Court Opinion

ID: 6738903
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:32.507699+00
Date Added: 2024-06-11T16:01:53.709058
License: Public Domain

Christianson, Ch. J.
(concurring specially). Section 4.896, Comp. Laws 1913, provides: “No mutual insurance company hereafter organized under the laws of this state or now or hereafter organized under the laws of any state or country, shall engage in the business of hail insurance in this state without first depositing and thereafter keeping on deposit with the treasurer of this state the sum of $25,000 in money, or in lieu thereof bonds of this state or of the United States of the par value of $25,000; provided, that domestic mutual hail insurance companies in lieu of said deposit shall be required to file a bond in the office of the commissioner of insurance in the sum of $25,-000, conditional for the carrying out of its contracts and obligations incurred by its policies; said bond to be satisfactory as to form and surety to the insurance commissioner.” Section 4891 provides that “said money or securities so deposited shall be and remain in the hands of the treasurer of this state as a fund to secure the payment of all losses occurring under all policies or contracts for hail insurance, made by such company in this state, or covering property situated within the state. And the treasurer of this state shall not permit said deposit or any part thereof to be withdrawn by said company from his custody except as hereinafter provided.” Section 4899, Comp. Laws 1913, provides that when any company which has made such deposit desires *303to relinquish the transaction: of business in this state, it may be permitted to withdraw such deposit upon application to the commissioner of insurance; that when the commissioner of insurance becomes satisfied that all liabilities under policies and contracts have been fully paid and extinguished, he shall “file a certificate to that effect with the treasurer of the state, who shall thereupon deliver such deposit to said company, or its assigns.”
In March, 1913, plaintiff deposited $25,000 in cash with the state treasurer, under the provisions of § 4896, supra. The defendant Steen was elected state treasurer at the general election held in November, 1914. Upon his qualification in January, 1915, his predecessor in office turned over to him the said sum of $25,000. Steen afterwards deposited these moneys in various banks. The plaintiff subsequently withdrew from the state, and was permitted to withdraw its deposit. The defendant Steen turned over to it the amount of the original deposit. The plaintiff, however, insisted that it was also entitled to receive whatever interest had been earned thereon. From statements made iipon the oral argument it appears that Steen submitted the matter to the then attorney general, and was advised that considerable uncertainty existed as to who was entitled to such interest, and that it belonged either to the plaintiff, to the state, or to the defendant Steen personally. This action was thereupon brought. The action was -originally against Steen individually and as state treasurer, later the state of North Dakota was added as a party defendant. The matter was submitted to the court upon the pleadings. The trial court ordered judgment for the plaintiff. The state and Steen have both appealed, so the entire controversy is before this court.
The questions presented in this case are somewhat perplexing. The various authorities cited by counsel for the contending parties are of little or no value, for they deal with entirely different situations. There are many authorities dealing with the right of state treasurers and other custodians of public funds to receive and appropriate to their own use interest on such funds. The conclusions reached by the various courts are far from uniform. Some of the cases hold that it is not a matter of public concern what use was made of the moneys while in the hands of the treasurer; that he is liable for the principal alone, and that his liability ceases when he accounts for the principal. See *304Rock v. Stinger, 36 Ind. 346; Shelton v. State, 53 Ind. 331, 21 Am. Rep. 197; Com. v. Godshaw, 92 Ky. 435, 17 S. W. 737; State v. Walsen, 17 Colo. 170, 15 L.R.A. 456, 28 Pac. 1119; Maloy v. Bernalillo County, 10 N. M. 638, 52 L.E.A. 126, 62 Pac. 1106; Renfroe v. Colquist, 74 Ga. 613; Chase v. Monroe, 30 N. H. 427, 433. Otker cases hold tkat where tke treasurer kas received interest on public funds ke must account for the interest as well as for tke principal. See cases cited in note to Adams v. Williams; 30 L.R.A.(N.S.) 855. Counsel for tke plaintiff and for tke state have cited and rely upon these latter decisions. While they tend to support tke contentions of tke plaintiff, they clearly do not support tke contentions of tke state. For these cases merely hold tkat tke interest follows tke principal; and that wkere a custodian kas received interest on funds belonging to tke public ke must pay suck interest over to tke owner of tke money on which the interest kas been earned. But tke moneys involved in this case were not state funds. They did not belong to tke state. They belonged to tke plaintiff. Tke plaintiff had placed them in tke hands of tke depositary designated by tke legislature, to be held as security for tke payment of losses which might arise upon insurance contracts made by tke plaintiff. Tke money would eventually either be returned to tke plaintiff, or paid to those for tke protection of whom it had been deposited. Under no circumstances would tke state of North Dakota become tke owner of tke moneys. Tke state treasurer was custodian of tke moneys because tke legislature bad designated him. Tke legislature might as well, if it had seen fit to do so, have required tke deposit to be made with some otker state or county official, or with banks or trust companies in this state. Thus, securities of domestic life insurance companies are deposited with tke commissioner of insurance. Comp. Laws 1913, § 4896. In State ex rel. Olson v. Jorgenson, 29 N. D. 173, 150 N. W. 565, this court considered tke status of moneys in tke kail insurance fund, and tke functions of tke state treasurer and state auditor with respect thereto. The court said: “Tke fund known as the hail insurance fund is composed of moneys which do not belong to tke state, and which are not state funds. . . . Tke treasurer is tke custodian of tke fund, not a state fund, but a fund belonging to those who contributed it for tke purpose named. Tke commissioner of agriculture and labor is made the commissioner of kail insurance, and is given *305charge of the bookkeeping and the administrative features necessary to carry out the purposes of the act. . . . He acts not on a fund raised as state funds are provided, but by reason of the legislative assembly having permitted him and attempted to authorize him to act in another and different capacity, when owners of crops voluntarily request him so to do and make the necessary payments. In the same sense the treasurer is the custodian of the fund. The legislature might with equal propriety have made any other state, county, or township officials the custodians and administrative officials of this or corresponding funds, or it might undoubtedly have constituted some other official, and very likely a private individual, the administrative officer of the fund and business.” 29 N. D. 177. This reasoning and language is even more applicable to the moneys deposited by a foreign mutual hail insurance company under § 4896, supra. A deposit made under that section is and remains the property of the company making the deposit. It never becomes the property of the state. I am entirely satisfied that the state has no right to the interest earned upon the funds in question.
Does the interest belong to Steen or to the plaintiff ? The plaintiff was not required to deposit money. It might have deposited securities. It might, also, at any time have withdrawn all or any part of the moneys, and deposited securities in lieu thereof. Comp. Laws 1913, •§ 4900. It received back the full amount of its original deposit, just as soon as it was entitled to do so under the law. The only legal duty which Steen owed to the plaintiff was to safely keep the deposit and return it in accordance with the stipulations which the law attached thereto. He would have fully discharged his duty by keeping the moneys deposited, and returning them to the plaintiff. He was under no legal or moral obligation to earn any interest on the deposit. In depositing the moneys in banks he — not the plaintiff or the state — assumed all risk. If any of the banks had failed, and loss ensued, Steen would have been liable for the loss. The interest was earned by reason of the fact that Steen deposited the funds in banks and assumed the risk incident thereto. The insurance company owned the money upon which the interest was earned; Steen assumed the risk which made it possible for the money to earn interest. There is much force in the argument that under these circumstances the interest earned belongs to Steen, and my mind is not altogether free from doubt upon the point. *306While this is so I am not prepared to say that the judgment appealed from is erroneous, but am rather inclined to the view that the interest earned belongs to the insurance company, as the owner of the fund.