Opinion
Decided April 4, 1927.
Schools — Recovery of funds found due district by bureau of inspection — Petition alleging finding of bureau states cause of action, when — Section 286-1, General Code — Liability of successful bidder for accrued interest on bonds — Board entitled to interest to date of delivery and thereafter, when — Purchaser liable for difference between interest received and bond rate stipulated — Evidence — Report of bureau prima facie evidence and admission not prejudicial — Section 286, General Code.
1. Petition by board of education to recover public money due school district, alleging that bureau of inspection filed report in office of Attorney General of an examination of school district's office, and setting out part of report containing finding for recovery of public money against defendants which is due and unpaid, stated cause of action under Sections 286 and 286-1, General Code, requiring plaintiff to allege only so much of report of bureau of inspection as relates to unpaid claim against defendant.
2. Where defendant's bid for purchase of school district bonds provided that purchasers were to pay accrued interest to date of delivery, purchasers were bound to pay interest on bid from time bonds commenced drawing interest, and, after delivery of bonds which drew interest, from their date.
3. Successful bidders for school district bonds obligated to pay interest on bid, paying for bonds by bank certificates of deposit drawing 2 per cent. interest, held liable to board of education of school district for difference between interest received by board and interest stipulated in bonds.
4. Under Section 286, General Code, providing that certified copy of any portion of report by bureau of inspection shall constitute prima facie evidence of truth of allegations of petition to recover public moneys shown to be due, report is competent evidence in action to recover public money, and admission of report was not prejudicial, where judgment allowing recovery was less than amount shown to be due by report.
ERROR: Court of Appeals for Lucas county.
Messrs. Brown, Hahn Sanger and Mr. Sholto M. Douglas, for plaintiffs in error.
Mr. Edward C. Turner, attorney general, Mr. George W. Ritter and Mr. Gerald Branigan, for defendant in error.
This action was commenced in the court of common pleas by the board of education of the Sylvania village school district, on the relation of the Attorney General, to recover an amount of money claimed to be public money which was due the plaintiff but had not been collected. The defendants were C.L. Graves, B.K. Blanchett, and W.C. Thornburg, partners as Graves, Blanchett Thornburg, and the Opeika Savings Bank Company. A demurrer filed by the Opeika Savings Bank was sustained, and the case proceeded to trial against the other defendants, a jury being waived, and, upon consideration by the court, a judgment was rendered in favor of the board of education for $6,694.86.
It is contended that the amended petition does not set out a cause of action, that the trial court erred in admitting evidence, and that the judgment is against the weight of the evidence.
The action was brought under Section 286 and following sections of the General Code, which relate to the bureau of inspection of public offices. Section 286-1, General Code, provides, among other things, that it shall be sufficient for the plaintiff to allege so much of the report of the bureau of inspection and supervision of public offices as relates to the claim against the defendant, and that the amounts claimed against the defendant are unpaid, and that the plaintiff shall not be required to set forth in the petition any other or further matter relating to such claims. The amended petition on which the action was tried is based upon this section and avers that on or about June 8, 1923, there was filed in the office of the Attorney General a report of the bureau of inspection and supervision of public offices of an examination of the office of Sylvania village school district, covering a period from October 1, 1919, to March 28, 1923, and that so much of said report of the examination as relates to the claim against the defendants is set out in the petition. After copying that part of the report, the pleading avers that the report contains a finding for recovery of public money made against the defendants in the amount of $8,350.67, which amount it is averred has not been paid, and is due and owing to the plaintiff.
We perceive no reason why the pleading is not a good and sufficient petition within the provisions of the statute cited. The statute has been held constitutional and was construed in State, ex rel. Smith, v. Maharry, 97 Ohio St. 272, 119 N.E. 822. In that case the Supreme Court held that the statute was comprehensive enough to justify actions, not only against public officers, but against private persons. The statute authorizes, among other things, the recovery of public money which is due and has not been collected, and any public property which has been converted or misappropriated, and this court therefore holds that the averments of the amended petition, coupled with the report of the examination, state a case within this portion of the statute.
The report of the examination was introduced in evidence, whereupon the plaintiff rested, and the defendants introduced no evidence. The report shows that on February 26, 1921, the board of education of Sylvania village school district passed a resolution authorizing the issuance of $150,000 worth of 5 1/2 per cent. school district bonds for building purposes, as authorized by a vote of the people, the same to be dated May 1, 1921, and to mature at various dates to 1961. Thereafter bids were received, and it was found by the board of education that the best bid was that of Graves, Blanchett Thornburg. The bid of that firm was to pay for the bonds $150,000 and accrued interest to date of delivery. This bid was accompanied by a certified check for $3,000, and, being found to be the highest and best bid, was accepted by the board of education. By the terms of this bid, when accepted, the defendants were obligated to pay $150,000 and accrued interest to date of delivery.
Instead of making payment for the bonds in accordance with the bid, the defendants effected an arrangement with the Opeika Savings Bank Company, which was not a legal depository for the board of education, by which the board undertook to accept certificates of deposit of that bank drawing 2 per cent. interest, the bank also promising that it would pay an additional 3 per cent. to Graves, Blanchett Thornburg during the time the certificates were outstanding. One of these so-called certificates of deposit was made for $100,000, and recites that it has no negotiable or commercial value and can be withdrawn at any time by the depositor personally, and that interest will be paid at the rate of 2 per cent. per annum if the deposit remains undisturbed for six months, but shall draw no interest after six months. This instrument, which bears date of June 14, 1921, also recites that it is due on December 14, 1923.
The full principal sum bid for the bonds was not actually paid to the board of education until December, 1922. Some controversy has arisen as to when these bonds were delivered to the purchasers, Graves, Blanchett Thornburg. We do not regard the date of delivery as important, for the bid which was accepted provides that the purchasers were to pay accrued interest to date of delivery, as the bonds drew interest from their date; and certainly the purchasers would be bound to pay interest on their bid after delivery of the bonds. The board of education was obligated to pay interest on the bonds from their date, and the purchasers of the bonds, and the customers to whom the purchasers sold the bonds, would of course hold the property of the school district for this interest, and the plainest principles of law would require that the amount bid for the bonds be paid with interest from the time the bonds commenced drawing interest, which was May 1, 1921. The fact that the board of education or its clerk accepted certificates from the Opeika Savings Bank Company drawing 2 per cent. interest is not important, except as it shows that the board did in fact receive 2 per cent. interest while the bonds which it had issued were drawing 5 1/2 per cent. Clearly the defendants would be liable to the board of education for 5 1/2 per cent. less the 2 per cent. which it received from the Opeika Savings Bank Company. The amount of interest remaining due was computed to be $8,350.67, as shown by the report. The amount adjudged by the trial court is substantially less than that sum, namely, $6,694.86. Under no method of computation could the amount be less than the amount adjudged.
It is urged that many parts of the report of the bureau of inspection and supervision introduced in evidence consist of incompetent and immaterial evidence. Possibly some parts of the report may be of that character. The statute, however, provides that a certified copy of any portion of the report shall constitute prima facie evidence of the truth of the allegations of the petition. Certainly the result of the examination is competent evidence, and the report shows that the result or conclusion reached was a finding that the balance due from the defendants to the Sylvania village school district was a sum of public money due and uncollected in excess of the amount of the judgment. In admitting this report in evidence we find no error to the prejudice of the plaintiffs in error. Cook v. Penrhyn Slate Co., 36 Ohio St. 135, 139, 38 Am. Rep., 568.
Judgment affirmed.
WILLIAMS and LLOYD, JJ., concur.