Court Opinion

ID: 3499820
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:06:59.776286+00
Date Added: 2024-06-11T13:56:53.586651
License: Public Domain

Because Lawrence v. American Surety Co., 263 Mich. 586, 606
(88 A.L.R. 535), did not directly involve the specific character *Page 427 
of the liability of the State to the receiver, it is not determinative.
Defendant's claim that this is a suit against the State overlooks the fact that, in effect, it is merely a proceeding in a suit by the State.
The State can act only through its officers. Under 3 Comp. Laws 1929, § 11959, the State took and had full charge of bank receiverships. Only State officers, the banking commissioner and the attorney general, could file the petition for receivership. Stewart v. Algonac Savings Bank, 263 Mich. 272. In making the appointment, the court exercised a statutory jurisdiction, not the inherent power to appoint a receiver which is incidental to original equitable jurisdiction. The power to appoint is a non-judicial function which may be conferred on executive officers. Robinson v. People's Bank ofLeslie, 266 Mich. 178 (92 A.L.R. 1251). So the court made the appointment in the capacity of agent of the State, designated by the legislature for that purpose, rather than as a co-ordinate branch of the government. The degree of control by State officers intended by the legislature is evidenced by the provisions that the court may appoint as receiver only a person "who shall have the recommendation of the banking commissioner;" that the receiver, in addition to his duty to the court, "shall make report to the commissioner of all his acts and proceedings;" that upon appointment of a receiver the commissioner cause notice to be given to creditors to present their claims; that liquidating dividends to creditors are paid by the receiver under direction of commissioner; and that before directing payment of any dividend or accepting any final report the commissioner shall cause an examination to be made of the receivership. The provision that the receiver "pay over all money so *Page 428 
collected or received to the State treasurer" is mandatory.Moore v. Wayne Circuit Judge, 141 Mich. 398. The court has no custody or control of the funds except in connection with their withdrawal from the State treasury to pay claims.
The circuit court has no jurisdiction to issue a writ of mandamus against a State officer. 3 Comp. Laws 1929, § 15186. This case, then, is merely ancillary to and part of the receivership proceedings because it is brought to require one of the State officers, the treasurer, to perform the duty imposed on him in the liquidation of a State bank. The State having brought the original suit, impliedly consented to the determination of all issues necessary to final liquidation.
Were the statute requiring deposit of funds with the State treasurer an isolated one, designed merely to provide a depository in private litigation, it might with reason be said that the deposit is with a person or an officer and not into the public treasury. But the provision here is a measure adopted by the State to maintain its full control of the liquidation. The State treasurer, named because the receipt and custody of money is his function in State government, takes the fund, not as an individual nor as the person in charge of an office, but in his official capacity as the representative of the State in the same manner that the court, the banking commissioner and attorney general perform their logical functions in behalf of and as agents of the State in the receivership proceedings.
If the fund were public moneys belonging to other governmental subdivisions, deposited with the treasurer under mandate of statute, the State would be liable for its repayment. People, ex rel. Houghton County, v. Auditor General,9 Mich. 141; State, ex *Page 429 rel. School District No. 4, Rosebud County, v. McGraw, 74 Mont. 152
(240 P. 812); Myers v. Board of County Commissioners ofthe County of Kiowa, 60 Kan. 189 (56 P. 11). While not in point, it is of interest also that private moneys deposited with public treasurers under statute are held to be public funds for bank deposit purposes and the interest on the deposit belongs to the depositing body. Spratley v. Board ofCommissioners of Leavenworth County, 56 Kan. 272 (43 P. 232), (condemnation funds held by county treasurer); Chicago, M. St. P. R. Co. v. Public Utilities Commission of Idaho,47 Idaho, 346 (275 P. 780), (disputed freight rate collections deposited with the State treasurer).
If a difference is to be made between private and public moneys deposited in the State treasury by command of statute, the rule of common honesty would give preference to the funds of citizens taken by force of law in a proceeding in which the State has assumed full control of them and in which the ultimate owners have no power of custody or control while in possession of the State. Any other rule could result in confiscation.
The practice of the treasurer in handling the fund for convenience in accounting or otherwise cannot affect the liability of the State. The statute does not provide for its segregation or special custody or deposit in any respect. Whether the treasurer keeps the receivership money in cash, mingles it with other funds, misappropriates it to other accounts or deposits it as other State moneys, does not change the responsibility. As it was not tax money raised for special purposes, the only fund into which it could go is the general fund, even though the treasurer might give it a particular name. When the fund *Page 430 
came into the State treasury by command of statute, which also provided for its distribution, there was an appropriation of it by law for its proper purpose, within the meaning of the Constitution, article 10, § 16. It is the duty of the treasurer to pay it out of any available fund.
"If improperly used, so that the treasury should not be in a condition to respond, the claim of the county would not, as suggested on the argument, be extinguished or impaired. It would remain, like all other liquidated demands, a claim payable whenever the treasury is replenished." People, ex rel.Houghton County, v. Auditor General, 9 Mich. 141, 143.
In its answer to the order to show cause the State avers that the general fund is largely overdrawn and there is no money in the treasury available to pay plaintiff's claim. The averment was not traversed and must be accepted as true. The fact that the general fund is exhausted may mean only that it owes other funds. Presumably moneys are constantly coming into and are being paid out of the general fund. Such moneys are as legally applicable to pay the debt of the State to the receiver as to pay the debt of the general fund to other funds. If it had been shown that such general fund moneys are available to pay plaintiff, a writ of mandamus would be proper. But upon the record as it stands it is undisputed that no money is available to pay plaintiff and I agree that the writ must be denied.