These are actions at law by which the several plaintiffs seek to recover judgments against the town of Foxcroft for money delivered to its treasurer, Elias J. Hale, at his instance, and supposed to have been thereby loaned to, and hired by the town itself. The character of some of the arguments for the plaintiffs impels us at the outset to again emphasize the often stated difference between a town and an individual, or corporation, in respect to its pecuniary duties and liabilities.
Towns in Maine, as in the other New England states, are territorial divisions into which the territory of the State is divided by the legislature for political purposes,—-for the more convenient and effectual administration of certain functions of political government.
It follows that a town cannot assess or borrow money except for purposes strictly within the line of its duty. It can effectually act, even in such cases, only in legal town meeting, called, notified and held in the manner prescribed by law. The particular subject matter upon which action is called for must be distinctly specified in the notice. If any prescribed step is omitted, the inhabitants and hence the town itself are not bound by the result. Whoever deals with a town or its officers must bear in mind these bulwarks about the property of the inhabitants of the town, and make sure before hand, not only that the proposed contract is clearly within the legal powers of the town, but also that such power is exercised in the legal mode.
It should not now, after three-quarters of a century of statehood,
It must be apparent, after consideration of the cases cited and of the other cases upon the subject, that a claim against a town cannot be supported and enforced solely upon the general principles of equity and good conscience applied to individuals and corporations. A town is never estopped from invoking the defense of ultra vires. Syracuse Water Co. v. Syracuse, 116 N. Y. 167.
The cases at bar, however, concern, chiefly if not solely, the power of a town to borrow money, and how that power must be exercised to bind the inhabitants of the town to answer therefor out of their individual property.
That a town, in the absence of statute or constitutional restriction, has power to borrow money for a legal town purpose and within the limits of that purpose, without special statute authority, is now conceded. If money is needed for the performance of a town duty and the state has not commanded an assessment of taxes for it, the majority of the inhabitants of a town acting in a legal town meeting under a sufficient warrant can bind all the inhabitants in determining to borrow part, and even all, of the money rather than raise it at once from taxes. Clark v. School District, 3 R. I. 199; Baileyville v. Lowell, 20 Maine, 178; Belfast Bank v. Stockton, 72 Maine, 522; Brown v. Winterport, 79 Maine, 305. But this power of a town to borrow money is strictly limited to money necessary for the discharge of its legal liabilities. It is limited In amount as well as in purpose, and it must be exercised by the town in town meeting upon proper warrant, and by vote
The town treasurer is not the town’s financial agent, and has no /power whatever, as such, to bind the inhabitants of the town to repay money borrowed by him for the town and used by him in discharging liabilities of the town. He has no more power than a highway surveyor in this respect. He is unlike the cashier of a bank or the treasurer of a trading corporation. He is simply a public officer charged, by law not by the town, with the duty of receiving and guarding the public money and disbursing it upon lawful warrant. See cases last above cited and also Abbott v. North Andover, 145 Mass. 484.
When, however, a town has the power to borrow money, it may borrow through an agent appointed for that purpose, and may appoint its treasurer such agent. The treasurer’s power in such cases is strictly limited, in the first instance to the power of the town, and in the second instance to the terms of the vote of the town meeting. A town cannot borrow upon the credit of its inhabitants more money than it actually needs for the specified purpose; and its agent, whether the treasurer or some other person, cannot borrow more money, nor for any other purpose, than is specified by the terms of the vote. When the need of the town is supplied, or the limit of the vote is reached, the power of the agent
We have thus at length again stated the narrow limits of the power of a town and of its officers and agents to bind its inhabitants by any contract for borrowed money, and have again cited familiar illustrative cases. We have done so in the hope that hereafter, at least, persons proposing to intrust their money to any town officer br agent upon the credit of the town will understand,— (1) that they cannot safely assume that the town, or its officer, has any authority to bind its inhabitants to repay the loan,— (2) that if such authority does not really exist,-still unexhausted and potent in the town and its agents unhampered by any statute or constitutional limitation, or is not exercised in the prescribed manner, or is not made good by subsequent authorized action of the town in town meeting, they cannot recover their money back from the town,—and (3) that in case of such improvidence upon their part, the court cannot weaken or bend the law to save them from the consequences of their improvidence,
On the other hand, the citizen of the town cannot safely rest supine. There is imposed upon him the duty of watchfulness and discreet action in town affairs. The town is not without freedom of action to bind its citizens within the narrow limits of its powers. Assuming the subject matter to be within the powers of the town and to be legally before the citizens in legal town meeting, the majority can bind the town and all its citizens by its action upon that subject matter within the limit of the town’s power. What of its legal power to exercise,—to what extent,—when and how to exercise it,—are questions for the town meeting to decide by majority vote, (except of course where the legislature has assumed to predetermine such questions.)
It may be lawfully voted, also, to refer more or less of such questions to the judgment and discretion of officers and agents, and to empower them to bind the town by their action in the premises. While the power of the agent can never exceed the power of the
When the money is once lawfully borrowed by the town under sufficient authority within any statute or constitutional limitation and has passed into the possession of the officer lawfully authorized to receive it, the lender is not affected by any subsequent misconduct of that agent, or any other town officer, nor by any subsequent mal-administration of town affairs.
The citizens of the town, not its creditors, have the duty of watchfulness over town affairs, town funds and town officers and agents. If they are remiss,—if they choose dishonest or incompetent officers,—if they omit to require ample guarantee,—if they accept their reports without examination,—and the funds lawfully borrowed or raised by taxation are embezzled or wasted, the loss must fall upon the inhabitants, and not upon the creditors of the town. So, if the inhabitants of a town become subject to burdensome liabilities by reason of the recklessness, or worse, of any town officer or agent acting within votes too broadly worded, or too confidingly passed, they should attribute the result to their own lack of wisdom and lack of attention to civic duty, and not to any harshness of the law.
We now come to the consideration of the transactions legally in evidence in the particular cases before us and of the legal rights and liabilities of the parties tested by the principles above stated.
Elias J. Hale, who borrowed the money and signed the notes as treasurer, was annually chosen treasurer of Foxcroft, from 1866 to
It is not questioned that the annual and special tovfai meetings held during that time were legal meetings, and that the various persons appearing to have acted as selectmen, auditors and committees of the town were sucli officers, at least de facto. No question is made as to their regular election and qualification.
Soon after Mr. Hale’s first accession to the office of town treasurer and before any .of the loans in these cases were made to him, the-town in regular annual town meeting upon the following article in the warrant, viz:—
“Art. 12.
i To see if the town will authorize the Treasurer to obtain money by loan or otherwise, to pay the debts of the town, and to take up i securities against the town, and issue new ones instead thereof, or to modify the same, and what conditions the town will prescribe in relation thereto,”
passed the following vote, viz:—
“Art. 12.
Í Voted to authorize the treasurer to obtain money by loan or otherwise to pay the debts of the town, to take up securities against the town, and to issue new ones instead therefor, or to modify the same, and to obtain the money on the best terms that ‘ it can be procured.”
This article and this vote were renewed in substantially the same language at each subsequent annual meeting and hence more or
The scope and effect of this vote are to be considered. If the town was in debt at each passage of the vote, and had not made sufficient provision otherwise, it had the power to empower an agent to borrow upon its credit, enough to provide for the debt. It could also arrange, through its agent, with its creditors with their consent for an extension of the debt, or its renewal, or for a substitution of new and even different evidences of indebtedness. Gelpecke v. Dubuque, 1 Wall. 221; Little Rock v. Merchants National Bank, 98 U. S. 308. All this power was by this vote delegated to the appointed agent, the treasurer. The town practically intrusted to him full discretion as to the management of the debt otherwise unprovided for. He was authorized to obtain money for the debt,— by borrowing on such terms or with such other arrangement as he could make,— to take up such evidences of debt as had been before issued, and issue new ones in their place,— and to modify at his discretion any existing arrangement with any creditor. Under this vote he could borrow to payqrn' existing debt, or he could continue the debt in such manner and on I such terms as he could arrange with the creditor.
If, therefore, at the times of the respective borrowings named in these cases, the town was in debt more than it had made provision for, the treasurer had authority under this town vote to bind the town by such borrowing up to the amount of the debt left otherwise unprovided for. That authority however would lessen and disappear as the debt was reduced and extinguished, and would also disappear with its own execution. Benoit v. Conway, 10 Allen, 528, supra. Whether such indebtedness of the town existed at the times of the borrowings is evidently the main question of fact in the cases under that vote.
At the annual meeting in 1865 a committee was appointed “to investigate the standing and report the liabilities of the town.” This committee reported a loan indebtedness as of March 13,1865, of over $25,000 and gave a list of notes, etc. This report was
The treasurer, therefore, had prima facie authority to borrow each year upon the credit of the town for the payment of debts, not less than $10,000. So far as the loans made by these plaintiffs come under that authority, the plaintiffs have shown a prima facie right of recovery from the town. The next step is to ascertain the status of the several loans.
I. The Lovejoy case.
This plaintiff originally intrusted $300 to Mr. Hale as the borrowing agent of the town and upon the credit of the town, September-29, 1878, and received from Mr. Hale a town note therefor of the same date. Mr. Hale did not specify to the plaintiff for what particular purpose the money was borrowed, and hence it must be assumed tbat the plaintiff understood it to be borrowed under the record authority'. This loan coming within that authority was prima facie binding on the town.
The town, however, has pleaded the statute of limitations in bar of the note of 1883. To this plea, the plaintiff replies that payments of interest have been made and indorsed upon the note within six years. Such payments were made by the treasurer and by him indorsed upon the note, but were not charged to the town in his account. The town claims that such payments by its treasurer do not of themselves renew the note as against the town, since they were not made out of town funds. But the town owed the principal and interest and had the power to pay, renew, modify, or continue the obligation as it could arrange with its creditor. This power it delegated to its treasurer, empowering him to renew or re-arrange the terms of its obligation as he best could. He did renew by paying interest. That was enough for the plaintiff. He was not bound to see that the money came out of one cash drawer rather than another, or that the treasurer should afterward charge it in his accounts.
II. The Griffith case.
The plaintiff’s intestate intrusted $1030 to Mr. Hale as the borrowing agent of the town and upon the credit of the town June 28, 1887, and received the town note therefor of the s'ame date. No special purpose was mentioned. Payments of interest were made by the treasurer and indorsed upon the note within six years. This note therefore is also prima facie binding upon the town, for the reasons stated in the Lovejoy case.
This plaintiff, in the same manner as the above named plaintiffs, intrusted money to Mr. Hale, and received town notes from him in 1889, 1891 and 1892. October 30, 1892, he surrendered these notes with some additional money to the treasurer and received a new town note therefor for $770 of the same date. Again on November 18, 1892, he intrusted in the same way $200 more to the treasurer and received a town note for that. No special purpose was mentioned for either of these loans, and, as in the Love-joy case, it must be assumed that the plaintiff loaned upon the faith of the record. These notes are therefore prima facie valid against the town.
Later, February 9, 1893, the plaintiff again loaned to Mr. Hale for the town $200 and received a town note therefor of the same date. This sum however was borrowed and loaned specifically “for school purposes.” It was so stated and understood at the time. The validity of this note, therefore, depends upon the authority of the town or its treasurer to borrow money “ for school purposes.” We can find in the record no such authority. The town does not appear to have needed to borrow money for schools, as it raised money by taxation for them, and nowhere does it appear that the town ever voted to authoi’ize the treasurer to borrow for that purpose, or that it ever in any town meeting ratified such borrowing.
Applying the principles stated at length in the early part of this opinion, the plaintiff has failed to show even a prima facie obligation upon the town to pay this latter note. Whatever the power of the town in the premises, a vote to empower an agent to borrow money for the specific purpose of obtaining money to pay town debts cannot be stretched to include borrowing money for current expenses for which the town had made provision by taxation. The plaintiff was apprised for what purpose and under what authority the treasurer was assuming to borrow his money. He loaned it for that purpose, and upon the strength of that supposed power. That purpose and power proving to be non-existent, the plaintiff
IV. The Gould case.
In January, 1869, a Mrs. Harriman intrusted to Mr. Hale, as a loan to the town $800, and received a town note therefor on long time at seven per cent interest. It was understood between them that this money was borrowed for the purpose of the town aiding in the construction of the Bangor and Piscataquis Railroad. The town was authorized by the legislature to aid in that construction, and once in 1867, and again in 1868 effectually voted to so aid by a subscription to the stock to the extent of at least $25,000,— and it made the subscription. This bound the town to pay for the stock subscribed for. The town further voted, upon proper warrant articles, to raise the necessary money by loan, and also voted that the treasurer be authorized “ to obtain the above amount . . . . for the above purpose, by loan on a time or times not exceeding twenty years, the treasurer to issue notes therefor .... as. he deems best.” It was under this authority and vote that Mrs. Harriman’s money was borrowed. The town thereby became. prima facie lawfully bound to Mrs. Harriman.
This note was surrendered April 25, 1874, and a new note issued to her by Mr. Hale as treasurer on fifteen years time for the same amount but at a less rate of interest. For reasons already stated this new note was lawfully issued and it renewed or extended the town’s indebtedness to Mrs. Harriman. This last note was then transferred to the plaintiff Mrs. Gould, who at its maturity April 25, 1889, surrendered it and received a new note of that date at a still lower rate of interest. On this last note, which is the note declared on, interest was annually paid by the treasurer up to 1894. The original loan was prima facie binding on ‘the town, and its various renewals and extensions were within the purview of the town’s annual vote.
V. The Emerson case.
This plaintiff, as in the other cases, loaned $200 June 1, 1893, and received the town note therefor, like the others. This transac
ÍThe plaintiff .previously in October, and in November, 1889, intrusted $500 and $300 to the treasurer as a loan to the town and received town notes therefor. It was understood, however, by the plaintiff and the treasurer at both times that the money was being hired for the specific purpose of building a common road. Hence these notes do not come within the vote as to debts. They rest on the authority to borrow money for the building the road.
Votes were passed instructing the treasurer to borrow money for that purpose; but, waiving the question of the extent of such votes, the defense now claims that the town itself did not possess the necessary power, and hence that no action of the treasurer, or of the ■ plaintiff, under those votes could bind the town. The constitutional limitation of municipal indebtedness is invoked against any such power in the town. As to this limitation, it appears that the gross indebtedness of the town exceeded the five per cent limit at the time of this borrowing for the road, but the plaintiff contends that from the gross indebtedness should be deducted the uncollected taxes, the town poor-farm, the state bonds helfl by the town, and other things usually denominated “ town assets ” and that after this is done, the indebtedness will appear to be considerably within the limit. The constitutional prohibition however, is very sweeping. It prohibits the creation of “any debt or liability, which singly, or in the aggregate with previous debts or liabilities, shall exceed five per centum of the last regular valuation,” etc. There is no suggestion in it that anything, uncollected taxes, or town farms, or anything else, may be subtracted from the debts' or liabilities. A debt is that which One is bound to pay to another. That the debtor has means with which to pay makes him none the less a debtor until he has paid. Liabilities are the antithesis of assets, and a prohibition against the creation of “any liability” does not imply that liabilities may be created up to the amount of the assets. Again it must be remembered that much of the property and revenues of a town are merely held in trust for the public and are subject to
The plaintiff again contends that the money was borrowed as a “ temporary loan to be paid out of money raised by taxation during the year,” and so within the exception in the constitutional prohibition. The first vote was in these words,—“Voted that the treasurer be authorized to hire money not to exceed $1000 to build said road.” The second vote was, “Voted that the treasurer be authorized to hire such sums of money as he may deem necessary to complete said road.” There is nothing in these votes indicating that the money borrowed under them was to be so paid. On the contrary the article in the warrant upon that subject was passed over without action. There seems to be no way in which the plaintiff can avoid the constitutional barrier against her claim for these loans. Even the gateway of the town’s implied liability to refund her money paid into its treasury is closed against her. Litchfield v. Ballou, 114 U. S. 190.
The defendant, however, opposes to all the claims of each plaintiff two contentions not heretofore noticed in this opinion but which should now be considered.
The first contention is, that through the whole period of these transactions, from the time of the first vote authorizing the treasurer to borrow money to pay town debts, the debts and liabilities of the town exceeded the five per cent limit fixed by the constitution. But in the first and each recurring vote, authorizing the treasurer to borrow money to pay town debts, was a provision for “a loan for the purpose of renewing existing loans,” and hence was within the exception in the article of the constitution limiting municipal indebtedness. That article explicitly excepted such loans, or debts, or liabilities. However much the loans to a town
Foxcroft was already largely indebted for loans when the constitutional limitation took effect. Though money was appropriated from time to time to reduce this indebtedness, yet for some reason the reduction was in fact small and new loans were constantly required to meet the . old loans. The particular . loans herein adjudged to be prima facie valid obligations of the town, prima facie appear to be loans made in renewal of existing loans and hence within the constitutional proviso. Whatever may be tbe fact as to other loans, it has not been shown in these cases that when these loans were made the constitutional proviso could not apply. What can be shown when other loans, if any, are sought to be recovered remains to be seen.
The second contention is, that at the time of each of the various borrowings under the annually recurring vote, authorizing the treasurer to borrow money to pay town debts, the treasurer had already borrowed as much as the vote authorized or could authorize, and hence his authority was exhausted, and the town was not bound by his further borrowings, including the money loaned by these plaintiffs. In considering this contention the preliminary question is, which party has the burden of proof ? Must the plaintiff affirmatively prove that the treasurer’s authority to borrow was not exhausted, or must the defendant affirmatively prove that it was? The burden is clearly upon the defendant. To hold otherwise is to require the plaintiff to affirmatively prove a negative proposition, and in this case a proposition practically impossible of affirmative proof, the treasurer being dead and his official reports not showing any excess of borrowing at those specific times. The very statement of the question suggests the answer we have given. There is no need of further reasoning. No authority is cited
The remaining question is, whether the evidence in the case sustains this burden of proof thus shown to be upon the defendant town. The counsel for the town at the oral argument frankly admitted, what is true, that the record contained no sufficient evidence in support of their proposition unless the contents of a certain small book in the handwriting of the deceased treasurer, Hale, which book (the original) was exhibited to and left with the court.
The written entries or memoranda of a deceased third person, to be admissible as evidence of matters therein stated, must appear to have been made,-—contemporaneously,— in the line of the writer’s duty, and as a register of passing events made as they occurred,— the writer being regarded in this respect as a mechanical and self-forgetting registrar. If the entries-or memoranda appear to have been made merely for the private purposes of the writer, like a list of assets or liabilities, or written merely to preserve his recollection or views of past matters, they are not admissible. Wharton on Evidence, §§ 238, 243, and numerous cases there cited.
The entries in the book befoi’e us clearly fall within the latter category, and are not to be regarded as evidence. The heading on the first page of entries is—“Outstanding notes against the town of Foxcroft March 11, 1867.” Under this heading begins a list of notes, with dates, names of payees, and amount. The first date is July 14, 1854, some twelve years before Hale became treasurer and began to make entries. On the tops of the following pages are the words “Town of Foxcroft” only. The contents of the entire book are merely a list of notes, not a register of passing events. There is no intimation that the notes were entered on this
We have now considered and determined all the questions presented by the pleadings and the legal evidence before us, and necessary, for our judgment.
At the argument, counsel upon both sides called our attention to alleged excessive over-borrowings and defalcations of Mr. Hale as treasurer, and we were reminded of the newspaper accounts, at the time of Mr. Hale’s death, of his dealings with the town and the public in the matter of borrowing money. We have, however, as was our duty, ignored all such reports and statements and have based our judgment exclusively upon the legal evidence put into the cases submitted to us. If such over-borrowings and defalcations took ■ place, or if facts existed taking the loans out of the constitutional proviso, they must be proved by legal evidence before the court can consider them in any case.
The judgments to be rendered under this opinion are obviously as follows:—
In the Lovejoy case.— Defendants defaulted.
In the Griffith case.— Defendants defaulted.
In the Dunham case.— Defendants defaulted only for the amount of the two notes dated Oct. 30, 1892, and November 1892.
In the Gould case.— Defendants defaulted.
In the Emerson case.'—• Defendants defaulted only for the amount of the note dated June 1, 1893.