McCrary v. Schenebeck

McHaney, J. Prior to its insolvency and its being-taken charge of for liquidation by the State Bank Commissioner on December 19,1931, the Lonoke County Bank was the duly designated and qualified depository for the public funds of Lonoke County, with the appellants as sureties on its depository, bond. On November 30, 1934, the county court of said county made and entered an order compromising and settling with appellants their liability on said bond for 10 cents on the dollar. There was an appeal from this order to the circuit court by a citizen and taxpayer. On December 1, 1934, appellee, also a citizen and taxpayer, brought this action in the circuit court against the county treasurer and the bondsmen on her official bond, as set out in the first count of the complaint, and against the bondsmen for the depository, as set out in the second count, both seeking to recover the amount of public funds on deposit in the Lonoke County Bank when it closed. The county treasurer and her bondsmen defended on the ground that act No. 16 of the Acts of 1935 relieved them from liability. Appellants defended on the ground, among others, that they were relieved by the provisions of act No. 325 of the A.cts of 1935. The trial court sustained the plea of the treasurer and her bondsmen and denied a recovery as to them. It overruled the plea of appellants and rendered judgment against them on count 2 of the complaint. Prom this judgment there is an appeal and a cross-appeal. Disposing of the cross-appeal first, it is contended by the cross-appellant that said act 16 of 1935, p. 37, is unconstitutional and void, and that it does not relieve the treasurer of Lonoke County and her bondsmen from liability, and Bauer v. No. Ark. Highway Imp. Dist. No. 1, 168 Ark. 220, 270 S. W. 533, is cited to support the contention. But in that case the rule was again stated that the Legislature may enact valid legislation to relieve a public officer and his bondsmen from loss of public funds, where the loss is not occasioned by the officers’ fault, for the reason that individual taxpayers have no vested interest in such funds, and there is no impairment of the obligation of contracts. It was there further held that the special act of 1923, relieving sureties on a bond indemnifying appellee district against loss of funds in a depository bank was invalid, as it impaired vested rights of taxpayers in said district. This court has frequently held such legislation as act 16 of 1935 valid. Pearson v. State, 56 Ark. 148, 19 S. W. 499; Newton County v. Greene, 104 Ark. 270, 149 S. W. 73; State v. Davis, 178 Ark. 153, 10 S. W. (2d) 513; Huxtable v. State, 181 Ark. 533, 26 S. W. (2d) 577. Since said act 16 of 1935 is valid legislation, and since it does relieve county treasurers and their bondsmen for loss of public funds occasioned by insolvency of any bank in which such funds were lawfully deposited, where such bondsmen are not paid sureties, it necessarily follows that cross-appellant cannot recover. The direct appeal in this case has given us more concern. Appellants set up act 325 of the Acts of 1935, as relieving them from liability. If it does, and we now so hold, it becomes unnecessary to discuss other questions argued in the briefs of counsel on both sides. Said act is entitled “An act to relieve county officials and their bondsmen from liability for funds lost in closed banks.” Section 1 thereof is as follows: “In all cases where any funds in the hands of any county officials of this State have been lost or become unavailable by reason of the insolvency of any bank in which the same were deposited, and not through defalcation of such county official, such county officials and their bondsmen, and the bondsmen for any county depository, in cases where such bondsmen have not become sureties on account of the payment of a cash consideration and in such cases only, are hereby released and relieved from any and all liability for loss of such funds. And further where any such county official has advanced all or any part of any such funds out of his private resources for the purpose of relieving a temporary emergency such funds shall be repaid to him out of the funds to which said advances were made in order that the effects of this bill shall be fair and equitable, provided, this act shall apply only to such banks as were closed by proclamation of the President of the United States, and/or State Bank Commissioner of Arkansas.” This act 'became effective April 4,1935. The proviso in said section causes all the difficulty in its construction, —“provided, this act shall apply only to such banks as were closed by proclamation of the President of the United States, and/or State Bank Commissioner of Arkansas.” All the National and Federal Reserve banks were closed 'by proclamation of the President on March 6, 1933. The Lonoke County Bank, of which appellants were bondsmen, was closed by the Bank Commissioner on December 19, 1931, more than a year before the President’s proclamation. Are the bondsmen for said depository bank relieved by the provisions of this act, or does the proviso above quoted exclude them as well as the bondsmen of all other depository State banks that were closed by the Bank Commissioner prior to March ,6, 1933? The President’s proclamation did not close any bank not a member of the Federal Reserve System. The Bank Commissioner’s records, of which we take judicial notice, show that very few State banks were, at that time, members of the Federal Beserve, — approximately seven per cent. If we hold that only the banks that were closed .on March 6, 1933; are included in said act, it would appear to work a discrimination against those State banks and their bondsmen that were closed by the Bank Commissioner prior to said date without any valid reason therefor. We do not think the language of the proviso open to this construction, nor that the Legislature intended to make any discrimination, but intended to relieve all county officials and their bondsmen from liability for funds lost in banks closed by the President’s proclamation, or closed by the Bank Commissioner, without reference to the time when they were closed by the latter. Under the contention made by appellee, a State bank closed by the Bank Commissioner one day before March 6, 1933, having county funds on deposit and a bond with non-paid sureties, would be. compelled to make the deposit good, but such a bank with like conditions, on being closed the next day, is relieved. We do not think the Legislature intended such injustice, but that all should be treated alike. The intention was, and, as we think, plainly written in the act, that its provisions of grace should extend to banks .closed by the-President’s proclamation and those closed by the Bank Commissioner, without regard to the time when closed by him. This construction of the act and determination of the legislative intent is further strengthened when we consider its course through both houses of the General Assembly, as reflected by the journals, of which we take judicial notice. House Bill No. 72, the predecessor. of this act, by McCall of Saline, was introduced on January 17, 1935, read twice and referred to the committee on judiciary. The bill was amended in the committee and returned with the recommendation that it do pass as amended. Later the amendments were adopted and the bill ordered engrossed. On February 14, it was amended as follows: “Amend House Bill 72, by McCall of Saline; strike from said bill the following language: ‘provided, this act shall not apply where any bank was not taken over by the Bank Department on or after March 1, 1933,’ and insert the following: ‘Provided, this act shall apply only to such banks as were closed by proclamation of the President of the United States, and/or State Bank Commissioner of Arkansas on or after February 28, 1933’.” Another amendment was later adopted, but it is not material to this inquiry. The bill was ordered engrossed, reported correctly engrossed, and on March 4 it was read the third time and failed to pass. This action was reconsidered and on March 7, the bill was read the third time and passed with the emergency clause attached. It was transmitted to the Senate on the same day, where it was read the first and second times, whereupon Senator Holloway offered the following amendment: ‘‘Amend House Bill 72, by McCall of Saline, by striking the following words from the last line of § 1, to-wit: ‘ on and after February 28,1933’.” This amendment was adopted, and on March 11 the bill as amended was read the third time and passed by the Senate as amended. It was thereupon returned to the House, which body concurred in the Senate amendment, was ordered engrossed and was passed by the House as engrossed on March 13th. The force and effect of all this is that it reflects the legislative intent that the act should apply to all banks closed by the Bank Commissioner, whether before or after February 28, 1933'. The amendment striking out the date, February 28, 1933', is very persuasive that the Legislature intended the act to apply to all banks closed by the Bank Commissioner without regard to the time when closed. Moreover, this amendment was offered by the Senator from Lonoke County, the county in which this bank was located, and we think it fair to presume that the intention of his amendment was to cover this identical situation. This view of the matter makes it unnecessary to consider or discuss the other questions raised on the appeal and the cross-appeal;' The act being valid and being applicable to the bondsmen of the county depository, the Lonoke County Bank, the trial court erred in overruling the plea of the act as a bar to the action. The judgment based on count 2 of the complaint will be reversed, and the cause dismissed.