145 P. 932 | Nev. | 1914
Lead Opinion
By the Court,
after stating the facts:
"Sec. 6. In case of great necessity or emergency, the board of commissioners by unanimous vote, by resolution reciting the character of such necessity or emergency, may authorize a temporary loan for the purpose of meeting such necessity or emergency, but such resolution shall not take effect until it has been approved by resolution adopted by a majority of the state board of revenue, and the resolution of the state board of revenue shall also be recorded in the minutes of the county commissioners.
It is contended that boards of county commissioners are not empowered to issue negotiable promissory notes under the provisions of section 6, and, further, that sections 6 and 7 are unconstitutional and void, because relating to a subject not embraced in the title of the act, in violation of section 17, art. 4, of the constitution.
The sections in question, we think, are not within the constitutional inhibition. The act provides for a gradual reduction of the tax rate in the several counties of the state until a certain prescribed rate is reached, which should thereafter be the maximum rate. Boards of commissioners are required annually, prior to the first Monday in March, to make a budget of the amount estimated to be required to meet the expenses of conducting the public business of the county for the next ensuing year. Such boards are prohibited from allowing or contracting for any expenditure unless the money for the payment thereof is in the treasury and especially set aside for such payment. A violation of this provision subj ects the commissioners to removal from office. Recognizing that unforeseen necessities or emergencies might arise requiring the expenditure of additional money not provided for in the general tax levy, sections 6 and 7 were inserted in the act to make provision for meeting such necessities or emergencies. These provisions are therefore in harmony with the general purposes of the act.
Judge Thayer, speaking for the Circuit. Court of Appeals, Eighth Circuit, in Ashuelot National Bank v. School District, 56 Fed. 197, 199, 5 C. C. A. 468, 470, said:
"It is unnecessary for us to assert that the decision last referred to (Brenham v. Bank, 144 U. S. 173, 12 Sup. Ct. 559, 36 L. Ed. 390) goes to the full extent last indicated of holding that a municipal corporation can only acquire authority to issue negotiable securities by a statute which confers such power in express language, and that the power will not be implied under any circumstances. We think, however, that we may fairly affirm that the two
In Coffin v. Board of Commissioners, 57 Fed. 137, 140, 6 C. C. A. 288, 292, Judge Thayer, speaking for the same court, also said:
"Finally it is proper to call attention to the rule of law which requires the authority of a municipal corporation to issue negotiable paper to be clearly made out and established whenever the existence of such a power is called in question. A power of that nature will not be deduced from uncertain inferences, and can only be conferred by language which leaves no reasonable doubt of an intention to confer it. ”
Also, 11 Cyc. 551, says:
" Express authority is not in all cases required for the issuance of negotiable paper, but may be implied from other express powers granted. There is, however, no room for any implication of such power where a statute makes other specific provision for the payment of indebtedness, as by taxation, etc., or by warrant on the treasurer for money payable out of a designated fund or any money in the treasury not otherwise appropriated. ”
See, also, County of Hardin v. McFarlan, 82 Ill. 138; Claiborne Co. v. Brooks, 111 U. S. 400, 411, 4 Sup. Ct. 489, 28 L. Ed. 470; Brenham v. Bank, 144 U. S. 173, 12 Sup. Ct. 559, 36 L. Ed. 390; Gause v. City of Clarksville, 5 Dill. 165, Fed. Cas. No. 5,276; notes, 30 Am. Dec. 193, and 51 Am. St. Rep. 830.
When the case of Douglass v. Virginia City was before this court, there were comparatively few authorities available upon the question of the power of counties and municipal corporations, in the absence of express authority, to issue negotiable instruments. The question had not then received the consideration which courts and text-writers have subsequently devoted to it. It would also appear from the authorities that a more strict rule prevails in reference to the exercise of such a power by county authorities than in the case of strictly municipal corporations.
In the case of Gause v. City of Clarksville, 5 Dill. 165, Fed. Cas. No, 5,276 (decided in 1879, ten years later than the Douglass v. Virginia City case), Judge Dillon,
" We are aware that the American courts, as to private corporations organized for pecuniary profit, have very generally held a different doctrine, and affirmed their implied or incidental power to make commercial paper. (Dillon on Municipal Corporations, secs. 81, 82, 407, and cases cited.) But the powers of private corporations in this regard are not here material. The American judgments which have affirmed the like power in municipal corporations have done so upon this course of reasoning: The corporation, they argue, has power to contract a debt, and it is assumed to be incident to that power to give a note or bill or bond in payment of it. Thus, in Kelley v. Brooklyn, 4 Hill (N. Y.) 263, Cowen, J., makes the basis of the judgment the erroneous proposition that, independent of any statute provision, all corporations, private and municipal, may issue negotiable paper for a debt contracted in the course of its business; and other courts have, without examination, adopted this mistaken view of the law. (Galena v. Corwith, 48 Ill. 423, 95 Am. Dec. 557; Clarke v. School District, 3 R. I 199; Sheffield v. Andress, 56 Ind. 157; Tucker v. Raleigh, 75 N. C. 267; Ketchum v. Buffalo, 14 N. Y. 356; Douglass v. Virginia City, 5 Nev. 147; Sturtevants v. Alton, 3 McLean, 393, Fed. Cas. No. 13,580.) It sufficiently appears from the foregoing that it is a mistake to affirm that the power to issue negotiable paper necessarily or legally results from the corporate power to create debts. ”
The decision in the case of Galena v. Corwith, 48 Ill. 423, 95 Am. Dec. 557, cited supra by Judge Dillon, was subsequently materially restricted, if not entirely overruled, in Hardin v. McFarlan, 82 Ill. 138, and in Commissioners v. Newell, 80 Ill. 587.
We would not, we think, be warranted in sustaining the judgment in this case upon the authority of Douglass v. Virginia City, for the reasons stated.
"To do and perform all such other acts and things as may be lawful and strictly necessary to the full discharge of the powers and jurisdiction conferred on the board.” (Rev. Laws, sec. 1508.)
We think this subdivision is only applicable to the section of which it constitutes a part, but, even if it could be said to be applicable to section 6, supra, of the act of 1893, it cannot be said, we think, that the issuance of negotiable .promissory notes is strictly necessary to the full discharge of the powers prescribed in said section 6.
Section 46 of the civil practice act (Rev. Laws, sec. 4988) provides:
"In the case of an assignment of a thing in action, the action by the assignee shall be without prejudice to any set-off or other defense, existing at the time of, or before notice of, the assignment; but this section shall not apply to a negotiable promissory note, or bill of exchange, transferred in good faith, and upon good consideration, before due.”
Under the provisions of this section, which is the only statute in this state bearing on the question, the defendant has the right to interpose against the plaintiff any defense which it might have against the Nye and Ormsby County Bank, were suit instituted by the latter corporation, which defense accrued prior to notice of the assignment. (Elder v. Shaw, 12 Nev. 82; Haydon v. Nicoletti, 18 Nev. 299, 3 Pac. 473; Huntington v. Chittenden, 155 N. Y. 401, 50 N. E. 49; Scott v. Armstong, 146 U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059.)
In the case of Stadler v. Bank, 22 Mont. 190, 56 Pac. 11, 74 Am. St. Rep. 588, it was held that, notwithstanding a statute like ours, supra, the holder of non-negotiable securities was only subject to such defenses as existed at the time of the transfer. This decision, however, is based on the language of another statute which only referred to defenses existing at the time of the transfer, and the latter statute was deemed controlling. Notwithstanding statutory provisions substantially the same as
As before stated, the only statute in this state upon the question is the one quoted supra, and this leaves no room even for construction.
It is alleged in the answer that the defendant had no notice of the assignment until long after the Nye and Ormsby County Bank went into the hands of a receiver and shortly before the suit was instituted. It is alleged in the answer that the defendant had on deposit in the Nye and Ormsby County Bank on the day the notes, by their terms, became due and on the day the bank closed its doors, a sum of money much greater than the total amount of the notes with accrued interest; that the defendant offered to pay the notes at the time they became due, or within a few days thereafter. It is well settled that no demand is necessary for a deposit in an insolvent bank in order to set it off against a note in the hands of the receiver. (Colton v. Drover, 90 Md. 85, 45 Atl. 23, 46 L. R. A. 388, 78 Am. St. Rep. 431; Thompson v. Trust Co., 130 Mich. 508, 90 N. W. 296, 97 Am. St. Rep. 494.)
On the day the Nye and Ormsby County Bank closed its doors and went into the hands of a receiver, the defendant was entitled to set off the amount of its deposit in the defunct bank pro tanto, not only against the receiver, but against any assignee of the bank holding the notes of the defendant county; such county having no notice of such assignment prior to the suspension of the bank.
Many other questions have been discussed in the briefs which we deem unnecessary to determine.
The judgment and the order sustaining, the demurrer to the answer are reversed, with directions to the court below to also modify its order to strike, if necessary, so as not to exclude allegations in support of defendant’s alleged defense of set-off.
Rehearing
On Petition for Rehearing
Rehearing denied.