Summary
In Wadsworth v. State, 225 Ala. 118, 142 So. 529, the facts were quite similar to the facts in the case now before us. The court in the Wadsworth Case again recognized and approved the rule of the Malloy Case, but failed to apply the rule solely for the reason that the payee was a state or other governmental agency.
Summary of this case from Wilder Mercantile Co. v. Le Maistre Ginning Co.Opinion
3 Div. 998.
June 2, 1932.
Appeal from Circuit Court, Montgomery County; Walter B. Jones, Judge.
Eugene Ballard and Ball Ball, all of Montgomery, for appellants.
The check of Wadsworth was the equivalent of money, and was the property of the state. The First National Bank of Montgomery was the agent of the state treasurer to collect it. See Lacey v. State, 13 Ala. App. 212, 68 So. 706; State v. Montgomery Savings Bank, 199 Ala. 365, 74 So. 942. The giving of credit by the payee to the holder of the amount of the check is sufficient to constitute an irrevocable payment. Brady on Bank Checks, § 155; Montgomery County v. Cochran (C.C.A.) 126 F. 456; Amer. Ex. Bank v. Gregg, 138 Ill. 596, 28 N.E. 839, 32 Am. St. Rep. 171; Titus v. Mer. Nat. Bank, 35 N.J. Law, 588; Amer. Nat. Bank v. Miller (C.C.A.) 185 F. 338. A check is paid by being presented to the drawee and marked paid. City Nat. Bank v. Burns, 68 Ala. 267, 44 Am. Rep. 138; First Nat. Bank v. Burkhardt, 100 U.S. 686, 25 L.Ed. 766. If a check is sent for collection to the bank on which it is drawn and the bank charges the amount thereof to the drawer, he is discharged from further liability thereon, provided he has sufficient funds on deposit to pay the check and the bank is solvent. Planters' M. Co. v. Armour Pky. Co., 109 Miss. 470, 69 So. 293; Morse on Banking; City of Douglas v. Fed. Res. Bank, 271 U.S. 489, 46 S.Ct. 554, 70 L.Ed. 1051.
Thos. E. Knight, Jr., Atty. Gen., and A. A. Carmichael, Asst. Atty. Gen., for the State.
Taxes are payable only in cash. Enterprise v. Rawls, 204 Ala. 528, 86 So. 374, 11 A.L.R. 1175; 3 Cooley on Taxation (4th Ed.) § 1252, p. 2483; Burke v. Armstrong, 52 Ala. 48. Tax receipts are not conclusive against the taxing authorities. 3 Cooley, § 1256; Williams v. Shows, 197 Ala. 596. 73 So. 99; 1 Page on Contr. § 601: 4 Page on Contr. § 2159; Weddigen v. Boston, etc., Co., 100 Mass. 422; Fleig v. Sleet, 43 Ohio St. 53, 1 N.E. 24, 54 Am. Rep. 800. Persons dealing with the state or its officers are bound to take notice of the limitation of powers conferred on or exercisable by such governmental agents. Enterprise v. Rawls, supra; Gen. Elec. Co. v. Ft. Deposit, 174 Ala. 179, 56 So. 802. The presumption is that officers will follow the law. Birmingham v. Wills, 178 Ala. 198, 59 So. 173, Ann. Cas. 1915B, 746. The state treasurer was diligent in depositing the check, and the First National Bank of Montgomery, as agent, was diligent in sending the check forward for collection. Watt v. Gans, 114 Ala. 264, 21 So. 1011, 62 Am. St. Rep. 99; 1 Morse on B. B. (6th Ed.) § 421; Morris v. Eufaula Nat. Bank, 106 Ala. 387, 18 So. 11; 6 Michie, B. B. § 60. The check of the tax collector was merely conditional payment. Watt v. Gans, supra; Stanley v. Green, 205 Ala. 225, 87 So. 356; Glenn v. Birmingham, 223 Ala. 501, 137 So. 292. The state was well within its legal rights in reimbursing the Montgomery bank, and appellant cannot complain as to this. Stanley v. Green, supra. The Autauga Banking Trust Company being in a failing condition had no right to attempt to pay the check by sending New York exchange to the Montgomery Bank. Stanley v. Green, supra. The Montgomery Bank had the right to credit the account of the state and to extend the credit and this does not affect the rights of the state to hold the principal and surety liable for the money. Lummus C. G. Co. v. Walker, 195 Ala. 552, 70 So. 754. Authorities cited by appellants are not apt.
Appellant Wadsworth as tax collector of Autauga county collected taxes, of which, on February 15, 1930, $1,592.50 belonged to the state. He deposited funds so collected to his account in Autauga Banking Trust Company. The deposit does not appear to have been in that bank as a state depositary to the credit of the state treasurer by authority of section 894, Code. But we assume that the collector made the deposit in the bank of his choice, and it was a general deposit, and subject to his check. He had no legal authority to do this. Its effect was a conversion of the funds and to fix an absolute liability as for a debt by him to the state. Alston v. State, 92 Ala. 124, 9 So. 732, 13 L.R.A. 659; Moody v. Jacobs, 211 Ala. 291, 100 So. 467.
When the tax collector receives money for state taxes, he is its bailee, and is forbidden by law to use the identical money so collected, except as directed by law. State v. Houston, 78 Ala. 576, 56 Am. Rep. 59; Ex parte Cowart, 201 Ala. 55, 77 So. 349. He is directed by law to transmit such money to the state treasurer, section 3085, Code, or deposit it in a state depositary to the credit of the state treasurer. Section 894, Code.
Not having done either, but having made a general deposit in bank to his own credit, he thereby became a debtor to the state. Having therefore become a debtor, he was due to pay the debt, as he would to any other creditor, and his transaction in doing so is governed by the general rules pertaining to the payment of debts.
The check which he sent to the treasurer on the Autauga Bank Trust Company was not a completed payment. The receipt of a check as a payment is prima facie conditioned upon the ultimate payment of the check. Stanley v. Green, 205 Ala. 225, 87 So. 356; Glenn v. City of Birmingham, 223 Ala. 501, 137 So. 292. But, though such check is only prima facie payment of the debt, if the payee of the check accepts something other than money in payment of it, when he could have had money by demanding it, such acceptance constitutes a complete payment thereof so far as affects the liability of the drawer to the payee, for which it was given. Marx Co. v. Bankers' Credit Life Ins. Co., 224 Ala. 249, 139 So. 421; Federal Reserve Bank v. Malloy, 264 U.S. 160, 44 S.Ct. 296, 68 L.Ed. 617, 31 A.L.R. 1261.
The facts of this case are similar in principle in this respect to the Malloy Case, supra. But for one important difference, that case would probably be authority in this. We observe also that an important statute has been enacted in Alabama as well as in other states, and somewhat similar to one enacted by Congress, in an effort to make a limitation on that principle in respect to federal reserve banks, section 6381, Code; Farmers' Merchants' Bank v. Fed. Reserve Bank, 262 U.S. 649, 43 S.Ct. 651, 67 L.Ed. 1157, 30 A.L.R. 635; Transcontinental Oil Co. v. Fed. Reserve Bank, 172 Minn. 58, 214 N.W. 918, 61 A.L.R. 474.
We also note that section 9222, Code, has further changed the rule of duty respecting the method of collecting checks. Marx Co. v. Bankers Credit Life Ins. Co., supra; Jefferson County Bldg. Loan Ass'n v. So. Bank Trust Co., ante, p. ___, 142 So. 66.
Not showing that section 6381, Code, applies in this case, it follows that, if the payee of the check here in question were other than the state, or other governmental agency, this transaction would probably be governed by the Malloy Case, supra, and our Marx Company Case, supra.
In the absence of an agreement otherwise providing, or the consent of the creditor to receive some other medium, payment of a debt may be made only in money. Morgan Paving Co. v. Carroll, 211 Ala. 121, 99 So. 640; Williams v. Costello, 95 Ala. 592, 11 So. 9.
Particularly is it necessary to pay money in order to discharge the obligation to pay taxes, and the collecting officer is not authorized to accept any other manner of payment. Burke v. Armstrong, 52 Ala. 48; City of Enterprise v. Rawls, 204 Ala. 528, 86 So. 374, 11 A.L.R. 1175.
The exact question we have is, whether a debt has been paid to the state, when its treasurer receives a check for the debt, and through its agent accepts a check of the drawee in its discharge but fails to collect it, and when by diligence he could have collected cash on the first check. The authority and powers of particular state officers and agents are determined by law, and this cannot be varied or enlarged by usage or administrative construction. 36 Cyc. 865, 872, 873.
The power of the state to contract is a legislative prerogative, and no officer can contract for it without legislative authority, not even the Governor. Such power must be exercised in manner and form as directed by the Legislature. State v. Cobb, 64 Ala. 127, 153 (7); Van Dyke v. State, 24 Ala. 81; Walker v. Chapman, Governor, 22 Ala. 116, 131; Ex parte State, 52 Ala. 231, 235, 23 Am. Rep. 567; Miller v. Swann Billup, 89 Ala. 631, 637, 7 So. 771; 36 Cyc. 879.
The authority of the state treasurer was to receive cash due it by the tax collector for taxes which he had collected and converted by depositing the money in bank. The state Legislature has given him authority to receive nothing else in payment. Therefore he had no authority to accept one check in payment of another. The checks were only provided as a convenient method of transmitting money. Glenn v. Birmingham, supra. But until the money is received for which the check is given, there is no payment except by agreement. The state has made no such agreement. There is therefore no payment. Such was the judgment of the circuit court, and it is affirmed.
Affirmed.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.