Hull & Argalls v. County of Marshall

Lead Opinion

Lowe, G. J.

These causes have their origin in a similar state of facts, and in their main features involve the same questions.

On the 14th day of January, 1859, Wm. 0. Smith, County Judge of Marshall County, contracted with one Wm. Dishon, for the buliding of a court house at Marietta, in said county, to be completed in twenty months, at a cost of $26,000; and issued and delivered to him as payment therefor in advance, twenty-six bonds of one thousand dollars each, of the date aforesaid, drawing ten per cent interest, and payable to William Dishon or order, in one, two, three and four years, with coupons attached for the annual payment of interest.

A part of these bonds were at once sold, endorsed and their payment guarantied by Eishon to the plaintiffs, who, after the demand and protest for non-payment at maturity, have brought their respective suits, to recover upon the same against the county of Marshall and thе guarantor. The latter makes no defense; the former seeks by demurrer to the petitions to raise the questions of the power of the County Judge to fix a liability upon the county, in the manner and by the description of paper above specified. The demurrers being sustained in both cases, the plaintiffs appeal to this court.

A county is a political sub-division of the State, invested with certain limited and specified powers, which are divided among and are to be exercised by a class of agents or county officers appointed for that purpose. Their duties are not only defined, but the mode of performing them is in many instances prescribed by law; especially those which relate to the fiscal operations of the county, and the raising of money by taxation. When this is done, it is a well settled maxim that the power must be exercised precisely as it is givеn. Indeed it is a general rule, that when the statutes confer special ministerial authority, the exercise of which may affect the rights of property or incur a municipal liability, it shall be strictly construed and as strictly observed, and that any departure will vitiate the whole proceeding. Sedgwick on Stat. and Const. Law, 347-351.

Among the number of county officers created by law is the county judge, whose duties are both ministerial and judicial; and whilst the power to provide for the erection of a court house, jail and other county buildings, is expressly enumerated and made tbe duty of that officer, yet this duty is in its nature ministerial, although under the Code, it falls within his functions as a county court. It is conceded that in the execution of this power, the right to enter into contracts with third persons for the building of a court house necessarily follows, subject however to the restrictions, as to the mode of payment laid down in the law. If the expense of the building is to be met out of the ordinary revenue of the county, it can only be drawn from the County Treasury in the particular manner designated in the statute. The judge as the accounting officer of the county, is required to audit and allow the expenses or charges as they shall accrue and mature, as it is his duty to do with all other claims against the county; and when this is done to draw, sealed with the seal of the county, his warrant on the Treasurer for the amount of money thus to be paid from the County Treasury, and to enter upon his warrant book in the order of their issuance, the number, date, amount, and name of payee of each warrant drawn on the county treasurer. When this warrant is presented for payment, and not paid for want of money, the treasurer shall endorse thereon a note of that fact, and the date of the presеntation, after which it draws six per cent interest. This being the rate of interest expressed by law, it would not be competent for the county officers to allow a greater amount. Nor is the treasurer permitted to disburse any money from the county treasury otherwise than upon the warrant of the county judge. Code of 1851, § 152.

To this there is but one exception, or one other method of drawing money from the county treasury. And that is, as we understand it, where the people of a county by, a vote in the manner described in the Code, authorize a loan of money for some of the county purposes named therein, calling for an extraordinary expenditure. Such vote however, amounts to nothing unless the proposition to borrow money is accompanied by a provision to lay a tax for tbe payment thereof, which must also be adopted by a vote.

Money rаised for such a purpose constitutes a fund distinct from all others in the hands of the treasurer until the liability thus increased is discharged. What sort of paper or security, the county shall give for money borrowed is not provided for in the statute. In the absence thereof, however, we suppose that Avhen the authority is regularly conferred, it carries with it the requisite incidents for its due execution; and that negotiable bonds not unlike those sued on, might be very properly issued. The holders of such securities after maturity, would be entitled to present them to the county treasurer, who could safely redeem the same out of the fund set apart and specially appropriated for that purpose.

It may be safely stated that the above are the only methods known to the law for reaching the money in the county treasury, for the building of a court house. That is to say, where the costs and charges of such an undertaking are to he defrayed out of the ordinary revenue of the county, then the money necessary to meet the expense thereof, may be drawn upon the warrant of the county judge in the manner above indicated, without any appeal to the people of the county for authority to do so. If, however, an extraordinary expenditure is contemplated, which the ordinary revenue of the county would not likely meet as fast as the same should fall due, then it would be competent for the county judge to borrow money as before slated, provided, first, that he obtained his authority for so doing, by a majority vote of the people of his county; and, second, that the people authorizing the loan, shall also provide for the payment thereof, out of a special fund to be raised by taxation.

The wisdom of such a regulation for the disbursement of the county funds is apparent. It guards against an unreasonable abuse of the powers vested in the financial agents of the county. For it will be noticed that under the first of tbe above methods of drawing money from the county-%re&i^ ¿ ury, that it can only be done upon a claim already subsisting^ and in the payment of which the county gets an equivalent in advance. The second method contemplates the payment of money to be borrowed alone under the authority of the whole body of the people of a county, to whom so important a depository of power may be safely entrusted. Whether, therefore, the money is disbursed in the one or the other of these ways, the rights of the people and the security of their funds aro fairly and adequately protected.

It is true that the power to issue county bonds in the form of negotiable securities is not expressly provided for in the statute, undеr any circumstances, or for any state of case, yet it is insisted that the right'to do so, in the absence of any statutory direction, flows by implication from the powTer to borrow whenever such power is conferred. Without such right it might not be possible to affect a loan of money under the rules regulating the commerce and capital of the county.

But if it should be asked why this same implication of law does not equally apply to the power given to the county judge to contract for the building of a court house, carrying with it the right to employ the requisite means necessary to accomplish the end, even if that should involve the necessity of executing the bonds of the county in the form of negotiable paper, the answer is a plain one. The statute is not silent on this subject, but specifically defines just the manner in -which all the funds of the county shall be disbursed; and hence it fоllows that all contracts made by the county judge, contemplating payment out of the county funds, must be made in subordination to those limitations and provisions of the statute. If the contract should stipulate for the payment of the money in any way not authorized by law, or out of a fund not provided ior by law, it would be nugatory and void. To sanction and enforce such a contract would be to break down all the barriers and checks which the law has erected around the county treasury to protect its finances. It seems to us that Dwarris, in his treatise on Statutes, (which is frequently quoted by Sedgwick in his work on Statutory and Constitutional law, with approbation,) states the true principle of interpreting all such statutes when he says, that, “ as a maxim it is generally true, that if an affirmative statute direct a thing to he done in a certain manner, that thing shall not, even although there are no negative words, he done in any other manner.

Now, recurring to the bonds sued on in the above cases, the question is asked, under our system of county finances, and the special regulations adopted by the'legislature, for their collection and disbursement, how are they to be liquidated and paid off? If presented by the holders to the county treasurer, where is his authority for receiving and settling the same? Shall he pay them out of the ordinary revenue of the county? This would not only be inadequate to meet them, but the statute requires that this discription of county funds shall only be disbursed upon the warrants of the county judge.

Although the expenditure of $26,000 in the building of a court house, in a new county like that of. Marshall, must be regarded as an extraordinary expenditure, yet it is not pretended that the voters of that county either authorized a loan of money, or provided a special fund to. meet such expenditures, in the absence of which it is impossible to see how these bonds are to be' legally taken up and disсharged. It would be no answer to say that they could be paid out of the ordinary revenue of the county by exchanging them; as they fall due, for the county judge’s ■warrants, for this would be an attempt to reach fund raised and set apart for ordinary police objects, and -which could not be legitimately used for any other purpose, in order to pay an extraordinary liability fixed upon the county by the act of the county judge alone, and which, in its practical effect and operation, is the same as a county loan. The General Assembly deemed it inexpedient, if not dangerous, to permit the county judge, in his own discretion, to contract a debt against the county, by way of a loan for any amount, without the sanction of the people. Hence the prohibition. Nevertheless, to issue bonds of the description of these on which suit is brought, for the purpose оf raising money on them, (whether that be done by exchanging them as security for money, calling it a loan, or selling in the market for money, by the county judge or court house contractor, can make no difference,) has not only the effect to establish the relations of debtors and creditor between the county and the holder of the bonds, but to stamp the transaction, in its essential features and ultimate consequences, with the incidents of money borrowed. And if such a power should be recognized, it would be productive of the very mischief intended to be guarded against in the law, and open the door for the most stupendous abuses and frauds.

A majority of this court, therefore, cannot but view the issuing of county bonds, in the form of negotiable paper to be sold in the market, without limit as to number and amount, in the absense of any authority from the people of the county, as a manifest perversion of the law, and a dangerous power ‍​‌‌​‌‌​​‌‌​‌‌​​‌‌‌‌‌​​​​​‌‌‌​​‌‌‌​‌​‌‌‌‌‌‌​​‌‌​​‍which should be arrested at the threshold of its exercise. There is less apology for resorting to such artifices to raise money, inasmuch as every public exigency of the county may be fully met within the provisions and limitations of the law defining the duties and powers of the county agents.

From this partial analysis of the statute defining the powers of a county judge over the subject of court houses, we deduce tho following propositions: First, That among others, the duty of providing a court house is specifically enumerated and enjoined. Second, That the performance of this duty involves the power to enter into all necessary and lawful contracts. Third, That the terms of such contracts, so far as they relate to the payment of the expenses incident to the undertaking, must be in accordance with, and subject to the provisions of the statute regulating the disbursement of the county funds. Fourth, That the costs and charges of erecting a court house can only be paid in one of two ways, either out of the ordinary revenue of the county, or by a loan of money; that under the first of these methods the payment must be made alone upon the county judge’s warrants, issued in the particular manner prescribed bylaw, for subsisting claims duly audited and allowed. The second method contemplates a cash payment out of a fund borrowed for that purpose, which, when authorized, furnishes the only occasion where a county judge can bind the county by negotiable securities. Fifth, That the county treasurer has a legal right to pay out the funds of the county in liquidation of county bonds only when they have been given for money borrowed, and a special fund appropriated for that purpose. Sixth, In the absеnce of either of these contingencies, the authority to issue bonds in the form of negotiable paper, binding the county for the future payment of money, is wanting, and if exercised would be a void act.

In each of the above cases a demurrer was interposed, raising the question of the validity of the bonds and coupons sued upon, inasmuch as the authority of the judge to issue them, did not appear upon the face of the bonds or by allegations in the petitions to have been derived from a vote of the people of the county.

The demurrers wore sustained in the court below, and the plaintiffs insist that this was error. They claim that if under any circumstances, in any state of cases or contingency, a a county judge is authorized to execute in the name of the county, negotiable bonds, there is no legal necessity to state in the petition, that the stаte of case existed or contingency had happened, which conferred the authority; but the bonds being 'prima facie regular upon their face, and importing as they do, a good consideration, that a cause of action is stated whenever they are properly described in the petition; and that the extrinsic fact relied upon by the defense to impeach the validity of the bonds, should be the subject of a plea in bar, and cannot be reached by demurrer. This position was most ably maintained in argument, the soundness of which in the present aspect of this case, we do not feel it necessary to contradict, for the reason that its application to the facts in this case is not observable.

The bonds in question contain the following language: “ By authority of the statutes of the State of Iowa, for value received, I, William C. Smith, county judge of said county, do hereby pledge the faith of said county of Marshall to the payment оf one thousand dollars, to Wm. Dishon or order, twelve months after date,” &c.

The affirmative statement that the judge derived his authority for issuing the bonds from the statutes, excludes the idea that he obtained it from any other source. The demurrer was intended to settle the question whether the statutes did confer such a power. We have already given our interpretation of the statute upon this point, and held that it did not, but that it only prescribed the manner in which the authority to borrow money might be obtained by a vote of the people of the county, and the resulting power to issue bonds for such loan. The two things are quite distinct. If the demurrers had been overruled, it seems to us the legal effect of such a decision would be to hold just what the judge, in the execution of the bonds, claims upon their face — that the power to do so is delegated in the statute. Still, as a question of pleading and prаctice, we readily confess that it is not free from doubt, and would be inclined to give it a more thorough examination, if practically it was of any importance to tbe parties whether the existence of the power, which is the great object of the inquiry, was determined under an issue of law, or under an issue of fact. Under the circumstances, we are inclined to think there was no error in sustaining the demurrers.

A question was made upon the argument, whether in the hands of innocent holders, these bonds should not be collected against the county in any event. If the power to make, never existed, no subsequent transfer of the bonds could give to them the effect of legal liabilities in the hands of any one. On the other hand, if the power had been delegated, resulting as it would in this case by a vote authorizing a loan, then any irregularity in conducting the vote, or other imperfection in thе execution of the power, would not have been allowed to vitiate the bonds or prejudice the rights of bona fide holders, either in a direct or collateral proceeding. In transactions of this kind the public agent acts alone under delegated power; and third persons, dealing with him, must, at their peril, ascertain for themselves whether in fact and law the authority being exercised does exist. 21 How. 441, 539; 23 Ib., 381.

It only remains for us to state, that according to our apprehension, there is no conflict between the opinions above expressed and the ruling made in the case of The State of Iowa ex. rel. Brooks v. Napier, Bounty Judge, 7 Iowa 425.

Affirmed¹.

Notes

1 (1.) The following petition for a re-hearing of this cause, was filed by Bmcll dsShiras, of counsel for Hull & Argalis, appellants, and after consideration by the court, was overruled :

The pleadings in this case show that the bonds and coupons, upon which this suit was brought, were part of a series of bonds issued by the defendant to one William Dishon, or order, in payment for building a Court House in said county, and by Dishon endorsed to plaintiffs before due; that plaintiffs aro dona fide holders for value.

It is admitted that the County Judge liad poioor to contract for the erection of a Court House, and also to contract that payment should be made for such erection at a future day, and that the cost of such Court House does not affect the question of power, except in a case of fraud, and then only as evidence of fraud between the parties. The whole question turns upon the power of the County of Marshall, or of its legally constituted officers, to issue coupon bonds in payment of indebtedness then accrued, or thereafter to accrue. It is true that a County is a political subdivision of a State, invested with limited and specific powers, that all its power is derived from the act creating such corporation; but it is also true, that every municipal corporation has certain implied powers which are derived from the duties imposed uponit. The authority referred to by the court, in Sedgwick on Stat. and Gon. Law, 347, 351, does not refer to the powers of municipal corporations, or of their ofiicers, but to summary judicial proceedings and swnmary admimistrattoé proceedings. In McMillan v. Lee County, 3 Iowa, 311, the Court use tho following language: ‘‘Then again, the counties exercise granted powers, and, as municipal organizations, cannot exercise'any other. If not expressly granted, yet, if necesswy to carry out, or accomplish the pmpose ‍​‌‌​‌‌​​‌‌​‌‌​​‌‌‌‌‌​​​​​‌‌‌​​‌‌‌​‌​‌‌‌‌‌‌​​‌‌​​‍and object of their creation, they map be exercised, but not otherwiseMany of the powers exercised by the officers of municipal corporations are not specifically pointed out, but arise, or grow out, of other duties devolved upon such officers. The Code confers certain powers upon counties, and provides, that “each county, now or hereafter organized, is a body corporate for civil and political purposes only, and, as such, may sue and be sued; may acquire and hold property, and make all contracts necessary or expedient for the management, control and improvement of the same, and for the better exercise of its civil and political powers; map ta7c& any order for the disposition of its property, <&d By chapter 15, the county judge ia mado the general agent and the officer who is to exercise and carry out all the powers of the county. He is in fact the county itself, as far as any act is concerned, for the county acts through him only. “ He is in fact the head and hand of the county.”

If the cmnty, by its county judge, can contract, it of course can create a liability by such contract; a liability to be performed at a future time; a liability to be measured by a money equivalent; a contract which, if it comes within its civil and political powers, is only to be measured by the discretion of the county judge. In regard to building a court house, this court has decided, in the case of Brooks v. Napier County Judge, 7 Iowa, 225, tbat the county judge has power to contract for the erection of a court house, that he has a right to contract for the payment of the money at a future day; and that the manner of the exercise of his discretion or power, cannot be controlled by any one. This seems all to be conceded in the opinion filed in the case at bar; but the court say, “subject however to the restrictions as to the mode of payment laid down in the Code.” “If the expense of the building is to be met out of the ordinary revenue of the county, it can only be drawn from the county treasury in the particular manner designated in the statute.

As far as we can discover, there is no provision of the Code which provides for drawing money out of the ordinary revenue of the county, or from any special fund. The Codo provides tb at the county judge shall audit claims against the county, and also audit and set-tie the Treasurer's account; also, he is required to keep an account of receipt* and disbursements, and and also all debts payable to and by the County, &c. By § 124, money raised by loan is a special fun3 in the treasurer’s hands. So road funds and other funds are special funds in the bands of the treasurer. See Code, § 156. The Code, §152, provides that the treasurer shall disburse the money in his hands on warrants drawn and signed by tho county judge and sealed with the county s^al, and not othej’wise.

The county may be liable to pay a demand against it, and also may be liable to have a judgment rendered against it, in cases where the treasurer would not be authorized to pay the demand. The authority of the treasurer to pay a demand upon presentation is no test of the liability of the county, or of the validity of a contract with the county, and because the treasurer is not authorize to pay а demand, is no test of the liability of the county to ■pay such demand.

There is no distinction in this respect, in the Code, between the liability to pay out of the general or out of the special founds, upon ordinary or extraordinary expenditures. The provisions of the Code are the same in all cases.

Tho court, in tho opinion filed, say: “ The Judge is the accounting officer of the county ; is required to audit and allow the expenses and charges as they shall accrue and mature.’' This is not the language of tho Code. The Code, § 106, p. 21, says, “to audit all claims for money against the county ” &c. This docs not require that the claim shall have matured or accrued. The Code does not say that he shall audit all claims and draw his warrant on the treasurer for such claims; but the auditing claims and drawing warrants on the treasurer are separate act1», and independent acts as to time. A claim for money may be audited and allowed as a money demand, when it is not payable at the time.

Suppose а contract should be made with a county to perform a certain amount of labor, and the money to be paid in a stipulated time after the completion of the contract, and suppose the contract should be performed and an application made for an acceptance of the contract, and to have the amount due audited and allowed, would not the judge have au thority to audit and allow such a claim, and fix the time of payment, and give to the party entiiled evidence of the allowance? Tho liability would arise from the performance of the work.

The court assumes that the county cannot pay, or contract to pay, a greater amount of interest than six por cent., because, whf*n county warrants are presented for payment and are unpaid for want of funds, they will draw interest at that rаte. All parties, having power to contract to pay interest at all, may contract for any rate they please, unless there is some statute restricting them in this respect. It is not true that the county officers may not contract to pay interest on unpaid warrants at a greater rate than six per cent., for there is nothing in the statute which limits such power. The statute is only intended to provide, that warrants shall become due and draw interest from presentment. Even if the statute did restrict the county officers to the payment of six per cent interest on the warrants unpaid, this cannot be construed into any limitation upon other contracts of the county.

There is no provision in the Code which requires the county to give any particular evidence of indebtedness, whether the same is to be paid out of the general or special fund of the county. Bach fund, as far as the statute is concerned, is disbursed in the same manner; the treasurer can pay neither without the warrant of the county judge. If a fund is raised by a special tace, this does not give the treasurer any greater control over it than when the fund is raised by a general tax. The treasurer has no ministerial power, he exercises no judgment, he is absolutely to pay no money, except upon the warrant of the county judge. It is true that there are certain liabilities which cannot be created by the county judge, without a vote of the people; but building a court house is not one of them. In Brooks v. Napier, County Judge, 7 Iowa, 425, the court ruled that the value of the court house to be built had nothing to do with the ciuestion of the power of the county to build a court house, and that the amount to be expended, did not determine whether it was extraordinary expenditure or not. It is true that such liability, created ‍​‌‌​‌‌​​‌‌​‌‌​​‌‌‌‌‌​​​​​‌‌‌​​‌‌‌​‌​‌‌‌‌‌‌​​‌‌​​‍without a vote of the people must be met out of the ordinary county revenue. This is a matter that rests exclusively between the county, contractiug through the county judge, and the contractor. When the money comes due, the county is responsible for it.

The wisdom of allowing a county to incur an indebtedness, and to issue its negotiable pa-peras evidence of such indebtedness, is a matter which this court is not called upon to determine. This court cau only determine aslo the power of the county to incur such indebtedness under the laws, as they existed at the date of the bonds. This is not a mw question. It has been before the courts, and has been settled, if any question can be settled by the courts of the coimtry. In the case of Ketchum v. The City of Buffalo, 4 Ker. 356, in the Court of Appe -Is of Hew York, the question involved in this case were fully decided. It is there decided that a municipal corporation, being merely authorized to establish markets, may purchase the necessary grounds for the pnrp rae; thаt it may purchase on credit; that it may give its negotiable bond in payment for the same. (See also State of New York v City of Buffalo, 2 Hill, 434; Kelley v City of Brooklyn, 4 Hill, 263; Halstead v. The City of New York, 5 Barb. 215. In the first of the above ca*es, the court expressly decide, that such an indebtedness is not a borrowing of money, and did not come within the statutory prohibition on that subject. The com t there shows that there is a marked distinction between incurring a debt and issuing a note, or bond, for a legitimate purpose and borrowing money with such power, that it could be used for any legitimate or illegitimate purpose. If bonds were issued and sold by the county judge for some legitimate purpose, but where the proceeds are not a special fund under the law, the county judge might divert it from its ostensible purpose, bocause the fund would be in the ordinary county fund; but when bonds are issued for building a court house under contract, they cannot be diverted to any other purpose. None of the objections аgainst borrowing money can lie against such indebtedness.

It is immaterial whether the ordinary revenue of the county meets this indebtedness or not, and this court cannot say that, in thiscase, the ordinary county revenue would not meet this indebtedness, l’heie is certainly nothing in the pleadings which shows that the ordinary county revenue would not meet it. We cannot see by what rnle of law this court can presume any such fact. Can this court determine that a suitable court house for the county of Marshal! could have been erected in January 1859, foralesssum than 5526,000? What is the revenue of Marshall county, and what are its current expenses, upon the knowledge of which this court can determine that an expenditure, in which the sum of $26,000 is pnyable • during a term of four years, is an extraordinary one, and that it cannot be met by the ordinary county revenue ?

The court however says, that to pay for the erection оf a court house would he fo reach a fund set apart for ordinary police objects, and could be used for no other. But in Brooks v. Napier County Judge,, this court decided that a payment for the cection of a court house could be made out of the ordinal y county revenue; that the erecting of a court house was an ordinary duty of a county judge.

We think the first proposition laid down by the Supreme Court is correct.

The second proposition is undoubtedly correct as far as it goes; but there might be well added, “either for cash or on credit, as might be deemed necessary by the county judge.”

The third, we think, is not correct, as it is not necessary that a contract, to bind the county, should be of such a form, or character, as to authoiize the treasurer of the county to liquidate it upon presentment. The disbursement of the county revenue is entirely separate and distinct from the power of creating a liability against the cuuhty.

The fourth proposition may be correct, if it is limited to the aciuul disburse/m&ni of money Ijy the treasurer; but if it is extended to embrace the creation of a liability}, then it is clearly erroneous.

The fifth is correct, as applied to the county treasurer; but this is not a proceeding against the county treasurer.

The sixth is clearly erroneous, as the authorities are all the other way. It is a settled proposition that as far as a municipal corporation is given power to act, it can act just as far as any other person, unless it is expressly restricted; and there is no restriction upon the county, as to the form of indebtedness it may create.

Every municipal corporation is required to have its funds in some particular officer’s hands, and such officer can only pay the same out upon orders of one or more of the other officers of the corporation. Still, unless restricted, negotiable payment may be given by a municipal corpora-Uon, as well as by any other Corporation, and is constantly given, and the issue of such paper is sustained by the courts.

We do not сlaim that the bond itself shows the authority of the county judge to issue it, but the petition does, for it sets out that these bonds were issued in payment for building a court house, and this is admitted by the demurrer. This, we say, shows full authority to issue the bonds; for the county judge may contract to have it done on credit, and may issu* evidences of indebtedness in liquidalion of such indebtedness.

We have thus, as we think shown that the county judge has authority to issue bonds for the purpose set forth in the petition in this case, and that the judgment of the court b-1 ought to be reversed and the demurrer overruled; and therefore, most respectfully ask this court to grant a rehearing in this case.

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Dissenting Opinion

Weight, J.,

dissenting. I do not believe that tbe foregoing opinion contains tbe law as applicable to these cases, and therefore I dissent. In mj view the Chief Justice commits the double error of discussing questions really not made by the record, and then misconstruing the law as applied to those questions.

The instruments sued on are of the tenor following:

“ $1000. OEEICE OB' CouNTY JUDGE,

Marshall County, Iowa,

,T ^ '

“ By authority of the statutes of the State of Iowa, for value received, I, William C. Smith, County Judge of said county, do hereby pledge the faith of said County of Marshall to the payment of the sum of one thousand dollars to William Dishon or order, in twelve months from this date, with interest at the rate of ten per centum per annum, payable annually, at the office of ‍​‌‌​‌‌​​‌‌​‌‌​​‌‌‌‌‌​​​​​‌‌‌​​‌‌‌​‌​‌‌‌‌‌‌​​‌‌​​‍the County Treasurer of said county as per coupons hereto attached; and by virtue of said authority, the County Treasurer of said Marshall county, is hereby authorized, directed and required to pay to the legal holder of this bond at its maturity, the said sum of one thous- and dollars, together with the coupons hereto attached, as the same fall due. In witness whereof, I have hereunto set my hand as County Judge, and affixed the seal of said county, at Marietta this fourteenth day of January, A. D. 1859.

[Seal.] William C. Smith,

County Judge.”

And this coupon:

CoupoN. No. 1.

Marshall County Iowa Bonds.

The Treasurer of said county will pay to bearer one hundred dollars, on the 14th day оf January, A. D. 1860, being the interest due that day on No. 25, payable to William Dishon or order.

William C. Smith,

County Judge.”

In one of the cases, there is a count which attempts to set out the consideration and facts leading to the execution of. the bond, and another which declares upon it, as an instrument in writing made by the county, which was duly assigned by the payee to plaintiffs before maturity. In the other case there are six counts, being in form like those found in the books under the common law practice, on promissory notes. The demurrer in each case reaches the whole petition, and is not to each count separately. If either count was good, therefore, the demurrer should have been overruled. (Darr v. Lilley, 11 Iowa, 4, and cases there cited.) And I can find no precedent for assuming a state of facts stated in one count of a petition, to be applicable to another аnd different one, and predicating thereon an argument against the sufficiency of both or all. Then again, for any thing that I can know in a judicial manner, the bonds in the one case were issued for a' consideraton other and distinct from that stated in the other.

Not only so, but it is admitted that these bonds were assigned for a valuable consideration, bona fide, to the plaintiffs before maturity. In other words, it is admitted by the demurrer that plaintiffs are innocent holders of this paper. Being such, the question of consideration is entirely immaterial. However invalid the bonds might be in the hands of Dishon, for the want or failure of consideration, plaintiffs are not affected thereby. The contract being in writing, a consideration is presumed, and of course the pleader is not required to aver it.

Plaintiffs must recover, therefore, unless the bonds upon their face are invalid, or what amounts to the same thing in this inquiry, unless under thе law the county judge had no power to issue this character of paper.

In the first place, I maintain that from this record it does not appear whether these bonds were issued with or without a vote of the people, as provided for in §§ 114 and 115 of the Code of 1851. If a vote was necessary, then I am bound to presume, in the absence of a contrary showing, that it was had. If it was not necessary, then of course the pleader need not state the authority. For if the power existed by the general law, the pleader is not required to set it forth. If the power could only be conferred by a vote, “ the pleader may assume the needful circumstances until the contrary is pleaded.” (Ring v. Johnson County, 6 Iowa, 265.) This was held in a case where the law clearly required that a vote should be taken. That this ease settles the question, where it does not appear that the law required а vote, I think is beyond controversy.

But let us assume that these bonds were issued to Dishon under a contract entered into by him to build a court house ; that there was no vote of the people, and that they were issued before he did the work. And still I maintain that the demurrer should have been overruled. To begin with, plaintiffs had no notice of any of these matters, and this ought to be conclusive of the question. But waiving this ground, impregnable as it is, I say that a vote of the people was not necessary, and that the county judge had the power to make the contract, whatever the popular will. Be it ' understood that I am not discussing the policy of the law: I have nothing to do with the fact that corrupt county judges abused that power, that it would have been better to require a vote, or in some manner to have guarded the authority conferred. I have no doubt that in some instances the рower was grossly abused; but such abuses are more or less incident to the exercise of all powers where a large discretion is conferred, and it may be very impolitic, therefore, to thus legislate. But this is no reason why I should set aside a contract, made by the judge, in the absence of fraud, and thus violate well settled legal principles, to get around and obviate the effect of unwise legislation.

Now, tbe powers of thé county judge are to be ’measuréd by the statute it is claimed and admitted. By this he is invested with the usual powers and jurisdiction of county commissioners. He is the accounting officer and general agent of the county, and as such is authorized to take the management of all county business; the care and custody of all county property; to superintend the fiscal concerns of the county, and secure their management in the best manner; to prоvide necessary rooms for his office and those of the treasurer and clerk, and for the District Court. Contracts made by the county, which are to be formally executed, are to be in the name of the county, and executed by the county judge in his official capacity. (Code of 1851, §§ 105-6 and 108.) If there is no regular court house, it is the duty of the county court to provide a place for holding the District Court. (§ 1573.)

By the law of 1848, (act of February 15, § 4,) power was possessed by the county commissioners to contract for the erection of a court house, and other necessary public buildings for the use of their county. And as the usual powers and jurisdiction of that board are conferred upon the county court, it follows that the power to provide for the erection of a court house is included. And so it was expressly held in Brooks v. Napier, County Judge, 7 Iowa, 425. The majority opinion “apprehends that there is no necessary conflict between that case and this.” And yet I maintain that the case in 7th Iowa is, in principle, decisive of the very question now under discussion and in accordance with the position which I assume. Thus, it is expressly held that: “The county judge may enter into contracts for the erection of such buildings, (court house, jail, &c.,) binding the county thereby, without first submitting to a vote of the people of the county, the question of their adoption, or the propriety of incurring the expenditure of money necessarily involved in them.” “ There is no provision however, under which the county judge may be required to submit to a vote of the people of his county, the question of building a court house, or the adoption of a plan on which he proposes to build it. The county may be in debt, and its warrants depreciated; the court house proposed to be built, as to the plan and cost of the same, may be altogether unsuited to the wants and to the means of the county; and yet, if the county judge chooses to contract for its erection, so far as we are able to discover, there is no limit to his discretion, and no means in the hands of the people to defeat it. If the proposed plan is submitted to the people, and is condemned by them, there is nothing to prevent the county judge from entering into the contract, in spite of their vote against it.” And in that case it will be seen, that the county judge was petitioned to submit the question to a popular vote; that he refused, and that the relator applied for a mandamus, the information setting forth among other things, that the county treasury was bankrupt; that it would be necessary to borrow money to carry out the proposed contract; that a majority of the voters thought the proрosed building was too large for the wants of the county, and the price proposed an extravagant outlay of money, involving the necessity of borrowing or oppressive taxation. In this case however, there is nothing to show that the building contracted for (if one was, but of which I know nothing,) was too large or too small for the wants of tbe people; whether it was good or bad policy to make said contract; whether the county was in or free from debt; whether the contract could be met and discharged from the ordinary revenue, or whether it involved oppressive taxation; nor, finally, that money would have to be borrowed to carry it out. That the cases are in conflict, I think must be most manifest.

Will it be said that the contract may be made without a popular vote, or in spite of a vote against the one proposed, but that the judge cannot undеrtake to pay for the work done, otherwise than as the work progresses; or in bonds, promises to pay, or warrants due at different times, and that if he does so, such warrants or bonds are invalid? Or is it said in the same connection, that the warrants are void, because they bear ten per cent interest? To all these and similar positions I say, that the power to contract, carries with it necessarily, the power to provide the means to pay for the work to be done. That in this respect the county is like an individual; and as a municipal corporation it may be bound just as the individual. The county judge is the general agent of the county, and as such, is entrusted with the management, of all county business; he superintends the fiscal affairs of the county, and is to secure their management in the best manner possible. Having these general powers, he may do whatever is necessary to carry them out. If he acts indiscreetly or unwisely, the principal (the county) and not third persons, must suffer the consequences. And as to the interest, if more than he could agree to pay, this at the most would not vitate the whole contract, but only pro tanto. Not only so, but the law is, that “ parties” may agree in writing for the payment of interest not exceeding ten cent on the one hundred by the year. (Act of 1853, § 2.) And “parties” as here used extends, in my opinion to bodies politic and corporate. I find nothing that restricts the county from agreeing to pay such interest. The powers conferred upon the county ‍​‌‌​‌‌​​‌‌​‌‌​​‌‌‌‌‌​​​​​‌‌‌​​‌‌‌​‌​‌‌‌‌‌‌​​‌‌​​‍judge are certainly broad and general enough to include this. And I know of no reason why a county judge might not with much propriety, provide for the payment of a portion of county indebtedness at a fature day, instead of making it all due immediately, and in doing so, undertake to pay a higher rate of interest than that recoverable upon the ordinary warrants.

But finally, these instruments are, in their legal substance? nothing more than the ordinary county warrants. They are more formal in their language, and so framed as to be negotiated with greater ease and facility in the market. And yet after all, they are but warrants drawn by the proper and legally constituted financial agent of the county upon the county treasury. All that is said about “pledging the faith of the county;” about “the county treasurer being hereby authorized, directed and required to pay,” &c;” about “the authority of the statutes of the State of Iowa,” does not charge their legal character. The county would be bound to pay, if liable, without “pledge of its faith.” And if the power to make the contract was conferred, the recitation that it was done by authority of the statutes could not make the promise more obligatory. Nor would any of these things, nor all of them combined, detract from the otherwise binding efficacy of the bonds.

I dissent for these reasons, and am unhesitatingly of the opinion that the judgments below should be reversed.

Case Details

Case Name: Hull & Argalls v. County of Marshall

Court Name: Supreme Court of Iowa

Date Published: Jun 25, 1861

Citation: 12 Iowa 142

Court Abbreviation: Iowa