van Vlissingen v. Board of County Com'rs

Security for County Funds Deposited in Banks. The statute requires that banks designated by the board of auditors of a county as depositories of the funds collected by county treasurers shall secure deposits to a specified amount by bonds, with sureties, approved by the county commissioners. No other or different security is contemplated as a condition of receiving such deposits. It will not be presumed that the county board will accept other security in lieu thereof. Incomplete Delivery and Acceptance. An assignment of a mortgage to a county, voluntarily made by a bank holding deposits as one of the designated depositories of the county funds, and placed in the hands of .the county attorney, and intended as further security generally for deposits accrued, and which might accrue, to and beyond the bond limit, field ineffectual as a delivery to the intended as-signee, or as a transfer of the security, as against a subsequent assignment of the bank, which took effect before the actual delivery to or acceptance by the county board of the assignment first mentioned. (Opinion published 56 N. W. Rep. 251.)

Appeal by plaintiff, Paul van Vlissingen, from an order of the District Court of Clay County, Ira B. Mills, J., made December 26, 1892, denying bis motion for a new trial. H. A. Bruns and Thomas C. Kurtz were partners at Moorhead, doing business as bankers under the name Merchants Bank of Moor-head. They gave bond and received on deposit the money of Olay County. Kurtz was chairman of the Board of County Commissioners. In October, 1891, some question was made as to the safety of money on deposit, belonging to the county. Kurtz thereupon handed to W. B. Douglass, County Attorney, a note and mortgage for $6,000 made by the Moorhead Manufacturing Company, and $2,000 of the stock of the Bed Biver Valley Investment Company, as additional security to the county for the payment of its deposits. Douglass put the stock and securities in an envelope and left them in the safe of the firm in the bank. They remained there until sometime in January, 1892, when they were taken out by the County Attorney. On February 10, 1892, Bruns and Kurtz had on deposit over $20,000 of the money of the county. They were on that day adjudged insolvent and the plaintiff was appointed receiver of their property. Tliis appointment seems to have been made by tbe District Court under Laws 1881 cb. 148, on tbe petition of some creditor.. After this tbe County Attorney delivered the stock and securities to-tbe County Auditor and reported tbe facts to tbe Board. Prior to-doing this be bad no instructions or authority from tbe Board to act for it or to obtain security. Tbe board authorized tbe County Attorney to sell tbe note, -mortgage- and stock and deliver tbe proceeds, to tbe County Treasurer. Before this was accomplished, tbe plaintiff as such receiver brought this action of replevin against tbe Board, of Countjr Commissioners to obtain tbe possession of tbe stock and securities. More than ninety days elapsed after tbe stock and securities were so delivered by Kurtz to tbe County Attorney, before-tbe insolvency proceedings were commenced against Bruns and. Kurtz. Tbe issues were tried July 27, 1892, before tbe court without a jury. Findings were made that tbe County owned tbe stock and securities and was entitled to their possession, and judgment was-ordered that they be returned to it, and if a return could not be had, that it recover of plaintiff their value. The trial court in a note expressed tbe opinion that tbe County, as'creditor of Bruns- and Kurtz, had tbe right to obtain additional security for tbe debt and that tbe delivery of tbe stock and securities to tbe County Attorney in October, 1891, passed tbe title to tbe County. Tbe statutes of this state confer no authority or capacity upon a county, under any circumstances, to acquire chattels of tbe kind in controversy. Shepard v. County of Murray, 33 Minn. 519; Williams v. Lash, 8 Minn. 496; Shelley v. Lash, 14 Minn. 498. By Laws 1860, cb. 15, § 2, tbe statute was so amended as to authorize the county to purchase and bold real and personal estate for the use of tbe county, and lands sold for taxes as provided by law. One purpose of this amendment was apparently to place real estate and personal property upon tbe same footing, as respects their acquisition or ownership by the county. James v. Wilder, 25 Minn. 305. By Laws 1864, ch. 23, the law was again amended so as to read in its present form, as found in 1878 Gr. S., ch. 8, § 83. Each organized county within this state is empowered to purchase and hold real and personal estate for the use of the county, and lands sold for taxes, as provided by law, and to purchase and hold for the benefit of the county, real estate sold by virtue of judicial' proceedings in which the county is plaintiff. Under the statute as so ■ amended, a county cannot for any purpose acquire title to a mortgage or corporate stock. Such property could never be considered as held for the use of the county. Our statutes prescribe the method whereby the treasurer may lawfully deposit the county moneys and relieve both himself and his sureties from responsibility concerning the same. 1878 G-. S., ch. 8, §§ 150, 153; Laws 1883, ch. 51; Laws 1881, ch. 124. A depository can only be lawfully appointed upon compliance with these statutory prerequisites. The depository cannot be designated •or the amount it is authorized to receive enlarged by the County 'Commissioners alone, either individually or as a board. And, inasmuch as the action of both the Board of Auditors and the Board •of County Commissioners in the selection and designation of depositories and the acceptance and approval of the security calls for the exercise of discretion and discrimination, it is clear that the powers of these boards in these particulars cannot be delegated to individual members of the boards or to any other official or person. Commissioners of Hennepin Co. v. Robinson, 16 Minn. 381; Darling v. City of St. Paul, 19 Minn. 389; In re Wilson, 32 Minn. 145; Minneapolis Gas Light Co. v. City of Minneapolis, 36 Minn.. 159. If then the County Attorney had no power to take security for the county deposits in this bank, it follows that defendant’s claim of title to these chattels rests entirely upon the action of the Board of Commissioners taken subsequent to plaintiff’s appointment as receiver, either by way of ratification of the unauthorized act, or by the acceptance of the security previously attempted to be given. It is a conclusive answer that plaintiff had previously been appointed receiver. Whatever might be the power of the county to accept security in addition to the statutory bond, it could not lawfully receive any security different in kind, in place of such bond. But this is what the Attorney assumed to do in its name. The bond of the depository bank did not exceed thirty thousand dollars • and it could not lawfully receive more than fifteen thousand dollars of the county funds. It appears from Mr. Douglass’ testimony that in the month of October he had a conversation with Kurtz in which it was in substance agreed that in lieu of increasing the amount of the bond rendered necessary if the deposits were allowed to increase, Kurtz would fix up a package of securities. And pursuant to this conversation the papers in question were handed to the County Attorney. There is no evidence tending to contradict this testimony of Mr. Douglass and it was pursuant to the agreement here disclosed that the papers were handed to the Attorney. The purpose was not to secure funds already deposited. They were supposed to be safe by all parties. Williams v. Lash, 8 Minn. 496 and Shelley v. Lash, 14 Minn. 498 are substantially overruled in the case of Shepard v. County of Murray, 33 Minn. 519. Upon reason and authority, where the county has the express power to create a debt or obligation, such as a treasurer’s bond, and the power to sue and collect such debt, it should have the power to take money or property in payment or security of that debt, if such action is necessary to save the county from loss. The county did not accept this mortgage as a purchase, but only as collateral security in addition to the bond. Breen v. Kelly, 45 Minn. 352; Richards v. Osceola Bank, 79 Iowa 707. The power existed in the county to accept additional security and this cannot be successfully assailed. The only question is, must the law officer of the county call together in special session the Board of County Commissioners to accept securities given solely for the benefit of the county. Such a position would be absurd. But if it should be held that the County Attorney had no authority to accept this assignment for the benefit of the county, still there was a sufficient delivery even upon the technical rules governing the delivery of deeds of real estate, for it is well settled that a deed delivered to one party for the benefit of another, with intention that it shall take effect immediately, does so, although the party receiving it had no authority and it was without the knowledge of the grantee. The deed being manifestly for the benefit of the grantee, an acceptance would be presumed until an actual dissent is proven and the burden is upon the grantor to show a dissent. Holcombe v. Richards, 38 Minn. 38; Read v. Robinson, 6 Watts & S. 331; Church v. Gilman, 15 Wend. 656; Tompkins v. Wheeler, 16 Pet. 113; Adams v. Adams, 21 Wall. 185; Lee v. Fletcher, 46 Minn. 49; Fenton v. Miller, 94 Micb. 204. It is claimed by tbe appellant that the acceptance of these securities was an absolute violation of the law and therefore void, in that the bond of the bank was only $25,000 or $30,000 and that the securities were accepted under an arrangement to increase the deposit in excess of that allowed by the bond. The deposit was upward of $20,000, and the bond was duly given, and the bank duly designated, and the bond was in the usual form. This is not overcome by the statement of Mr. Douglass that he thought the bond was somewhere from $25,000 to $30,000, but he could not say. The additional securities were taken because there was a large amount of money being deposited, and the question was raised whether the bond was sufficient, i. e., whether the sureties were good. There is nothing to show that the county did not take this as additional security on the ground that the sureties were not good. The statutes in this state authorize the county commissioners at any time to demand an additional bond and if the sureties are not good to insist on additional sureties; hence, there is no evidence that there was any violation of law in this case. But there is another reason why this assignment cannot be questioned, and that is that the assignee is estopped. An assignee only represents the debtor except as the statute gives him power to assail conveyances fraudulent as to creditors. Certainly, this is not a conveyance that a creditor could avoid. The bank did not make it to defraud anyone; and the bank received and retained county money deposited in reliance upon it. The bank would be estopped to deny the validity of the transfer which was made, and so is the plaintiff, its assignee. Argenta v. San Francisco, 16 Cal. 255; Nelson v. Mayor, 63 N. Y. 535; Commissioners of Hennepin Co. v. Robinson, 16 Minn. 381; Kelly v. State, 25 Ohio St. 567; Hough v. Cook County Land-Co., 73 Ill. 23; Whitney v. Robinson, 53 Wis. 309.