Bank of McCool v. United States Fidelity & Guaranty Co.

Holden, J., delivered the opinion of the court. This is a suit by the appellant, Bank McCool, against individual members of the board of supervisor’s'of Attala county and their sureties on their official bonds,'to recover damages for a failure of the supervisors to select and commission the appellant as the county depository and deposit with it public funds amounting to seventy-five thousand dollars, claiming that it was entitled to be commissioned as the county depository, because its bid for the county funds was the best received and should have been accepted by the board under the State Depository Law. A demurrer filed to the bill was sustained by the lower court, hence this appeal. The facts upon which this suit is predicated are substantially as follows*: The board of supervisors advertised for proposals for keeping the county funds for one year, — 835 — under the County Depository Law. In response to the notice, the appellant, Bank of McCool, and the Merchants’ & Farmers’ Bank of Kosciusko, both banks being located in Attala county, filed their bids to become depositories for the county funds. The appellant, Bank of McCord, offered a higher rate of interest for the funds than that offered by the Merchants’ & Farmers’ Bank, and tendered a bond conditioned according to law together with certain securities, as required by the depository act. The Merchants’ & Farmers’ Bank tendered only a personal bond, signed by individuals and not by surety companies, as provided by the statute. The bill alleges, that “thereupon, on February 8, 1917, an order was made in this matter reciting the several bonds”; the order of the board being: “And, on Monday, the 5th day of February, 1917, sealed bids were opened by this board when it appeared that the Merchants’ & Farmers’ Bank of Kosciusko, Miss., bid for the same the sum of two' and nine-sixteenths per cent, per annum, on daily balances, and whereas, the Bank of Mc-Cool bid on the same the sum of three and twenty-six hundredths per cent, per annum, for the daily balances, and tendered a bond condition according to law, in the sum of seventy-five thousand dollars, for the safe-keeping and custody of said funds; when said board awarded the same to the Merchants’ & Farmers’ Bank of Kosciusko, Miss., they offering the best terms, considering that it would be to the best interest of the county and more suitable to our people to have a depository in Kosciusko, than in McCool, Miss., both of said banks being equally solvent. When the same was accordingly awarded to the Merchants’ & Farmers’ Bank, all members of the board voting for the same except Hon. J. D. Boyd of District No. 2, Attala county, Miss., the member of the board from said district, voted for the Bank of McCool, and desired his vote to be recorded against the same, contending that the law should be followed as written, as understood’by him. The Bank of Mc-Cool offering more money for the deposit, as shown in the — 836 — above bids, than the Merchants & Farmers’ Bank, but was awarded to the said last-named bank for the reasons above stated, and all parties desire that this record go on the minutes.” The bill charges that this action of the board was in violation of appellant’s rights, because the appellant had bid the highest rate of interest, tendered lawful security, and was a solvent bank; that the county had, in depositable funds, throughout the year, seventy-five thousand as a daily balance, and that, if the board had accepted appellant’s bid, it would have received this money, loaned it out, and profited to the extent of three thousand, five hundred and fifty-five dollars; that appellant is entitled to punitive damages for the willful and wanton conduct of the members of the board in refusing to commission appellant a depository; that the board violated its duty and the law in selecting the Merchants’ & Farmers’ Bank as a depository, instead of appellant, and in turning the funds of the county over to the- former. There are other allegations in the bill unnecessary to set out because, as we think, they have no merit. The principal contention of the appellant is that the action of the board, as shown by its minutes, was illegal,.for the reason that the board had no discretionary power in selecting the depository, but that it was mandatory upon the board to select the appellant as a depository, because its bid for the funds was the best; that it was solvent and had furnished the security required by law, and therefore it was the ministerial duty of the board to award the funds to appellant, under the provisions of the Depository Law. The opposite view urged by the appellees is that boards of supervisors exercise discretionary powers in selecting or declining to select a county depository, and their acts are not subject to review in a collateral proceeding. Chapter 257, Laws of 1914, section 4235, Hemingway’s Code, prescribes the method to be pursued by the boards of supervisors in making the selection of county depositories. Section 1 of this chapter concludes: — 837 — “And the said board shall cause the county funds in the hands of the county treasurer to be deposited in the hank or banks proposing the best terms having in view the safety of said funds.” Section 3 of chapter 194, Laws of .1912, which was not amended by chapter 257, Laws of 1914, concludes as follows : “The board of supervisors shall have the right to reject any and all bids where, in the opinion of the board the security offered is not sufficient.” After a careful consideration of the question involved, we have reached the conclusion the lower court ivas correct in sustaining the demurrer filed by the appellees. The reasoning, upon which this conclusion is based, is that the Depository Act vests in the board of supervisors the discretionary power of rejecting proposals made by banks to become depositories for the county funds. The act provides that the funds shall he “deposited in the hank or hanks proposing the best terms having in vieAV the safety of said funds.” And, in the exercise of their discretion, the members of the board are not liable for any mistake made by them while acting in good faith and not through corrupt or fraudulent motives. And, when, in their discretion, the supervisors have refused to select a bank to become a depository, the terms and safety being in view, their act cannot be inquired into or questioned in a collateral proceeding, which would he an interference Avith the exercise of their judgment in the matter. There is no charge of fraud or corruption against the supervisors in this case. They may have made a mistake of fact in failing to select the appellant as the county depository, but no inquiry as to what actuated them in doing so can be made except for fraud, because their determination is judicial and final. It is true the allegations of the bill, which set out the order of the board on its minutes, designating the depository, show that the board selected the Merchants’ & Farmers’ Bank as a depository instead of the appellant bank, on — 838 — account of convenience in the location of the bank, nevertheless the recited facts upon which the board acted, even though true, are immaterial in this case, because it was not necessary to state the reason or facts upon which the board acted. Furthermore, the board may have also considered the question of safety of the funds. A weak bank might' be the highest bidder. The order of the board, set out in the bill, amounts to no more than a mere allegation of fact in the bill, and, while the demurrer admits the truth of the allegation, still the wrong charged was done in the exercise of a discretion, and no liability exists against the members of the board. The contray would be true if the act of the board was ministerial instead of judicialand, while plausible argument may be made that, when the appellant bank made the best bid and qualified otherwise according to law, that then the letting of the funds became ministerial, yet this cannot be sound, because the law authorizes the board in its discretion to select or reject any proposal of a bank, for reasons of safety, Avhich the board may have in mind, as provided in the act. In the case of Pearl River Bank v. Town of Picayune, 126 Miss. 473, 89 So. 9, decided by this court, July 11th, 1921, it was said, in the opinion by Sykes, P. J.: “It will be noted that, in the selection of a depository, under chapter 257, Laws of 1914 (section 4235, Hemingway’s Code), the board selects as the depository the bank or banks proposing the best terms, ‘having in view the safety of said funds.’ Under this section the board is not simply required to accept the bid of the bank proposing the best terms, but must have in view the safety of the funds. It is a matter of primary importance to the municipality or to the county to deposit its funds with a safe and secure bank, where these funds are subject at all times to the use of the municipality. Under this section, if for any reason either a county or a municipal board should question the solvency of the bank offering the best terms — 839 — as a depository, it would have the right to reject this bank because of this part of the section. That the legislature intended for these boards to carefully guard these funds is further shown by the concluding part of section 3, chapter 194, Laws of 1912 (section 4240, Hemingway’s Code), which gives these boards the right to reject any and all bids when, in their opinion, the security offered is not sufficient. By these laws they are enjoined: First, to have in view the safety of the deposits; and, second, to reject bids when the securities are insufficient. . . . “Under this scheme it is perfectly manifest that the board is vested, and wisely so, with a discretion in this matter, and that the first and primary question to be considered by the board, ‘having in view the safety of said funds,’ is the solvency of the banks bidding for this depository, and the second consideration is the best bid of a solvent bank. These are necessarily discretionary powers vested in these boards. Being discretionary powers, their acts are not subject to judicial review in this proceeding. Swan v. Gray, 44 Miss. 393 ; Shotwell v. Covington, 69 Miss. 735, 12 So. 260 ; State v. Henry, 87 Miss. 153, 40 So. 152, 5 L. R. A. (N. S.) 340.” We think the decision in the above case is controlling in the case now before us, and, in view of the conclusions reached by us above, the judgment of the lower court should be affirmed. Affirmed.