154 Mich. 550 | Mich. | 1908
Lead Opinion
Plaintiff, in an action of assumpsit on two certain promissory notes on all the common counts, brought suit in Shiawassee circuit court against defendant. The case was tried before the Honorable Charles H. Wisner, circuit judge, presiding, without a jury, the court finding the facts and conclusions of law in writing, as follows:
“ Finding of Facts.
“For more than 20 years last past it has been the habit and custom of Shiawassee county to borrow money from time to time, as in the case at bar, said moneys being received and used by the county in the payment of its ordinary expenses, and, previous to the date of the notes mentioned in the declaration herein, no question has ever been raised as to the validity of such loans. The moneys realized from such loans, with interest thereon, have been repaid by the county from time to time as the same matured. The proceedings of the board of supervisors were from time to time duly published, as the law requires. The plaintiff had knowledge of the facts aforesaid at the time he made the loan represented by the note herein mentioned, and he, as did also the county, acted in the utmbst good faith in the transactions. Since the notes in the case at bar became due, the question of issuing bonds for the purpose of paying the floating indebtedness of Shiawassee county, including the amount involved in this case, has three times been, submitted to the electors of said county, and on each of said occasions the proposi*552 tion has been lost. At a regular meeting of the board of supervisors, held at the court-house of said Shiawassee county April 10, 1900, a quorum of said board being present, Supervisor Morrice offered the following resolution, and moved its adoption:
“ ‘ Whereas it is believed that the occasion may arise whereby it may be necessary to borrow money to meet the ordinary expenses of this county, be it therefore resolved by the board of supervisors of Shiawassee oounty that the treasurer of said county be authorized to borrow from time to time as the treasury demands such sums as may be necessary not to exceed eleven thousand dollars.’
“Such motion was carried by a yea and nay vote; total — yeas 23, nays none. The board was then composed of 24 members. Acting under authority of the foregoing resolution, Richard F. Kay, then treasurer of Shiawassee county, and so acting on April 13, 1900, borrowed from John T. McCurdy the sum of $5,000 for the use of Shiawassee county, giving a note therefor, which was taken up by the treasurer (and cannot now be found), and a renewal note given January 15,1901, which was as follows:
“ ‘$5,000.00 Corunna, Michigan, January 15, 1901. '
“ ‘July 15, A. D. 1901, for value received, I promise to pay to John T. McCurdy or bearer, at his office in the city of Corunna, the sum of five thousand dollars together with interest thereon at the rate of six per cent, per annum.
[Signed] “ ‘Richard F. Kay,
“ ‘County Treasurer.’
[Seal of the Treasurer of Shiawassee county, Michigan.]
“ Indorsed on the back:
“ * I request an extension of the within note for six months from date, July 15, 1901.
[Signed] “ ‘R. F. Kay.
“ ‘ I hereby extend said note six months.
[Signed] “ ‘John T. McCurdy.
“ ‘Interest paid in full January 15, 1902.
“ ‘Interest paid to March 15, 1902.
“ ‘Interest paid to October 1, 1902.’
“Indorsed stamped upon the face:
“ ‘Paid December 15,1902, treasurer’s office, Shiawassee county.’
‘ ‘ This note was paid by renewal note as follows (which is one of the notes sued upon):
*553 “ ‘$5,000.00 Corunna, Michigan, December 15, 1902.
“ ‘One year after date for value received I promise to pay John T. McCurdy or bearer at his office in the city of Corunna the sum of five thousand dollars together with .interest thereon at the rate of six per cent, per annum from this date until paid. Authorized by the board of supervisors. This note is given as renewal of a note of like amount dated January 15, 1901.
[Signed] “ ‘ Richard F. Kay,
“ ‘ County Treasurer.’
[Seal of the Treasurer of Shiawassee County, Michigan.]
“ The interest was paid upon this note by the treasurer to December 15,1905, and indorsed upon the back thereof. In like manner as aforesaid, and on October 18, 1901, the said treasurer, and so acting, borrowed from said John T. McCurdy the further sum of $5,000 and gave a note therefor as follows:
“ ‘$5,000.00 ' Corunna, Michigan, October 18,1901.
‘ ‘ ‘ March 1,1902, for value received I promise to pay to John T. Mc-Curdy or bearer at his office in the city of Corunna the sum of five thousand dollars together with interest thereon at the rate of six per centum per annum from date until paid. Authorized by the board of supervisors.
[Signed] “ ‘ R. F. Kay,
“‘Shiawassee County Treasurer.’
“ Indorsed on the back:
“ ‘ Interest paid to March 1, 1902.
“ ‘ Interest paid to May 1, 1902.
“ ‘Interest paid to October 1,1902.’
“Stamped across the face:
“ ‘Paid December 15, 1902, treasurer’s office, Shiawassee county.’
“ The above note was paid by renewal note as follows (which is the second of the two notes herein sued upon):
“ ‘$5,000.00 Corunna, Michigan, December 15, 1902;
“ ‘One year after date for value received I promise to pay to John T. McCurdy or bearer at his office in the city of Corunna the sum of five thousand dollars together with interest thereon at the rate of six per cent, per annum from date until paid. Authorized by the board of supervisors. This note is given as renewal of a note of like amount dated October 18, 1901.
[Signed] “ ‘Richard F. Kay,
“ ‘ County Treasurer.’
[Seal of the Treasurer of Shiawassee county, Michigan.]
“ ‘On motion of Supervisor Wert the county treasurer was authorized to borrow necessary funds not to exceed $10,000.’
“The payments of interest by the treasurer upon both the notes in the suit were by him reported to the board of supervisors, which reports were referred by the board to its regular committee on settlement with the county treasurer, by said committee returned to the board with the recommendation that such report be accepted and approved, and it was duly accepted and approved. The two loans, aggregating $10,000, were also in due course reported to the board by the treasurer, by the board referred to its regular committee on settlement with the county treasurer, and by said committee reported back to the board, with recommendation that such report be accepted and approved, and the same was so accepted and approved. Both Mr. McCurdy and the treasurer acted in good faith in the entire transaction, both understanding and believing that the same were perfectly legal and binding. Mr. McCurdy had no knowledge or notice whatsoever that the county of Shiawassee made any claim whatsoever that the statute of limitations had run, or was running, against any portion of his claim until he was notified by his attorney that such statute had been pleaded in this case. December 15, 1905, at the time of the last payments of interest on the two notes, plaintiff had such notes present with him at the office of the treasurer of Shiawassee county, and then asked the treasurer to pay the principal of the notes, which the treasurer refused to do, on the grounds that the county had no funds with which to pay the same, and also for the reason that he had been enjoined from paying the outstanding indebtedness of the county. On the trial of this cause the plaintiff produced the two notes in court, and surrendered them to the clerk, to be by him canceled, upon the rendition of judgment, either for plaintiff or for defendant. The plaintiff never appeared before the board of supervisors
“Opinion and Conclusions of Law.
“ It is the defendant’s first contention that the suit cannot be maintained against the county, for the reason that the claim was not presented for audit by the board of supervisors. This is not an unliquidated claim, but the amount thereof is fixed and determined by the action of the board of supervisors in authorizing the loan, in confirming and ratifying the action of the treasurer in making the loans, and the payment of interest thereon from time to time. There was nothing whatever for the board to pass upon. No question of discretion was open to the board, and it had repeatedly acknowledged, fixed, and determined the amount of the county’s indebtedness to the plaintiff. The law does not require the performance of an idle ceremony where substantial rights are in no way affected. The county either owed the plaintiff the full amount of his claim, or it owed him nothing. The board had already determined that it owed the claim, and when the debt had matured, and demand was made and payment refused for any reason, plaintiff had a right to sue and have the question of the county’s liability judicially determined. The right to bring an action in assumpsit declaring on the common counts by an individual against the county is sustained in Weston v. County of Luce, 102 Mich. 528, and cases cited. The writ of mandamus is not the proper remedy where an action of law will lie. Board of Sup’rs of Bay County v. Board of Sup’rs of Arenac Co., 111 Mich. 105, and cases cited.
“ While it is conceded that the county of Shiawassee received into its treasury $10,000 of the plaintiff’s money and mingled it with its contingent funds, yet it is claimed that in no event can he recover, not having shown that the money was actually paid out for the legitimate expenses of the county. I think it a sufficient answer to this claim to suggest that the law presumes that all public officers are honest and act within and do their duty, under the law; and, the" money having been shown to have reached the contingent fund of the county, the law
“ Our Supreme Court have held:
“ ‘A board of supervisors has no power, under 1 How. Stat. § 483, subds. 7, 10, to borrow the money necessary to defray the current expenses and charges of the county, but the same must be raised by taxation.’ Board of Sup’rs of Dickinson Co. v. Warren, 98 Mich. 144.
“Plaintiff’s counsel contend that the Supreme Court’s attention was not called to sections 2441 or 2484, subd. 16, 1 Comp. Laws; and that, had the court considered these sections and section 2493 (as to the use of the word ‘raise’), they would have necessarily reached a different conclusion. While the case above, cited was a mandamus proceeding brought to compel the chairman of the board of supervisors to execute bonds to consummate a loan for the purpose of raising money for current expenses, and was not such a case as that at bar, where a party’s money has actually been appropriated to the use of the county, both parties acting in good faith, yet the case covers the broad ground above stated, and I am not prepared to say that a consideration of the sections mentioned would have necessarily caused it to reach a different conclusion. I am therefore constrained to hold that, in so far as plaintiff’s right to recover rests upon a special contract (the two notes ), such contracts are void, and no recovery can be had upon them.
“ May recovery be had under the count for money had and received by the defendant for use of the plaintiff ?
“ ‘An action for money had and received is an equitable action, and can be maintained in all cases for money which, in equity and good conscience, belongs to the plaintiff. It has been much extended in modern times, and is founded solely upon the equitable rights of the parties.’ Beardslee v. Horton, 3 Mich. 560.
“See, also, Moore v. Mandlebaum, 8 Mich. 434; Atkin.
“ ‘The obligation to do justice rests upon all persons, natural and artificial, and if a county obtains the money or property of others without authority, the law, independent of any statute, will compel restitution or compensation.’ Marsh v. County of Fulton, 10 Wall. (U. S.) 676, 684.
“ The city of Port Huron, under the provisions of a statute authorizing it to do so, issued a bond to a railroad company, and took the railroad company’s bond in exchange therefor. Suit was brought on the city’s bond. Mr. Justice Cooley, writing the opinion of the court, held the act unconstitutional and the bond void, but used this language:
“ ‘ It is not claimed that the city has ever received from the railroad company any payment upon the bonds of the latter, either by way of principal or of interest. If it had, we should agree with counsel that it could not retain such payments and at the same time refuse to pay its own bonds.’ Thomas v. City of Port Huron, 27 Mich. 820.
“It is claimed that the language quoted from the two cases above cited was not necessary to a decision of the respective cases, and it is therefore of no binding force as authority. But it comes from such eminent authority, has such a ring of common sense, and points to the attainment of such an equitable and just result, that I believe I will pay some attention to it. In many similar cases the highest courts of the States and Nation have held, in effect, that the money of the individual cannot be appropriated to the use of municipal corporations and the true owner thereof be without remedy merely because the original contract, under which the money was obtained, was made without authority of law. City of Parkersburg v. Brown, 106 U. S. 487; Reed v. City of Plattsmouth, 107 U. S. 568; Paul v. City of Kenosha, 22 Wis. 266, 271, 273; Nelson v. Mayor, etc., of New York, 63 N. Y. 535, 544, 545; Louisiana v. Wood, 102 U. S. 294; Hitchcock v. City of Galveston, 96 U. S. 341; Chapman v. County of Douglas, 107 U. S. 348; Logan County Nat. Bank v. Townsend, 139 U. S. 67; 2 Dillon on Municipal Corporations (4th Ed.) § 938, and cases cited. Prom the foregoing I reach the conclusion that the plaintiff is entitled to recovery upon the equitable count for money had and received. What is the measure of his
To these findings of fact and conclusions of law defendant duly excepted, and assigns error thereon. Three general propositions are advanced and discussed on the part of the defendant in its brief and argument to show that the judgment appealed from is erroneous.
(1) The claim should have been presented to and acted upon by the board of supervisors.
(2) Defendant is not liable, either upon the notes or upon an implied contract.
(3) The statute of limitations bars one-half of the claim.
The important, and, we think, the determining, question is whether defendant is liable under the facts as found in the case. Plaintiff’s case shows that the money was
The knowledge of plaintiff of the custom of 20 years, by the officers of this county, to enter into like transactions, is urged as showing good faith on his part, as a factor weighing in his favor in this action. The record shows that other cases like the one at bar are pending, and that in this irregular way large sums of money have been received by the county. The court below finds that this has been the custom for 20 years, and we hold that such transactions have all been without authority of law. That a custom of this nature has existed for 20 years does not appeal very strongly to the court as a reason for granting equitable relief. There is no proof in the record that the money in this case has been used by the county. The finding of fact to the effect that it had been used was based, as the court states, upon his presumption. We do not think such presumption was warranted. It was not supported by the proofs. As we view the case, however, we think the point not of material significance.
The intimation is strong from the pleadings that these loans were not made for the purposes set forth in the reso
“We have had occasion several times to hold that all persons dealing with public corporations are bound to make their contracts according to law, and will not be protected unless they do so. This case illustrates the necessity of such a rule. The doctrine was applied, under the statute applying to townships, in Mackenzie v. Baraga Township Treasurer, 39 Mich. 554. It had already been held, in City of Detroit v. Paving Co., 36 Mich. 335, and in City of Detroit v. Robinson, 38 Mich. 108, that there could be no liability against a municipality upon contracts not made in conformity with the statutes. And in Niles Waterworks v. Mayor, etc., of Niles, 59 Mich. 311, the law was laid down strictly on the same principles. It is the only rule which can be relied on to prevent fraud and collusion. Contractors have ample means to protect themselves; and, if a township can be held on implied contract, or estopped by the acts of its officers, when there is no valid contract, it would enable these persons to disregard the law entirely, and collifcde with their friends to do indirectly what, if directly done, would be a plain illegality.” Mackey v. Township of Columbus, 71 Mich. 227.
In cases where equitable reasons are urged for the purpose of placing liability upon a municipality, consideration of the rights and interests of those most seriously interested must not be lost sight of. The taxpayer is entitled to the protection of all constitutional and statutory restrictions. In the aggregate he is the public for whose benefit the municipality exists, and which bears all the burdens put upon it, but which is not consulted when such burdens, as in this case, are assumed.
In the case at bar the record shows that three times the electors have at special elections refused to vote to bond the .county to pay floating indebtedness, which includes the amount in suit. Whether this was done before or after the notes in suit became due is immaterial. In the
The facts in this case do not indicate that it would be inequitable to deny relief; nor is this a case where the
The first and third contentions of plaintiff need not be considered.
The judgment is reversed, and no new trial granted.
Concurrence Opinion
(concurring). I do not find in the record any evidence of bad faith upon the part of the plaintiff, the board of supervisors, or the treasurer who issued to the plaintiff the notes of the county. It is not an unusual thing for boards of supervisors to borrow money in anticipation of taxes, and to authorize the giving of notes of the county as evidence of the loans so made. Usually such temporary loans are paid as fast as taxes are collected. If it had appeared in the case of Board of Sup’rs of Dickinson Co. v. Warren, 98 Mich. 144, that, instead of being about to bond the county for a large sum, the supervisors had voted the necessary moneys, and proposed to borrow only until such time as the taxes could be received, I think a different question would have been presented than the one decided. In any event, however, the decision of that case goes upon the ground, not merely that the county had no power given it to borrow money to pay current expenses, but that a proper construction of the statute indicated that the exercise of such power is prohibited. In the case at bar it
If we eliminate the theory of a recovery upon the original contracts, or upon a renewal or extension thereof, we must also eliminate the idea that the county has, by any acknowledgment of indebtedness, waived the provisions and operation of the statute of limitations. It is undisputed that as to one-half the sum claimed it was not received into the treasury of the county within six years before suit was begun. A careful examination of cases adjudicated by the Federal courts, and by the courts of this and other States, has convinced me, contrary to my first impressions, that plaintiff cannot be permitted to recover without setting aside rules as salutary as they are well established. Counties have no inherent general power to borrow money. They have no power to borrow money to pay current expenses. For such expenses they are remitted to the exercise of the power to tax. If, notwithstanding this want of power, money is borrowed to pay current expenses, it is of small consequence to deny the right of the lender to recover upon the express contract while raising an implied and enforceable duty on the part of the municipality to pay. The board of supervisors, having no authority to make the loan, have no authority to ratify the making of it, or to create a liability of the county by applying the money to the payment of expenses or to any other use. The people of the county have declined to ratify the transaction, in so far as a refusal to vote an issue of bonds for that purpose can be so consid
“If we conceded the premises assumed by defendant, viz., that the contract was wholly ultra vires, we might be compelled to reach the conclusion that the city could not be estopped to set up its invalidity.”
A distinction is drawn in argument, and there áre adjudicated cases which appear to recognize it, between an obligation implied by law to do what the illegal contract requires to be done and a duty to restore — give back— whatever has been received in pursuance of the original illegal contract; between the contractor an implied obligation to perform and the legal obligation to refrain from disaffirming the contract while keeping the benefit derived from it. There also are decided cases which are supposed to go upon the idea that a want of power to do a particular thing is to be distinguished from a prohibition of, or an express denial of the right to, the exercise of the power. The opinions in Argenti v. City of San Francisco, 16 Cal. 255; Allen v. Intendant, etc., of La Fayette, 89 Ala. 641 (9 L. R. A. 497), Hitchcock v. City of Galveston, 96 U. S. 341, and many others, among them some of our own decisions, contain statements which seem to support one or both of these propositions, while in Paul v. City of Kenosha, 22 Wis. 266, and in some other decisions, the theory of a total failure of consideration is made to support a recovery. In that case the city issued and sold its bonds, which were void for want of power to issue them. They were a part of an issue of bonds in aid of the construction of a railroad, were originally delivered
“I admit that there are numerous authorities which conflict with these views. Indeed, upon the general subject of the extent of the liability of a municipal corporation, the authorities are a tangled web of contradictions, and it is difficult to assert any proposition with respect to the same for which adjudications on both sides may not be cited. As a general rule, undoubtedly the city is only liable upon express contracts authorized by ordinance. The exceptions relate to liabilities from the use of money or other property, which does not belong to her, and to liabilities springing from neglect of duties imposed by the charter, from which injuries to parties are produced. There are limitations even to these exceptions in many instances, as where the property or money is received in disregard of positive prohibitions; as, for example, she would not be liable for moneys received upon the issuance of bills of credit, as this would be, in effect, to support a proceeding in direct contravention of the inhibition of the charter. Other limitations may exist, but it is unnecessary to pursue the matter any further.”
In Allen v. Intendant, etc., of La Fayette, a bill was filed by the taxpayers to restrain the payment of warrants
4 ‘ We cannot perceive that the doctrine is open to objection on the ground of its supposed evil tendencies and consequences. It is shorn of all perilous possibilities by the limitations which hedge it about. It cannot obtain where the charter, or other statute operating in the premises, contains a prohibition of the power to borrow money, since a promise cannot be implied in the face of express law, but only in cases where, as in this one, there is merely a defect of power. 1 Dillon on Municipal Corporations (4th Ed.), § 451. It involves no danger of the municipality being charged with moneys which have been appropriated by its officers to their own use, or even to the use of the corporation, except in the manner, to the extent, and for the purposes authorized by the charter, as in either case the implication will not arise, and corporate liability will not attach. None of the evils which are justly supposed to result from the power to borrow money, which are not also attendant upon the capacity to incur debts, and which therefore have led to a denial of the*568 former power, unless expressly, or by necessary intendment, conferred, while the latter is admitted as incident to ordinary municipal functions, can possibly supervene, where the money which has been borrowed has also been honestly devoted to expenditures for which the corporate authorities might have incurred debt; and to declare liability in the one instance, and deny it in the other, on the ground of evils which pertain alike to both, would be an anomaly to which we cannot subscribe. Indeed we apprehend that the power to create debts may be productive of more evils in municipal government than could, in the nature of things, result from the doctrine we are considering, when would-be lenders of money come to understand that the return of their proverbially timid capital depends, not upon the contracts they make, but on the faithful application of the loan to certain specific objects, by persons over whom they have no control.
“From every point of view, therefore, we feel safe in affirming that, under the case presented by the bill and answer — there really being no dispute about the facts in this regard — Mrs. Frederick has a valid demand against the town of La Fayette for the amount of money advanced by her, not because the corporate authorities agreed to repay it to her, but because they have legitimately used it for the benefit of the town, in a way, and to an end fully authorized by its charter. The warrants she holds are not enforceable as such, yet they truly represent the amount of her claim; and, in the payment of that amount, the corporate authorities would do no more than equity and justice require of them. It would be an idle and useless thing, therefore, to enjoin their payment; and exercising that discretion which may always be indulged with reference to the grant or refusal of an injunction, when substantial equity does not demand the issuance of the writ, we decline to reinstate it in this case.”
Cases may be found where a like result has been arrived at by holding that the plaintiff, lender, was subrogated to the rights of the debtor, who had been paid with the borrowed money. If we were to admit the force of the reasoning employed by the Alabama court, and if the point for decision was now first presented to this court, it is manifest that plaintiff has not made a like case upon the facts. The case might be rested here. But the point pre
“If, on the other hand, the contract be one which it was within the power of the corporation to make, the fact that informalities may be found in the proceedings does not prevent recovery, in a case where, as in the present, the , municipal corporation has had the benefit of performance by the other contracting party, and has from time to time ratified the contract, and audited the bills presented. * * * This rule is, of course, not applicable where express statutory restrictions have been ignored in making the original contract.”
That, when a municipality is forbidden to execute public works, except under contract with the lowest bidder, there can be no recovery, as upon an implied contract, for work done for the benefit of the municipality, but not
I concur in reversing the judgment of the circuit court. Appellant will recover costs of both courts.