Merchants Nat. Bank v. McKinney

Corson, J.

This is an action to recover of the defendants the consideration paid by plaintiff for certain Douglas county warrants, alleged to have been sold and transferred by the defendants to the plaintiff in the year 1881. The case was tried by a referee, who found and reported the facts, upon which a judgment was rendered by the court in favor of the plaintiff for §2,993.15 and costs. From this judgment and order for judgment the defendant» appeal to this court. Before considering the appeal upon its merits, it will be necessary to dispose of a preliminary objection made to the hearing of this appeal, upon the ground that there is no bill of exceptions in the record. It is contended by the respondent that it moved for judgment in the court below, “upon the pleadings in said action, evidence taken therein, report of the referee, and all proceedings had in the case,” and that the evidence and proceedings can only be brought before this court by a bill of exceptions. There would be much force in the objection if the appeal was from the order only, but as it is taken from the judgment also, which brings before us for review the judgment roll, which contains the pleadings, report of the referee and judgment, which can be reviewed in the absence of a bill of exceptions, the objection is without merit, so far as it is made to the record. This court will only look into the judgment roll, and the errors assigned thereon, and determine whether or not the judgment is sustained by the pleadings and findings of fact. This is all, as we understand them, the counsel for appellants asks us to do; hence the objection is disposed of by the decision of this court, made on the motion to dismiss this appeal at the April, 1890, term of this court. 45 N. W. Rep. 203. See, also, Blossom v. Ferguson, 13 Wis. 75; Railroad Co. v. Lyons, 30 Wis. 61.

This brings us to the merits of the case. The plaintiff in its complaint alleges that defendants warranted the said county orders, so sold by them to this plaintiff, to be the warrants of said Douglas county, and to be binding, according to their purport, upon said county; and it further alleges that said warrants were wholly false, forged, fictitious, fraudulent, and void. The answer puts in issue these allegations. It is claimed by respondent that these warrants were illegal and void, for the reason that they were issued by a pretended board of county commissioners of Douglas county, which was illegally appointed, and acted without authority of law. The referee finds that, as to the warrants described in the fourth cause of action, there was an express warranty on the part of the defendants; and hence it becomes necessary for us to determine the validity of the organization of said Douglas county, and of these warrants, notwithstanding the referee found, as to the balance of the warrants, that there was no express warranty. It will be necessary, therefore, to briefly state the facts disclosed by the findings in reference to the organization of that county.

At a session of the territorial legislature of the Territory of Dakota, prior to February, 1881, Douglas county was segregated from the balance of the territory, its boundaries defined, and its name given to it; but it remained unorganized until the spring of 1881, when a petition purporting to be signed by the voters of said Douglas county (how many does not appear from the record) was presented to Gov. N. G. Ordway, then governor of said territory, praying for the organization of said county. Some of the names appearing on the petition the referee finds were signed thereto without the knowledge or consent of the parties whose names so appear thereon; that the petition contained names of persons not residents of said Douglas county; and that at the time said petition was presented to the governor, and the commissioners hereinafter referred to appointed, there were not to exceed 20 voters living in said county. The governor, without any knowledge, so far aá the record discloses, that said petition was not what it purported to be, and that there were not 50 voters in said Douglas county, appointed "Walter H. Brown, E. B. Hoyett, and Charles H. Still-well county commissioners of said county. Stilwell did not receive his commission, and failed to qualify, but Brown and Hoyett qualified by taking the requisite oath, and filing a bond as provided by law, and thereafter acted as such commissioners. The two commissioners, Brown and Hoyett, appointed one Alfred Brown as register of deeds and ex officio county clerk, who duly qualified. The two commissioners then, acting with Alfred Brown, ex officio county clerk, appointed one Frank Neese a third county commissioner to fill the vacancy caused by the failure of Stilwell to qualify. Neese qualified, and was elected chairman of the board. The board so constituted appointed the other county officers of said county provided for in organized counties who qualified and entered upon the discharge of their duties as such county officers, and the "county government so organized continued to transact the business of the county for more than a year. During the year 1881 said board issued county orders or warrants of said county, signed by Frank Neese as chairman of the board, Alfred Brown as county clerk, and sealed with the seal of the county,- — a portion of which were the warrants in controversy in this action. The referee further finds that defendants had no knowledge of the alleged illegal organization of said Douglas county, or that said warrants had been irregularly or fraudulently issued, or that they were not good and valid warrants of said county, issued in payment of a valid subsisting indebtedness of said county, and that said defendants had no knowledge of any facts tending to show that said warrants, were illegally or fraudulently issued. And the referee further finds that the plaintiff had no knowledge of any facts tending to show said warrants were illegally or fraudulently issued.

The law in force at that time for the organization of new counties was Chapter 21, Code 1877, Sections 1, 2, and 3 of which are as follows: “Section 1. Whenever the voters of any unorganized county in this territory shall be equal to fifty or upwards, and they shall desire to have said county organized, they may petition the governor, setting forth that they have the requisite number of voters to form a county organization, and request him to appoint the officers specified in the next section of this act. Sec. 2. Whenever the voters of any unorganized county in the territory shall petition the governor, as provided in the preceding section, and the said governor shall be satisfied that such county has fifty legal voters, it shall be the duty of the governor, and he is hereby authorized, to appoint three persons, residents thereof, county commissioners for such county, who shall hold their office until the first general election thereafter, and until their successors shall be elected and qualified. Sec. 3. Said county commissioners, after having qualified according to law, shall appoint all the county officers of said county required by law, who, after having qualified, shall hold their office until the next general election, and until their successors shall have been elected and qualified. ”

It will be observed that the first section provides that “whenever the voters of an unorganized .county shall be equal to fifty or more, and they shall, ” etc., and that by the second section it is provided that ‘ ‘whenever the voters of an unorganized county * * * shall petition the governor as provided in the preceding section, and the said governor shall be satisfied that said county has fifty legal voters, ” etc., the governor shall appoint three persons commissioners of said county, etc. Appellants contend that the legislature has left the matter of determining the fact whether there were the requisite 50 voters to the governor, while the respondent as strenuously insists that there must exist, as a matter of fact, the 50 voters in the county, and the governor must also be satisfied of that fact before he has jurisdiction to act at all in the premises. The question is not free from difficulty, but we are inclined to adopt the theory of the law contended for by the appellants, — that when the petition sets forth that there are the requisite number of voters in the county, and the governor is satisfied of that fact, his decision must be regarded as prima facie a determination of a matter left to his judgment and discretion, so far, at least, as the public and third parties are concerned. The power to organize new counties was primarily in the legislature, but that body saw proper to provide for their organization by general laws, and, having done so, these laws must receive a reasonable construction. The legislature having made it the duty of the governor, when he was satisfied that a county had 50 voters and upwards, and they petition him for an organization, to proceed and organize it, by the appointment of three commissioners, it would seem that such appointment could not be questioned in a collateral proceeding, where neither the county nor its officers are parties. To allow the decision of the governor to be controverted in such a case would be to overturn the doctrine long established, that the acts of de facto officers are good as to the public and third persons. The learned counsel for respondent has invoked the rule applied in many cases affecting the title to property, or the right to issue county or municipal bonds, where it has been held that the fact of the existence of certain conditions precedent to the right of the' officers to act must be shown before the officer has jurisdiction to act at all; and cites Cagwin v. Town of Hancock, 84 N. Y. 532; Liebman v. City and County of San Francisco, 24 Fed. Rep. 705; Mulligan v. Smith, 59 Cal. 206.

We think there is a well defined distinction in principle between this class of cases and the case at bar. In those cases, and cases of that class, the condition precedent must exist before any action is authorized on the part of any officer. It was not provided in those cases that the facts should be found to exist or be proved to exist to the satisfaction of some officer specified, who is authorized to act when he is so satisfied. But in the case at bar it is made the duty of the governor to appoint, and he is authorized to appoint, county commissioners, when the voters present to him a petition setting forth that they have the requisite number of voters, and request the organization of the county, and he shall be satisfied that the county contains 50 or more voters. The term 1 ‘satisfied” imports examination, investigation, and a decision. We are of the opinion, therefore, that the legislature intended to vest in the governor the power, in the first instance, at least, to determine the question of whether or not there are 50 voters in the county, and that the language used is broad enough to carry out that intention. The legislature evidently intended to vest in the executive authority to organize new counties, and, to prevent questions involving the legality of such organizations being raised in a collateral proceeding, it intended to make his decision so far conclusive as to make such an organization at least a defacto organization. It cannot be presumed that the legislature intended to leave so important a matter as the organization of a new county, as respects the public and third persons, to be determined by the courts, years perhaps after the organization of such county, and when important rights have been acquired under such organization. Can the public be expected to re-examine the proceedings of the governor, ascertain whether or not the signatures to the petition are genuine, take a census of the county, and ascertain' at its peril, whether or not there actually existed the required number of voters in the county to authorize the governor to organize it, before it can transact business with the county officers of such county ? Should the public be required to look further than to see that a county organization actually exists, with officers performing the duties usually performed by county officers of a county? We think not. That there can be a de facto county organization has been recognized by a number of decisions of the supreme court of the State of Kansas and the supreme court of the United States. State v. Pawnee Co., 12 Kan. 426; State v. Ford Co., Id. 441; State v. Stevens, 21 Kan. 210; State v. Sillon, Id. 207; Comanche Co. v. Lewis, 133 U. S. 198, 10 Sup. Ct. Rep. 286.

The question came up in the Kansas cases in a direct proceeding by the state against the county and its county officers. In two of the cases the county organizations were sustained, notwithstanding fraud was shown in their organization, because of legislative recognition, which was held to legalize and make what was before a de facto organization a de jure organization. And two were held not to be de jitre organizations, because not so recognized by the legislature, and their organizations were set aside. In State v. Pawnee Co., supra, the court says: “A de facto organization was effected with a full set • of county officers, and with all the paraphernalia of a legally organized county. From that time up to the present it has exercised all the powers and duties of a legally organized county. On March 4, 1873, while said county had a de facto existence as an organized county, the legislature recognized its organized existence. It is claimed said Pawnee county has no valid organization on accouu.t of fraud and irregularities in its organization. We shall not stop to inquire whether the organization was originally valid or not, for, as there was a complete organization defacto, we think the recognition by the legislature cured the supposed fraudulent and defective organization, and the county, from that time forward, became a legally organized county. ” In Comanche Co. v. Lewis, supra, Mr. Justice Brewer, speaking of the organization of a Kansas county, says: ‘‘It is universally affirmed that, when a legislature has full power to create corporations, its acts recognizing as valid a de facto corporation, whether private or • municipal, operates to cure all defects in ■ steps leading up to the organization, and makes a de jure out of what before was only a de facto organization.” The question of de facto officers will be discussed later on. The fact that there may be a defacto county organization renders it unnecessary to hold in this case that the decision of the governor was conclusive upon the, question of the number of voters in said Douglas county, and hence we do not pass uj)on the question here. It is enough for the purposes of this case to hold that his decision, and his action under it, did have the effect to create a de facto organization of that county.

But it is contended by the respondent that if the governor had authority to appoint county commissioners for that county, still in the county of Douglas there was not even a de facto organization, for the reason that only two of the persons appointed county commissioners qualified, and these two had no authority to act without the third commissioner, and hence all acts of organization by these two were without authority, and absolutely void. We are of the opinion that the position of counsel for respondent is not well takeD.

The rule invoked, that, where certain persons are required to perform certain acts as a board, no act of the board will be valid until said board is filled by the number required to constitute the board, as is stated by Justice Miller in Peay v. Schenck, Woolw. 175, is not applicable to this case for two reasons: (1) Because the appointment of county officers is by the law made by the commissioners, and- not by the board of county commissioners; and (2) because our statute has provided that a joint authority to three or more public officers is to be construed as giving authority to a majority of them. Section 4765, Comp. Laws. In the case decided by Justice Miller, above cited, he says that the statute of the United States had been changed in respect to requiring all to act, but that such change was made after the sales made in that case .had taken place, and hence the provision could not be applied to that case. The two county commissioners who qualified received their appointment and commissions from the governor, who was the officer named in the statute to make such appointment, and, having qualified and entered upon their duties as such commissioners, they were de facto, if not de jure, officers. The governor had appointed the three commissioners, and his power was exhausted, and the failure of one to qualfy must be regarded as though the commissioner had died before he had qualified, and before the other county officer had been appointed. The two commissioners assumed to and did appoint a register of deeds, who was ex officio county clerk. The appointment was made by the persons who by law were required to make the appointment. The appointment may not have been valid, being made by only two commissioners, when three had been appointed by the governor, but the person appointed was not an intruder. He was in under color of title, and that is all that is required to constitute an officer de facto. Having been appointed, and having assumed the office, and proceeded to discharge its duties, his acts, as regards third persons ánd the public, were valid. The public and third persons transacting business with his office were not required to investigate his title to the office, but could rely upon the fact that he was in possession of the office, performing its duties, and that he was an officer defacto, whose acts were good as to them.

The two commissioners, and the register of deeds, as ex officio county clerk, appointed the third county commissioner under the provisions of the statute which provides that a failure to qualify, as provided by law, constitutes a vacancy in the office, and is by law to be filled, in the case of a county commissioner, by the remaining commissioners and county clerk and probate judge. The referee finds that the two commissioners and county clerk made this appointment, and the finding is silent as to the probate judge. As these officers were not constituted a board, we think the appointment by the three, without the probate judge, made the third commissioner so appointed at least a de facto commissioner. Had the probate judge acted, (had there been one,) the appointment by the two commissioners and the county clerk would have been good though the probate judge, if present, had voted for some other person as commissioner; hence we conclude that the absence of the probate judge did not render the appointment void, and that the commissioner so appointed was, at least, a de facto officer. The three commissioners then proceeded to appoint the balance of the county officers provided for organized counties. These officers being appointed by the county commissioners, who, if de jure officers, were the proper persons to make the appointments, held their offices under color of title, and were de facto officers. In Carleton v. People, 10 Mich. 250, the court said: “And all that is required, when there is an office, to make an officer de facto, is that the individual claiming the office is in possession of and performing its duties and claiming to be such officer under color of an election or appointment, as the case may be. It is not necessary that his election or appointment shall be valid, for that would make him an officer de jure. The official acts of such persons are recognized as valid on grounds of public policy, and for the protection of those having official business to transact. ” And in Norton v. Shelby Co., 118 U. S. 425, 6 Sup. Ct. Rep. 1121, Mr. Justice Field says: “When an office exists under the law, it matters not how the appointment is made, so far as the validity of his acts is concerned. It is enough that he is clothed with the insignia of the office, and exercises its powers or functions.” The case of State v. Carroll, 38 Conn. 449, is regarded as a leading case upon the subject of defacto officers. In that case an act of the legislature authorized the clerk of a city court, in case of the sickness or absence of the city judge, to appoint a justice of the peace to hold the court during the temporary absence of the j udge. A justice having been called in by the clerk of the court, and having acted as such judge, his acts were called in question on the ground that the act authorizing the clerk to call him in was unconstitutional and his act void. The court held that, whether the law was constitutional or not, the justice called in was a defacto officer, and his acts while sitting as such judge are valid. In this case the court defines an “officer defacto” as follows: “An officer de facto is one whose acts, though not those of a lawful officer, the law, upon principles oi policy and justice, will hold valid, so far as they involve the interests of the public and third persons, where the duties of the office are exercised — First. Without a known appointment or election, but under such circumstances of reputation or acquiescence as were calculated to induce people, without inquiry, to submit to or invoke his action, supposing him to be the officer he assumed to be. Second. Under color of a known or valid appointment or election, but where the officer had failed to conform to some precedent, requirement, or condition, as to take an oath, give a bond, or the like. Third. Under color of a known election or appointment, void because the officer was not eligible, or because there was a want of power in the electing or appointing body, or by reason of some defect or irregularity in its exercise, such ineligibility, want of power or defect being unknown to the public. Fourth. Under color of an election or appointment by or pursuant to a public, unconstitutional law, before the same is adjudged to be such.” We think all the officers of Douglas county were good de facto officers, under the third rule laid down by the court in that case. See, also, State v. ALling, 12 Ohio, 16; People v. White, 24 Wend. 539; Lavler v. McGlachlin, 28 Wis. 364; Ralls v. Douglass Co., 105 U. S. 728; Stockle v. Silsbee, 41 Mich. 615, 2 N. W. Rep. 900; Fowler v. Bebee, 9 Mass. 231; Petersilea v. Stone, 119 Mass. 465; Broadwell v. People, 76 Ill. 561; In re Ah Lee, 6 Sawy. 410, 5 Fed. Rep. 899; Mallett v. Mining Co., 1 Nev. 188. In State v. Alling, supra, the supreme court of Ohio held that a clerk of the court, appointed by de facto judges, held the office as a de jure clerk, and could not be removed in quo toarranto proceedings.

But the counsel for respondent insists that no county officers existed in Douglas county, or exist in any unorganized county, and cannot exist until the county is legally organized; that is, it is only by legally organizing the county that they can be brought into existence, and that until Douglas county was legally organized, in contradistinction from a defacto organization, there could be no county officers, either de facto or de jure. That there can be no defacto officer unless there is a de jure office is a well-settled law. Norton v. Shelby Co., supra; Carleton v. People, supra. Were there, then, de jure offices to be filled when the governor proceeded to organize Douglas county ? As stated, the county of Douglas had been segregated from the other portions of the territory, its boundaries defined, and its name given to it long prior to its attempted organization, in February, A. D. 1881. The county was by this act created and brought into existence, and the county offices pertaining to a county when organized were, we think, from that time existing offices to be filled in the manner provided by law. This is made more apparant from the fact that there is no law creating county offices, except the general law, which provides that each organized county shall have the fallowing officers, naming them, (chapter 21, § 15, Code 1877,) and neither the governor nor the county commissioners were authorized to create such offices, but only to fill them by appointment. The legislature must have understood, therefore, that, upon segregating a county from the balance of the territory, defining its boundaries and giving to it its name, such offices existed, for it authorized the governor to appoint three persons, residents of said county, “county commissioners,” and these commissioners were authorized to appoint “all the other officers of said county required by law.” What county officers, and required by what law? Clearly, the officers provided for by section 15, c. 21, Code 1877. The offices, then, were simply filled when the governor appointed three persons county commissioners and they appointed the balance of the officers. In Walsh v. Com., 89 Pa. St. 419, the court, speaking of the organization of a new county, says: ‘ ‘The moment the life of the county began there came into being the several county offices specified in the constitution. They were not offices to be filled by clerks or agents or deputies pro hac vice. They were offices and they were vacant. All the conditions under which the constitutional duty of the governor to select incumbents subsisted.” In Leake v. Blasdel, 6 Nev. 40, the court says: “The county itself, as we understand the law, was unconditionally created by the act, and as completely segregated from the county of Nye as it could be by legislative action. * * * This simply declared that the described territory shall be the county of Lincoln,— not at some future time, not upon the happening of anything in the future, but upon the passage and approval of the act. There may be a county without a government of its own, as is often the case.” So we say here the county existed from the moment it was segregated from the other portions of the territory, its boundaries defined, and its name given to it, and all the offices provided by law existed. They were vacant, it is true, but they nevertheless existed, ready to be filled whenever certain conditions should exist. It is a fact of no small significance that in either of the Kansas cases cited, nor in the case cited from the supreme court of the United States, was the question of the existence of offices de jure, to be filled, raised by counsel or discussed by the court; yet the law of Kansas relating to the organization of new counties was quite similar to our own, as it existed when Douglas county was organized. The court held in those cases that there was evidence of the grossest fraud, the population being entirely insufficient to authorize the organization of the county, and the governor misled by false petitions and affidavits; yet the organizations were held good defacto organizations, which only could have been done upon the theory that de jure offices existed that could be filled with defacto officers. We conclude, therefore, that thfere were de jure county offices existing in Douglas county to be filled, and that when filled the officers were, at least, de facto officers, and their acts good as to third persons and the public; and that the board of county commissioners of said Douglas county, in issuing the warrants in controversy, constituted a defacto board, and the warrants issued by it are prima facie valid and binding upon the county. The judgment of the court below is reversed, and the cause remanded for such other and further proceedings as may be taken consistent with this opinion.

Bennett, J., concurring; Kellam, P. J., not sitting in the case or taking any part in the decision.

Case Details

Case Name: Merchants Nat. Bank v. McKinney

Court Name: South Dakota Supreme Court

Date Published: May 28, 1891

Citation: 2 S.D. 106

Court Abbreviation: S.D.