State v. Bætz

LtoN, J. The learned assistant attorney general, who argued the case before this court with great ability, contended 'that the delivery by Mr. Beetz of his check of September 22d to the treasurer of the hospital, Mr. Mills, and its acceptance by the latter, was not a payment of the $10,000 on account of the appropriation to the hospital; and if a payment, that the state treasurer had no authority to make it before the first of October, and could not lawfully make it then without the proper warrant of the secretary of state. The view we take of the case renders it unnecessary to determine either of these propositions. For the purposes of the case it will be assumed that they are correct. But it does not necessarily follow therefrom, as was also claimed by the counsel, that the defendants are liable on the official bond of Mr. Beetz for the $10,000 claimed. Notwithstanding these assumed irregularities, if the proceeds of the check, to the full amount thereof, came to the hands of Mr. Mills as hospital treasurer, and was used by him to pay the indebtedness of the hospital, for the payment of which the money was specifically appropriated by the legislature, the state has no grounds for its claim that the money remains in the hands of Mr. — 633 — Bcbíb. In that case there has been no such breach of his official bond as is assigned in the complaint. If the treasurer pays an appropriation in advance of the time of payment appointed by law, or if he pays it without the warrant of the secretary of state, when such warrant is required, he takes tire risk of being held liable upon his bond for any damages which may result to the state by reason of the irregular payment. But where the payment is made to a person to whom and for whose benefit the money is absolutely appropriated by law, and especially where the amount paid is placed to the credit of the treasurer in. the books of the secretary of state (although perhaps irregularly), it is difficult to' comprehend the principle upon which the state can recover the sum thus paid, in an action on the treasurer’s bond, in which the nonpayment of the money is assigned as the breach. If the appropriation be only payable in a certain contingency, and the treasurer pay it before the contingency happens, he takes the risk that the contingency will happen. Appropriations for the payment of official salaries at stated times are of this class. The treasurer may prepay a salary, and the officer to whom it is paid may resign, or die, or be removed from office, before the salary is payable. In such case, doubtless, the treasurer would be liable on his bond for the sum thus paid, and could be compelled to account for it to the state. But if such officer holds his office when the payment actually becomes due, there seems to be no good reason why the prepayment should not be held a valid payment from that time. There is another class of appropriations where the money appropriated must pass through the hands of an intermediate officer or agent before it reaches its ultimate destination. The appropriations to the hospital for the insane belong to this class. If the state treasurer makes an irregular payment of the money appropriated to such officer or agent, and it fails to — 634 — reach the persons ultimately entitled to it, it is probable that an action may be maintained by the state, on the bond of the treasurer, to recover the amount of such irregular payment. 'In each class of appropriations above mentioned, if the officer or person to whom and for whose benefit money is appropriated, receives the money, most assuredly the obligation of the state to him is discharged, no matter how irregular the payment. This being so, there seem to be no legal or equitable grounds upon which the state can compel the treasurer to refund the money, thus paid, after it has become absolutely due and payable to the person who has received it. The attorney general relies upon the case of United States v. Keehler, 9 Wall., 83, as holding the doctrine for which he contends. Divested of all features not applicable here, the case is this: Keehler, the defendant, was a postmaster, and one Clemmens was a mail contractor. Keehler had special instructions from the post-office department to pay over the net proceeds of his office to Clemmens from time to time, upon production by the latter of proper orders and receipts from the department. Keehler paid Clemmens a balance in his hands of such net proceeds without the production of the department order and receipt therefor. When the payment was made, the government owed Clemmens an amount greater than he received from Keehler. The action was upon the official bond of Keehler to recover the sum thus paid to Clem-mens; and Keehler and his sureties were held liable therefor. The grounds of the decision are thus stated by Mr. Justice Milleb, who delivered the opinion: “Can this voluntary payment to a creditor of the United States be pleaded to a suit on the bond? It is hardly necessary to say that such a payment is no compliance with the condition of the bond. It is therefore not good under a plea, of covenants or conditions performed. Nor can it be used as an equitable set-off, because it would produce endless confusion in the accounts of the department, and lead to double payments and serious embar — 635 — rassments in its business, if every post master who had government money could select a creditor of the United States and pay what he might suppose the government owed him.” ¥e do not question the soundness of that decision. But that case differs from this in several important particulars. Had Keehler been required by an act of congress to pay over the net proceeds of his office to Clemmens at a time certain, on production of the order and receipt of the post-office department, and had the amount paid by him to Clemmens been placed to his credit on the boohs of the department, although irregularly, we should have a case more nearly like this. Had the case presented these features, we venture the opinion that it would have been decided differently; for the perils of confusion of accounts, of double payments, and of embarrassments in the business of the department, would have been removed. Tet that is the strongest case cited to sustain the position of the attorney general. It is now to be determined whether Mr. Mills received and disbursed the $10,000 claimed in this action, as hospital treasurer. If he did, and if he used it to pay demands for the payment of which the money was appropriated by the legislature, then, as already observed, there is no foundation for the claim that the money is still in the hands of Mr. JScetz, and that it should have been paid over by him to his successor in office. The whole transaction, as it appears upon its face, is this: Mr. Mills received the check of the state treasurer as money, and receipted for the amount of it as money, on the appropriation, after the same was due and payable. He loaned the check to the bank of Madison as so much money, and received from the bank collaterals to secure the loan. He collected on the collaterals a sum of money exceeding the amount of the check, and with such money took up orders on him as hospital treasurer. These orders were properly drawn for the liabilities of the hospital for the payment of which the appropriation was made. — 636 — It seems perfectly clear to our minds that the legal results of these transactions are, that Mr. Mills received the money as hospital treasurer, just as effectually as though the state treasurer had paid over to him $10,000 in cash on the appropriation, on the first day of October; and that, by taking up the hospital orders with the money, he paid those orders, and thereby relieved the state from liability upon the demands for which they were issued. True, when Mr. Mills received the collaterals, and when he took up hospital orders with the money which he realized on them, he was in peril of being compelled to account to the assignee of the bank of Madison, in bankruptcy, for the amount so realized. • If we understand his testimony correctly, he testified on the trial of this action in the circuit court, in substance, that he elected to consider the money collected on the collat-erals as held by him for the assignee, if such assignee should recover the same; and the hospital orders which he took up with it, as his individual property. We think it was not competent for Mr. Mills thus to change the character and effect of his acts. The money came to his hands (although indirectly) from the treasury of the state. He gave the state treasurer his official receipt for it. It was the money of the state in Ms hands, and he was the agent of the state to disburse it for specific purposes. He disbursed it for those purposes by paying it on proper vouchers to the persons for whose benefit it was appropriated. It seems impossible in the nature of things that, by the mere force of the will or intention of Mi’. Mills, this money of the state in his hands can, in any contingency, become the money of the assignee, or the orders the property of Mr. Mills and valid claims against the state. Public officers and agents do not hold public funds by any such uncertain and dangerous tenure. When they disburse public funds as the law directs in taking up public indebtedness, such indebtedness is thereby paid; and they cannot become public creditors for the sums thus paid, even though — 637 — they intended to treat sucb funds as belonging to some individual, and to buy the demands of the public creditors, instead of paying them. The fact that Mr. Mills was compelled by the judgment of the United States court to pay to the assignee of the bank the amount collected by him on the collaterals, is quite immaterial. It is his misfortune, if he has so dealt with the money of the state as to subject himself to loss. Notwithstanding such judgment, the fact remains that, as hospital treasurer, he received from the state treasury and properly disbursed the $10,000 which it is claimed in this action Mr. Bcetz ought to have paid over to his successor in office. In the late case of Kinyon v. Stanton, ante, p. 479, we held that a party who had drawn his funds from a bank on the day of its failure and in view of it, thereby rendered himself liable over on his check, on® which, by reason of the negligence of the holder in not presenting it to the. bank for payment in time, the drawer would not otherwise have been liable; and that the fact that such party had been compelled by the judgment of the federal court to repay the amount thus drawn, to the assignee of the bank in bankruptcy, did not relieve him from such liability. That case tends to establish the doctrine, that the rights and liabilities of all parties affected by the receipt and disbursement of the $16,000 in controversy were fixed before the assignee obtained his judgment, and are unaffected by it. It is unnecessary to protract the discussion of the questions presented by this appeal. After careful consideration of the case, we conclude that, as hospital treasurer, Mr. Mills received from the state treasury the $10,000 claimed in this action, and disbursed the same according to law, paying therewith those demands against the hospital for the payment of which the money was appropriated; that the liability of the hospital and the state upon such demands was thereby discharged; and hence, that the failure of Mr. Bcetz to pay ovqr that specific — 638 — $10,000 to his successor in office is not a breach of any condition of his official bond. It follows that the nonsuit was properly ordered, and that the judgment of the circuit court must be affirmed. By the Gowri. — Judgment affirmed.