Minnehaha National Bank v. Toohey

PO'LDEY, J. This original proceeding in mandamus .is brought to compel the defendant, as treasurer of the independent school district of the city of' Sioux Falls, to honor and pay a certain warrant issued by the school board of said school district in payment for certain government 'bonds known as “Liberty Bonds,” and which bonds had theretofore been subscribed for by said school district. It appears from the affidavit filed by plaintiff and upon which the application for a peremptory writ of mandamus is 'based that on the 8th day of November, 1917, the hoard of education- of said school1 district, pursuant to a resolution theretofore adopted, issued to the plaintiff a warrant on -the defendant in payment for said Liberty Bonds; that said warrant, on its face, was drawn against the “bond interest and sinking fund” of said' school district; and that at the time said warrant was presented' to defendant there were sufficient of the funds named in said warrant 011 hand to pay the same in full. [1] Defendant in -his answer admits the above facts, and admits that the said school board has authority to' invest the bond interest and sinking* fund of said school district in government -bond's of the character described in plaintiff’s affidavit, and admits that plaintiff is ready to and' will, upon the payment of the -said warrant, deliver the said Liberty Bonds to' the said school board. The only reason assigned by 'defendant for not paying said warrant is that the said Liberty Bond's have not been and will not be delivered into the custody and- possession of 'defendant as treasurer -of s-aid school district, it being his contention that, as such treasurer, he is the proper custodian -of said bonds a-nd the [553] only person who is entitled to the custody thereof; that he is responsible for the safe-keeping* of said bonds; and that, in case the same should1 be lost to the school district through embezzlement or otherwise, he would be liable on liis official bond for such loss, whether said bonds had ever been in his possession or not. This contention Is not warranted by the law. Under the provisions of section 125, c. 119, Taws of 1913, the city treasurer of the City of Sioux Falls is ex officio treasurer of the Independent school district of the city of Sioux Falls without any liabilities or obligations other than those imposed upon him as such city treasurer, except such as are impliedly imposed upon him in his capacity as treasurer of the school district. Nor is he required to give any official bond other than that furnished as city treasurer. By section 60, c. 119, Laws of 1913, the city treasurer, upon assuming that office, is required to furnish a bond “conditioned for the faithful performance of the duties- of the office and the payment of all money received by such officer, according to law and such ordinance of such -city.” This provision of law, applied to defendant as treasurer of the school district, would -require him to pay out all money belonging ta the school district according to law and the resolutions of the school board; and the lawful manner, or at least one lawful manner, of paying out the money belonging to the school district, is upon- warrants regularly issued for a lawful purpose by the school board. From this it follows that, when the warrant involved in this case was presented to him for payment, it was his duty to pay it, unless there is some provision of law that requires that the bonds to be paid for with the -proceeds of said warrant be- deposited with him before or at the time he pays out the money. [2] The only provision of law to which our attention has been directed relating to the custody of bonds and other securities purchased by the school board or held by the school board as security for loans is found in section 130, c. 119, Laws of 1913. Section 121 of this act authorizes1 the city commission to purchase certain classes of bonds, including the class of bonds involved in this case, and to use the sinking fund of the city in payment therefor. Said section also provides that such sinking fund may be loaned on any of the securities that the -city is [554] authorized to purchase, provided such securities are deposited with the city treasurer to be 'held by him as collateral security for such loan. This makes a distinction between bonds that are purchased and owned by the city, and such as are held by the city as -collateral security -only. In case they are taken as collateral, they are to- be -deposited with and kept by the city treasurer. He then becomes the legal custodian thereof, and of course liable therfo-r on his official bond. But in case of bonds that are owned by the city no such provision is found. By the provisions of section 130 the school board is authorized to- -buy, or take and hold as, security for loans, any of the bonds or securities that a city may take for a similar purpose and under the same restrictions, and may use its sinking fund to make such purchase or loan. Iii other words, money belonging to the sinking fund of the school board may be l-o-aned on any of the securities named in section 121, but -such securities must be deposited with the treasurer to be held biy him as collateral security for such loan, and he would be justified in refusing to- pay the money out of such sinking fund until such securities were deposited with him. But there is no- such provision relative to bonds -that - are purchased and owned by the -school -district. From the fact -that the Legislature required securities that are taken as collateral only to be deposited with the treasurer, and di-d not require securities that were purchased and owned by the school district to- be deposited with him, it may fairly be inferred that the Legislature did not intend that such securities should be deposited with the treasurer, but intended to leave the s-ch-ool board free to select a custodian- for the latter class of securities. And, as the treasurer is not m-adfe the legal custodian of such bonds, he is not liable on his official bond for the safe-keeping thereof, an-d was not warranted in refusing to pay the s-aid warrant except upon the condition that the -bonds purchased with t-h-e proceeds -thereof be -deposited with him. When the warrant was presented to him for payment, it was his duty to pay it. The warrant, when paid, will take the place of that amount of ca-sE in his- settlement with the school board, and will relieve 'him from liability for the amount -of cash paid out on said warrant. [3] As it was the plain duty of the defendant to pay said [555] warrant on presentation, the peremptory writ will issue as prayed for; but, as defendant was acting in the interest of the public, and appears to have been acting in good faith, no- costs will be allowed to the plaintiff. McCOY, J., concurs in the result.