Plaintiff, in a third amended petition, sought recovery of $26,404.35, plus interest and attorneys’ fees, from the Callaway Memorial Hospital and its trustees. Suit was first instituted on March 15, 1967. The first count was upon various notes which the hospital had allegedly endorsed; the second count was for money had and received, supposedly accruing because of money paid for the purchase of the same notes. The trial court sustained the motion of defendants to dismiss both counts for failure to state a cause of action, which we construe as the failure to state a claim on which relief can be granted. Originally plaintiff also sued Callaway County and the three Judges of the Cоunty Court, but those defendants were dropped after the sustaining of their motion to dismiss.
It.was alleged in count 1: that the hospital was “organized as a county hospital by the County of Callaway, Missouri”; that between November 18, 1962, and December 31, 1964, plaintiff purchased from the hospital, prior to maturity, sundry notes executed by individuals “payable to thе ordér of Fulton National Bank” and endorsed with recourse by the hospital by its authorized representatives; that the notes were prepared by the hospital’s representatives and that a list of the notes (62 in number), with the amount of each, the dates of purchase, and the balance due on each, was attached to thе petition as an exhibit; that the consideration for the notes was deposited to the credit of the hospital, at its request, in plaintiff bank (but at no place is the amount of consideration stated) ; that such notes were the property of the hospital and that they were sold under the authority of “the statutes of Missouri” (citing none); thаt each note was presented to the maker at maturity, demand made, and payment refused, and that plaintiff thereafter gave notice and made demand upon the defendants on December 31, 1964, and also made formal claim, which was rejected. Copies of the various notes were also attached as exhibits. It was further alleged: that the balance due on all said notes, including interest to December 31, 1964, was $26,404.35, for which sum plaintiff prayed recovery, with 8% interest and attorneys’ fees of $5,300, at $100 per note. (There seems to be a discrepancy between the petition and the exhibit as to the number of such notes, but this is immaterial.)
In count 2 plaintiff, as an alternate cause of action, alleged: that it incorporated the allegations of count 1 concerning the parties ; that on February 10, 1961, plaintiff entered into a written agreement with the hospital for the purchase of sundry notes held or to be held by the hospital, that the agreement was approved by the hospital trustees, and that a copy was attached as
The agreement referred to (dated one year and nine months before the first date of purchase here relied on) recited that plaintiff agreed to purchase “certain notes” upon various conditions stated, among which were: that notes should carry an “add-on-rate” not to “exceed bank notes”; that the notes should be payable in monthly instalments; that the bank should set up for the hospital a “reserve account” (more fully explained) to covеr losses which might be sustained by the bank, against which delinquencies should be charged, on certain further conditions. The agreement is noteworthy principally for its vagueness; not even the purchase price is stated or, put another way, the percentage of discount. The agreement covers “certain notes” of not less than $75.00 face value.
Copies of sundry notes, dated in 1962, 1963 and 1964, all payable to Fulton National Bank in varying amounts, were attached to the original petition with notations of sundry payments. They were endorsed in the name of Callaway Memorial Hospital either by its office manager or its administrator.
Plaintiff’s position on the first count is that the Court erred in dismissing that count because a cause of action was stated as to the “defendants” as endorsers without qualification, since the hospital received value and was not an accommodation party. We consider that point first. If the statutes on negotiable instruments were applicable, the old law, Chapter 401, RSMo 1959, V.A. M.S., would apply, for the Uniform Commercial Code was not effective until July 1, 1965. We do not reach a construction of those statutes, nor is it material that the hospital was allegedly an endorser for value. The hospital, as a county entity, had no authority whatever to incur liability as an endorser on such notes. The distinctions which plаintiff discusses as between an irregular endorser (§ 401.064) and a general endorser (§ 401.066) and also between general and accommodation endorsers are immaterial here, for the hospital had no authority to endorse with recourse under any circumstances. Plaintiff does not discuss the latter point, which is decisive.
The hospital, alleged to be an instrumentality of the county, had no authority to incur any indebtedness, contingent or otherwise, unless permitted to do so by statute. We may take judicial notice that Callaway is a county of the third class. If the county itself may not incur a certain type of indebtedness, certainly its creature may not do so. Section 50.070, RSMo 1959, 1969, V.A.M.S. рrovides the manner in which such a county may incur indebtedness, i. e., by the issuance by the county court of tax anticipation notes payable out of county revenues for that year, and upon certain fixed conditions.
Generally, any county may only become indebteded in an amount exceeding the income and revenue fоr the current year, by a vote of two-thirds of its electors — § 108.-010, RSMo 1959, 1969, V.A.M.S. And, by virtue of Article VI, Section 25, Missouri Const.1945, V.A.M.S. no county may “lend its credit” to any private individual, or become indebted except as already indicated in § 108.010 (Article VI, Section 26(a)).
It is really hornbook law that neither a county nor any instrumentality of a county may contract any form of indebtedness, absolute or contingent, except such as is permitted by statute. We are cited to nо authority which would permit a county instrumentality to endorse, with recourse, notes of third parties. The hospital is sued here upon its endorsements. It had no authority to make them, and they are ultra vires and void. Certain of the authorities which we cite on count 2 are applicable here, but they will only be discussed once. But see, generally: Donovan v. Kansas City,
Plaintiff, in various places, refers to the liability of the defendants (plural); the only individual defendants remaining are the hospital trustees; plaintiff has not, in any manner, briefed their individual liability as distinguished from that of the hospital. They did not endorse the notes, either as individuals or on behalf of the hospital, and they received no consideration. We have held that the hospital is not liable on count 1, and the sаme result follows as to those individuals.
Plaintiff’s second, and alternative, count is said to be based upon the assumption that the “contract” is void. The count is said to constitute an action for money had and received; the theory is that defendant hospital received plaintiff’s money for the purchase of the endorsed notes, that certain sums remain unpaid on the notes, and that it is “inequitable” for the defendants to retain the sum of $26,404.35 “of the purchase price.” We have not been told what the purchase price was, nor what was the total of the face amounts due on the notes when purchased; we are told that the amount stated is the balance which remained due on the notes as of December 31, 1964. Many of the notes were dated in 1964, and were payable in instalments over a period of 12 or 24 months. . On many, payments had been received in 1965. We can only assume that plaintiff got tired of trying to collect on the notes and decided to sue the hospital upon a claim of secondary liability. The mere fact that plaintiff could not or did not collect all the notes does not create an “inequity.” The hospital is holding no specific property or money of plaintiff; whatever was received for the notes has admittedly been used long ago in its operations. A repayment now would come out of taxpayers’ monies. We do not yet understand why plaintiff originally alleged that the notes were payable to the hospital and were endorsed by it, but later shifted (as was necessary) to the allegation that the notes were drawn payable to plaintiff, as they show on their faces.
The agreement attached to plaintiff’s petition as an exhibit does not provide for repayment by the hospital. If it had, it would have been ultra vires. The theory of plaintiff seems to be that of recovery on an implied contract to return the money, but
zvhen, zvhy, and upon zvhat contingency,
is not alleged. Yet it pleads and appears also to rely upon the express written con
The cases involving actions for money had and received are not entirely clear or wholly consistent. Essentially, such a suit is one for unjust enrichment, and it partakes to some extent of equitable principles, though not strictly such an action. It is not a suit upon express contract but upon an implied contraсt created by law. Eichenberg v. Magidson’s Estate, Mo.App.,
Both plaintiff and defendants cite the case of Ballard’s Estate v. Clay County, Mo., Div. One,
We do not consider that the Ballard case is applicable here on its facts; if it is deemed to be, it would in our opinion be in conflict with the Donovan case, supra, which, as an In Banc decision, is controlling. From a different point of view, thе allegations of count 2 may well be considered as a mere repetition of the action upon the endorsement. It alleges the endorsement, the sale “with recourse” and the purchase prior to maturity. And, in any event, under the decision in Donovan, supra, the illegal (or ultra vires) transaction cannot be evaded by рermitting a recovery upon a theory of “implied” rather than express contract. As such an action it would be wholly futile.
The other cases cited by plaintiff are not sufficiently in point to require discussion. For instance, Lively v. Ridgewood Const. Corp., Mo.App.,
What we have said with reference to the trustees in discussing count 1 is also applicable here. Their individual liability is not argued by plaintiff. They received no money from plaintiff, and no reason for liability on their part is demonstrated.
The judgment dismissing both counts of the third amended petition is affirmed.
The foregoing opinion by HENRY I. EAGER, Special Commissioner, is adopted as the opinion of the Court.