USA > Wisconsin > An illustrated history of Wisconsin from prehistoric to present periods : the story of the state interspersed with realistic and romantic events > Part 56
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" We have been secure, happy and peaceful in the enjoyment of the prod- ucts of our labor. While in other portions of the Union conflicts of the most serious character have arisen between employers and their workmen, deference to the plain provisions of the constitution and the laws have enabled Wisconsin not only to avoid all serious results from such difficulties, but to save expense and the too frequent exasperation attending needless use of state troops.
" The reports of the state officers, boards and institutions of the state, required by law to be made, will be presented to you in full. From a careful examination of these reports, it appears that the affairs of the state have been conducted economically and well. It is not my purpose to present to you any extended detailed statement, but to depart somewhat from the usual method. I urge upon you the advisability of your careful examination into all these reports, assuring you on behalf of those in authority in the several departments of their desire to have you scrutinize with care the present manner of conducting the business of the state. They invite criticism and suggestion from you, looking to a more economical and satisfactory administration.
" I feel it a privilege to be able to extend to the people of Wisconsin con- gratulations that the highest court in the state has affirmed the decision of the circuit court against former state treasurers who have misappropriated the interest on state funds to private uses. The aggregate of the judgments will be a large sum of money, but the recovery of the money is a trifling matter compared with the principle established, which is a great victory for the doc- trine that public office is a trust that should be honestly administered."
STATE FINANCES.
In speaking of the finances of the state since the commencement of the governor's first administration, he said :
" On January 5, 1891, there was a balance on hand in the general fund of $23,599.32, with warrants already drawn aggregating $36,096.87 ; actually showing $12,497.55 more money spent than there was in the general fund. Against this showing there is a surplus in the general fund to-day.
" On January 1, 1893, $312,939.79 was the magnificent sum to the credit of the general fund of the state, with no unpaid warrants outstanding. Of this surplus but $98,466.10 came from the direct war tax refunded to the state in 1891, by the United States government. There is, therefore, an actual balance to the credit of careful and wise economy of $226,971.24.
" In addition to this, by an improvement in methods, the interest on state funds deposited in banks has, during the past two years, added $53,410.11 to the income of the state, without cost or the loss of a dollar, as a result of such method of temporary loans.
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" Six of the counties in the state now pay the amount of state taxes charged to them on or before the second Monday in July, while all the other counties pay on or before the first Monday in February. This tends to make confusion, and causes much annoyance, and I would recommend that the law be so amended that all such taxes shall be payable at the same time."
The message also treated of the beneficial results of the Australian ballot system. The salary of the state superintendent he recommended to be in- creased in proportion to the amount of work performed by that official. The loaning of the trust funds, the protection of public lands, the public health, the co-employe law, the contingent fund, educational affairs, the national guard, war records and public roads, received due consideration in this terse message.
The governor, in concluding his message, said :
" In concluding this brief and somewhat circumscribed review of state affairs, I have endeavored to confine myself to subjects that, to me, seem to press most prominently for legislative attention. There is still one topic to be considered that overshadows all others in the minds of the tax-payers, that is, adherence to the strictest economy in all public expenditures, however small, consistent with efficient service and wise conduct of state affairs. The show- ing made by the economies of the past two years, though so large that it will, no doubt, prove a surprise to many people, is by no means complete. There are opportunities still for the legislature to dispense with needless officials and to still more restrict expenses in certain branches of state government, with the assurance that the result will follow, as it has in the past, that money will be saved and the service improved at the same time. No detail of this subject is so small as to be unworthy of your most serious attention. Extravagance in the conduct of public business results in needless burdens upon the people, and, what is worse, breeds official neglect and corruption.
" Knowing that one of the most valuable aids to the last legislature in the consideration of appropriations was its joint committee on retrenchment and reform, I recommend that this legislature appoint such a committee, to whom shall be referred all bills for the expenditure of money.
" Believing that the legislature in its wisdom will be impressed with the high and patriotic importance of discouraging all tendencies to loose and lavish public expenditures as a first essential of good government, I commend to you these suggestions regarding the public business of the state."
THE STATE TREASURY CASES.
Agreeable to the promises made by the Democracy during the campaign of 1890, and the subsequent instructions given to the attorney-general, actions were commenced against Edward C. McFetridge and Henry B. Harshaw and
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their sureties. These cases were tried before Judge A. W. Newman, in the circuit court of Dane county.
The first action of this nature was the State vs. Edward C. McFetridge, which action was brought upon the official bond of the defendant as state treas- urer, during the term commencing the first Monday in January, 1885, and ending on the first Monday in January, 1887, to which office he was elected in November, 1884. This action was also brought against all of the surviving sureties upon such bond, eleven in number. Three of the sureties had died previous to the commencement of the action. The bond was in the sum of $500,000, the material conditions of which are as follows :
" Now, therefore, if the said Edward C. McFetridge shall faithfully dis- charge the duties of the said office of state treasurer, and also his duties as a member of the board of commissioners of the public lands, and in the invest- ment of the funds arising therefrom, and if all persons appointed or employed by him in his said office shall faithfully perform their duties and trusts therein, and if the said Edward C. McFetridge shall deliver over to his successor in office, or to any other person authorized by law to receive the same, all moneys, books, records, papers, and other articles and effects belonging to his said office, then this obligation to be void, otherwise to be and remain in full force and effect; and the said bond and obligation hereby entered into is hereby deemed to extend to the faithful execution of the duties of the said office of treasurer until his successor shall be elected and duly qualified."
The complaint alleged that during the term of office of Edward C. McFetridge, he, the principal in said bond, loaned to or deposited with certain banks and banking firms, large sums of public funds, which came into his hands as such treasurer, and received from such banks, as consideration for such loans or deposits and as interest thereon, large sums of money ; that the fail- ure of said treasurer to account for or pay over such interest money to the per- sons entitled thereto, or to his successor in office, was the alleged breach of the condition of the bond.
The principal defendant, Edward C. McFetridge, it was charged, as a further breach of the bond, failed to perform his duties as one of the commis- sioners of the public lands in the investment of trust funds in the treasury.
The defendants Edward C. McFetridge and James A. McFetridge an- swered separately. The other defendants answered jointly. Each answer substantially admitted that the treasurer deposited the public funds in various banks, and that the treasurer received some pecuniary gain, compensation or percentage from some of said banks, in consideration of the benefits accruing to them from such deposits, and that such deposits were authorized by law.
The trial of the action before Judge Newman, in the circuit court of Dane county, resulted in the findings of fact to the effect that during the official term
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of the defendant Edward C. McFetridge, the principal in the bond in suit, " loaned to and placed and kept on deposit with the various banks, banking associations and firms, from time to time, a large portion of the funds and pub- lic money of the state, which came to his hands, as state treasurer, with the agreement or understanding that such banks ' should pay as a compensation for such loans or deposits a percentage or interest upon the average amount of such loans or deposits, at certain rates for certain fixed periods, at certain definite times ;' that said Edward C. Mc Fetridge, during his said term, received of such banks, associations and firms, $44, 217.83 as interest upon the funds and public money in his hands belonging to the state, thus deposited, which sum he failed to account for as public money of the state or to pay the same over to his suc- cessor in office.
" As conclusion of law the court found that the money thus received by the treasurer as interest on the public funds thus loaned or deposited became accessory to and a part of those funds; that such funds, thus increased by the interest paid thereon, belonged to the state, and not to the treasurer ; and that Treasurer McFetridge having failed to charge the same to himself in his ac- count with the state, or to pay the same over to his successor in office or other person lawfully entitled thereto, is, and the sureties in his official bond are, liable in this action for the amount thus paid the treasurer as interest and unac- counted for, together with interest thereon from the first Monday in Janu- ary, 1887, at which date he surrendered his office to his successor."
The following opinion in this case, and in the case of State vs. Harshaw, which was tried with it, was filed by Judge A. W. Newman, of the Sixth judi- cial circuit, before whom those cases were tried :
" There are two actions against the former state treasurers and their sure- ties to recover money which the treasurers received from certain banks, for the use of public money deposited with them, and which they have failed to deliver to their successors in office. The two cases depend mainly on similar facts, and the questions of law are very much the same, so they were tried, and are decided together for convenience.
" Mr. McFetridge was treasurer for five years, from 1882 to 1887 ; Mr. Harshaw from 1887 to 1891, four years. During these terms of office, the law fixed the salary of the office at $5,000 per year, and at the same time declared that that sum 'shall be in full for all services rendered by him in his official capaci- ty.' This sum is equal to the largest salary paid to any officer in the state. It is equal to the salary paid to the governor and to the justices of the supreme court. The duties of the office of the state treasurer require from him little be- sides good bookkeeping and suitable care to keep the public money safely. He is not in any important sense the state financier. The general manage- ment of the finances of the state is confided to three commissioners, of whom
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the treasurer is one. These defendants, during their respective terms, kept large sums of the public money deposited in banks, and received from the banks, for the use of it, large sums of money, several times larger than the salary allowed to the office by law. This interest money they did not account for to the state nor deliver to their successors in office, but kept as their own. The evidence tends to show that earlier treasurers had earlier done the same, but with much less of system and smaller profit. It is to recover these interest moneys that these actions are brought.
" It may be assumed, for the purpose of the decision, that these interest moneys belong to whatever party shall be found to have been the owner of the fund which earned them. This is the general rule of law, and no circumstances seem to make this case exceptional. Indeed, it is understood that there was no dissent from this proposition on the argument. Interest upon a fund is accessory to the fund and becomes a part of it. The fund, as so increased by interest, belongs to the owner of the original fund.
" In this action it is claimed for the state that the principal fund, which earned this interest, was the money of the state. On the ground that the in- terest was an accretion to that fund, the state claims to recover it in this action. For the defendants it is denied that the principal fund was the money of the state; but, on the contrary, it is claimed that it was the treasurer's own money, and for that reason he has the right to retain the interest which it earned. So the issue is, practically, whose money was it that earned the interest ? The decision will be a necessary consequence from the answer to this question.
" It seems to be fair to assume that money which is received into the state treasury is the state's money, until in some way it is satisfactorily shown or demonstrated that it is not the state's money. The argument by which this is said to be demonstrated is this : The treasurer gives a bond, with sureties, for the faithful discharge of the duties of his office. Upon this bond he and his sureties are liable to the state in the amount of the penalty of his bond, to account for and pay over all the moneys which shall come to his hands by virtue of his office, absolutely and in every event. That in no event whatever can he be excused from such payment. Hence, it is inferred that he at once, upon the execution of his official bond, becomes an absolute debtor to the state in the amount of the penalty of his bond. From the fact that he is so an absolute debtor, it is again inferred that moneys which are received into the state treas- ury become the treasurer's own money, and that his bond stands to the state in place of the money.
" The whole argument rests upon the premises that the treasurer is liable in every event. If in any circumstances of loss he is not liable, the argument fails. No case has been found where it has been held that the treasurer is liable when the money has been lost without his fault, by act of God or of the
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public enemy. The only case where the question was involved is U. S. vs. Thomas, 15 Wall., 337. In that case it is held that for such a loss he is not liable. In that event he is excused for losing the public money. It would be no excuse for not paying over that he had lost his own money by whatever means. This makes the responsibility of the custodian of public funds the same as the common-law responsibility of the common carrier. He also is ex- cused for loss by the act of God or of the public enemy. It has not been claimed that the common carrier, by reason of his strict responsibility, becomes the owner of the goods he carries.
" This is an open question in this state. It is to be decided according to what shall appear to be the better reason. It does not seem that public policy shall require a state treasurer who keeps the public funds faithfully in the place designated by law, shall be held liable for public money lost without his fault, by the act of God or the public enemy ; for example, by an earthquake which should engulf the capitol, or by an invading army which should capture it. But there are many decided cases in which the judges assume and say that the treasurer is an absolute debtor, and, as a corrollary, that the money is his own. This conclusion does not seem to be a necessary inference from the premises, and is denied in some of the cases where the absolute liability is assumed, as in Hennepin Co. vs. Jones, 18 Minn., 199; but these cases are mostly, if not all, in- volving the liability of town, county, or local treasurers, or collectors of public money, and for that reason are not strictly in point in this case, for ordinarily the statutes relating to the management and preservation of the public funds by the state treasurers and the local treasurers are different. Usually, in the case of the local treasurers, nothing is designated with respect to the mode or place of keeping the funds, so that if he accounts fairly, and meets all obligations as presented, there is usually no occasion or disposition to inquire further as to the disposition or management of the funds; while, in the case of the state treasurers, the statutes are more explicit. It is contemplated that all public funds of the state shall remain specifically in the vaults of the treasury, so that they can be counted quarter-yearly.
" So the state treasurer does not stand on the same footing as the local treasurer. In the case of the local treasurer, inasmuch as the law does not direct the mode and place of keeping the funds, the treasurer, it is assumed, may keep them where and very much as he pleases. It is very much the same as if the funds were his own. But, in the case of the state trsasurer, the statutes provide industriously for the safe-keeping of the funds in a designated place, where they are to some extent under the supervision of other officers than himself.
" The recent case of Comm. vs. Godshaw, 17 S. W. Rep., 737, de- cided by the court of appeals of Kentucky, goes upon this distinction. This
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case holds that a local collector, called ' the trustee of the jury fund,' whose duty it was to collect fines and forfeitures and other sources of revenue, to be applied to the payment of the jurors, was the owner of the money he collected, upon the ground that no law directed a place for depositing or mode of keeping it. It was held that the interest paid to him by a bank where he deposited the funds could not be recovered from him by the state; but the court say that this would not be so if the law prescribed a mode of keeping or a place of de- positing it. The court say : 'Nothing is prescribed as to the mode of keeping it or the place of depositing it.' Money paid into the treasury becomes the money of the state because it is required to be paid into the treasury as such ; and, the law requiring the money to be paid into certain banks, when the. treasurer does this, and the money is lost, he is not accountable unless by his neglect.' The court cites Perley vs. Muskegon Co., 32 Mich., 132, as an authority to the same effect. So, if it shall be found, on an examination of the statutes, that by law the state treasurer is required to keep the state's moneys in the vaults which the state has provided for that purpose at the capi- tol, where it can be counted periodically, and has forbidden him to lend it, then these cases are authority that the money is not the treasurer's own money, but that it is the state's own money ; and that the treasurer's relation to it is strictly that of a bailee ; and that if he obeys the laws relating to its custody, and it becomes lost without his fault, he is not liable.
" The condition of the treasurer's bond is for ' the faithful discharge of the duties of his office.' The general duties of his office are defined by Section 152 of the Revised Statutes : ' The treasurer shall keep his office at the capitol, shall receive and have charge of all moneys paid into the state treasury, and shall pay out the same as directed by law.' The language is plain and un- ambiguous. It does not admit of misinterpretation. Ogden vs. Glidden, 9 Wis., 47. It is to be understood according to the common and approved usage of the language. Sec. 4971, R. S. 'He shall have charge of the moneys' seems equivalent to saying, 'He shall have custody of the moneys.' The governor and attorney-general are required, at least once in each quarter year, to examine and see that all the money appearing by the books of the secretary and state treasurer as belonging to the several funds is in the vaults of the treasury. If it is not found to be there it must be put there within ten days, or the attorney-general must bring an action to recover it. Sec. 159. This also is plain and unambiguous. It is objected that the word ' treasury ' may be ambiguous; that it does not always mean the place where the money is kept, but that it sometimes signifies merely the custody of the officer. But the phrase ' vaults of the treasury ' is not obnoxious to that objection. It is required that they examine and see that ' all the money' which ought to be there is there in the vaults of the treasury. Sometimes the term ' money ' is ambiguous. In
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some connections it is held to include some things which strictly are not money ; but as used in this statute, it will hardly be claimed that its meaning is doubtful. It will not be held that in this statute the word ' money ' includes promissory notes, checks, or certificates of deposit, or perhaps anything which is not understood to be money. These are only evidences of debt. It makes no difference that they are issued by a bank.
" In law there can be no difference between a loan to a bank and a loan to anyone else. There is no law which presumes one borrower without secu- rity is safer than another. Cedar Co. vs. Jenal, 14 Neb., 254; Wayne Co. vs. Bressler, 32 Neb., 818; Perley vs. Muskegon Co., 32 Mich., 132. The law makes the depositing of public moneys by any of the officers named in Sec. 4418, which includes the state treasurer, ' for his own gain, profit or advantage, without special authority,' prima facie evidence that such officers have embez- zled the money. Sec. 4419. This is a clear intimation, at least, that it was not intended that the state treasurer should make profit for himself by the use of public money. Sec. 4419 also provides that ' every public officer shall promptly pay over, as required by law, the same moneys received and held by him by virtue of his office, and the whole thereof.' It is objected that this statute is ambiguous ; that the phrase, ' the same moneys,' may, and probably does, mean ' the same amount of moneys.' But it will be seen that all that is significant in the idea that it is the same amount of moneys which is to be paid remains in the statute if the word ' same ' is entirely omitted from it. It will still direct that he 'shall pay over the same moneys received and held by virtue of his office, and the whole thereof.' To say that he shall pay over all- the whole amount of-moneys received and held by him is very much the same as to say that he shall pay over the same amount of moneys received by him. The vice of the proposed interpretation is that it gives no force to the word ' same.'
" A statute ought, upon the whole, to be so constructed that, if possible, no clause, sentence or word shall be superfluous, insignificant or void. Every clause and word of a statute shall be presumed to have been intended to have some force and effect. Harrington vs. Smith, 28 Wis., 43, 67. This provi- sion is part of a penal statute, and, perhaps, on the familiar rule, is to be strictly construed. Yet the intention of the legislature must govern in the construction of penal as well as other statutes, and they are not to be con- strued so strictly as to defeat the obvious intention of the legislature. U. S. v's. Lacher, 134 U. S., 624. It seems to be written in these statutes, with sufficient clearness to be understood by the common mind, that the state treas- urer is to receive all the money paid into the state treasury, and to take care of it ; that he is to keep it specifically 'in the vaults of the treasury ' provided by the state in connection with his office in the capitol; that the money is to be
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counted in the vaults of the treasury by the governor and attorney-general quarter-yearly ; that he is to pay out the same money received by him, but only upon the warrant of the secretary of state. His whole dealing with it is official, specific, and not at all as though he were the owner. It is all incon- sistent with the idea that the legislature contemplated that, as against the state, it was the state treasurer's money. In contemplation of law, the treasurer is simply the custodian of the state's money. It is strictly a bailment. Comm. vs. Godshaw, 17 S. W. Rep., 737; Perley vs. Muskegon Co., 32 Mich., 132; U. S. vs. Thomas, 15 Wall., 337. No decision to the contrary is known where there were statutes directing the mode of keeping the funds.
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