State ex rel. Bank of Crane v. Hawkins

BLAND, P. J. In response to a notice duly given by the county clerk of Stone county, under the provisions of section 6817, article 6, chapter 97, entitled “County Depositary,” R. S. 1899, that the county court of said county would, on May 6, 1907, receive sealed bids from banking institutions in the county to become depositary of the fund of said county, the Bank of Crane submitted a proposal offering to pay 5 3-4 per cent on daily balances; the Farmers & Merchants’ Bank submitted a proposal to pay 5 1-2 per cent on daily balances; and the Bank of Galena a proposal to pay 5 1-2 per cent on daily balances. Each of these bids was accompanied by-a check exceeding in amount one-half of one per cent of the county revenue the preceding year as a guarantee of the good faith of the bidder, and as required by section 6818 of the chapter. The Bank — 43 — of Crane also deposited with tbe clerk of tbe county court its bond in tbe sum of $50,000, conditioned as required by section 6820 of tbe chapter, which bond was executed by said bank and signed by twenty-five sureties wbo own unincumbered real estate in this State of tbe aggregate value of $100,000. Tbe county court opened tbe three bids on May sixth and continued tbe. award until May eleventh, when it . rejected tbe bid of tbe Bank of Crane and that of the Farmers & Merchants Bank and selected tbe Bank of Galena as county depositary for tbe ensuing two years. On May 13, 1907, one of tbe judges of this court, in vacation, on tbe application of tbe Bank of Crane, issued a preliminary rule prohibiting tbe defendant justices of tbe county court from taking any further action in tbe matter of selecting a county depositary for tbe funds of said Stone county. Defendants have made and filed their return to tbe preliminary rule, setting up the facts above related, and also tbe following additional facts: That tbe Bank of Galena, on May fourteenth, and before the service of tbe preliminary-rule issued herein, complied with section 6820, supra, by filing with tbe clerk of tbe county court a good and sufficient bond as county depositary; that tbe adjournment for consideration of tbe bid from May sixth to May eleventh was made at the special instance and request of tbe Bank of Crane, and copied into their return tbe following entry of record made by tbe county court on May eleventh, to-wit: “Tbe court, after a full and fair investigation, and being fully advised in tbe premises, finds that tbe county’s interests will be best subserved by a rejection of tbe Bank of Crane’s proposal for tbe following reasons, to-wit: “First. Tbe Bank of Crane having been tbe county depositary for tbe previous two years, tbe court finds that tbe business of tbe depositary in tbe matter of handling tbe funds has not been conducted in a man — 44 — ner satisfactory with the county’s interests, and that while said depositary filed a bond indemnifying the .county, the court deemed it advisable to avoid expensive litigation, if such emergency should arise in the ensuing term, by selecting a depositary, if possible to do so, of such character as will transact the business in a satisfactory manner. “Second. The court, through its agent, L. U._ Crawford, for the purpose of enabling, the said Crawford to- check up and audit the accounts of the county treasure!’, requested said bank to render a statement of' moneys on hand in the depositary at the close of business on the fifteenth day of April, 1907/ Said bank reported the amount on hand at that time as being $14,336.45, when as a matter of fact there was $15,-012.39. “It is therefore ordered and adjudged by the court that the Bank of Crane’s bid be, and is hereby rejected.. • “It is further ordered and adjudged by the court that the proposal submitted by the Farmers and Merchants Bank be and it is hereby rejected. “Whereas, the Bank of Caleña offered the highest and best bid, it is ordered and adjudged by the court that said bank be and it is hereby selected and appointed by the court as such depositary for the ensuing term of two years from the date of the approval of such bond as the law requires.” It is asserted by the relator that the error in the balance deposited to the credit of the county in the Bank of Crane, on April 15, 1907, was due to an error in the drawing of certain checks in the individual name of the treasurer instead of in his official name. There is no allegation in the return that the treasurer was found short in his accounts, or that the Bank of Crane had so conducted its business as depositary as to involve, or threaten to involve, the county in litigation. The proceeding is in prohibition which will not lie, un — 45 — less it appears from tlie facts stated in tbe return that the county court exceeded its jurisdiction in rejecting the bid of the Bank of Crane* Relator’s contention is that as it was the highest and best bidder, the county court was bound to accept its bid and designate it as depositary of the county fund for the ensuing two years; to the contrary, defendants contend they had a right to reject the relator’s bid and to select the Bank of G-alena as county depositary if, in the judgment of the county court, it was to the- best interest of the county to reject the highest bid and accept a lower one. These opposing views must be settled by a construction of section 6819, of the chapter, as amended in 1901. As amended the first clause of the section reads as follows: “It shall be the duty of the county court at noon on the first day of May term of said court in 1891 (1901.), and every two years thereafter, to publicly open said bids and cause each bid to be entered upon the records of the court, and to select as the depositary of the county funds, district school funds and capital school funds not otherwise invested according to law, the banking corporation, association or individual banker offering to pay to said county the largest rate of interest per annum for said fund: Provided, that the court shall have the right to reject any and all bids.” Prior to 1895, the treasurer of the State and the treasurers of many of the counties of the State derived a profit from the State and county funds by receiving interest thereon from banking corporations in which they deposited said funds. Section 17, article 10, of the Constitution of 1875, declares the making of profit out of State, county, city, town or school district money, or the use of the same for any purpose not authorized by law, by any public officer, to be a felony; and section 15, of the same article, makes provision for the deposit of all State moneys at interest for the benefit of the State. In pursuance of this declared policy of the State, — 46 — tbe Legislature enacted tbe county depositary law. This policy prohibits all forms of graft by public officers in tbe handling or depositing of public funds and forbids all favoritism in the selection of banking institutions as depositaries of said funds. Keeping this policy in view, the county depositary act should be so interpreted as to effectuate tbe purposes tbe Legislature had in view when enacting it, that is, that tbe county should receive tbe benefit of tbe highest rate of interest obtainable on tbe county funds, at a minimum risk of losing said funds, or any part thereof. This would not be accomplished by tbe selection of a depositary of doubtful solvency, or whose business methods are not consistent with safe and sound rules of banking. The county courts are by law made the agents of the counties for the transaction of all county business, and the Legislature, in its wisdom, delegated to these courts the power and the duty of selecting depositaries for the funds of the counties, and gave them the right to exercise, not arbitrary' power, but a sound discretion in making such selection, by providing that they might reject any and all bids for the fund. Without this proviso it would be the imperative duty of the county courts to designate the banking institution making the highest bid as county depositary and to award to it the funds, on the execution of a solvent bond. The proviso modifies the imperative words of the statute, not by leaving it to the discretion of the county courts to select or refuse to select a depositary at ail, but to reject any bid made by a banking institution whose solvency or business methods would, in the opinion of the courts, put to hazard the funds of the county, or involve it in litigation in respect thereto. Under the statute, the designation of the depositary is an act in the administration of the financial affairs of the county, and the exercise of a ministerial or executive function conferred upon the county courts by the Legislature. That the — 47 — exercise of such a function cannot be controlled or regulated by prohibition is the well-settled law of this State. [State ex rel. West et al. v. Clark Co. Ct. et al., 41 Mo. 44; Vitt v. Owens et al., 42 Mo. 512; Hockaday et al. v. Newsom, 48 Mo. 196; School Dist. v. Burris, 84 Mo. App. 654; High on Extraordinary Legal Eemedies (3 Ed.), sec. 669.] Therefore, we conclude that the preliminary writ should be discharged and the cause dismissed at the cost of the petitioner. It is so ordered. All concur.