Opinion
7 Div. 123.
June 9, 1932. Rehearing Denied June 30, 1932.
Appeal from Circuit Court, Clay County; E. P. Gay, Judge.
Young Longshore, of Anniston, for appellant.
Suit by the state must be authorized by written direction of the Governor, and in absence of such written direction the suit must be dismissed on motion. Code 1923, § 5644; Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590; American Book Co. v. State, 216 Ala. 367, 113 So. 592. The money deposited by Sparks to his credit as tax collector never having reached the state and county treasurers, title never vested in the state and county. Wolffe v. State, supra; Van Dyke v. State, 24 Ala. 81. A tax collector is not required by statute to deposit funds received by him in payment of taxes due the state and county in any particular place so long as it is available when due to be paid over to the proper persons. It was not unlawful for Farmers' State Bank to receive the money for deposit. Code 1923, § 904. When Sparks deposited his collections in said bank which had not qualified to receive the money under article 8, chapter 5 of the Code, the relation of debtor and creditor was thereby created and the deposits were no more than general deposits. National Surety Co. v. State, 219 Ala. 609, 123 So. 202; Moody v. Jacobs, 211 Ala. 292, 100 So. 467. Where several complainants file a bill jointly and make no case for joint relief, the bill should be dismissed. Davis v. Williams, 130 Ala. 530, 30 So. 488, 54 L.R.A. 749, 89 Am. St. Rep. 55. The joint claim filed by the court of county commissioners does not meet the requirements of the statute. Separate claims should have been filed by the state treasurer and the county treasurer. Code 1923, § 6310; Jackson v. Whitesell, 213 Ala. 369, 104 So. 662.
Arthur L. Hardegree, Sol., Pruet Glass, and A. L. Crumpton, all of Ashland, for appellee.
The Attorney General has authority to institute and maintain his action by himself or through the circuit solicitor, without procuring written authority from the Governor. Code 1923, § 5648; Bradford v. State, 201 Ala. 170, 77 So. 696. But if written authority were required, the motion being unsupported by proof was properly overruled. Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590. The deposit of tax funds of the state and county by a tax collector in a bank which has provided no surety for the repayment of such money is forbidden by law, and receipt of such funds by the bank is unlawful. Code 1923, §§ 3973, 3977; Alston v. State, 92 Ala. 124, 9 So. 732, 13 L.R.A. 659; Moody v. Jacobs, 211 Ala. 291, 100 So. 467. The unlawful and unauthorized deposit of public funds in a bank which subsequently becomes insolvent creates a trust relationship in such funds between the bank and the community to which they belong, and constitutes a preferential claim against the assets of the insolvent bank. Green v. City of Homewood, 222 Ala. 225, 131 So. 897; People v. Farmers' State Bank, 335 Ill. 617, 167 N.E. 804, 65 A.L.R. 1327; Maryland Cas. Co. v. Rainwater, 173 Ark. 103, 291 S.W. 1003, 51 A.L.R. 1332; United States F. G. Co. v. Bramwell, 108 Or. 261, 217 P. 332, 32 A.L.R. 829; First Nat. Bank v. Henry, 159 Ala. 367, 49 So. 97; Alston v. State, supra; Boyden v. President, etc., of Bank, 65 N.C. 13. The tax collector suing for the use of the state and county is a proper party in this proceeding, but is not a necessary party. People v. Farmers' State Bank, supra. The real parties in interest are the state, and the state for the use of Clay county. Moody v. Jacobs, supra.
The following appear on briefs as amici curiæ in opposition to the decree appealed from.
J. G. Rankin, of Athens, W. C. and J. P. Beebe, of Bay Minette, J. S. Mullins, of Alexander City, and Steiner, Crum Weil, of Montgomery.
Coleman, Spain, Stewart Davies, of Birmingham, filed a brief as amicus curiæ, in support of the decree.
The appellant does not question the fact that this proceeding was instituted under the authority of the Attorney General, but does question the authority of the Attorney General, in the absence of specific directions from the Governor under sections 5644 and 5647 of the Code of 1923. True, these sections authorize the Governor to cause suits to be brought for the recovery of public funds, but section 854 of the Code of 1923 authorizes the Attorney General to institute and prosecute all suits in law or equity necessary for the protection of the rights and interest of the state. There is no conflict in these provisions, as the Attorney General can act independently under section 854, but must do so when directed by the Governor under sections 5644 and 5647. Whether the case of Wolffe v. State, 79 Ala. 201, 58 Am. Rep. 590, would be of any importance if we did not have section 854 of the Code matters not, as it is sufficient to say that this section appeared first in the Code long after said case was decided.
It is uncontroverted that Sparks, as tax collector, deposited state and county funds in the Farmers' State Bank; that said bank was not a designated depository, and had given no bond for the safe return of the funds as provided by section 3973 of the Code. It is also undisputed that the officers of the bank knew that said deposits consisted of tax money due the state and county. This was a violation of law on the part of Sparks and, in effect, a conversion of the fund, and though under ordinary conditions created the relation of debtor and creditor, and regardless of what the statute would be as between individuals under similar conditions, the real and important question is, Did the state and county have a lien or preferred claim to the funds or against the assets in the hands of the receiver? We think this question has been settled in the affirmative by our recent case of Green v. City of Homewood, 222 Ala. 225, 131 So. 897.
It is a principle supported by numerous authorities that the unauthorized or unlawful deposit of public funds in a bank which subsequently becomes insolvent creates a trust relationship in such funds between the bank and the community to which they belong. It is obvious that to hold otherwise in such cases would leave an open door to fraud and would allow the interests of the public to be jeopardized by the wrongful act of a trusted officer. Where a state treasurer deposits state funds in a bank, without authority of law, and the bank had notice of the character of the funds which were comingled with the general assets of the bank and used in payment of debts of the bank, which later suspended payment and went into the hands of a receiver, the lien of the state for the payment of the trust fund will attach to all assets of the bank as a preferred claim. State v. Bruce, 17 Idaho, 1, 102 P. 831, 134 Am. St. Rep. 245, L.R.A. 1916C, 1; Independent Dist. v. King, 80 Iowa, 497, 45 N.W. 908; Myers v. Board of Education, 51 Kan. 87, 32 P. 658, 37 Am. St. Rep. 263. This doctrine has not only received the approval of our own court in the case of Green v. City of Homewood, supra, but by many of the state courts as well as the Supreme Court of the United States. See note in case of Maryland Casualty Co. v. Rainwater, 51 A.L.R. 1342. It is true that in our case of Green v. City of Homewood, 222 Ala. 225, 131 So. 897, the bank there was a designated depository, but it was held that the sum received on deposit in excess of the amount authorized by law was unlawful and that, to this extent, the state had a lien under the doctrine that we apply in the case at bar.
True, the state and Clay county have a remedy against the tax collector and his sureties, but this is by no means exclusive, and does not deprive the state and county from pursuing this fund and enforcing their lien.
The record shows that the state and county are real beneficiaries and actors in this proceeding, and, while the tax collector may not have been a necessary party, he was not an improper party. Moody v. Jacobs, 211 Ala. 291, 100 So. 467.
We think that under the authorities upon which we rely the county, as well as the state, had a lien on the money so deposited as per the respective interest of each, and that the bill or petition was not bad as for a misjoinder of parties complainant. Davis v. Anderson, 224 Ala. 400, 140 So. 423; Winter-Loeb Grocery Co. v. Boykin, 203 Ala. 187, 82 So. 437.
Section 6310 of the Code requires a presentation of claims, after notice by publication, exclusive of deposits as shown by the books. It does not say exclusive of depositors, and the claim here involved was a deposit. The claim in the case of Jackson v. Whitesell, 213 Ala. 369, 104 So. 662, was not for a deposit; besides the court held that the presentation was sufficient. Moreover, even if this claim had to be presented, we think the presentation was sufficient to apprise the superintendent of the nature and character of the claim.
The case of National Surety Co. v. State, 219 Ala. 612, 123 So. 202, is not opposed to the present holding. It lays down the proposition, which we do not question, that the deposit there was not a special one, and that the relation of debtor and creditor existed between the depositor and the bank, but did not hold that there was no lien in favor of the state or other governmental agencies upon a deposit illegally made and received by the bank with notice. There the suit was against the surety, and no effort was made to enforce a lien on the deposit or assets of the bank.
The decree of the circuit court is affirmed.
Affirmed.
All the Justices concur, except BROWN, J., who dissents in part.
It is too clear to permit of argument that no person or officer, unless authorized by statute, can sue in the name of the state of Alabama, except on "the written direction of the governor of the state to the attorney of record." Code 1923, § 5644.
There is no pretense in this case that any such authority was given, but appellee seeks to meet the contention made by the appellant, that this proceeding was instituted without authority of law, by showing by parol testimony that the suit was authorized by the Attorney General.
The fault in this position of the appellee is that the authority to sue in the name of the state, conferred by section 854 of the Code, is an official duty imposed by the statute, and must be exercised by the Attorney General over his "signature and official designation," and is a power which he has no authority to delegate to another. Ex parte State of Alabama (In re Stephenson), 113 Ala. 85, 21 So. 210; State ex rel. Almon et al. v. Burke, Judge, 160 Ala. 163, 48 So. 1035; State ex rel. Gaston v. Cunninghame et al., County Com'rs, 216 Ala. 423, 113 So. 309.
I am therefore of opinion that the motion to dismiss should have been granted, and that the court erred in overruling the motion.
I am further of opinion that Sparks was improperly joined as a complainant, and that the demurrer filed by the appellant assigning this ground was well taken, and should have been sustained. Sparks, if a necessary or proper party, should have been made a defendant.
I therefore respectfully dissent in part.