Davenport v. Town of Johnson

| Vt. | Feb 15, 1877

The opinion of the Court was delivered by

Powers, J.

Sec. 71, c. 15, Gen. Sts., makes it the duty of the town treasurer to pay orders drawn upon him by the selectmen, and provides that in case he neglects or refuses to pay such orders on demand, the holder may maintain an action thereon against the town. The office of this statute, so far as concerns the order, is simply to regulate the right of action upon it. It makes a demand of payment a condition precedent to any right of recovery against the town. The holder, on trial, must make proof of such demand as an essential element in his right to sue. If the treasurer indorses upon such order when presented, any memorandum officially attesting or acknowledging such demand, no further proof would be requisite ; but he is not under any duty to do this; and if he omits it, the fact of a demand must be established by proof aliunde. But a demand once made will enure to the benefit of any subsequent holder of the order. The quality of negotiability which such orders possess, does not depend upon evidence that a demand for payment has been made, but arises from the form of the instrument. If in form negotiable, they pass by delivery or indorsement, and the indorsee may sue thereon in his own name.

The action of the auditors before and at the annual March meeting in 1874, did not legalize these orders as binding obligations upon the town. It was no part of the duties of the auditors to audit and allow such claims. Their duties are limited to the examination and adjustment of the accounts of the several town officers as such. Their jurisdiction, and that of the selectmen, over the allowance of claims against the town, is not concurrent. The duties of the several town officers are prescribed and limited by statute ; and within the scope of their official duty, their action is final. The auditors are appointed to revise and verify the accounts of these officers of their doings for the protection of the town, and report the result of their examination to the town, and the town takes final action in the premises.

The right of the selectmen to allow the claim for which they drew the orders in suit, is claimed to exist in virtue of s. 52, c. 15, Gen. Sts., which reads : “ The selectmen shall also audit, and, in their discretion, allow the claim of any person against the town for money paid or services performed for the town, and may draw orders on the treasurer for the sum so allowed.” In the examination of claims against the town under this section, the selectmen act for and in behalf of the town. They represent the town in the inquiry into the merits of the claim, and in the exercise of a discretion thereon, they sustain in interest a relation adverse to that of the claimant, and are bound to act for the best interests of the town.

If the selectmen should acquire a pecuniary interest in any claim allowed, whereby they reaped a profit to themselves, the town would be entitled to the benefit of such profit, upon the familiar doctrine that applies to agents, trustees, administrators, and all other persons who stand in fiduciary relations to others, that such persons shall make no profit to themselves as against ■ those for whom they act. This doctrine was recognized and applied in Judevine v. Town of Hardivide, General Term, 1876 ^*

It is evident that this doctrine applies with special force to a case where the claimants are the selectmen themselves. What room in such case is there for the exercise of a fair discretion in passing upon the question of the allowance of their own claims ? Each one of the selectmen had a pecuniary interest in this claim, which amounted to a thousand dollars and more. They had long before the date of the orders adjudged it advisable to incur the debt covered by the orders, and had paid, or become liable to pay, it themselves. Now when the question was presented to them whether this was a claim properly allowable against the town, and they assumed to sit in judgment upon that question, how could they impartially act for the town and represent its adverse interests in that inquiry ? The statute was not designed to apply to such cases, and the allowance of the claim by the selectmen availed nothing, and the orders were drawn without authority of law.

The plaintiff being a nominal holder, the defence can be made the same as though suit had been brought in the name of the original payees.

Judgment affirmed.

* Ante, 180.