United States Fidelity & Guaranty Co. v. First State Bank

1. Pleading. Demurrer. Admissions. Banks. Deposit of public moneys. Insolvency. Liability of depositories. “Municipal.” Under Code 1906, section 3485, so providing, all moneys deposited in a bank or 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 otherwise is prima facie public money and a trust fund and is not liable to be taken by the general creditors of the depository. 2. Same. This statute is in derogation of the common law and must be strictly construed, and the word “municipal” was intended to embrace only that character of municipal corporations as are represented by cities, towns and villages and levee boards, and does not include the board of drainage commissioners and the funds of such board deposited in a bank are not protected by the statute.

Appeal from the chancery court of Bolivar county. Hon. M. E. Denton, chancellor. Suit by the United States Fidelity & Guaranty. Company, surety of John L. Gills, treasurer of the drainage commissioners of Bolivar county, by virtue of his office as treasurer of the county, against the First State Bank of Shaw-, of which W. J. Hardee was appointed receiver, to be subrogated to the rights of the drainage commissioners. -From a decree sustaining a demurrer to the bill of complainant, the United States Fidelity & Guaranty Company appeals. The facts are fully stated in the opinion of the court. The basis of appellee’s contention, which the court adopted, is that section 3485 specifies what funds are trust funds, and drainage funds are not specified— expressio unius est exclusio alterius. This, I submit, is a surprising misconception of the language of the statute. The section in question is as follows: “3485 (3077). 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 general creditors of the ' officer or by the creditors of the depository. ” County funds are specified, and my contention is that drainage funds are county funds. They are raised for a county purpose, towit, the drainage of some district of the county needing drainage. Chap. 39, Code 1906. They are raised by assessment on lands in the particular district of the county (Sec. 1868), or by sale of bonds based on assessment of lands in the particular district of the county (See. 1709). They are turned into the •county treasury (Sec. 1704). The county tax collector ■collects the delinquent assessments (Sec. 1703). (See particularly Chap. 191, Acts 1910.) They are as much •county funds as funds for separate school districts of the ■county, not municipalities, which the county treasurer .also handles (Sec. 4531). What else need there be to constitute these funds, ■county funds? But appellee points out sections 1697 and 1707, and •says that these drainage districts are constituted corporate entities with power to contract and be contracted with and to sue and to be sued in their corporate names. True, but that does not mean that they are anything more than mere corporate agencies, for the more prompt and efficient carrying out of a laudable and beneficient public county work. The board of supervisors appoint the commissioners (sec. 1682), fill vacancies (sec. 1719), and the commissioners report to them (secs. 1715 and 1709). This indicates the county’s interest and control. The state of Mississippi carries out part of its educational scheme through corporate agencies. The'University of Mississippi is a distinct entity — a corporation (Chap. 146, Code); so is the Agricultural and Mechanical College (Chap. 3, Code), and the Industrial Institute and College (Chap. 66). State funds are set aside for the support and maintenance of these institutions, and are subject to the disposal of the board of trustees, but these funds undoubtedly remain state funds, consecrated to the particular state work. Appellee contends that these drainage districts are more than county agencies or institutions, because a drainage district may not lie wholly within one county. The idea is that this puts the drainage districts in the same category with the levee board, which the legislature thought necessary to specifically mention in section 3485. If it be time, as suggested, that a drainage district lying partly in one county and partly in another, is not a county agency or institution, but an entity like the levee board, it is not to be understood how that fact could militate against my theory so far as a drainage district lying wholly within one county is concerned; and we are concerned here only with a district of that character — a drainage district of Bolivar county. We might, therefore, pretermit further consideration of this contention, but we think that theory is not consistent with the provisions of the drainage chapter, and that it might be well to point out these. While it is true that chapter 39, Code 1906 (sees. 1684 and 1685) seems to contemplate the organization of drainage districts lying in more than one county, it is exceedingly doubtful whether it contemplates ousting the county of the control of its integral parts of such district and funds arising therefrom. Now, sections 1687, 1688 and 1689 provide how the landowners may petition the chancery court and the court shall refer the same to the drainage commissioners of the county to investigate. Section 1690 provides for an oath to be taken by the commissioners, to make a faithful investigation and report to the court. Section 1689 refers to these commissioners as the county commissioners. So the commissioners are those selected by the board of supervisors or elected by the people under section 1682. There is nothing here, I confess, to militate against the idea that the commissioners from each county constituting the proposed district, might be constituted one board. But suppose the district is organized as provided by section 1697, and the board of commissioners start to raise funds for their work — how do .they proceed? Section 1698 provides for assessment of the lands affected, and sections 1700-1703 for hearing of objections. Here the control of the chancery court seems to end. So, to whom now does the law refer the commissioners? Section 1709 provides for raising funds by sale of bonds and refers them to the board of supervisors. To what board? Necessarily of each county, as no one board would have jurisdiction of lands over the entire district. When the money is in hand, to whom shall it be turned over for safe-keeping? Section 1704 furnishes the answer: County treasurer to be district treasurer. Treasurer of which county? If it' be answered, treasurer of the county in which the district is organized, then we call attention to the fact that the corporation does not appear to be organized or have its domicile in any particular county of the district. Note further the language of section 1704: “The treasurer of each county shall be treasurer,” etc. The tax collector of each county collects the assessments of lands in his own county. (See. 1703.) These collections he turns over to/he county treasurer. (Acts 1910, p. 191.) Next,. the law requires the commissioners to report annually, showing the amount of money levied for main district .purposes, amount of orders issued, to whom payable, amount of money on hand, etc. To whom is report made? Not to the chancery court, because the statute does not say so and its control of the commissioners seems to end when the assessment is confirmed. (Sec. 1702.) In fact, the jurisdiction conferred on the chancery court seems to be for the purpose of condemnation and when the award is made and confirmed its jurisdiction seems to be ended. Then it must be that the report is' to be made to the board of supervisors. But to the board of what county? There could be no reason in making report to one board, because that board would have no control and voice in matters relative to lands in another county. 'Section 1709 seems to contemplate that the board of supervisors has control of the assessments and levies to pay the bonds on hand in their respective counties involved in the drainage district. So, it follows that the report is to the board of supervisors in each county, and it must also follow that the law contemplates preserving the integrity of each county’s part of such a drainage district and the funds collected therein. While these considerations demonstrate the correctness of our contention, we do not believe all that should be necessary to include that these funds are county funds and trust funds, not liable to be taken by creditors of the depository. We submit the fact that those funds were and are committed by law to the custody of the county treasurer and he is made responsible for their safe-keeping as for other county funds, is alone sufficient. This must be so, otherwise we should have the curious anomaly of certain public funds in his hands, trust funds and therefore not liable to be taken, and other public funds, which it is equally important to protect, not trust funds with no good reason to assign for the .distinction. The laws do not operate so unequally, and no construction should be adopted which would render it unequal in its operation. Again, it would seem that the funds collected by the county tax collectors, under section 1703, would, by express language of section 3485, be trust funds and not liable to be taken, yet the same funds paid into the hands of the county treasurer for account of the drainage district, would not be. That would not do. It was evidently the purpose of the legislature to declare' all public funds trust funds, no matter how handled or deposited, to the end that they be not liable to be taken by the creditors of the custodian or by the creditors of the depository, but be, at all events, safe for the public purpose for which they were raised. It also must have been the effort of the legislature to adopt general expressions so as to include them all, no matter to whom committed. Note the fact that the statute does not say, “All moneys deposited in bank or with any other depository by or for a tax collector or treasurer,” but “all moneys deposited in bank or with any other depository, by or for a tax-Collector or other officer having custody,” etc. This is significant of the legislature’s purpose to protect funds, whether in hands of the state treasurer, the treasurer or trustees of the university or other state schools and institutions, or any other officer-agent of the state; and county funds, whether in the hands of the treasurer, commissioners entrusted with some public work, or other officer-agent of the county; and so on through the category; and also significant of the fact that the legislature intended to leave no room for exceptions. If appellee’s contention that drainage district funds are not county funds is worthy of indulgence, then we submit that they are to be regarded as “municipal.” There was probably significance in the adoption of this word instead of the word “municipality.” The latter would have referred undoubtedly to cities and towns alone. Black’s Law Diet., Municipality. But “municipal” is broader, applicable to any incorporated political subdivision. Note the idea carried out, state, the largest subdivision; county, the next subdivision; municipal, a generic term implying either a subdivision of a county or .larger territory. “Levee board” was' evidently tacked on as a legislative afterthought. Had it taken its logical position in the classification, it would have followed “state” and preceded “county,” because it involves more territory than a county. This, however, does not obscure the legislative intent and meaning. In Words and Phrases, page 4619, col. 1, it is said: “Though the word ‘municipal’ is the adjective of ‘municipality,’ meaning ‘pertaining to a- municipality, ’ between the noun and the adjective there is a difference that while the noun names the thing, the adjective merly describes a relation to a thing. The adjective is more elastic than the word ‘municipality,’ or even the term ‘municipal’ corporation. State ex rel, Illinois Central R. Co. v. Levee Com’rs of Orleans Levee Dist., 33 So. 385, 399, 109 La. 403. * In Black’s Law Dictionary, “municipal” is defined: “Municipal signifies that which belongs to a corporation or a city.” Neither Black’s Law Dictionary nor Words and Phrases furnish any definition of “municipal funds” or “municipal moneys.” It would be exceedingly unfortunate for this court to adopt any construction of the statute in question that might except any public funds, whatever called, from its beneficient operation. It cannot be anticipated when it may come about that the particular custodian of the public funds affected, and his bondsmen, may not be able to respond and the public have no protection, save that afforded by section 3485. Section 3485 of the Annotated Code of Mississippi does not embrace drainage funds. Why? Because it does not say so by word or implication. Certain public funds are covered by this section and it tells in words too plain to be disputed just what same consists of, towit: state, county, municipal and levee board. It is á well-settled principle of law that when a statute or any other writing attempts .to enumerate, then it will be held to the enumeration. This is not denied by counsel for appellant. Counsel for appellant’s first contention is that the word “county” as used in the statute embraces drainage funds; and cites chapter 39 of the Annotated Code of 1906, and particularly sections 1698, 1703 and 1709; and chapter 191 of the Acts of Mississippi of 1910, and section 4531 of the Code of 1906. After reading all of this I submit that it clearly shows that drainage funds are a separate and distinct fund; and that the only name you can give to such organizations is “ drainage districts. ” Again, see section 1697: “Said district is hereby declared, to be organized as a drainage district . . . and is hereby declared to be a body politic. . . . ” Section 1707: “ ... it shall, in its corporate name, by its commissioners, henceforth, have power to contract and to be contracted with, to sue and be sued, to plead and be’impleaded. ” What is a drainage district? A gucm-corporation. See 14 Cyc. 1026 “C”. Elmore v. Drainage Commissioners, 25 Am. St. Rep. 363; Drainage district a distinct entity. See Mayor v. N. J. Drainage District, 31 So. (La.) 305. All dictionaries in giving definition of quasi-corporations gives such a definition as will include a drainage district. A class of corporations with powers and privileges not derived from an express charter, or articles of incorporation, with limited powers and duties conferred or imposed on them by statute or usage. A clear definition is given in second paragraph to note to Todd v. Birdsall, 13 Am. Dec. 524. A drainage district and a levee board are very much alike, the same powers, duties, etc., both created and organized under acts of the legislature. What is a levee board, or levee district? See 25 Cyc. 194-A, which is as follows: “A. Districts. 1. Nature and creation in general, (a) Definition. A levee district is a guasi-public corporation, created by the state, under its police power, for the performance of certain prescribed governmental functions in the district, such as the prevention of the overflowing or inundation of lands.” The levee board keeps off water from river. The drainage district carries off water that falls in the watershed. I submit that the use of the words “levee board” as used in section 3485 is not, as counsel for appellant would make it appear, a legislative afterthought. The wise lawmakers, seeing that the words “state, ” “county” and “municipal” did not include and protect the funds of the said board, added the words “levee board” and protected the funds. Later, as is shown by the following pages of this brief the lawmakers passed a law protecting the funds of drainage districts. Drainage funds are entirely different from separate school districts’ funds, or 16th section funds, or funds of this character, and the laws recognize this and .provide that the treasurer shall be treasurer for drainage districts, and that he shall give a bond for such drainage funds to the commissioners of drainage districts. (See 1704.) The laws do not require that the treasurer give a bond for 16th section funds, or school district funds, to the township trustees, or for school districts, and the bond which he is requited to give when the goes into office covers all of such funds, all county funds, but not drainage funds; and, therefore, he shall give a bond to the drainage commissioners for this fund. It certainly is no fair illustration to compare drainage funds and drainage districts with the University of Mississippi, the Agricultural and Mechanical College, the Industrial Institute and College, etc. Here “state” funds, the very words used in section 3485, are set aside for the maintenance of these institutions; a part of the “state” money raised from the state as a whole, and not from any particular district. Certainly it cannot be denied that the chapter 39 of the Code of 1906, and especially 1685 thereof, authorizes organizing drainage districts which may embrace land in more than one county; and even if a district embraces land in only one county, this would not constitute it a county institution. A drainage district organized under our laws is simply and purely an entity, as much so as a levee board. Suppose a levee board, or district, was wholly within one county; would this make it a county institution and make its funds county funds? Certainly not. I do not take it that merely because this particular drainage district did not embrace lands in counties other than Bolivar, when the law authorized the taking in lands in other counties, and when this was not done because the survey, or watershed, did not happen to extend into another county, that this would make it a county institution and make its funds county funds. Said section 1685 provides that the district shall be organized in the chancery court of the ■county in which the greatest amount of land is included. Section 1704 makes the county treasurer of the county in which the district is organized (not the county treasurer in which the land is located) the district treasurer. If the funds are county funds, then we find the treasurer of one county handling funds and receiving commissions therefrom belonging to other counties. Clearly and undeniably, this would never do, and certainly was not the intention of the legislature. Counsel for appellant seems to lay stress on the fact that section 1704 of the Code provides drainage funds shall be turned over to the county treasurer to be district treasurer. If indeed the funds were county funds, then why provide by law who shall be district treasurer? If it is county funds it goes to the county treasurer without any law expressly saying so; and here we have the law giving him a separate and distinct office. Certainly the tax collector shall collect the taxes. Why not? Does this add anything to appellant’s contention? The same tax collector collects for the levee board and for every other tax that is levied in any possible way. The law provides that the drainage commissioners shall make reports. See section 1715. But, it does not say that the report shall be made to the board of supervisors. This, however, is of no consequence, and has no bearing whatever on the question before the court. While the laws may appear “curious” to counsel in that certain public funds are protected by section 3485, while others are not, still this does not change the law. Except for section 3485, certainly no public funds would be protected. Now, when said section 3485 says what public funds are protected and names and enumerates them, some other public funds cannot be included. Conditions are continually arising whereby new laws have to be enacted for the public good and necessity. In fact, at the time of the passing of the law — section 3485 — mo such thing as a drainage district was known in Mississippi, and therefore, not included. The legislature of 1910, seeing that drainage funds were not protected, passed a law including such funds. See section 12, chap. 137, p. 129, Acts of 1910. “Section 12. All funds coming into the hands of the treasurer belonging to any drainage district shall be deposited in the depositories provided for by this act, under the same conditions as county funds are deposited, to be drawn by the proper parties and in the manner provided by law. And all tax collectors may pay drainage taxes into such depository in the same manner as county funds are paid in, and shall be subject to the same protection herein provided for the protection of general county funds.” This certainly settles the question as to drainage funds not being county funds. The legislature here discusses “county funds” and the “funds” derived from drainage dictriets, and passes a law protecting the “funds” belonging to “drainage districts” the same as “county funds.” What could be more conclusive than drainage funds are not county funds? Unfortunately for appellant, but fortunately for the poor depositors of this “busted” bank, who made and saved a few dollars by hard labor and denying themselves the actual necessities of life, this law was not in effect until Jan. 1, 1912. Appellant would make it appear that a great injustice will be done if the “drainage money” is not paid — and to whom? Not to the public, or to the drainage district, but to them. Let us see and look into the great injustice. 1st. Appellant made for Jno. L. Gill, “among other bonds” his bond as drainage district treasurer, charged and collected a nice annual premium. Next, Gill put some money belonging to the drainage district, in said bank, requiring a bond. Again, appellant turns up bondsman, mind you, for the same money, charged and collected a nice annual premium; but not contented with this, they required the bank to give them a bond to protect them, and they now have this bond. Collecting premiums “coming and going,” protected against loss by an indemnifying bond, and then a great injustice will be done if the strong arm of the law is not thrown around them. Oh Legislature of Mississippi! Oh Chancery Court! Oh Supreme Court! Protect us when we are already protected against any possible loss! Take this eight thousand five hundred and thirteen dollars, twenty five cents away from those depositors, including the widows and orphans who have lost their money! Let them go! They are entitled to nothing! Take what little there is left away from them and give it to us! Counsel for appellant realizing that the word “county” funds will not embrace “drainage ” funds, then drops to the next nearest word, towit, “municipal,” and gets down to splitting hairs by drawing a difference between “municipal” and “municipality;” but after all he and the law books have to say, the difference is merely in the way you use the word. You, of course, would speak of cities, towns and villages as “municipalities,” or one of them as a “municipality,” and speak of its funds, powers, officers, etc., as “municipal funds, powers, officers, etc.” Sec. 3299, Code of 1906. “Municipal corporations are divided into three classes — cities, towns and villages.” Section 3300 uses the words “municipal powers, duties,” section 3318, “municipal limits;” and many other sections of chapter 99 of the Code of 1906 used the word “municipal,” while sections 3301, 3308 and '3310, and many others, use the-word “municipality.” Certainly there can be no difference except the way in speaking of the funds belonging to a city, town or village, of course, “municipal” is correct. Now what is the meaning of this word as used in the Code of 1906? What was the meaning of the legislature? Chapter 99 gives the answer, whether it be municipal or municipality; and section 3299 even goes as far as to define just what it means, namely, cities, towns and villages. In every place it is used the meaning can be no other than cities, towns and villages. Now, when the Code enumerates what funds are preferred by law, the law applies to only such funds as are named, and the construction of the words used will be the general meaning as used in the statute. You might say the United States, or the state of Mississippi would be included in the word “municipality,”, or the fund officer limits, etc., as municipal funds, officer -limits, etc.; but certainly that is not the meaning intended by the Code. I, too, say, look at the general idea of section 3485. 1st state, 2nd county, 3d municipality and 4th levee board; and now since the law of 1910, 5th funds belonging to the drainage district — something the legislature, did not have in mind and knew nothing about at the time of the passing of the law, section 3485. Authorities cited by counsel, as well as all dictionaries, bear out my contention, towit: Municipality, the noun, and municipal, the adjective. Indeed “Words and Phrases”' defining the words fully bears out my contention, and page 4625, vol. 5, col. 1, “irrigation districts” are defined as not being municipal corporations, citing Board Directors, etc. v. Peterson, 29 Pae. (Wash..) 995. 105 This district was organized under a law quite similar to ours, and in this the court held the district not to be a municipal corporation. In this case the contention was that the district was included in the following words of the Constitution, “county, city town and school' district or other municipal corporations.” Surely if this will not include the irrigation district, the wording of section 3485 of the Code of Mississippi of 1906 will not include a drainage district .or the funds thereof. This general meaning of the word municipal corporations is borne out by “municipal Corporations,” 1 Dillon, section 31. A sanitary district, reclamation district, irrigation district or drainage district is not a municipal corporation. 5. Words and Phrases, p. 4625, col. 2, Sanitary District, citing In re Werner, 62 Pac. 99, 129 Col. 567. A drainage district, being practically the same as a levee board or district, I call attention to: See United By. & T. Co. v. Wevers, Sheriff, 36 So. 797. While I have not found a case defining municipal funds, still this case deals with municipal tax and holds that a levee tax is not a municipal tax.