Powell v. Board of Supervisors

Reed, J., delivered the opinion of the court. The Bank of Tunica was selected as the depository of the county of Tunica for the year 1913. We quote from — 421 — the order made by the hoard of supervisors on January 6, 1913, accepting the bank’s bid, approving its securities offered, and directing the issuance of a commission to it, as follows: “It is therefore ordered by the board that the said bid of said bank of Tunica as depository of all funds of Tun-ica county be and the same is hereby accepted, and said bonds above mentioned are hereby approved, and said depository shall account for and pay interest to the said county of Tunica on any daily balances of all funds of said county deposited with it during the year 1913 in the manner as provided by law.” It appears that the notice to create a depository was given by the board of supervisors in accordance with chapter 137 of the Acts of 1910, and the commission was directed to be issued as provided for in that law. However, in this appeal, counsel for appellant and appellee treat and consider chapter 194 of the Acts of 1912, which was enacted to take the place of - chapter 137 of the Laws of 1910, and to be the law of the state for the establishment of county depositories, as applicable in this case. The commission issued -to the Bank of Tunica after stating that the bank had complied-with the requirements of the law, by giving-'the several securities placed with the county treasurer, being for the total amount of fifty thousand dollars, declares that: The bank “is hereby created and appointed depository of the county of Tunica for the balance of the term ending the 31st of December, 1913, and is hereby authorized and empowered to receive and disburse, according to law, any and all county funds there offered for deposit, but shall not have on deposit at any time an amount exceeding forty-five ’ thousand dollars, the said depository agreeing to account for and pay interest at the rate of and in the manner provided by law for the use of the county funds there kept on deposit.” The Bank of Tunica failed on April 28, 1913, and became insolvent. Thereafter, W. H. Powell, appellant, — 422 — upon a general creditors ’ bill, was appointed by the chancery court receiver of the bank and is engaged in administering its affairs having charge of all of its assets and undertaking the payment of its debts. At the time of the failure there was on deposit in the bank the public funds of the county to the amount of seventy-one thousand, nine hundred, twenty dollars and fifty-two cents.. The board of supervisors of Tunica county, on August 12, 1913, filed a petition in the chancery court setting out all of the facts relating to the creation of the county depository and the depositing of the county funds therein, alleging that the excess of twenty-one thousand, nine hundred, twenty dollars and fifty-two cents over the security given for fifty thousand dollars was an unsecured sum in the bank, and praying that the claim for this excess be established and declared a trust fund payable to the-county, and: £ ‘ That a first preference lien and charge be fixed upon all the assets of said bank and all- proceeds thereof on hand, or which may come into the hands of the receiver, and that he be directed to pay said sum and interest before paying any other creditors.” An answer was filed by the receiver, denying that the county was entitled to any preference over other creditors of the bank or had any rights to the assets of the bank superior to those of other creditors. The receiver also claimed in his answer that the county had deposited all of its funds in thé bank as the sole qualified depository under the law therefor; that the funds thereby became assets of the bank as other sums borrowed by it; that the relation of debtor and creditor merely then existed ; that the county must recover its funds in the event of insolvency out of the securities.; and that, failing in this, it must take its place in the line of general creditors and share its assets pro rata with them. The chancery court, by its final decree, sustained the contention of the county and declared the amount in the — 423 — hank in excess of the securities given to he a prior and preference charge against all funds and assets in the hands of the receiver and administered in the court subject to the payment of proper costs and expense in administering the estate. Prom this decree the present appeal has been prosecuted. Counsel for appellant in beginning their brief say: ‘ ‘ There is only one question presented by this appeal, to wit: When the board of supervisors have elected a depository of county funds under the act of the legislature and authorizing such depositories to be selected, and when the advertisement calls for bids for all of the •county funds and fixes the amount of security to be given, and when the bid accepted is for all of the county funds •and the security required by the advertisement is given, and when the order of the board awards all of the county funds to the successful bidder, there being at that time less than the amount of the security with ten per cent, •off, on deposit, and afterwards the board permits the depository to have in its hands a greater amount of public funds than it has security for, whether section 3485 of the 'Code of 1906 applies to the excess.” Section 3485 of the Code reads: “Public moneys are trust funds. — All money deposited in bank, or with any other depository, by or for a tax collector, or other officer having the custody of public funds, state, county, municipal, or levee board, whether the same be deposited in the name of the officer as an individual or as an officer, or in the name of any other person, is prima facie public money and a trust fund, and is not liable to be taken by the general creditors of the officer or by the creditors of the depository, ” It is beyond question in this state that, independent of the depository law, a county has a preference claim against all assets of a bank for public funds on deposit therein, and that such funds are trust funds for which this preference is given. Fogg v. Bank, 80 Miss. 750, 32 — 424 — So. 285; Metcalfe v. Bank, 89 Miss. 649, 41 So. 377; Green v. Cole, 98 Miss. 67, 54 So. 65; Potter v. Fidelity & Deposit Co., 101 Miss. 823, 58 So. 713. We do not see, in the present law, chapter 194 of the Acts of 1912, providing for the establishment of a county depository anything inconsistent with the provisions of section 3485 of the Code of 1906. The plan of the legislature. in authorizing the establishment of county depositories has for its purpose the providing of security for the county public funds. Such funds when secured in such depository do not need to be protected by section 3485. Therefore section 3485 will not operate to provide a preference charge on funds secured in a depository. This, in effect, was decided in Potter v. Fidelity S Deposit Company. In that case Chief Justice Mayes, delivering the opinion- of the court, said: “Section 3485 was not repealed, or intended to be repealed, by the Laws of 1908. Section 3485 still stands as security to the state for all deposits of its money made by any person, in case of the insolvency of the institution, where the deposit-is made, in all cases where any deposit is not made by virtue of its authority as evidenced by the depository law of 1908.” The funds of the county in the depository bank to the amount of the security, fifty thousand dollars, were thereby secured funds and not protected by section 3485. The bank was created and appointed a depository of the-county, for the term, to receive and disburse according to law funds offered for deposit, but with the express-prohibition that the bank should not have on deposit at any time an amount exceeding forty-five thousand dollars, which was intended to be ten per cent, less than the total amount of the securities placed, fifty thousand dollars. The bank was the qualified county depository for all county funds up to the amount fixed by thé board of supervisors when establishing it the depository. It could not be the depository except as authorized by the statute — 425 — and. the order of the hoard in compliance therewith. The authority is shown by the commission issued' to the bank. The very purpose of the legislature, by the enactment of the law for the establishment of county depositories, was to provide for the safe-keeping of the county funds. The safety of the funds is to be secured by the placing •on deposit with the county treasurer, securities in amount ten per cent, greater than the maximum, sum to be on deposit in the bank at ahy one time. Under the plan, the board of supervisors may arrange for the depositing of “the county funds in more than one bank.. If two banks were selected and made depositories, then each bank would be a depository to the amount fixed in its contract or arrangement with the board. It is surely a proper interpretation to put upon the statute to say that a bank selected as a depository is only such depository, authorized by law to • receive deposits of county funds, in the amount to which it qualifies by the deposit of securities. Therefore county public funds received into the bank up to the amount f or which it has qualified are received and held by the bank as a county depository. When the full amount for which the bank has qualified has been reached, then any other funds will be received into the bank, not in its capacity as depository, but simply as a bank which is not a county depository receiving public funds. Such excess funds will come under the protection of section 3485. “They are funds unsecured, deposited in the bank without authority given in the statute, and by virtue of the order of the board of •supervisors following the directions of the statute, and which authority is to be expressed in the commission issued to the bank. They are trust funds and are not liable to be taken by the creditors of the depository. We note the argument made by counsel for appellant that, as the board of supervisors selected the Bank of Tunica as the sole depository for all of the county funds, xhe county has itself disposed of its public funds as re — 426 — quired by the depository laws, and the relation of debtor and creditor is thereby established between the hank and the county; and that, in the event of insolvency, the-county must realize out of its securities taken, and, failing in this, must share the assets pro rata with other-creditors ; but we do not see that this will avail appellant, in this consideration. The selection of a bank does not complete its creation as a county depository. This is only accomplished by the depositing of the securities, which is followed by the issuance of a commission showing its qualification as depository to receive and disburse funds in amount not exceeding a sum stated. The Bank of Tunica, elected county depository for all funds, only qualified for a definite-amount. It is not a question of election but of qualification. A bank may be elected, and still never qualify by-depositing the securities. We do not see that the protection of the excess funds-by the operation of section 3485 will be prevented by the-board’s permitting the depository to have in its possession a greater amount of funds than the bank had qualified for. This is a suit by the county. The rights of the-county are sought to be enforced, not those of the board. In the case at bar the failure of the board to keep informed as to the amount of funds in the bank and to prevent the sum being in excess of the proper amount will not affect the county’s rights; for the bank knew the-amount on deposit and knew whether it had exceeded the amount it was authorized to receive under its commission. It acted wrongfully in receiving such excess amount. It became a trasteé under the law holding such funds not, simply as a debtor, but as a trustee. We conclude that the chancellor did not err in his decree and that the amount of the county funds deposited in the bank in excess of the sum in which the bank quali - fied as depository is protected by section 3485. Affirmed,.