Court Opinion

ID: 3543040
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:54:32.876999+00
Date Added: 2024-06-11T13:38:30.275000
License: Public Domain

The bond here sued upon was conditioned that defendant city treasurer "shall account for and pay over and deliver to the person or officer entitled to receive the same, all moneys or other property that may come into her hands as such city treasurer." This she has not done. Prima facie, the treasurer and the sureties are liable on the bond. But, since the loss was occasioned by depositing the moneys in a bank which subsequently became insolvent, under the express provisions of Chapter 89, Laws of 1923, she is relieved from liability, "where [the] moneys shall have been deposited in accordance with the provisions of this Act."
What, then, are the provisions of that Act? The first part of the Act provides that the city treasurer shall deposit all public moneys in his possession and under his control in any solvent bank in the city as the city council may designate. The bank in question here had been designated as a depository. The Act then provides: "The treasurer shall take from such banks such security as * * * the council * * * may prescribe, approve and deem fully sufficient and necessary to insure the safety and prompt payment of all such deposits on demand together with the interest thereon." The Act provides for different classes of securities which may be accepted. It then provides that "it shall be the duty of * * * the council * * * upon the acceptance and approval of any of the above mentioned bonds or securities, *Page 100 
to make a complete minute entry of such acceptance and approval upon the record of their proceedings." (Sec. 1.)
The statute, it should be noted, does not require a minute entry to be made by the council as to what securities the council may prescribe and "deem fully sufficient and necessary to insure the safety and prompt payment" of the deposits. That is a matter which the legislature has seen fit to let rest upon the understanding between the council and the city treasurer without a formal minute entry. The mere fact that the council approves a depository bond reciting that the sureties obligate themselves for "all damages and loss of every kind by reason of deposits made" is no indication that the council thereby authorized the deposit of all public moneys without limitation as to amount. Of course, so far as the liability of the sureties on the depository bonds is concerned, they would be held to the obligation assumed by them regardless of the amount of the deposits. That clause in the depository bonds simply measures the extent of the liability of the sureties, and has nothing to do with the conduct of the city treasurer as to the amount of deposits that may be made under a given bond.
To ascertain what amount of money the treasurer was authorized to deposit under a given bond, reference must be had to the understanding between her and the city council. Here it is shown that one of the bonds contains this clause: "Whereas, it is mutually understood and agreed that said surety shall not be liable thereon for moneys on deposit in said bank, in excess of said sum of Seventy-five Hundred ($7,500.00) Dollars, but shall at all times during the continuance of these presents be liable for any and all such deposits up to the said sum of Seventy-five Hundred ($7,500.00) Dollars, payable on demand." Certain it must be that, if this were the only bond approved by the council, the treasurer would not have been authorized to deposit more than $7,500 without a clear understanding to the contrary. While the record in this case is not clear on some points, the *Page 101 
reasonable inference to be drawn from the evidence in its entirety is that the city treasurer understood that she should not deposit money in the bank in excess of the penal sum named in the bonds held as security. The record shows that at the time the bank closed she was asked if she had sufficient surety bonds to cover the money on deposit. She did not reply by saying that she was relying upon the fact that the council had approved bonds to the extent of $27,500 as giving her the right to make deposits in any amount without limitation. She replied by saying that she had approximately $50,000 of the city's money in the bank, and had about $51,000 in bonds.
There is evidence that the city council had taken action at nearly every meeting for a year or so before the bank failed with reference to the matter of securing deposits of city funds. At one meeting a motion was made and adopted to require the city treasurer to secure surety bonds for all deposits of the city in any bank. No record was made of this. Following action taken by the council, the matter was taken up with the treasurer by the mayor, and she was informed of the action taken by the council. Notwithstanding the efforts of the council to have all of the deposits protected by surety bonds, there is evidence that the treasurer submitted to the council a personal bond some time in the fall of 1923 for their approval, but it was rejected. While the record shows that the council did not fix the amount of the bonds, in dollars, which the treasurer should procure, there is evidence that the sense of the council at several of its meetings was that she should get her deposits "fully secured."
In my opinion, the evidence was sufficient to prove prima facie that the treasurer had been required by the city council to limit the deposits to the penal sum stipulated in effective depository bonds. She did not testify in her own behalf. If it were a fact that she understood, from the mere fact that the bank had been designated as a depository and from the fact that there had been acceptance and approval of the depository bonds in the sum of $27,500, that she was authorized *Page 102 
to make deposits without limit as to the amount, she could easily have said so.
The decision in the case of City of Missoula v. Dick,76 Mont. 502, 248 P. 193, is not in conflict with the views I have stated. In that case the stipulated facts were that the bond in question "was by the city council deemed fully sufficient and necessary to insure the safety and prompt payment of all moneys deposited, on demand, together with interest thereon." By reason of this stipulation the court in that case properly said: "The council prescribed and approved the bond which should be given to cover all deposits made between May 10, 1922, and May 10, 1924." No such facts appear in this case.
While it is unnecessary to determine the question here, it is also doubtful whether the burden of proof of facts tending to relieve the treasurer of liability does not rest upon her. In other words, in order to secure the exemption from liability under Chapter 89, it would seem that the treasurer must assume the burden of proving that the deposits were made in conformity with the Act, by proof, first, that the council had prescribed the security deemed sufficient, and, secondly, that it approved the security actually furnished.
The question whether the judgment in the action by plaintiff against the bank to establish a preferred claim is a bar to the maintenance of this action, not having been passed upon by the majority opinion, requires no consideration here. *Page 103