Bank of Commerce v. Clark 114 Miss. 850, 75 So. 595

Bank of Commerce et al. v. Clark, Sheriff and Tax Collector.

[75 South. 595,

Division A.]

1. Depositories. Statutes. Construction. Repeal.

The banking Act of 1914, chapter 124, and'the amendment thereto of 1916, chapter 207, were never intended to repeal and destroy the purpose and protection afforded by section 3485 of the Code of 1906, with reference to deposits of public moneys and making such deposit a trust fund with a preference over certain other claims.

2. Depositories. Statutes. Construction. Repeal.

The depository law of the state (Acts 1908, chapter 96, as amended by Laws 1910, chapter 224), when put in operation as provided therein, supersedes and annuls the security and protection of section 3485, Code 1906, and to that extent supersedes the said code section; but the provisions of no other statute affect or repeal section 3485, Code 1906.

*8513. Depositories. Deposit of public funds. Statute.

The fact that a tax collector, accepted a private bond, not authorized by law, to secure the deposit made by him of the public funds in the bank, can in no wise affect the Status of the deposit of these public funds as fixed and defined by section 3485, Code 1906.

Appeal from the chancery court of Harrison county.

Hon. W. M. Denny, -Jr., Chancellor.

Suit by John B. Clark as sheriff and tax collector,of Harrison county against the Bank of Commerce and others. From a decree overruling a demurrer to the bill, defendants appeal.

The facts are fully stated in the opinion of the court.

N. C. & C. E. Hill, for appellants.

The appellants in this cause take the position that section 3485 of the Code of 1906, is necessarily repealed by chapter 124 of the Laws of 1914, and that said provision of the Code is no longer in force and effect, because the subject-matter embraced in said section of the Code has been treated of by said two acts of the legislature, and that the provisions of said Acts of 1914 and 1916 are not in harmony with section 3485 of the Code in this, that section 39 of chapter 124 of the La\vs of 1914, in treating upon the payment of claims against said bank and as to how they shall be paid, provides as follows:

“All deposits not otherwise secured shall be guaranteed by this act. The guaranty provided for in this act shall not apply to a bank’s obligations as endorser upon bills re-discounted, nor to bills payable nor to money borrowed from its correspondents or others, nor to deposits bearing a greater rato of interest than four per cent per annum. Each guaranteed bank shall certify under oath to the Board of Bank Examiners at the date of each called statement the amount of money it has on deposit not eligible to guaranty under the provisions of this act, and in assessing such bank this amount shall be deduct*852ed from the total deposits.” Section 38 as amended by chapter 207 of the Laws of 1916, so as to read as follows:

“All deposits not otherwise secured, and all cashier’s checks, certified checks, or sight exchange, issued by banks operating under this law shall be guaranteed by this act. The guaranty as provided for in this act shall not apply to a bank’s obligations as endorser upon bills rediscounted, nor to bills payable, nor to money borrowed from its correspondents or others, nor to deposits bearing a greater rate of interest than four per cent per annum. Each.guaranteed bank shall certify under oath to the board of bank examiners at the date of each called statement the amount of money it has on deposit not eligible to guaranty under the provisions of this act, and in assessing such bank this amount shall he deducted from the total deposits,” and it will he observed that by the original enactment of the new banking law of 1914, and by the amendment thereto in 1916, it is provided that all deposits “not otherwise secured,” shall be paid out of the guaranty fund of the state and are thereby made preference claims over the ordinary creditors of said bank. The court will observe that in the original Act of 1914 and amendment of 1916 that no provision is made in-either act for the payment of any “trust fund,” and that no reference is made to a “trust fund,” hut in the amendment of 1916 cashiers checks, certified checks or sight exchange issued by banks operating under the guaranty clause are added to the character of claims that are designated by Act of 1914 as preference claims, and surely if the legislature had intended that section 3485 of the Code should still remain in force and effect that sort of claim would most certainly have been included in The Acts of 1914 and in the Act of 1916, and inasmuch as both legislatures had the subject-matter before thém in legislating upon the payment of claims owing by insolvent banks never included in either of them a provision for the payment of what appellee contends is a “trust *853fund” and it is provided by said Act of 1914 tbat all laws in conflict with said act are repealed, assuredly we submit tbat tbe present plan of liquidating banks and taking security on deposits is in conflict with .said section of tbe Code. Tbat was held in tbe case of Potter v. Fidelity and Deposit Company, 58 So. 713, 103 Miss. 91, tbat “A deposit of state funds in a bank made pursuant to chapter 96, page 77, Laws of 1908, were not trust funds under section 3485 of tbe Code of 1906, and tbat the Code bad no application to public funds deposited in a bank where said deposits were made according to tbe Depository Law of 1908.” Tbe Depository Law was enacted long after tbe Code of 1906 was enacted, and likewise tbe chapter on tbe government of tbe liquidation of state banks was enacted long after tbe depository law was made, and provides a complete remedy for tbe liquidation of banks and "for tbe payment of claims against it. One of tbe provisions of said act is tbat all deposits “not otherwise secured” shall be paid in full out of the assets of tbe bank if sufficient, and if not, then out of tbe state guaranty fund. And when said provision was amended by a subsequent législature in 1916, and other and a different character of claims added there to tbat were to be paid in full, no mention 'whatever was made in either act to “a trust fund.”

But even if there is such a thing now as a “trust fund” under section 3485 of tbe Code, still we submit tbat when tbe tax collector took and required tbe execution of a bond to him for tbe repayment of said funds then said deposit is “otherwise secured,” and therefore is not embraced! within tbe meaning of tbe Law of 1914, and tbe amendment thereto in 1916.

¥e submit tbat the court below was in error in overruling the demurrer of appellants in bolding tbat section 3485 of tbe Code was not replaced, and in bolding further tbat said deposit was a trust fund and tbat appellee was entitled to proceed against tbe assets of said bank to tbe exclusion of all other creditors in tbe collection of his *854claim in full, and was in further error in holding that appellee should not have made said bond and bondsmen parties to said suit, so that the representatives of said bank and the banking department could have filed a cross-action against said bondsmen for the recovery of said money, in the event the court should hold that appellee was entitled to go directly against the bank’s funds for the recovery of his said deposit before exhausting his remedy against said bond.

Dodds é Montgomery and V. A. Griffith, for appellee.

In the first and second assignment of error, which were presented in the court below as the third ground of demurrer, appellants attack section 3485 of the Code of 1906, and say that this section has been superseded and replaced by the state banking law contained in chapter 124 of the Laws of 1914, and the amendment to same contained in chapter 207 of the Laws of 1916. It is contended that section 38 of chapter 124 of the Laws of 1914 and the amendment of the same section in chapter 207, Laws of 1916, expressly provides what deposits are guaranteed and that the public funds in this case do not fall within said section. It is contended that said section mentions all deposits which are to be guaranteed and by the affirmative enumeration of same does not include public moneys and not only by an affirmative enumeration does it fail to include public moneys, but by positive expulsion excepts from the guaranty provision all deposits “otherwise secured.” It is very evident that section 38 does not mention public moneys. It is further very evident that the state banking law of 1914 and 1916 does not deal with public moneys or trust funds. It is evident that the banking law does not deal with the same subject covered by section 3485 of the Code of 1906, to wit; public money as trust funds. Public moneys deposited by tax collectors in public depositories had been amply taken *855care of by numerous provisions made by practically every legislature since 1908.

There was no necessity for protecting public moneys on deposit with public depositories. Section 3485 of the Code covered all public moneys wheresoever deposited and expressly constituted them trust funds. This section had performed great service for the public in many cases and had been liberally construed many times by this court. It afforded ample security and our. legislature evidently believed that public moneys with the protection thrown around public depositories, and with the protection afforded by section 3485 of the Code of 1906, were amply and throughly safe-guarded. For this reason our recent banking law extends its strong arm to the ordinary depositor, who heretofore had suffered by unexpected failures. The evil existing at the time the banking-law was passed did not affect public moneys. The remedy afforded by said law did not deal therefore with public moneys; the law was passe to cure a well k'nown evil. Ordinary depositors with astonishing frequency were suffering total or partial loss of their deposits, and the business of our state was being- visibly affected by ruinous losses caused by frequent bank failures. With the liberal construction of the recent banking law, which it now seems that this court is adopting, the evil sought to be cured will soon be a thing of the past in our state.

But our legislature did not leave the repeal of section 3485 open to argument. While repeal by implication is not favored in law, and all construction is against repeal by implication, still our legislature by section 45 of the state banking act provides: “Section 45. How conflicting acts to be construed: All acts and parts of acts in conflict with this act are hereby repealed in so far as they so conflict, but no provision of any banking law or other statute of this state shall be construed to be amended, modified or repealed except in so far as necessary to permit the unrestricted operation of this act as *856applied to banks participating in tbe priviliges of this act.” By this we see that our legislature did not desire and did not intend to repeal any statute or banking law of our state unless the repeal was necessary to promote the unrestricted operation of the banking act. We submit that the unrestricted operation of section 3485, Code 1906, not only does not conflict with the banking act but. that on the contrary the full and restricted operation of said section tends to promote and carry out the wise and beneficient intention of our legislaturein protecting from loss those who have heretofore innocently suffered as the victims of unexpected bank failures. In the case of Powell v. Board of Supervisors of Tunica County, it was strongly contended that section 3485 of the Code of 1906, had been repealed by the depository laws of 1910 and 1912. In that case public funds had been deposited in a bank, which had been selected, and which had duly qualified, as a public depository. It was contended that the depository laws covered the same subject as section 3485 and that said section had therefore been repealed by the depository law. The facts of the case showed that public moneys had been deposited with the bank in excess of the amount for which the bank had qualified as a depository. This court decided that section 3485 did not apply to the public funds so far as they were protected by the qualification of the bank as a depository, but that said section 3485 did apply to any excess. In other words’ this court held that section 3485 was always of force and effect, unless it was directly and unmistakedly superseded by some provision covering the same subject-matter. Powell v. Board of Supervisors of Tunica County, 107 Miss. 410, 65 So. 499.

In support of the contention that the Banking Act has superseded section 3485, Code 1906, appellant quotes from the case of Potter v. Fidelity and Deposit Company, 101 Miss. 823, 58 So. 713 as follows: “A deposit of state funds in a bank made pursuant to chapter 96, p. 77, Laws *857of 1908, were not trust funds under section 3485 of the Code of 1906, and that the Code had no application to public funds deposited in a bank where said deposits were made according to the depository law of 1908.”

We admit that the deposit in this case would not be a trust fund if the appellant, Bank of Commerce,, had qualified as a depository for enough to cover appellee’s claim. But even then under the Poivell Case, 107 Miss. 410, section 3485, Code of 1906, would protect any excess over and above the amount for which the bank had qualified as a depository.

And the court has been very reluctant in holding that even public depository laws superseded section 3485, Code of 1906, although the depository may have fully complied with the depository laws. Depository laws and section 3485, Code of 1906, do cover identically and absolutely the same ground, to-wit: the deposit of public

moneys. But section 3485 covers the deposit of public moneys wheresoever made while the depository laws only cover deposits made in qualified depositories. And where a bank has become a public depository and has fully complied with the depository law, it does seem that the public is amply protected and section 3485 is not needed and therefore superseded. And yet this court reversed itself in the case of Board of Levee Commissioners v. Powell, and decided that the depository law of 1908, chapter 97, on account of a saving clause in section 3, did not supersede section 3485, Code 1906, even where the bank had fully complied with the depository law. Board of Levee Comm. v. Powell, 109 Miss. 415, 69 So. 215.

In short tins court has always held that section 3485 of the Code is still in effect unless the deposit is made by virtue of a depository law in a duly qualified depository. Potter v. Fidelity and Deposit Company, 101 Miss. 828, 58 So. 713; Board of Levee Commissioners v. Poivell, 109 Miss. 161, 68 So. 7.

*858The third ground further says that the deposit of the sheriff and tax collector does not fall within the protection of the State Banking Act of 1914, because the said deposit was “otherwise secured by a bond, a copy of which is attached to the bill of complaint, as exhibit “B.” Appellants say that appellee is not protected by the banking act because of this bond. Appellee admits that this deposit was otherwise secured. It was secured by section 3485, Code 1906. But appellants contend that complainant’s deposit was “otherwise secured” by said private bond. Such a bond could not change the character of the deposit in any way whatsoever. This security is not authorized by any law. It was taken without the sanction of any statute. It is true that authority has been by recent legislatures conferred upon certain officials entrusted with public funds to take security for their deposit. These depostiory laws are all strictly construed. As said by Judge Mayes in the cases of Potter v. Fidelity & Deposit Company. The deposit laws were passed for this very purpose. “Section 3485 merely relieved the person depositing the funds from criminal liability at the utmost. It certainly did not confer authority to make the deposit. Under section 3485, no person had any authority to loan the fund. No authority was given to demand security.”

The sheriff therefore when he made his deposit with the Bank of Commerce had no authority to demand any security, and the private bond demanded by him was therefore without sanction of law. The Bank of Commerce was not a public depository in any sense of the word. Consequently in our opinion we do not see how the private arrangement of the sheriff with the bank in taking a private bond could in anywise change the status of the deposit from what it would have been if the sheriff had merely followed the course of the ordinary depositor. A security so utterly unauthorized by law could not have been what the legislature meant when it said; “All *859deposits not otherwise secured.” Surely it was not intended that the beneficient protection of the act should be withdrawn from a deposit of public money merely because the temporary trustee had done something not authorized by law.