I am not able to agree with the conclusion reached by the majority of the court in this case. The evidence shows and the court found as a fact:
"(8) That the defendant Traver, during the said term of office as treasurer of the plaintiff school district, and the continuance in said office, and during the term of the bond executed and delivered by the defendants, and accepted and approved by plaintiff, as and for his official bond as such, and for many years prior thereto, had been a Director, the cashier and active managing officer of the said Farmers State Bank; that all of the records and books of said bank were kept by him or under his directions and supervision and control as the executive officer thereof. That in such position he knew the condition of said bank at all times during the period of time herein involved.
"(9) That the cash reserve of said bank had been materially impaired for more than one year before October 2d 1931, thatsaid bank had been insolvent for more than 7 months before it wasclosed and that for a period of more than 7 months before it closed the cash reserve had never been over 17.50%, being as low as 6% and averaging for that period only 13.52%, and for a period of more than 2 years before October 2d 1931, the cash reserve was continually below the required 17.50%, and during such last mentioned time there was a continual withdrawal of deposits, without a corresponding increase in assets; all of which was known to the defendant Traver at the time.
"(10) That the said Traver also knew the bank's bills receivable and bills payable, its deposits, and that it was impossible to liquidate sufficiently fast to keep up the bank's reserve, that banking conditions in that vicinity were continually growing worse and the cash reserve was becoming more and more impaired and said bank becoming more and more insolvent and in worse condition; and while the cash reserve was below 17 1/2% said Traver as the active executive and managing officer of said bank increased its loans and discounts otherwise than by discounting or purchasing bills of exchange payable at sight or on demand. *Page 79
"(11) That on and after July 1st, 1929, and during all of the time to and after October 2d 1931, there were outstanding warrants of the plaintiff school district which were registered, and older and having priority over later warrants which said treasurer paid, and said treasurer failed, neglected and refused to call and pay the same allowing more than $5,000.00 of said warrants to remain outstanding against the plaintiff and more than said sum of money from time to time to remain in his treasurer's account in said bank with which they could have been paid.
"(12) That knowing the insolvent condition of said bank the defendant Traver accepted and received deposits of plaintiff's money while said bank was insolvent, and while he had knowledge thereof, and while he was acting as the managing officer of said bank, said deposits aggregating $13,541.47 from July 1st, 1930 to July 1st, 1931 and $674.45 from July 1st, 1931 to October 2d 1931, when the bank closed. Traver also allowed sundry sums to remain from time to time on deposit therein of plaintiff's money, and never reported the condition of said bank to the plaintiff, or to its Board of Education, but made and accepted such deposits of plaintiff's money in his said bank in violation of his duties as such treasurer, and of his good faith to plaintiff, and of the conditions of his bond, and that such action amounted to a fraud upon this plaintiff.
"(13) That without withdrawing plaintiff's money from his said bank and knowing that it was left therein, Traver took an active part in turning it over to the Superintendent of Banks, and thereby placed said money beyond his control, and thereby rendered it impossible for him to perform the duties of his office. That at no time since October 2d 1931, has the said Treasurer, Traver, been able to produce or to properly apply the sum of $7,830.94 of plaintiff's money, nor has he had possession of the same, nor has he been able to get the same into his possession as treasurer. That on the last mentioned date the said bank closed its doors and suspended business and plaintiff's said money was thereby lost.
"(14) That the defendant Traver, while acting as an officer of his said bank retained the public money of the plaintiff, and accepted deposits of the same while insolvent, and used it to bolster up the gradually failing bank. That for more than one year, *Page 80 to-wit; since July 1st, 1930, said bank had been unable to meet its ordinary obligations in the ordinary course of its business."
The conditions of the bond of the surety provide that the "said Leo A. Traver shall faithfully and impartially in all things, during his continuance in office, perform and discharge the duties thereof without fear, favor, fraud, deceit or oppression and render a true account of and properly apply all moneys and property of every kind that shall come into his hands by virtue of his holding said office. * * *" The bank was insolvent for more than seven months prior to the 2d day of October, 1931. Traver was the cashier and executive officer of the said bank and knew of said insolvency from its inception. Had he made any effort to comply with the terms of the said bond, he would have withdrawn the money of the plaintiff when he knew it was no longer safe in the hands of the bank. It appears from the finding of the court that registered warrants to the extent of $5,000 were outstanding against the school district during the time of the insolvency of the bank. It was the duty of the defendant Traver to call in and pay these warrants, and, had he done so, he would have saved to the district thereby the sum of at least $5,000; but by his failure to perform his duty in this respect, he caused the loss of that sum of money to the plaintiff.
Under the provisions of section 8998, Code of 1919, the defendant Traver was guilty of receiving a part of the money that was in the bank at the time it closed while the bank was insolvent. For this, he was liable to criminal prosecution under the provisions of sections 8998 and 8999, as those sections are construed by this court in State v. Syverson, 39 S.D. 638, 166 N.W. 157. It is very clear to me that the total sum involved of $7,830.94 has been lost to the plaintiff solely by his failure to make any attempt to comply with the provisions of the bond and that both he and the surety company are liable to the plaintiff for that amount. *Page 81