Opinion
No. 27864.
April 15, 1929.
BANKS AND BANKING. Interest is not recoverable on bank deposit, unless so provided by contract or statute.
In order that interest may be recovered on a deposit in bank, it must be so provided either by contract or statute.
APPEAL from chancery court of Webster county, HON. ALLEN COX, Chancellor.
Mitchell Clayton, for appellant.
In entering the decree for interest the court proceeded upon the theory that because the drainage district had an equity in these funds until the ditch was cut, that same became public money, for which interest is allowed. It is true we have a statute which provides when an officer deposits funds of public character in bank said funds are considered trust funds and protected as against creditors of the bank. Sec. 3019, Hem. Code 1927. This statute can have no application here as this money was not deposited by an official. No attempt was made to designate the Citizens' State Bank as a depository for the drainage district and it was not the regular depository for Webster county. Since they were private funds, of course there must have been an agreement to pay interest before same can be collected. No such agreement was made. The holding of lower court is manifestly wrong and the decree should be reversed, with judgment here for appellant.
Will E. Ward and A.J. McIntyre, for appellee.
The funds here in question were deposited under a contract showing plainly on its face that they were drainage funds deposited for the use and benefit of the Webster-Choctaw Drainage District, and thereby became trust funds of that district, notwithstanding the fact that they were deposited in the name of another person, viz.: The Tupelo Dredging Company. There is no statute in our state predicating the collection of interest on public funds upon the validity of selecting the depository, and in the absence of such statutory restriction, a depository receiving public funds knowing them to be such, should not, in equity and justice, be permitted to receive such funds without proper authority and then take advantage of its own wrongful act in so doing for the purpose of evading the payment of interest on such funds. In 1 Patton's Digest, sec. 1803, it is said that a depository is liable for interest on public funds regardless of the invalidity of its appointment as public depository; and sec. 1805, ibid, is to the effect that a depository is liable for interest on funds retained by it after the expiration of its terms as public depository.
Conceding, but not deciding, that the deposit made by or at the instance of the principal contractor in the Citizens' State Bank of Tupelo was of public money belonging to the Webster-Choctaw Drainage District and was not private funds, the said bank was not a public depository of said drainage district. So far as the record shows, it had never been, nor had it ever pretended to be such a depository either of the drainage district or of any of the counties or divisions thereof in the territory of the district. The relation of the bank to this money was therefore that of an ordinary commercial bank of deposit, in so far as concerns the matter of interest payable thereon.
In order that interest may be recovered on a deposit in bank, it must be so provided either by contract or by statute. There is no sort of claim here that there was any contract for the payment of interest; and upon the other point we know of but one statute imposing a liability for interest, of the character herein demanded, on a nondepository bank. This statute is chapter 174, Laws 1922 (section 4567, Hemingway's 1927 Code), which deals with tax collections and tax collectors, and with nothing else. Plainly, the deposit in question was not by or for a tax collector, and it was not a tax collection. Counsel have pointed to no statute which covers a case like this, and upon our own search, we have failed to find any such statute.
It follows that the bank is not liable for interest. The decree in that respect will be reversed, but in all other respects it will stand as rendered.
Reversed, and decree here.