with directions to make the city a direct party.
There remains a most important question to be considered as affecting the re-issuance of these warrants. I understand it to have been conceded from the first that the parties *641now holding snch warrants are not entitled to any greater rights than the parties who first obtained them from the treasurer on their re-issuance; that if the subsequent holder could recover, they could, and the warrants being nonnegotiable, of course, the principle is well settled under the law. It appears that the Dautrick warrant and one of the salary warrants were disposed of by Mr. Boggs with a number of others to the Union Savings Bank and Trust Company, in pursuance of an agreement made with one of its officers. The substance of the testimony of the bank’s officer who made the arrangement with the city treasurer by which the bank obtained a considerable number of these warrants will be given. This officer was the plaintiff’s witness, and this agreement is the very fountain head of the plaintiff’s rights. After stating the position he held in the bank, and that he was acquainted with Mr. Boggs, the city treasurer, he was on his direct examination asked to
“Q.—State whether or not the Union Savings Bank at any time acquired any of the warrants described in what is known as the Bardsley complaint?
A.—Yes, sir.
Q.—"Which ones?
A.—No. B1285, $25.00; 2ÑTo. B1881, $100.00.
Q.—Just state the circumstances and the manner in which these two warrants were acquired by the Union Savings Bank—at what time, first, what date, were they acquired?
A.—B1285 was acquired September 24, 1892; B1881 was acquired October 20, 1892.
Q.—Just state the manner and circumstances under which the Union Savings Bank acquired those warrants? *********
A.—B1285 was included along with a number of other warrants and delivered to the bank, either by Mr. Boggs himself personally or by some man in his employ, I could not-tell which. In payment of the warrant, or rather of the warrants included in the lot, we gave a check for the *642par value of the warrants. This check was cashed within the next day or two in the ordinary course of business. B1881 was depositéd in the bank October 20, 1892, along with a list of other warrants, at its par value.
Q.—Deposited to whose credit?

A.—It was deposited to the credit of the city of Tacoma.

Q.—Was the deposit afterwards drawn out by the city of Tacoma?
A.—The deposit was afterwards drawn out—
Objection. . . .
**********
Q.—Well, in what manner was that deposit afterwards drawn out?
A.—It was drawn out by check signed by George W. Boggs, treasurer of the city of Tacoma.
Q.—How, as to the first warrant, in what way was that paid, and to whom?
A.—A check was drawn payable to the order of George
W. Boggs, city treasurer.
*********
Q.—How I will ask you to state to the court whether or not you had at any time prior to this any arrangement or understanding with George W. Boggs in relation to warrants, and whether or not these warrants were acquired in pursuance of such arrangement, and if so, what that arrangement was?
*********
A.—I had an arrangement with Mr. Boggs whereby he agreed to purchase warrants for us. This arrangement was made prior to the purchase of these warrants. It was distinctly understood and agreed between Mr. Boggs and myself—
Interrupted by objection. . . .
A. (continued.)—I told Mr. Boggs we would take from him all the warrants issued by the city of Tacoma he might purchase for us. I further told him that we would advance the money, furnish him with the money to secure the warrants if necessary. Mr. Boggs agreed he would do this, and I then suggested that probably it would be better for him to *643have some man in his office purchase these warrants for us. • I told Mr. Boggs I did not desire him to use any city funds for us. It was a personal arrangement between Mr. Boggs he had his own funds. I did not furnish him money in advance to purchase these warrants, as they were delivered.
Q.—Did you always pay at par?
A.—We always paid at par. We gave Mr. Boggs a commission in some instances, not in all, but in some instances we gave him a commission for purchasing these warrants for us. It was a personal arrangement between Mr. Boggs and us, it being understood he would act as our agent in securing these warrants.
The Court.-—lie agreed to act as your agent, did he?
Witness.—He agreed to act as our agent in purchasing these warrants for us, or have some one in his office do it.
Q.—Was this commission in addition to par paid for the warrants?
A.—The commission was in addition to par. We never purchased a city of Tacoma warrant at a discount.
Q.—Mow, I believe that you stated that you never furnished him any money beforehand to buy warrants with?

A.—No. .

Q.—Me ver in any instance did you do that, did you?
A.—Mot .in the nature that we delivered over the actual money -to him prior to the delivery of the warrants.
Q.—Well, that is what I am talking about—whether you delivered over money to him prior to the delivery of the warrants. Did you or did you not?
A.—I have already answered that.
Q.—You did not?
A.—I did not.
Q.—You knew, did you not, of the practice of cashing warrants there with city money by Mr. Boggs?
A.—I knew he cashed warrants.
Q.—Did you not know thát it was with city money?
A.—Mot as a matter of fact.
Q.—You did not know that?
*644A.—I did not. I had no means of ascertaining.

Q.—Now, you knew that when he sold warrants to you he placed the money to the credit of the city, did you not f

A.—I know he did.

Q.—Or to the credit of that account that you call the city account?
A.—That is correct; I am aware of it.
Q.—That account was kept in what name?
A.—The name of the city of Tacoma.
Q.—I~Iow were the checks signed which you honored on that account?
A.—My recollection is, “ City of Tacoma, by George W. Boggs, city treasurer.”
Q.—blow, how largely during the year 1892 were you engaged in dealing in city warrants?
A.—Oh, quite largely, I could not give you the amount.
Q.—blow, how much, or about how much of the city warrants you dealt in in round numbers did you procure from Mr. Boggs?
A.—I think we procured nearly all we obtained in 1892 under this arrangement.
Q.—You procured them from him at any rate, did you?
A.—We either procured them from him, or from some man in his office. They were frequently brought to us by some man in his office.
Q.—And you had no knowledge and nothing to put you on notice, I understand you to say, that he was using the city funds to cash these warrants?
A.—I did not know he was.
Q.—You did not know whether he was or not?
A,—I may have had an idea, but I knew nothing in a way that I could swear positively that I did know.
Q.—blow, what was your idea as to that, was it that he was using city money to cash them with, or that he was not using city money?
A .—I sometimes thought he probably was using city money; at other times I thought he was not. He told me that he was not, that he had money of his own, that he frequently had money belonging to other people.
*645Q.—When was that that he told you that? When did he tell you that—at this conversation that you have referred to?
A.—I do not recall the exact date, I could not tell you.
Q.—Was it more than once he told you that?
A.—I could not tell you that either. It is only a hazy recollection of the whole matter.
Q.—At this time that you had the conversation in the hank, who was present besides you and Mr. Boggs—anybody?
A.—I think no one was present excepting the two of us.”
Section 57 of the Penal Code (vol. 2, Hill’s Code, Bal. Code, § 7123) provides that if a public officer, including a city treasurer, shall use any of the money entrusted to him for safe-keeping in order to make a profit out of the same he shall be deemed guilty of a felony. Under this statute a number of convictions have been had and affirmed in this court, one of them being in the case of State v. Boggs, the treasurer here in question. (16 Wash. 143, 47 Pac. 417.) It is true that in that case he was charged with receiving interest upon public moneys. But suppose he had been charged with using the public money for speculation and had received his profit by way of a commission instead of interest, would there have been any difference in law? An information founded on this very transaction would seem Avell founded. Other cases are those of the State v. Isensee, 12 Wash. 254 (40 Pac. 985); State v. Downing, 15 Wash. 413 (46 Pac. 646); and State v. Krug, 12 Wash. 288 (41 Pac. 126), where the indictment in general terms charged the use of public money for the purpose of making a profit. A later decision is that of State v. McCauley, 17 Wash. 88 (49 Pac. 221). This statute, sustained in so many cases, makes it a felony for a public officer, like the treasurer of a city, to use the money intrusted to him belonging to the public for the purpose of making a profit. A *646profit can as well be made by receiving a commission as by receiving interest. Mow it appears from tbe testimony of the plaintiff’s witness in tbis case tbat Boggs did receive a profit in using tbe money of tbe city of Tacoma to buy warrants to turn over to tbe bank in question, and consequently be was brought directly within tbe terms of tbis statute. Conceding tbis witness did not know of tbis statute, and it is only fair to ¿ssume tbat be did not, and although tbis bank repaid all city deposits in full, as it is stated tbat it did do, these matters cannot affect tbe validity of such agreements. By tbis testimony it appears tbat tbe treasurer was given a commission, at least in some instances, for handling these warrants in tbis way. As to bow be was paid for handling tbe others, does not appear, nor is it material. It is evident that be was paid in some way for bis corrupt practices with reference to all of these warrants. As far as tbis bank is concerned, it appears by other testimony of tbis witness tbat it was all done under one agreement. It conclusively appears tbat be was handling them with tbe city’s money, although there was apparently some attempt or desire not to disclose a knowledge of tbat. But it stands out in bold relief, for it is admitted tbat tbe city’s account was credited with tbe deposits when warrants were turned into tbe bank. If it was Mr. Bogg’s money tbat was being used, why was tbe city given credit? Why was tbe check given to him as city treasurer? Tbis witness was called by tbe plaintiff to lay tbe very cornerstone of bis structure —to show tbat tbe money of some of these warrants upon their re-issuance went into the city fund. Mow be' did use tbe city money. It was known tbat be was using it. Tbe bank bad direct knowledge of it. Mo attempt to evade tbis can weaken tbe fact, and no room is left for doubt but tbat it was a part of these arrangements tbat be should use it. Tbe acts proven are conclusive. Tbe general practice *647seemed to be tbe same. But the proof as to this bank is clear. The testimony of this witness is not contradicted in this matter. When warrants were delivered to the bank the city was invariably given credit for the amount as a depositor a check was given Mr. Boggs—not in his private capacity, but as city treasurer—and this was the plaintiff’s showing. If an arrangement of that kind could then be entered into and enforced, it can yet be done, and a most dangerous state of affairs exists if it is understood that such arrangements can be virtually upheld in the courts to the jeopardy of public interests. What is it but enforcing the agreement where the parties are given the benefit of the entire substance of the contract? The profit to be derived by the bank and subsequent holders was in getting the interest upon these obligations, resulting in a direct loss to the city to the extent of its idle money, for the use of which private parties were getting the benefit. The amount of this loss, while not directly shown, is apparently large, considering the magnitude of the transactions and the length of time such practices were indulged in. It would pass considerably beyond the hundred thousand dollar mark. It is apparent that the city’s money was largely represented in bank credits as a deposit by the treasurer; that these credits were obtained by a deposit of these warrants upon their re-issuance. The method pursued was a very simple one. By it the city was paying ten per cent, upon its idle moneys for the privilege of depositing them. If the principal became ultimately lost the hardship was that much greater, and it is directly traceable to this practice of dealing in warrants for the benefit of the treasurer, and the parties for whom he was re-issuing them. As to how long such warrants were carried by the bank is not shown nor how much above par was received for them when they were sold to other parties, as was sometimes done. The arrangement was apparently a profitable one.
*648It seems clear that the result of this decision is to say that while an agreement or contract may he so heinous as to warrant a conviction of the treasurer for a felony, if car- • ried out, it is yet not so bad but that it may be the foundation for a recovery in a civil action. If there is any authority to sustain such a proposition, it is sufficient to say that it has not been cited.
On the previous hearing it was assumed that there was no statute preventing a city treasurer from dealing in city warrants. On that theory it was argued by the appellant that such authorities as McConnell v. Simpson, 36 Fed. 750, did not apply to this case. But there was a statute —the one making it a felony—prohibiting the city treasurer from speculating in the city’s warrants with the city’s money. This seems to have been overlooked by the defend- „ ant’s attorneys, and has developed in the later and more complete examination of the case.
The authorities against the validity of such agreements are too numerous to undertake to cite. The general rule will be given. The result of this case is to run directly contrary to them, or section 57 must be overturned in so far as it makes it a crime for a public officer to make a profit on public money, and Krug, Boggs, McCauley and those who were convicted of making a profit only thereon, and not for an embezzlement of the funds, were wrongfully convicted. There should not be a more lax rule recognized in a civil case than would obtain in a criminal one. The difference, if any, should be the other way. This principle is recognized where contracts contrary to public policy will not be enforced, nor rights founded thereon, even though no crime has been committed, nor statute violated in entering into it. In Boyd v. Cochrane, ante, p. 281 (51 Pac. 383), where an agreement was entered into to extend the time of a note in consideration of securing a deposit of *649public money for a certain time, although the agreement had been executed and the bank had the benefit of the deposit for the time specified, this court refused to recognize it to the extent of releasing a surety even, holding the agreement to extend void as against public policy. The court said in that case:
“ The losses which so frequently occur to counties and other municipalities in this state are nearly always attributable to the action of the custodian of the funds in keeping them on hand after they should have been paid out on warrants and demands which were due.”
Rule 279, Greenhood on Public Policy, was quoted:
“ Any contract by which public office is to be used for private gain is void.”
The following was said with reference to Mr. Pomeroy’s work:
“ Mr. Pomeroy, in his work on Equity Jurisprudence, in discussing this question, places first, under the ban of the law, contracts made for the purpose of unduly controlling or affecting official conduct, and says (section 935): ‘All agreements directly or indirectly preventing or controlling the due administration of justice are opposed to the universal and most elementary principles of public policy. Whatever be their form and immediate purpose, and however innocent may be the motives of the parties, they are plainly invalid.’ ”
Bishop on Contracts was quoted as follows:
“ The rule is thus announced by Bish. Oont. § 500: ‘Any contract between an officer and a private person by which the former undertakes to do anything of official duty,- right or wrong, in accord with such duty or contrary to it, is in a greater or less degree an obstruction to the unbiased exercise of his office, even where it does not influence him corruptly. Therefore, it is void.’ ”
The court also said that:
“ If there were no authorities upon this proposition, as a *650matter of first impression it would seem to us that the' defense pleaded here shows a contract in violation of public policy, and is void.”
The case received the unanimous support of this court, and I am unable to distinguish between the principle involved there and here. There does not seem to be even a conflict in the authorities therein, and under it there could be no recovery of the principal even as to these warrants. The return of that would be a matter of grace only, if it was shown that the city had the benefit of it, and saw fit to return it. In any event, there should be no recovery allowed for any interest upon these re-issued warrants. In the later discussion of the case the question of practice has been lost sight of, the action being one in mandamus against the city treasurer only. It is a question whether under the authorities a partial relief could be given where it is not shown that the relator is not entitled to all that he demanded. But that, of course, does not go to the substance of the rights of the parties in the premises, and the whole matter seems to have been in a measure gone into on the trial.
Beavis, J.—I join in the dissenting opinion of Judge Scott.
ON PETITION FOR RE-HEARING.
Anders, J.
The respondent has filed a petition for a re-hearing in this ease, on the sole ground, as alleged, that it appeárs from the opinion lately filed herein, that the decision of the court was based upon the report of the finance committee of the city of Tacoma (alluded to in said opinion), which was offered in evidence at the trial below and excluded on the ground, as stated in the petition, of incompetency. And it is alleged by the learned counsel for the petitioner, that it was improper to determine the rights of the respondent and of the tax payers of the city upon evidence dehors the record. From the standpoint of counsel *651it must be conceded that tbeir conclusion is eminently correct, but the premise from which it is drawn is false, as matter of fact. Error was predicated upon the ruling of the Court in excluding this report, and it was, therefore, deemed incumbent upon the court to determine the question thus presented; and it was merely intended by what was said in respect thereto to show, first, what the report was, and, second, why it was in our opinion relevant and competent evidence. The language employed by way of argument was, perhaps, not as felicitous as it might have been, but it is not true that the report of the finance committee was treated as evidence in the case, or that the conclusion of the court was in any way influenced thereby. On the contrary, the case was decided solely upon the evidence admitted and considered by the court below and preserved in the record. Had that report constituted the basis of the decision, the cause would certainly have been remanded for a new trial.
The petition must be denied.
Gordon and Dunbar, JJ., concur.