Court Opinion

ID: 8033119
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:17:43.1885+00
Date Added: 2024-06-11T16:37:02.414145
License: Public Domain

The following opinion on motion for rehearing was filed

Former judgment of this court vacated and judgment of the district court affirmed.

Heard before Morrissey, C. J., Letton, Rose, Dean, Day and Good, JJ.,-Redick, District Judge.
Good, J.
This case is now before us on rehearing. The opinion on the first submission of the case is reported, ante, p. 126.
This appeal presents for decision this question: Is the depositors’ guaranty fund liable for a deposit of public funds in a state bank by a county treasurer in excess of 50 per cent, of the paid-up capital stock of the bank? In the majority opinion on the first hearing, the question is answered in the negative. The opinion is based on the propositions that the guaranty fund stands in the position of a surety or guarantor; that a deposit by a county treasurer of public funds in excess of the statutory limitation is illegal, and that the depositors’ guaranty fund is liable only for deposits legally made.
For a better understanding of the facts and statutory provisions bearing on the question, reference is made to the former opinion in this case, where the pertinent legislation and the history of its enactment are set forth. After more extended argument and a thorough consideration of the question, a majority of the court now entertains a different view.
The question is largely controlled by determining the legislative intent and meaning of section 8027, Comp. St. 1922, which is in part as follows: “No bank which has complied in full with all of the provisions of this article *137shall be required to give any further security or bond for the purpose of becoming a depository for any public funds, but depository funds shall be secured in the same manner that private funds are secured.” For some years prior to the enactment of this section, no bank could lawfully become a depository of public funds unless it gave bond for the safe-keeping and return of such funds. See sections 6191, 6193, Comp. St. 1922. One of the aims and purposes of the legislature in enacting section 8027, swpra, was to relieve state banks from the necessity of giving bond for the safekeeping and return of public funds therein deposited.
We think there is little or no doubt that the main purpose of the legislature in limiting the amount of public funds a county treasurer might deposit in any bank to 50 per cent, of its capital stock was to secure the greater safety and protection of public funds. By the enactment of the depositors’ guaranty fund law, pursuant to the provisions of which all banks, organized under the laws of the state, become liable for assessments to create and maintain the depositors’ guaranty fund, the legislature no doubt believed that ample protection and security would be furnished for any public funds deposited in state banks.
It might, with good reason, be urged that the legislature, in enacting section 8027, supra, intended to repeal the provisions of the depository law, in so far as it affected state banks, and to thereby remove any limitation as to the amount of public funds that a county treasurer could deposit in such banks. However, we do not find it necessary to so hold, to sustain our present view. Even if it be conceded that the depository statute, limiting the deposit of public funds in banks to 50 per cent, of the paid-up capital stock of such banks, has not been repealed by implication, so far as relates to state banks, we still feel confident that the proper construction of said section renders the guaranty fund liable for the deposit of all public funds, even though they are in excess of -50 per cent, of the paid-up capital stock. The latter part of said section provides that depos*138itory funds (meaning thereby public funds) shall be secured in the same manner that private funds are secured. Private funds deposited in state banks are secured and protected by the depositors’ guaranty fund, and there is no limit to the amount a private individual or “corporation may deposit in state banks. If public funds are secured in the same manner as private funds, then they too are protected by the guaranty fund, regardless of the amount thereof, and it would be wholly immaterial whether such deposits exceeded 50 per cent, of the paid-up capital stock of the bank.
It is argued that, if the county treasurer violated a statutory provision in making the excess deposit of public funds, then the excess was not a legal deposit and was not, therefore, protected. In support of this assignment, plaintiff cites and relies upon the decisions of’this court in Iams v. Farmers State Bank, 101 Neb. 778, State v. Banking House of A. Castetter, 110 Neb. 564, Cole v. Myers, 100 Neb. 480, and State v. Corning State Savings Bank, 136 Ia. 79.
In the lams case, money was placed in a state bank, and a certificate of deposit, bearing interest at 5 per cent, per annum, was issued to the purported depositor. In order to evade a provision of the guaranty fund law, limiting the rate of interest on time deposits to 5 per cent., the bank agreed to pay lams a bonus of 1 per cent, per annum on the money. The bank was guilty of a direct violation of the guaranty fund law. lams was a party to and induced the violation. Both parties participated in the unlawful act. It was held that the transaction was a loan, and did not constitute a deposit, within the meaning of the guaranty fund act, and that, where the bank failed, the certificate so obtained could not be paid out of the depositors’ guaranty fund.
In State v. Banking House of A. Castetter, supra, interest on a deposit in the bank was calculated at the rate of 8 per cent, and added to the amount, and a cashier’s check issued therefor. It was held, following the lams case, that the holder was not entitled to the protection of the guaran*139ty fund, because the inclusion of a greater rate of interest than 5 per cent, was in violation of the express prohibition contained in the depositors’ guaranty fund law. Cole v. Myers, supra, involved the right of different sets of sureties to subrogation, and does not seem to have any application to the question presented in this case. In State v. Corning State Savings Bank, supra, a recovery was sought against a savings bank upon a certificate of deposit, but which, in fact, represented a loan to the bank, and not a deposit. It was held that where savings banks are prohibited by statute from borrowing money, but a loan is made to a savings bank and the indebtedness represented by a certificate of deposit, no recovery can be had upon the certificate itself.
We think none of these eases is applicable to the present situation. The depositors’ guaranty fund law did not prohibit a treasurer from depositing public funds in a state bank in excess of 50 per cent, of its.paid-up capital stock; nor was there any law forbidding state banks to accept such deposits. In this instance, an excess «deposit was made in the bank, but no illegal or excessive rate of interest was agreed to be paid. It was in no sense a loan. If any wrongful act was committed, it was the act of the county treasurer alone. The funds deposited belonged not to him but to the public. The public was innocent of any wrongful act. It should not be deprived of the protection the law was intended to afford. The reasons, given in the cases referred to, for denying liability of the guaranty fund do not exist in this case. It may further be observed that the state is the custodian of, and has the legal title as trustee to, the depositors’ guaranty fund, and is charged with it's control, management and distribution through and by the department of trade and commerce. This same department is charged with the examination’ regulation and control of all the state banks, and by its examiners had full knowledge, or the means of full knowledge, that the county treasurer, claimant in this case, was making deposits in the defendant bank in excess of 50 per cent, of its paid-up capital stock.' It is a matter of common knowledge that such *140excess deposits are habitually and constantly being made by the county treasurers of the state, and yet the state has made no objection to such excess deposits, and, by its failure to object, has tacitly placed its approval upon such practice. It amounts to placing the same construction upon the statute by an administrative branch of the state government that is now placed upon it by this court.
The law prohibits state banks from making any loan in excess of a certain percentage of its paid-up capital stock and surplus; yet such loans are frequently made and their payment has always been, by this court, enforced whenever suit has been brought upon such loans. The argument of plaintiff, if carried to its logical conclusion, would deny the protection of the depositors’ guaranty fund for any deposit that was made in violation of law. If a county treasurer should take the public funds and deposit them in a state bank in his individual name, he would thereby violate the law and make himself liable for criminal prosecution, but we think there can bé no doubt that in such case the treasurer, or the county, as the beneficial owner of the fund, could claim the deposit and would be entitled to the protection of the depositors’ guaranty fund. Such, in effect, was the holding of this court in the following cases: State v. American State Bank, 108 Neb. 92; State v. American State Bank, 108 Neb. 98; State v. American State Bank, 108 Neb. 111; State v. American State Bank, 108 Neb. 119; State v. American State Bank, 108 Neb. 124; State v. American State Bank, 108 Neb. 129.
We are forced to the conclusion that, where a county treasurer deposits public funds in a state bank in excess of 50 per cent, of the paid-up capital stock of said bank, the entire deposit is within the protection of the depositors’ guaranty fund.
It follows that our former opinion in this case should be vacated. The judgment of the district court is
Affirmed.
Rose and Day, JJ., and Redick, District Judge, dissent for the reasons stated in the former opinion.