From 1928 to 1932 appellee Middleton was clerk of the Howard Circuit Court and appellee The Employers' Liability Assurance Corporation, Ltd., was surety on his official bond. At the expiration of his term Middleton had on deposit in three Kokomo banks, which had been designated as public depositories by the county board of finance, the sum of $18,011.25; said banks failed during the term but the clerk had realized $13,534.79 on his deposits and this sum was turned *Page 222 over to the new clerk, leaving a balance of $4,476.46 unpaid. This action was commenced by the State of Indiana on the relation of the Attorney General to recover said sum of $4,476.46, and the further sum of $299.08, which it was charged that Middleton had collected as clerk and for which he had failed to account.
The appellees answered in general denial and with two affirmative paragraphs. We are only concerned with the second paragraph, which charged that chapter 121, Acts of 1937 (§ 61-664 Burns' Supp. 1938, § 13844-85 Baldwin's Supp. 1937), relieved appellees of all liability for moneys impounded or lost in the closed banks. A demurrer to the second paragraph of answer was overruled. The cause was tried on a stipulation of facts and resulted in a judgment against appellees for $249.33, and no more. Appellant filed a motion for a new trial, which was denied, and this appeal followed.
We are first called upon to consider the appellees' motion to dismiss. It is shown that before the appeal was perfected the appellees paid to the clerk of the Howard Circuit Court the full amount of the judgment of $249.33, with interest and costs; that the clerk issued his usual receipt therefor and entered a memorandum of satisfaction on the proper judgment docket. The present clerk has filed a counter-affidavit admitting the above facts, and further showing that no distribution has been made of the proceeds of said judgment to the county treasurer or anyone else, and that he is holding the same as trust funds, subject to the further orders of the court.
Appellees rely upon chapter 38, Acts of 1881 (Spec. Sess.), § 2-3201 Burns 1933, § 471 Baldwin's 1934, which provides that "the party obtaining judgment shall not take an appeal after receiving any money paid or collected thereon," and the rule laid down in the case of State ex rel. Carson, Auditor of Cass County v.Hebel *Page 223 et al. (1880), 70 Ind. 314. That case held that a county treasurer had authority to receive and receipt for, and a county auditor had power to give a quietus for, the amount of a judgment recovered on the bond of a defaulting county treasurer, for moneys due the county; and although such receipt and quietus were given without the sanction of the county commissioners, an appeal by the plaintiff would not afterwards lie to this court from such judgment. Appellees contend that the successor clerk is a real party in interest in this litigation, and that his act of receiving the money paid to him on the judgment had the effect of placing it in the hands of the real plaintiff, and thereby extinguished the right of appeal.
The Attorney General asserts that under section 49-2719 Burns 1933, § 1438 Baldwin's 1934, the present clerk had no discretion to refuse the money tendered him by the appellees in payment of the judgment appealed from; that in receiving same he merely discharged a duty imposed upon him by law, and that this act did not amount to an acceptance of the proceeds by a party to the action, since the funds were undistributed and merely held in trust by a public officer, subject to the further directions of the court having jurisdiction of the case.
The situation with respect to the legal effect of the payment of the judgment is complicated by the fact that the funds sought to be recovered in the action are those which, if realized, 1. would belong to Middleton's successor as clerk, and such successor is the person to whom the judgment was paid, though he did not institute or prosecute the action that resulted in the judgment appealed from. It may be noted that the statute relied upon by the appellees (§ 2-3201 Burns 1933, § 471 Baldwin's 1934) precludes an appeal by a party receiving any money paid or collected. *Page 224 It is therefore pertinent to inquire whether the successor clerk is a party within the meaning of the statute, and whether he received the money in the sense contemplated. In the Carson case,supra, the conclusion of the court appears to be predicated upon the fact that the relator who brought and maintained the action also issued the quietus by means of which the judgment was satisfied. In the present case the successor clerk is a stranger to the record so far as the named parties are concerned. His act in receiving the money, issuing a receipt therefor, and crediting it on the margin of the judgment docket is nothing more than he should and would have done had moneys been paid to him in discharge of any judgment rendered by the court of which he was clerk. The Carson case is, therefore, clearly distinguishable, since we find lacking in the case at bar the element of the voluntary acceptance of benefits by the judgment creditor.
The statute (§ 2-3201 Burns 1933, § 471 Baldwin's 1934) is merely declaratory of the common law rule that a party cannot accept the benefit of an adjudication and yet allege it to be erroneous. 4 C.J.S., p. 416. But, like most general rules, this has its exceptions and it is accordingly recognized that an acceptance of an amount to which the acceptee is entitled in any event does not estop him from appealing from or bringing error to the judgment or decree ordering its payment. City ofIndianapolis v. Stutz Motor Car Co. (1932), 94 Ind. App. 211,180 N.E. 497. The facts upon which the court below rendered judgment against the appellees for $249.33 were stipulated by the parties and are undisputed. The appellant has not challenged the propriety of that part of the judgment by cross-errors and, so far as the motion to dismiss the appeal is concerned, the case comes clearly within the exception to the rule stated above. Appellees' motion to dismiss is therefore denied. *Page 225
The merits of this appeal turn upon the validity of chapter 121, Acts of 1937, § 61-664 Burns Supp. 1938, § 13844-85 Baldwin's Supp. 1937). This act by its terms undertakes to release public officials from personal liability when funds in their custody, trust, and otherwise are lost by reason of the failure or insolvency of banking institutions in which they are deposited. In such event the county, or other political subdivision, is subrogated as to any dividends arising from the liquidation of the bank, and persons entitled to moneys which were so deposited are authorized to make claims against the proper political subdivision or corporation therefor. It is directed that such claims shall be allowed if found correct and paid out of the general fund without an appropriation.
Prior to the passage of chapter 30, Acts of 1937, § 61-673 Burns' Supp. 1938, § 1438-1 Baldwin's Supp. 1937 (which is not the statute here challenged), a clerk of a circuit court 2. did not come within the provisions of any public depository law of the state and was not required to keep the funds received by him by virtue of his office, in any place designated by any other authority than himself. This created a situation of absolute liability for funds coming into the hands of such officer. It was frequently held that, under such circumstances, the official became an insurer of the funds with which he was charged and liable for their loss in the event of the failure of the bank in which they were placed. Inglis et al. v. State exrel. Hughes, Trus. Van Buren T'p., Madison Co. (1878),61 Ind. 212; McClelland, Trustee v. State ex rel. Speer (1894),138 Ind. 321, 37 N.E. 1089. The rule adopted by this state is in harmony with the weight of authority. 93 A.L.R. 819, Ann.
The Attorney General finds himself in a somewhat anomalous situation by urging the unconstitutionality of a statute. It is his contention that the act of 1937 is invalid for three reasons: (1) because it impairs the contractual *Page 226 rights of persons entitled to funds with which the clerk is charged to assert claims therefor against the clerk and his surety; (2) that the act is discriminatory in its classification; and (3) because the General Assembly possesses no power to provide for the payment of private or trust funds out of moneys raised by general taxation.
It appears to have been settled by this court that the release of a public official from liability for funds lost on account of the failure of the bank in which such funds were deposited 3. does not impair the obligation of contracts. Bolivar Twp. Bd. of Fin. of Benton Co. v. Hawkins (1934),207 Ind. 171, 191 N.E. 158, 96 A.L.R. 271. McClelland, Trustee v.State ex rel. Speer, supra, and Johnson v. Board ofCommissioners of Randolph County (1895), 140 Ind. 152, 39 N.E. 311, were, in effect, overruled by the Bolivar case, supra. The decisions of this court now appear to be in accord with the weight of general authority upon the subject. See 38 A.L.R. 1512 and 96 A.L.R. 295.
It is next claimed that the act of 1937 discriminates in favor of clerks and their creditors in those cases where such clerks had the funds in public depositories (at a time they were 4-7. not required so to do), and against clerks and their creditors who did not have the funds in such designated depositories. The contention is that the classification based upon the premise that the clerk had utilized an unrequired depository is arbitrary and unreasonable and violates section 23 of article 1 of the State Constitution, which prohibits the General Assembly from granting to any citizen, or class of citizens, privileges or immunities which, upon the same terms, do not equally belong to all citizens. A statutory classification, in order to be constitutional, must be reasonable and natural, and there must be some inherent and substantial difference *Page 227 germane to the subject and purpose of the Legislature between those included and those excluded. School City of Elwood v.State ex rel. (1932), 203 Ind. 626, 180 N.E. 471. It is within the province of the Legislature, in the first instance, to determine what classification is just and reasonable in view of the purpose to be attained, and the court will not lightly substitute its judgment for that of the Legislature. Martin v.Loula (1935), 208 Ind. 346, 194 N.E. 178, 195 N.E. 881.
It is likewise settled by the decisions of this court already cited, as well as by the weight of authority, that where funds raised by taxation are involved, it is within the purview of the Legislature to relieve the officer for their loss when they have been entrusted by him to a designated depository. This conclusion must be based, in part at least, upon the fact that such officer has acted circumspectly and in such a manner that he should not be called upon to bear the burden. Upon principle, there would not seem to be any reason why the same considerations should not validate legislation to relieve the officer when he has utilized such public depository, though not so required by positive statute. In either event the exercise of sound judgment and prudence on the part of the officer in the handling of public funds must be regarded as a basis for the legislative relief. The legislation here in question may have been prompted by the legislative conclusion that, in permitting officers other than clerks to deposit funds in a public depository, and thus be relieved of responsibility therefor, and denying that privilege to the clerks of the circuit courts, an injustice was done the clerks. It can not be doubted that the clerks might have been included with the other officers, and failing to relieve the clerks by permitting them to take advantage of the depository law, was a legislative error, and that those clerks who did all within their power to come within the depository law, and who deposited their *Page 228 funds in public depositories, were entitled to public consideration; that there is a moral responsibility, a moral obligation, to them that did not exist toward clerks who did not use designated public depositories and made no effort to bring themselves as far as might be within the depository law. With the wisdom of classification, if reason for it may be found, the courts have no concern. We are not at liberty to substitute our judgment for that of the law-making body as to what is or is not a wise classification in a statute. It is enough if, from the terms of the act and the subject upon which it operates, there appears some reasonable justification for the classification.
It seems clear from the provisions of the act of 1937, as well as from the legislative policy as revealed by other similar statutes enacted in this state, that the principal purpose of the act was for the relief of the public officials to which it applied. In that view of the case, the provision for reimbursing persons who had moneys in the hands of the clerks was merely incidental to the main objective, and was necessary to the end that such persons might not be deprived of their rights of redress against the clerks, individually, or upon their official bonds. The validity of the act must therefore be determined in the light of the paramount purpose, rather than from a disassociated consideration of its incidental features. If the situation were reversed, and the prime purpose of the act appeared to be to relieve persons who had moneys in the hands of clerks, a serious situation with respect to classification would be presented by the fact that all similarly situated would not be equally protected.
The Attorney General has pointed out in his brief that in all the cases in which the validity of legislation releasing officers from liability for the loss of public funds has been upheld, the funds lost were the property of or belonged to a governmental subdivision. He recognizes *Page 229 the right of the state to forgive the loss of its own funds, but he urges that the funds lost in the instant case did not belong to the state, but were the property of litigants, witnesses, publishers, heirs, beneficiaries, legatees, minors, and other persons for whose benefit the funds were paid into the hands of the clerk. He denies the right of the Legislature to make good the loss of these funds out of moneys raised by general taxes.
Some of the authorities do make the distinction that statutes which undertake to relieve public officials can not stand when they are applied to funds other than those raised by general taxes. Thus in Mount, Trustee v. State ex rel. Richey (1883),90 Ind. 29, 46 Am. St. Rep. 192, the court said, in quoting fromBoard, etc. v. McLandsborough (1880), 36 Ohio St. 227 (p. 31):
"`Indeed, it is difficult to fix any limit to the power of the General Assembly in this respect, where the funds so lost were raised by taxation, which, as we have said, is clearly a legislative power'" (Our italics.)
And further (p. 31):
"It is, perhaps, true, that the Legislature can not authorize the assessment of a tax for a mere private purpose . . ."
The language quoted was by way of dictum, since the case before the court did not concern funds which were not raised as taxes.
In McClelland, Trustee v. State ex rel. Speer, supra, it was held that the Legislature had no power to impose upon taxpayers of a township the burden of making good the loss of common school funds (not raised by taxation) occasioned by the failure of a bank. The statute there under consideration was held void, however, for other reasons disapproved in the Bolivar case,supra.
The Bolivar case considered the constitutionality of a *Page 230 statute in some respects similar to the one before us (ch. 78, Acts 1933.) In holding the act valid, Hughes, C.J., quoted the following language from McSurely v. McGrew (1908), 140 Iowa 163, 168, 118 N.W. 415, 132 Am. St. Rep. 248 (p. 192):
"`If nothing but private rights were involved, it is manifest that the act could not be sustained.'"
The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government. It is a legislative power, and is limited only 8. by the provisions of the constitution. State ex rel. Goodman, Prosecuting Attorney v. Halter (1898),149 Ind. 292, 47 N.E. 665, 49 N.E. 7.
It is implied in all definitions of taxation that taxes can be levied for public purposes only. This doctrine, now so firmly established in our system of constitutional law, is of 9. comparatively recent origin and finds its justification in the due process clause of the Fourteenth Amendment to the Federal Constitution, adopted in 1868. It was nine years later, however, before the United States Supreme Court applied the principle as a matter of substantive law. Davidson v. Board ofAdmrs. of New Orleans (1878), 96 U.S. 97. The exact line of cleavage between what is, and what is not, a public use, is somewhat difficult to mark. Some purposes readily align themselves on one side of the line as being clearly public in their nature, while others as readily fall on the other side as being obviously private, and there is a debatable ground between the two. The courts have never attempted to lay down with minute detail an inexorable rule distinguishing public from private purposes, because it would be impossible to do so. Such determination is primarily one for the legislative branch of the government and it can not be held to any narrow or *Page 231 technical rule of action. Courts will not intervene unless there is a plain departure from every public purpose which could reasonably be conceived. Laughlin v. City of Portland (1914),111 Me. 486, 90 A. 318, 51 L.R.A. (N.S.) 1143; Carmichael v.Southern Coal Coke Co. (1937), 301 U.S. 495, 81 L. Ed. 1245, 57 S. Ct. 868, 109 A.L.R. 1327.
So far as the purposes for which taxes may be imposed, they are identical with the purposes for which the government may contract debts or make appropriations. An exercise of the powers 10-13. of government may cause injury to particular individuals and, under some circumstances, the moral obligation may be such as to justify an exercise of the taxing power in favor of private persons. Such obligations may go beyond the limits of common law liabilities and be such as a just man would recognize in his own affairs, whether by law required to do so or not. Cooley, The Law of Taxation, Vol. 1, 4th Ed., §§ 174, 177, and 194. A moral obligation means that some direct benefit was received by the state as a state, or some direct injury has been suffered by the claimant under circumstances where, in fairness, the state might be asked to respond, and there must be something more than mere gratuity involved. People v. Westchester Nat. Bank (1921), 231 N.Y. 465, 132 N.E. 241, 15 A.L.R. 1344. Whether the facts existing in any case bring it within the class of claims which the Legislature ought to recognize as founded upon equitable and moral obligations is largely one for the Legislature to decide for itself. United States v. Realty Company (1896), 163 U.S. 427, 16 S. Ct. 1120, 41 L. Ed. 215.
Much might be said in support of the moral responsibility resting upon the state to make good the loss of funds in the hands of circuit clerks. The judiciary is one of the co-ordinate branches of government; circuit *Page 232 courts are an integral part of the judicial system of the state; clerks of such courts are very important officers thereof; and moneys placed in the hands of such clerks, pursuant to judgments and court orders, are regarded as in custodia legis. Notwithstanding the fiduciary character of the authority upon which clerks received and held the moneys of private citizens, the state failed, until after the passage of the act here complained of, to provide a public depository law applicable to these officers, although it had done so with respect to the custodians of its own funds.
We are not at liberty to say that the General Assembly abused its power when it recognized a moral responsibility on the part of the state to make good the losses suffered by persons 14. whose funds were on deposit to the credit of circuit clerks in closed banks. Their payment, in accordance with the terms of the act, did not amount to a mere gratuity. The political subdivisions and public corporations required to absorb the losses were subrogated to the rights of the clerk against the closed banks. The Legislature may have reasoned that the burden placed upon the taxpayers was necessary and proper to the end that confidence in the government and respect for its courts should not be materially weakened.
We hold the act valid.
Judgment affirmed.
Roll, J., dissents.