While I agree with the disposition made of this case by the majority opinion, I do not agree with what is said in the opinion upon which the conclusion is based.
When the said warrants were presented for payment to the treasurer of the school district, she had on hand in the bank, funds applicable for that purpose, greatly in excess of the aggregate amount of all the warrants. Under these conditions it was her imperative duty to pay them on presentation, and this is exactly what she did. She paid each warrant holder the amount of his warrant in cash. She then indorsed each warrant on the back, "Redeemed and paid," and signed her name as treasurer thereto. She then made an entry in her school district cashbook to the effect that the respective warrants had been paid. In performing these acts she was acting in her capacity as treasurer and was strictly following the provisions of the law. By the act of making the charge on the books of the district of the amount of the warrants against the school district's deposit in the bank, she transferred that amount of money from the school district to the bank, and this regardless of whether any such entry was made on the book of the bank.
Sections 7475 and 7476, R.C. 1919, read as follows:
"§ 7475. The school treasurer shall keep such accounts and make such reports as are required of him by law. He shall pay no money out of the school funds in his hands except upon the warrant of the school board, signed by the clerk and countersigned by the chairman. He shall pay all warrants properly drawn and signed when presented, so long as there is any money in his hands or subject to his order for their payment, and shall draw all money in the hands of the county treasurer belonging to his district, at least once every three months in each year.
"§ 7476. Whenever a warrant is presented to the treasurer for payment, and there is no money in his hands or subject to his order for the payment of such warrant, he shall indorse on such warrant `Presented for payment this _____ day of _____ 19 ___ and not paid for want of funds,' and sign such indorsement. If he has in his hands or subject to his order money for the part payment *Page 441 of such warrant, he shall make such part payment and indorse the sum on the warrant and add `Balance not paid for want of funds,' signing the same. He shall keep a correct register of all warrants so presented and indorsed. Every warrant thus presented and indorsed shall draw interest for the amount unpaid at seven per cent per annum until paid: Provided, that whenever there shall come into the hands of the treasurer, or subject to his order, money applicable to the payment of any warrant which has been so presented and registered, the treasurer shall notify in writing, by mail, the drawee of such warrant, at his last known place of residence, to present such warrant for payment, and interest shall cease, upon every such warrant, within ten days after such notice shall have been sent and such money shall be held for the payment of such warrant."
School warrants are not negotiable instruments in the sense that they can be transferred by indorsement so as to give the transferee any greater right than that of the transferer; they are mere assignable choses in action. Tattersfield v. School District, 60 S.D. 455, 245 N.W. 51, 54; Lewis v. School District,60 S.D. 163, 244 N.W. 102; sections 742 and 2307, R.C. 1919. Under the provisions of section 7475, the treasurer, if acting in his capacity as treasurer, upon the presentation of a valid warrant, has no alternative but to pay the same, provided he has on hand sufficient funds applicable to that purpose, and upon such payment such warrant is wholly extinguished as an obligation against the school district.
In support of its contention that the warrants involved came into its possession as valid obligations against the plaintiff school district defendant cites and relies upon Lewis v. Rutland School District, supra, and Tattersfield v. School District, supra. But these cases are not analogous to the present case.
Lewis v. Rutland School District, supra, involved a school district warrant. One Carl H. Norberg was treasurer of the district. He was also cashier and managing officer of the Farmers' Savings Bank of Rutland. The warrant was presented to him for payment. Nothing was said between him and the payee of the warrant as to whether he was to cash the warrant and cancel it, or whether he was to buy the warrant for the bank. He, acting as cashier of the bank, and with the intention of purchasing the *Page 442 warrant for the bank, paid for it out of funds belonging to the bank, and no charge was made against the funds of the school district on the books of the school district showing that said warrant had been paid with funds belonging to the district. He then indorsed the same, "Presented for payment and not paid for want of funds." Thereafter he as cashier of the bank assigned the said warrant to the plaintiff for which assignment he received the full face value thereof. Plaintiff afterwards presented the same to the treasurer of the school district for payment, but payment was refused, and the plaintiff brought suit for the collection of the warrant. The defense in that case was, as it is in this, that the warrant had been paid and that the indorsement placed thereon by the treasurer to the effect that the warrant had been presented and not paid for want of funds was placed there without authority; that at the time of its presentment the district had in its treasury and in the custody of said treasurer sufficient funds belonging to the district to pay the warrants. But it was a fact that the district never had paid this warrant nor any part thereof, although it had received full face value therefor. Under these circumstances, we held that the plaintiff was entitled to recover.
In the Tattersfield Case the school district owed some $3,000 interest about due on certain bonds. The district had on hand approximately $4,000, but this money was needed for the payment of current expenses, and it became necessary to issue a warrant in order to raise money with which to pay the interest on the bonds. Accordingly, a warrant for $3,000 was issued, payable to the bank with the understanding that the bank would negotiate the same and thereby raise money to pay said interest. The cashier of the bank, who was also treasurer of the district, indorsed the warrant "presented for payment and payment refused for want of funds." The bank then paid the full face value of the warrant on the said interest, and assigned the warrant to the plaintiff in part payment of a debt owed by the bank to plaintiff. The school district had never paid to any one the amount of this warrant, although it had received the full face value therefor, and the irregularity of the manner in which the warrant was issued is the only defense. In the opinion, we said: "The district still retains that benefit and will not be heard under these circumstances to urge the irregularity or illegality of the warrant." *Page 443
In this case the transaction that took place between the warrant holders and the treasurer of the district was not intended to be one of sale and purchase, or assignment. The warrants were presented to the treasurer for payment, and although the treasurer, for the time being, was acting as cashier of the bank, and paid the money out of the bank till, it was her intention to pay the warrants and retire them — not to buy them. This appears beyond any doubt from her indorsement on the warrants. She had no authority under these circumstances to register the warrants and leave them outstanding drawing interest against the district.
Appellants stress the fact that the money that was used in the payment of the warrants was never charged against the school district's account on the books of the bank. This, of course, should have been done. But it was not the duty of the school board to make such entry. To quote from what we say in Gray Construction Company v. Lillian P. Fantle, Executrix, et al, just handed down, 62 S.D. 345, 253 N.W. 464: "They [in this case the school board] had no control or supervision over the books and are not chargeable with knowledge of the contents thereof." The cashier, M.T. Antony, made a practice of keeping a false record of the account of the school district in the bank. When money was paid out by the treasurer on warrants presented for payment, the amount so paid was charged by the treasurer on the books of the district against the district's deposit in the bank. This showed the correct balance in favor of the district. No such charge was made on the books of the bank. This showed the balance in the bank in favor of the district at the time of its suspension to be much greater than it actually was.
By the transaction that took place between the school treasurer and the warrant holder when the warrants were presented for payment, she either paid them, which extinguished them as obligations of any kind, or she purchased them for the bank. The opinion of the court is based upon the theory that she purchased them for the bank. I think she paid and extinguished them and the provisions of sections 742 and 2307 are in no wise involved; and what is said in the Rutland School Case or the Tattersfield Case has no application. *Page 444