People ex rel. Board of County Commissioners v. Koenig

Mr. Justice Bouck,

dissenting.

I regret that I must dissent from the judgment and opinion of the court.

Declaring this case to be governed by Patterson v. People ex rel., 98 Colo. 86, 53 P. (2d) 1187, the majority opinion holds the county treasurer of Jefferson county, to-*463getter with the surety on his official bond, absolutely liable to that county for the loss of certain deposits of public moneys. These moneys had been deposited in good faith by the treasurer (who was the statutory custodian of all school district funds) in the New York banking house of Kountze Brothers, for the purpose of having paid therefrom such of the interest coupons clipped from the bonds of the various school districts in the county as might be presented for payment at said bank. This bank had for many decades enjoyed an enviable reputation for solvency and soundness, but succumbed to the great financial depression which began in 1929, and was adjudicated a bankrupt in the latter part of 1931. Thus was created the present controversy as to who shall sustain the resulting loss.

A statute the. validity whereof is not impugned, regularly enacted by the legislative branch of the state government, and in force when each of the bonds and interest coupons here involved was issued, seems clearly to authorize all that was done by the county treasurer for which he is now penalized by this court. This statute provided that the interest should be “payable at such place or places as shall be fixed by said board and designated in said bonds.” C. L. ’21, page 2148, §8366. By due action of the respective boards, the bonds of several districts accordingly designated the place by providing that the interest coupons were “payable at the Banking House of Kountze Brothers, in the City of New York, U. S. A., upon presentation of * * * said coupons * * The bonds of other districts designated two places by providing that interest coupons were ‘ ‘ payable at the Office of said County Treasurer or at the Banking House of Kountze Brothers, in the City and State of New York, U. S. A., at the option of the holder, upon presentation of * * * said coupons * * * as the same mature.” The coupons themselves contained corresponding provisions.

These provisions therefore became part of a valid con*464tract between the district and each holder of a bond or coupon. He was entitled to have them carried out according to their plain intent. Whatever was expressly or by necessary implication required to enforce the contract according to its terms was legal and legitimate.

Take, first, the coupons absolutely payable in New York City. (These are the coupons upon which Mr. Justice Butler bases his partial dissent herein. I think that he is right but does not go far enough in his dissent, as I shall later endeavor to show.) When a district said it would pay the. principal and interest of its bonds, and made the interest payable at Kountze Brothers’ bank, it of course contemplated payment in the ordinary and unambiguous sense of the word. It would not be reasonable to suppose that it meant merely permission to deliver a coupon at the New York bank for future collection. That privilege of the holder is his without any mention of it, and one can readily see that the language of the statute, bonds, and coupons has no reference to such an empty and futile right. Payment, however, presupposed the existence of a sufficient fund for the purpose at the very place designated for payment; in this instance not in Colorado but 2,000 miles away. In view of the inevitable uncertainty as to the number and aggregate amount of coupons which would be presented during any particular period —matters of which neither the county treasurer, the school district, nor any other person could of course have any definite knowledge — it is obvious that ordinary business prudence and integrity would always supply a sum well in excess of the average of presentations and payments, which, as the record shows, varied greatly. This, to my mind, is exactly what the county treasurer, as a reasonable man, did and had a lawful right and duty to do. If it had been alleged and proved that he had acted recklessly or had been guilty of negligence, there would have been a wholly different issue both at the trial in the district court and now in this court on review. Such, however, is not the case. In the absence of such an issue, the *465language used by tbe school district in its bonds and coupons would have been nullified if tbe county treasurer bad failed to supply ample funds as be did. A promise to pay in New York “upon presentation of * * * said coupons” would then have proved nebulous indeed, a veritable delusion and a snare. If tbe district may thus default, there seems cruel irony in tbe bonds themselves: “Tbe faith and credit of said School District No. 50, in tbe County of Jefferson, are hereby pledged for the punctual payment of * * * the interest upon this bond.” Tbe origin and purpose of tbe statutory provision under examination are not conjectural. It is common knowledge that tbe provision is traced to tbe practical business exigencies out of which it arose. Bond issues of public corporations have not infrequently languished unsought and unsold when lacking such a provision. Tbe Illinois courts bold, in tbe absence of statutory authority for paying bonds or coupons elsewhere than at tbe regular office of tbe fiscal officer, that tbe issuing body cannot lawfully make bonds or coupons payable at some place outside tbe state. The. courts of tbe other states, however, bold that this may be done even when there is no enabling statute. Hainer, Mod. Law of Mun. Securities, pages 297-8, §248; 6 McQuillin, Mun. Corporations (2d Ed.), page 166, §2451 (2292). In tbe case at bar we need not rely upon general principles. As stated, provision for payment at some other place is expressly authorized in Colorado by statutes. Such provisions bad previously, and have since, been similarly authorized by tbe statute for insertion in tbe various kinds of bonds issued by tbe state of Colorado, by counties, by irrigation districts, and by other bodies corporate. See (as to the state) C. L. ’21, §§345, 353, 362, 373; (as to counties) §§8843, 8847, 8858, 8867; (as to irrigation districts) §§1983, 1987; (as to towns and cities) §§9180, 9188. Long continued and uniform procedure on tbe part of all state, county, district, and other officers gave a positive administrative construction in favor of exactly what tbe county treasurer *466of Jefferson county did. It was no experiment; it was settled business practice.

Thus far I have discussed the coupons which were expressly and unconditionally payable at Kóuntze Brothers’ bank in New York City. I cannot discern, as does Mr. Justice Butler, any difference in principle between such coupons and the coupons payable in the alternative, either at the county treasurer’s office or at Kountze Brothers’ New York bank, at the option of the holder and without any requirement whereby the holder would have to give, previous notice of his election. As to both classes the contract as stated therein and in the bonds themselves is clear. Thereunder it certainly became the duty either of the county treasurer or of the school districts to make provision for actual payment at maturity in either place. In the absence of affirmative action by the districts, the county treasurer did just as the treasurers of the state., of the counties, of irrigation districts, and other public corporations for over half a century had done without protest or objection; he supplied the funds necessary to insure payment according to the solemn promise of the bond-issuing authority. His action, known and acquiesced in by the districts and by the county at all times, should therefore be accepted now as legal and binding upon the districts. The statute obviously called for such action. The statute should be held to protect him in it.

A significant fact is that the school districts are not parties to the present litigation. They are the only real persons in interest, being the owners of the district funds, and yet they are not complaining. This circumstance, I think, should in itself be sufficient to forbid a judgment against the county treasurer. It is a controversy involving fundamental business methods and legal obligations of the districts, not of the county. I fear that the only inference we can now draw from the. situation is that, by deciding as the majority opinion does, this court has lost sight not only of the legal liability but of the business aspect involved, which was obviously the sole reason for *467enactment of the enabling statute and for inclusion in tbe bonds and coupons of the provision as to place.

Furthermore, apart from tbe fact that tbe county is not tbe real party in interest because tbe funds in question are not county funds, I respectfully submit that tbe majority has overlooked tbe fundamental principles of interpretation for statutes and contracts. It fails to harmonize tbe various statutes and the various parts thereof with a view to giving effect to all. It fails to give tbe treasurer credit for making tbe initial deposit of tbe district funds in Colorado banks and thus satisfying tbe statute in that respect. It permits a drastic penalty to be visited upon tbe county treasurer at tbe instance of tbe county when tbe school districts were tbe only persons who could, under tbe statutes, have been injured, tbe very ones whose wishes and commands as contained in their express contracts with third persons tbe county treasurer has faithfully carried out in tbe only reasonable way.

In my opinion, tbe Patterson case in 98 Colorado, mentioned at tbe beginning, is not decisive of tbe present one. Moreover, I still believe that that case was wrongly decided. However, tbe two cases, as already indicated, are different in their facts and their presentation, and tbe case at bar seems to me to call for affirmance of tbe judgment rendered by tbe district court in favor of tbe county treasurer. Because tbe majority decides in favor of tbe county, I respectfully dissent.