Opinion
NOTE: Opinion filed at September Term, 1938, April 4, 1939; motion for rehearing filed; motion overruled at May Term, 1939, May 2, 1939.
1. JURISDICTION: Construction of Revenue Law: Organized Township. On appeal from a judgment denying a township priority in funds in a county depositary, the Supreme Court has jurisdiction because the construction of the revenue law is involved and because an organized township is a subdivision of the State and a party to the proceeding.
2. PUBLIC FUNDS: County Depositaries. The requirements of the statute regarding the selection of county depositaries are mandatory and a failure of compliance with such statutes prevents the title of public funds passing to the bank in which there were deposited and the relation of debtor and creditor arising.
But a literal compliance with all the statutory provisions is not required, if no public or private right is prejudicially affected in such selection.
3. PUBLIC FUNDS: Depositary. Where no depositaries were selected by a township and the county court awarded township funds, four-tenths to one bank and three-tenths to each of the two other banks, the banks showing familiarity with the statute, and no public or private right was prejudicially affected, that no preliminary order was made by the county dividing the funds into not less than two or more than ten parts did not render the selection of the depositary void on complaint of the trustee of the township.
4. PUBLIC FUNDS: Depositary: Townships. Where a township did not select a depositary for its funds, as it had a right to do, but deposited them in three banks acting as county depositaries, and the banks which submitted bids were not misled by the imperfections in the notice and it was not claimed that other banks were prevented from bidding, the township in a collateral attack upon the validity of the selection could not be heard to complain of imperfections in the notice.
5. PUBLIC FUNDS: Depositary. Where a county court accepted bids of banks as depositaries on an agreement that each bank pay interest at two per cent for a period of two years, and where the bids contained that provision and the checks submitted with the bids were accepted and the bidders went into contract in compliance therewith, and on approval of the bids, the checks were returned, the nature and amounts of the checks were immaterial; the failure to have them certified did not invalidate the selection since the purpose of the provision of the statute was to protect the county court in case the bidders failed to comply.
6. PUBLIC FUNDS: Depositary. Where the county court intended to and did select banks as depositaries and one of them as a clearing house, the court was not under mandatory duty to let all funds to the highest bidder nor reject bids as being too low since it permitted such banks to amend their bids and offer a higher rate of interest, where there was no claim that the court exercised its discretion arbitrarily.
7. PUBLIC FUNDS: Depositary: Filing Bond. Where the order of the county court designating depositaries was not made after the filing of depositary bonds but the original order designated the depositaries on condition that the bonds be filed and approved and they were later filed and approved, it was a sufficient compliance with the statute.
It was not mandatory that the bonds be given within ten days after the designation of depositaries.
8. PUBLIC FUNDS: Depositary. A township board, in a county under township organization, had the option of selecting a depositary or of adopting the county depositary, and when the board chose to adopt the county depositary no statute required or authorized the county court to compel the filing of new bonds expressly protecting the township funds.
The bonds already guaranteed performance of all duties devolving by law, and under Section 12188, Revised Statutes 1929, one of those duties was the protection of the funds of a township which fails to select its depositary.
9. PUBLIC FUNDS: Depositary Bond. Where a bond was filed and approved and later the mayor of a city in the county issued a proclamation declaring a bank moratorium, the bond of one bank was not improperly signed by the president and secretary where it was ordered signed and was signed while the bank was yet open and under the control of its officers and directors.
10. PUBLIC FUNDS: Depositary. Where a county court ordered the bank selected as the depositary to give bond secured by not less than five owners of unencumbered real estate of the value equal to the amount of the bond, and by an order later approved the bond which was filed, the burden was on the plaintiff, trustee of a township, to prove the insufficiency of the bond, and its sufficiency was shown where the trial court found that it afforded ample security for the repayment of public funds.
11. PUBLIC FUNDS: Depositary. In an action by the trustee of a township claiming a preference in funds deposited in a county depositary, where he claimed that there was fraudulent collusion among the depositaries, from evidence that officers of two of the banks were also sureties on the bonds, and there was no showing that the county court was a party to it or had any knowledge of it, it would be inequitable to allow such parties by their own act to relieve themselves of liability on the bond.
Appeal from Bates Circuit Court. — Hon. C.A. Calvird, Jr., Judge.
AFFIRMED.
Silvers Silvers and D.C. Chastain for appellant.
(1) The finance commissioner acquired no better title to the funds in the bank that the bank had. Dalton v. Sturdivant Bank, 76 S.W.2d 425. (2) If title to the funds in question never lawfully vested in the bank, then it is wrong to permit the commissioner to use them to pay the bank's general debts. Harrison Twp. v. People's State Bank, 329 Mo. 968, 46 S.W.2d 165; Clearmont School Dist. v. Jackson Bank, 37 S.W.2d 1006; School Dist. of Cameron v. Cameron Trust Co., 330 Mo. 1070, 51 S.W.2d 1025. (3) The bank must be legally designated as depositary and must qualify as such before it is entitled to receive deposits of the public funds. Harrison Twp. v. People's State Bank, 329 Mo. 968, 46 S.W.2d 165. (a) To designate a bank as depositary, the statute must be observed. The provisions of the statute are mandatory and must be complied with in all respects. In re Cameron Trust Co., 51 S.W.2d 1026; Marion County v. First Savs. Bank, 80 S.W.2d 861. (b) The county court cannot waive or alter the statute by any action it takes. Boone County v. Cantley, 330 Mo. 911, 51 S.W. 56. (4) The court erred in holding the banks to be legal depositaries and in denying preferences, because: In selecting and designating a county depositary it is essential that the county court: (a) Divide the county funds into not less than two nor more than ten equal parts, by order of record. R.S. 1929, sec. 12184; Aurora School Dist. v. Bank of Aurora, 227 Mo. App. 339, 52 S.W.2d 484. (b) Choose a depositary for a specific term ending sixty-five days after the next biennial letting. R.S. 1929, secs. 12184, 12185, 12188. (c) Give notice that such bids will be received, i.e., the notice should follow the statute as to period for which bids will be received. R.S. 1929, sec. 12184; Harris v. Langford, 277 Mo. 527, 211 S.W. 19. (5) The court erred in holding there was a lawful designation of depositaries, because, in this case there was a failure to comply with the following requirements: (a) That bidders deposit certified checks for an adequate sum as an evidence of good faith. R.S. 1929, sec. 12185. (b) The bid must specify the period of two years for which the bidder binds himself to pay the interest offered. R.S. 1929, sec. 12185. (c) Designation of a depositary must specify its term to be until sixty-five days after the next biennial letting. R.S. 1929, sec. 12188. (d) Upon opening the bids it is the duty of the court to select the highest bidder. R.S. 1929, sec. 12186; Denny v. Jefferson County, 272 Mo. 436, 199 S.W. 250. (e) The highest bidder, thus selected, is given ten days in which to qualify; whereupon it is finally designated as depositary. R.S. 1929, secs. 12187, 12188; Aurora School Dist. v. Bank of Aurora, 227 Mo. App. 339, 52 S.W.2d 484. (6) Deposit of public funds with any bank, except upon the foregoing statutory procedure, is permitted only in case no bids are submitted. R.S. 1929, sec. 12189; Marion County v. First Savs. Bank, 80 S.W.2d 864. (7) In case of rejection of bids as too low, readvertisement must be made. R.S. 1929, sec. 12191. (8) The only provision for a clearing house among several depositaries is where no bids are submitted for some or all the money and the money is deposited by contract, under R.S. 1929, secs. 12189, 12190, 12191. (9) There is no provision for subdepositaries, known to the law. R.S. 1929, Chap. 85, Art. IX. Especially where one bank bids for all the money, offering the highest rate of interest. R.S. 1929, sec. 12186. (10) The court erred in holding the banks lawful depositaries because: (a) The county court has no power to finally designate a depositary until after bond is given by the highest bidder, selected at the opening of bids. Selection of the high bidder is under R.S. 1929, sec. 12186. (b) Final designation is made only after bond is given, under R.S. 1929, sec. 12188. (c) The bond must be given in ten days after the preliminary selection of the highest bidder. R.S. 1929, sec. 12187. (d) This is to enable the court to readvertise and make a second choice before the term and bond of the then existing depositary expires. The existing depositary's term runs for sixty-five days after the biennial letting. R.S. 1929, sec. 12188. (e) In case, for any reason no selection is made at the time fixed by the statute, provision is made for readvertisement, etc. R.S. 1929, sec. 12196. (11) A designation of a bank as depositary is of no effect and confers no right to accept deposit of the county money unless a bond such as the statute requires is given, and in proper amount. R.S. 1929, sec. 12187; Huntsville Trust Co. v. Noel, 321 Mo. 749, 12 S.W.2d 754; White v. Greenlee, 330 Mo. 135, 49 S.W.2d 134; Marion County v. First Savs. Bank, 80 S.W.2d 864. (12) The court erred in holding the bonds given by the banks were valid as to township funds and in denying preferences on this ground because: (a) Such bonds must provide for protection of township funds in term; and in this case neither one of them did so. R.S. 1929, sec. 12187. (b) A surety is bound only by the strict letter of his bond. Nofsinger v. Hartnett, 84 Mo. 555; State ex rel. So. Surety Co. v. Haid, 329 Mo. 1220, 49 S.W.2d 41; City of St. J. ex rel. Consolidated Stone Co. v. Pfeiffer S. Co., 224 Mo. App. 895, 26 S.W.2d 1018; Bauer v. Cabanne, 105 Mo. 110, 16 S.W. 521. (13) The court erred in holding the Walton Bank bond legal, though unsigned by the bank, because: A bond not signed by the principal is invalid and no bond, and this bond was not signed by the principal. Bunn v. Jetmore, 70 Mo. 228; North St. L.B. L. Assn. v. Obert, 169 Mo. 507, 69 S.W. 1048.
Lyman J. Bishop and H.E. Sheppard for respondent.
(1) A bond given as a county depositary covers deposits of township funds causing the deposit of such public funds to create a debtor-creditor relation for which no preference can properly be allowed. Secs. 12184, 12198, R.S. 1929; Ralls County v. Commr. of Finance, 334 Mo. 167, 66 S.W.2d 115; Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56. (2) A rigid compliance with all the minutiae of the statute is not indispensable to the validity of a depositary bond. Immaterial variances from statutory form will not render it invalid. Henry County v. Salmon, 201 Mo. 136, 100 S.W. 20; Wright County v. Farmers Merchants Bank, 30 S.W.2d 32; Town of Canton v. Bank of Lewis County, 338 Mo. 817, 92 S.W.2d 595; Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56. (3) The provisions of the statute, Section 12187, Revised Statutes 1929, pertaining to township funds deposited in a county depositary, should be read into the bond as its terms and conditions. Wright County v. Farmers Merchant's Bank, 30 S.W.2d 32; Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99; Fogarty v. Davis, 305 Mo. 288, 264 S.W. 879; Henry County v. Salmon, 201 Mo. 136, 100 S.W. 20; State ex rel. Courtney v. Callaway, 208 Mo. App. 447, 237 S.W. 173. (4) The failure of the Walton Bank Trust Company to sign the depositary bond until some time after the bond was delivered to the county did not invalidate the bond as a depositary bond — the bond would be good and the sureties liable though the bank had not signed. White v. Greenlee, 337 Mo. 514, 85 S.W.2d 112; Farmers Traders Bank v. Harrison, 321 Mo. 815, 12 S.W.2d 755; Clark County Savings Bank v. Farmers Trust Co., 24 S.W.2d 1065. (3) Depositary bond is valid and enforceable though not filed in time provided by statute. Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99. (6) Preference, based on collusion, was properly denied. (a) Evidence of collusion was inadmissible as a collateral attack on the record of the county court designating depositaries and approving depositary bonds. The record of the county court, acting in a judicial capacity, was not subject to collateral attack. Art. IX, Chap. 85, R.S. 1929; Hartzfeld v. Taylor, 207 Mo. 236, 105 S.W. 599; Naeglin v. Edwards, 228 S.W. 764; Bingham v. Kollman, 256 Mo. 573, 165 S.W. 1097; State ex rel. G.M.A.C. v. Brown, 330 Mo. 220, 48 S.W.2d 857; State v. Fulton, 152 Mo. App. 345, 135 S.W. 95; State ex rel. Wirt v. Cass County Court, 137 Mo. App. 698, 119 S.W. 1010; McDonald v. McDaniel, 242 Mo. 172, 145 S.W. 452. The orders of the county court designating depositaries and approving depositary bonds were judicial acts. 34 C.J., p. 1179, sec. 3; Biddeford v. Yates, 72 A. 335, 15 Ann. Cas. 1091; Secs. 12186, 12187, R.S. 1929; Regan v. Iron County Court, 226 Mo. 79, 125 S.W. 1140; State ex rel. Doniphan Bank v. Harris, 176 S.W. 9; Barrett v. Stoddard County, 246 Mo. 501, 152 S.W. 43; State ex rel. Johnson v. Sevier, 339 Mo. 483, 98 S.W.2d 677; State ex rel. Heller v. Thornhill, 174 Mo. App. 469, 160 S.W. 558; State ex rel. Randolph County v. Evans, 240 Mo. 95, 145 S.W. 40; State ex rel. Johnson v. M. M. Bank, 279 Mo. 228, 213 S.W. 815; Denny v. Jefferson County, 272 Mo. 436, 199 S.W. 250. Appellant was a stranger to the record whose rights accrued after the rendition of the orders and may not attack the orders for fraud in the procurement — if considered as a party to the record still may not make such attack. 34 C.J., p. 526, sec. 832; Abington v. Townsend, 271 Mo. 602, 197 S.W. 253; State ex rel. Courtney v. Callaway, 208 Mo. App. 447, 237 S.W. 173; State ex rel. Van Hafften v. Ellison, 285 Mo. 301, 226 S.W. 559; McIntyre v. St. L.-S.F. Ry. Co., 286 Mo. 234, 227 S.W. 1047, certiorari denied 255 U.S. 573; Kaufmann v. Annuity Realty Co., 301 Mo. 638, 256 S.W. 792; Sisk v. Wilkinson, 305 Mo. 328, 265 S.W. 536. (b) Appellant had burden of proof. Burden was on appellant to prove all facts necessary to sustain a claim for preference — presumption is that deposit created debtor-creditor relation and that claimant is not entitled to preference. Security Natl. Bank Savs. Trust Co. v. Moberly, 101 S.W.2d 33; Landwehr v. Moberly, 338 Mo. 1106, 93 S.W.2d 935; In re Citizen's Bank of Senath, 102 S.W.2d 830; Western Union Tel. Co. v. Fidelity Bank Trust Co., 103 S.W.2d 489. There is a presumption in favor of the validity and legality of the designation of depositaries and the approval of depositary bonds and burden is on appellant to show to the contrary. State v. Eyerman, 172 Mo. 294, 72 S.W. 539; Hollowell v. Schuyler County, 322 Mo. 1230, 18 S.W.2d 498; Wiget v. St. Louis, 337 Mo. 799, 85 S.W.2d 1038. (c) Appellant failed to sustain the burden of proof with respect to showing collusion. The trial court rightly refused to give credence to the testimony as to collusion and this court should defer to such finding of fact. Wagner v. Binder, 187 S.W. 1128; Sec. 1723, R.S. 1929; Gary v. Averill, 321 Mo. 840, 12 S.W.2d 747; Childers v. Pickenpaugh, 219 Mo. 376, 118 S.W. 453; Koenig v. Union Depot Ry. Co., 173 Mo. 698, 73 S.W. 637; Gannon v. Laclede Gas Light Co., 145 Mo. 502, 46 S.W. 968; Hunter v. Wethington, 205 Mo. 284, 103 S.W. 543; Seehorn v. Am. Natl. Bank, 148 Mo. 256, 49 S.W. 886; State ex rel. v. Trimble, 307 Mo. 536, 271 S.W. 43; Mosier v. M. M. Bank of Flat River, 80 S.W.2d 207; West End Bank v. University City Bank Trust Co., 97 S.W.2d 881.
The appellant, Ed E. Powell, is trustee of Mount Pleasant Township, a duly organized township of Bates County, which county operates under Township Organization. As such trustee, appellant, being entitled to the custody of the funds of said township, filed claims for preference with respondent, State Commissioner of Finance, for the amount on deposit in each of three banks being liquidated by said Commissioner. Said banks were placed in charge of said Commissioner in April and May, 1934, and then had funds of said township on deposit as follows: Walton Bank Trust Co., $2,818.97; Farmers Bank, $2,605.94; Peoples Bank, $1,168.71. The commissioner approved said claims and submitted them to the Circuit Court of Bates County for adjudication as to priority. By agreement the three claims were tried as one case. The circuit court rendered separate judgments, denying preference and allowing and classifying them as common claims. Plaintiff appealed to the Kansas City Court of Appeals and that court transferred the case to this court on jurisdictional grounds.
The appeal is properly lodged in this court, both because construction of the revenue laws is involved and an organized township is a political subdivision of the State within the meaning of Article VI, Section 12, and of Section 5 of the 1884 amendment of the State Constitution. [Wright County v. Bank, 30 S.W.2d 32.]
Mount Pleasant Township did not designate a depositary for its funds, but deposited them in the three banks named which were acting as county depositaries. Appellant contends that none of these banks was lawfully designated as a county depositary and the township is therefore entitled to a preference, on the theory that the deposits were illegal and that the banks are trustees ex maleficio.
The selection of county depositaries is governed by Article IX, Chapter 85, Revised Statutes 1929, Sections 12184-12198, inclusive (Mo. Stat. Ann., pages 6455-65). In brief, they provide: the county court shall select a depositary at the May Term every two years; it shall divide the county funds into not less than two nor more than ten equal parts; cause notice to be published; receive sealed proposals as to rate of interest the banks offer to pay on the funds for the ensuing two years, the bids to be accompanied by certified checks, etc.; the bids shall be publicly opened and recorded on the first day of the May Term and a depositary or depositaries be selected on condition that the specified bond be executed and approved; Section 12188, provides that if a township board fails to select a depositary its funds shall be deposited in the county depositary. Other provisions of the statute are not material to the present discussion.
We have held the requirements of these statutes mandatory and that a failure of compliance prevents title to the public funds passing to the bank and the relation of creditor and debtor arising. [Harrison Twp. v. People's State Bank, 329 Mo. 968, 46 S.W.2d 165; In re Cameron Trust Co., 330 Mo. 1070, 51 S.W.2d 1025; Marion County v. Bank, 336 Mo. 675, 80 S.W.2d 861; White v. Greenlee, 330 Mo. 135, 49 S.W.2d 132; Denny v. Jefferson County, 272 Mo. 436, 199 S.W. 250; Huntsville Trust Co. v. Noel, 321 Mo. 749, 12 S.W.2d 751.] We have also held that a literal compliance with all the statutory provisions is not required, if no public or private right is prejudicially affected. [Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56; Wright County v. Bank, 30 S.W.2d 32; Henry County v. Salmon, 201 Ho. 136, 100 S.W. 20; Town of Canton v. Lewis County Bank, 338 Mo. 817, 92 S.W.2d 595; Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99; School Dist. of St. Joseph v. Bank, 325 Mo. 1, 26 S.W.2d 785.]
The appellant has briefed and argued no less than seventeen reasons why he contends that the statutes were not complied with. We now condense and discuss them in order. They are: (1) that no preliminary order was made by the county court dividing the funds into not less than two nor more than ten equal parts; (2) that the notice calling for bids was insufficient; (3) that the bids were improperly submitted; (4) that the selection of depositaries were not properly made; (5) that the bonds were not given in time, did not contain the proper recitals, one of them was not properly executed and the sureties on another were insufficient; (6) that there was collusion among the bidders.
(1) As to the absence of a preliminary order for division of the funds: appellant has cited us no case and we have found none ruling this point. The fact that one bank bid for ten tenths and the other two banks for three tenths each shows that the bidders were familiar with the statute in this respect, and, as the county court awarded four tenths to one bank and three tenths each to the other two banks, we fail to see how any public or private right was prejudicially affected.
(2) The question as to the notice for bids is more serious. It was published for the required length of time and was correctly worded, except that it stated that bids would be received up to noon on May 5, 1931, for a term "extending to the May Term, 1931. . . . The successful bidder to comply in all things with the provisions of Article 8, Revised Statutes of 1919."
Appellant contends that this notice was misleading in that the bidder might think he was bidding for a short time; further, that the notice is not aided by the reference to the statutes, for there were many articles numbered eight in the 1919 statutes relating to various subjects. Appellant cites Harris v. Langford, 277 Mo. 527, 211 S.W. 19. That was a suit by taxpayers against the county court of Ripley County to cancel a contract between the court and the Doniphan State Bank and to enjoin the county treasurer from turning over to said bank the funds of a drainage district and to order the county court to advertise for bids and award the funds to the highest and best bidder. The county court on April 15th had ordered the clerk to notify all the banks in the county by letter that on April 22nd bids would be received for the selection of a depositary for said funds. The clerk mailed these notices, but on April 22nd the court revoked this order and ordered that no bids be received. The clerk notified the banks of this last order. Then, on May 2nd, without any notice having been given the county court selected the Doniphan State Bank and entered into the contract complained of. The trial court's judgment was for defendants and we reversed and remanded the case. We held in In re Cameron Trust Co., 330 Mo. 1070, 51 S.W.2d 1025, that a school district was entitled to a preference against a closed bank where no notice had been given for the selection of a depositary, but we reached a somewhat different result in the case of Wright County v. Farmers' Merchants' Bank, 30 S.W.2d 32. The latter case was a suit on a depositary bond. A bank which had been legally selected as a depositary failed and defendant bank was organized and took over the assets. Then, without any notice and without the receipt of a written bid, the county court selected the defendant bank as depositary and it gave the bond which was sued on. Without deciding that defendant bank had been legally selected as depositary, we held it was a de facto depositary and the sureties on the bond were liable. In re North Mo. Trust Co., 39 S.W.2d 415, was a case decided by the St. Louis Court of Appeals. A school board, without any advertisement or bids, made a contract for the deposit of its funds in a bank which secured the same with a surety bond. The bank failed, the surety company paid the school district and took an assignment of the claim for which it asked a preference. The point was raised, but not decided, that the assignment did not carry with it the district's right, if any, to a preference. The court held that the bank was a de facto depositary and denied the preference. We cited this case with approval in Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56.
Harris v. Langford, supra, was a direct attack upon the order of the county court for the selection of a depositary and it was alleged that the absence of notice prevented other bids offering a higher rate of interest from being received. In the present case the plaintiff stands upon a different foundation. The plaintiff, Mount Pleasant Township, had the option of either selecting its own depositary or placing its funds in the depositary selected by the county court. It chose the latter course and is now, in this collateral proceeding, attacking the validity of the proceedings in the county court. If this were a direct proceeding to cancel the contract and it could be shown that the imperfections of the notice reduced the number of bidders and prevented the county court from obtaining the best contract a different question would be presented. We do not say that plaintiff is completely estopped, but we do say that, in this equitable proceeding, these are considerations which should not be ignored. In neither Harris v. Langford, supra, nor In re Cameron Trust Co., was any notice given. In the present case an attempt was made to comply with the statute in the publication of a notice. Certainly the banks which submitted bids were not misled by the imperfections of the notice and no claim is made that other banks were prevented from bidding. We rule this point against the appellant.
(3) Appellant contends that the bids were improperly submitted, for the reasons: that they did not offer interest for a period of two years or any other period; that they were not accompanied by certified checks nor checks in sufficient amount.
The county court accepted the bids on the agreement that each bank pay interest at two per cent for a period of two years and the bonds contained that provision. The checks which were submitted with the bids served their purpose when the bids were accepted and the bidders entered into contracts in compliance therewith, that purpose being to protect the court in the event the bidder failed to comply. On approval of the bonds the checks were returned to the bidders and the nature and amount of the checks are immaterial.
(4) Appellant contends that the selection of depositaries was not properly made. The People's Bank bid for all the funds at two per cent. Each of the other two banks bid for three-tenths of the funds at one and three-fourths per cent. The county court opened the bids on May 6th, being the first day of the May Term, 1931, and entered an order designating the Peoples Bank as depositary and the other two banks as sub-depositaries, that the county treasurer deposit four-tenths of the funds in the Peoples Bank and three-tenths in each of the others, that the Peoples Bank act as clearinghouse for all, and that each bank make bond for $24,000 to be approved by the court.
On August 31, 1931, the court again entered an order that "the designated depositaries each furnish bond in the sum of $24,000, each bond to be secured by not less than five owners of unencumbered real estate, of value equal to the amount of the bond or more."
Each bank filed its bond for the proper amount and each stating that interest should be paid on daily balances at two per cent per annum for two years. By orders of record the bonds of the Peoples Bank and the Farmers Bank were approved on September 8th and the other bank on September 14, 1931.
Appellant objects: that there is no authority for the selection of sub-depositaries; that the court was without authority to divide the funds as it did without rejecting the bids and readvertising; that the clearinghouse was not properly designated; and that no order was made designating the depositaries after the filing of the bonds.
There is no provisions in the statutes for sub-depositaries, but it is clear that the court intended and really did select all the banks as depositaries and one of them to act as clearinghouse (Sec. 12190). The court was not under the mandatory duty to let all the funds to the high bidder, the Peoples Bank. Nor do we think it was required to reject the other bids, as being too low, and readvertise (Sec. 12191). In effect, the court permitted the other two banks to amend their bids and offer a higher rate of interest. The court has some discretion in such matters. [State ex rel. v. Harris, 176 S.W. 9; Regan v. County Court, 226 Mo. 79, 125 S.W. 1140.] There is no claim that the court exercised its discretion arbitrarily. On the contrary, the wisdom of the court in thus dividing the funds is shown by the fact that Bates County had at the time of the trial received payment in full for its funds on deposit in the Farmers Bank, and the Walton Bank, but not in the Peoples Bank.
Of course, the designation of the depositaries, was not complete until the filing and approval of the bonds. The order for final designation mentioned in Section 12188 was not made after the filing of the bonds, but the original order designated the depositaries on condition that the bonds be filed and approved. When the bonds were later filed they were approved as "depositaries bonds" by orders entered of record. This was a substantial compliance with the statute.
(5) Appellant objects: that the bonds were not given within ten days after the designation of depositaries. We have ruled that this is not mandatory. [School Dist. v. Bank, 325 Mo. 1, 26 S.W. 2d 785; Henry County v. Salmon, 201 Mo. 136, 100 S.W. 20; Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99.]
That the bonds did not contain proper recitals: By this appellant means that the bonds did not expressly provide for the protection of township funds.
Each bond recites that the bank has been duly selected as depositary of the funds of Bates County for a period of two years in accordance with the provisions of Article IX, Chapter 85, of the Revised Statutes of Missouri, and is conditioned for the faithful performance of all duties devolving by law, and for the payment of all checks drawn by the proper officers of said county, etc.
As before stated, the township board had the option of selecting a depositary or of adopting the county depositary. When the board chose to adopt the county depositary, no statute required or authorized the county court to compel the filing of new bonds expressly protecting township funds. The bonds already guaranteed "performance of all duties devolving by law" and under Section 12188 one of those duties was and is the protection of the funds of a township which fails to select its own depositary. [Wright County v. Bank, supra; Henry County v. Salmon, supra; Mitchell v. Bank of Ava, supra.]
Appellant claims that the bond of the Walton Bank was not signed by the principal until after the bank had closed. The record does not sustain that claim. The bond was filed and approved on September 14, 1931. At that time it contained the signatures of the sureties, including the president, secretary and at least some directors of the bank. On November 4, 1931, by resolution of the board of directors, duly spread upon the bank records, the president and secretary were instructed to sign the bank's name to the bond. They did so, but not until February, 1933. In December, 1932, the Mayor of Butler issued a proclamation declaring a bank moratorium. While this was without legal authority, the banks consented and remained closed for a short period, but at the various dates when the bond was filed, when the board of directors ordered it signed by the president and secretary and when they signed it, the bank was open and under the control of its officers and directors.
Appellant cites Bunn v. Jetmore, 70 Mo. 228; and North St. Louis B. L. Association v. Obert, 169 Mo. 507, 69 S.W. 1044. They announce the general rule, to which there are exceptions, that sureties are not bound unless the principal is bound, but they have no application here. The Walton Bank would have been bound even in the absence of a bond. The mere receipt of deposits made the bank liable and its signature imposed no additional liability. Besides, the absence of the bank's signature was an inadvertence which was properly corrected before any liability accrued to the sureties. [Bank v. Harrison, 321 Mo. 815, 12 S.W.2d 755; Clark County Sav. Bank v. Trust Co., 24 S.W.2d 1065; White v. Greenlee, 337 Mo. 514, 85 S.W.2d 112.]
Appellant claims that the sureties on the bond of the Farmers Bank did not own unencumbered real estate equal to the amount of that bond. The county court ordered the bank to give bond "secured by not less than five owners of unencumbered real estate of value equal to the amount of the bond," and by order later approved the bond which was filed. Assuming, but not deciding, that plaintiff can in this proceeding attack the finding of the county court, the burden is on him to prove the insufficiency of the bond. Much of plaintiff's evidence was devoted to this purpose, but the trial court found against him. The trial court filed a written opinion in which, among other things, it is said: "The evidence tending to show this bond invalid comes from those who, as sureties on the bond, would benefit from the allowance of these claims as preferred. Their evidence, in which they insist they do not own sufficient real estate, after qualifying before the county court as owning same . . . does not impress a court of equity. To again appropriate some of the language found in the Boone County case the court can say: `There is not the slightest doubt that the bond afforded and now affords ample security for the repayment of all public funds for which it was given as security'"
(6) Appellant contends that the three banks entered a conspiracy, prior to the bidding, and obtained the deposits by means of a fraudulent and collusive agreement. Appellant does not claim, and there was no evidence, that the county court had knowledge of or was a party to any such agreement; nor that the rights of the public or any individual were injuriously affected thereby. Again assuming, but not deciding, that plaintiff could raise this point (18 C.J., p. 585, sec. 53F) he wholly failed to sustain his contention by the proof. On this question the trial court said: "There was evidence from the officers of two of the banks which officers were also sureties on the bond, that there was collusion among the bidders, in that it was agreed what each should bid. There is no showing that the county court was a party to this, or that they had knowledge of it. It appears to the court that it would be inequitable to allow these parties, by their own act, to thus relieve themselves from liability on the bond."
In the selection of depositaries the county court failed in many particulars to literally comply with the statutes, but there has been no showing that any public or private right has been violated thereby. There has been no showing that the plaintiff will be injured by the denial of a preference. On the trial the circuit court found that the bonds were then sufficient to secure the public funds. Most of the attack in the trial court on the validity of the selection of the depositaries came from the sureties who will be relieved from paying if a preference is granted to plaintiff. These sureties are officers, directors and stockholders of the banks which received the benefit of the deposit of the township funds. The banks assumed to act as depositaries, accepted the benefit, and it would be inequitable on the record before us to hold that they are not depositaries in fact. Especially as the bonds recited that the banks had been duly designated as depositaries. [18 C.J., p. 591, sec. 66F.]
The judgment and decree of the trial court is affirmed.