129 S.W.2d 887 | Mo. | 1939
Lead Opinion
This proceeding is one of several developing out of what is commonly known as the insurance rate litigation. [Sec, among the later cases, Aetna Ins. Co. v. O'Malley,
On December 1, 1930, said Superintendent of Insurance and the Attorney General of the State of Missouri, as first parties, and defendant, as second party, entered into a written contract. It recited that the first parties, in their respective official capacities, had designated the second party as "special counsel" to represent them in certain suits involving the insurance laws of the State pending in the Federal and State courts, wherein said first parties were defendants, "and also in any and all proceedings now or hereafter brought" seeking the recovery of excess premiums collected by stock fire insurance companies pending the determination of the validity of a "ten per cent reduction order" of the Superintendent of Insurance, effective November 15, 1922; that said first parties desired to "bind themselves . . ., so far as they may legally do so, on the point of compensation of the second party" for services to be rendered as aforesaid; and the parties agreed:
"1. That the second party hereto shall be paid from time to time out of appropriations made by the General Assembly of the State of Missouri, and available for such purpose, such sums on account of services rendered and to be rendered, and with which to defray expense in connection with said suits above mentioned, as may be agreed upon by the parties."
The remaining portions of the contract are immaterial to the instant controversy. *853
Mr. Weatherby also furnished opinions to the heads of certain departments of the State government, other than the Insurance Department, at the request of the Attorney General during 1931 and 1932.
For services rendered the State during 1931 and 1932, Mr. Weatherby received between $1900 and $2000 from appropriations for the Insurance Department. He received out of appropriations for the Legal Department for services mentioned in the "contract" and expenses approximately $4200 in 1931 and $5900 in 1932; and for the "opinions" aforesaid $3000.
The State's petition sought the recovery of the amounts paid out of appropriations for the Legal Department upon the theory they were properly chargeable against appropriations for the Insurance Department and the payments out of appropriations for the Legal Department were unauthorized and unlawful. No issue was tendered involving the value of the services rendered or the correctness of the amounts. Count one of the petition covered payments for the year 1931; count two, the payments for 1932, and count three, the $3000 item for opinions and an item of $200 for expenses incurred in connection with matters mentioned in the "contract."
The court nisi ruled recovery might not be had of any items other than the $3000 item for "opinions." Cross-appeals resulted.
[1] 1. Defendant says the Attorney General had the common law, authority and, under Laws 1931, page 18, section 7, quoted infra, implied statutory authority to employ counsel to assist in the litigation arising out of the insurance laws of the State. This may be conceded without so ruling. However, the issue remains under the facts of the instant case advancements to defendant out of the appropriation for the Legal Department were lawful, which we think may be determined from a consideration of our statutory provisions without discussing Missouri constitutional provisions. [Consult, among others, Mo. Const., Art. 4, Sec. 48; Art. 10, Sec. 19.]
Defendant explained the occasion for the contract between himself and the Superintendent of Insurance and the Attorney General. He testified the Superintendent of Insurance was making advancements to three lawyers out of appropriations for the Insurance Department; that the appropriations were inadequate to meet further charges, and the agreement with the Attorney General to advance moneys to defendant on the rate cases resulted. The record also discloses that subsequent to 1932 defendant's services were paid for wholly out of appropriations for the Insurance Department. It is unescapable that he was acting as counsel for the Insurance Department under his appointment by the Superintendent, approved by the Governor, under now Section 5678, Revised Statutes 1929 (Mo. Stat. Ann., p. 4344), which reads: ". . . The Attorney General shall be his (the Superintendent of the Insurance Department's) legal adviser, *854 but the Superintendent may, with the approval of the Governor, employ other counsel for the purpose of enforcing the insurance laws, except in criminal prosecutions. . . ." As such counsel defendant's services were available to the State for the purposes mentioned in said contract.
Section 5679, Revised Statutes 1929 (Mo. Stat. Ann., p. 4344), contemplates the payment of "all the expenses of the Insurance Department," except certain specified expenses including "proceedings against any company . . ., which expenses are to be paid by the company, or as provided by this law, shall be paid monthly out of the amount appropriated by law from the fees collected by the Insurance Department . . .; and all the fees received by the Superintendent . . . shall . . . be paid into the State Treasury . . ., and shall be placed to the credit of the Insurance Department fund. The State shall not be responsible in any manner for the payment of any such expenses, or of any expenses of this department, or any charges connected therewith." Thus is expressed a specific legislative intent not to charge the general revenues of this State with "any expenses of" the Insurance Department.
No point is made with respect to the contract bearing date of December 1, 1930.
The appropriations for the Insurance Department for the biennial period of 1931-1932 were made "chargeable to the Insurance Department fund" including "the salaries of . . . counsel . . . and attorneys . . ." and "general expenses" consisting of specified items "and other general expense . . ." "[Laws 1931, p. 124, sec. 15.]
On the other hand appropriations for the Legal Department were chargeable "to the state revenue fund," including $50,000 "for the payment of such counsel . . . as the Attorney General may deem necessary in the defense or prosecution, as the case may be, of proceedings now pending or which may hereafter be brought in any state court or federal court wherein the State of Missouri is a party in interest . . ." [Laws 1931, p. 18, sec. 7.]
These appropriation acts evidence a clear legislative intent that the salaries, fees and expenses arising out of appointments issuing from the Insurance Department were to be chargeable against the Insurance Department fund in so far as therein provided; whereas those arising out of appointments under the Legal Department were to be paid out of the State revenues. While the General Assembly was vested with authority to change the fund chargeable with the payment of the controverted items, it did not see fit so to do. It follows that payments to one holding an appointive position under Section 5678, supra, as "counsel" out of State revenue appropriated for the support of the Legal Department were without legislative sanction and unlawful. This is in conformity with the constitutional mandate found in Section 19 of Article 10. *855
The Court en Banc in Aetna Ins. Co. v. O'Malley,
[2] II. With respect to the $3000 item for legal "opinions." It is the statutory duty of the Attorney General to "give his opinion, in writing without fee," to heads of the departments of our State government. [R.S. 1929, sec. 11274, Mo. Stat. Ann., p. 586.] The salary of the Attorney General is payable monthly out of the State treasury (Ibid., Sec. 11272, Ibid., p. 585), and in 1931-1932 the salaries of the four Assistant Attorneys General were payable in the same manner and at the same time (Ibid., sec. 11277, Ibid., p. 587). The appropriation of State funds for the Legal Department for the years 1931-1932 were "earmarked" (Laws 1931, p. 18, sec. 7); and contained no provision covering the services aforesaid other than the provision for the payment of the salaries of the Attorney General and his four statutory assistants. Defendant was neither. The Attorney General, as head of the Legal Department, had no available funds out of which to make payment for said services, if defendant was otherwise entitled to payment. An attorney may voluntarily serve the State without expense to it and an Attorney General may avail himself of such services. [Commonwealth v. Roberta Coal Co.,
[3] III. a. Defendant says this money, it having been paid and the value of the services and the amounts involved standing unquestioned of record, may not be recovered.
The sovereign is plaintiff. The situation differs vastly from a controversy between private citizens involving the principle that one may do what he will with his own. Public officials are but the servants of the public. Public funds are but trust funds. Public officials performing a duty with respect thereto are not dealing with their own. *856
All persons, State officials and employees included, are charged with knowledge of the laws enacted by the sovereign for the protection of its property and are required to take due notice thereof. A broad distinction exists between the acts of a public official and those of an agent of a citizen within the apparent scope of his authority. Public officials act in regard to public funds in a trust capacity. Their acts beyond the scope of their authority are, and are known to be, unauthorized, do not bind their principal, and their mistakes are their own and not the mistakes of the sovereign. Defendant concedes that money paid under a mistake of fact may be recovered, and the observation in State ex rel. v. Scott,
[4] b. Defendant stresses the point that the State Auditor examined, audited and approved each of the items sued for; that in so doing he acted in a quasi-judicial capacity, and that the present action constitutes a collateral attack on his official ruling and cannot be maintained.
We think this contention sufficiently answered by our ruling that the instant payments were had upon warrants unauthorizedly drawn against an appropriation not chargeable therewith, and no action by any public official could make them anything else or infuse validity into them.
Defendant quotes statements from State v. Thompson (Banc),
[5] Disregarding our constitutional provisions (Mo. Const., Arts. III, V, Sec. 1, 15 Mo. Stat. Ann., pp. 405, 523), our statutes make the State Auditor the fiscal agent of the State (R.S. 1929, sec. 11399, Mo. Stat. Ann., p. 7796) for the safeguarding of the public funds in enumerated instances (Ibid., sec. 11404, Ibid., p. 7797), and authorize him to examine the parties, witnesses and others with respect to matters material to the settlement of any account (Ibid., sec. 11418, Ibid., p. 7804). The decisions ascribing to him a quasi-judicial function proceed upon the theory he does not necessarily act in a purely ministerial capacity in the sense that he makes no investigation and exercises no discretion. His lawfully authorized acts might be binding upon the State in certain respects but, if so, this does not go upon the principle that his rulings rise to the dignity of a judgment and stand res judicata of controverted matters. He does not try the merits of a claim as a court. He acts as a fiscal agent, not a judicial body. Our State Auditor does not sit as a court in judgment upon controversies between his principal and those having financial dealings with it. His authorization of unlawful disbursements of public funds is not binding upon the State. [Consult State v. Bank of Missouri (Banc),
c. What we have said disposes of defendant's point that he need not take notice of any limitation on the powers of the State Auditor in auditing the accounts. He had actual knowledge of the facts involved and he received payment under statutory provisions which every person was bound to know and construe at his peril.
[6] d. Defendant mentions that principle of law under which courts refuse their aid to a plaintiff in a controversy founded upon an illegal agreement. This rule is not for the sake of a defendant but rests upon public policy; and as between individuals in pari delicto the position of defendant is the better simply because the courts will not intervene. We are at some loss to perceive the applicability of the rule. The sovereign, through the General Assembly, has declared the public policy of the State applicable to the instant case. An enforcement, rather than the sanction of a violation, of the law best serves the public interest. The rule is not applicable when the State is an interested party. [Consult 13 C.J., p. 497, sec. 440, n. 26; 12 Am. Jur., p. 731, sec. 215; 6 R.C.L., p. 832, sec. 222, n. 16; McCarter v. Firemen's Ins. Co.,
Defendant quotes passages from Seaman v. Cap-Au-Gris Levee District,
e. 1. The State instituted this suit. From what has been hereinbefore ruled, defendant's broad assertion that the State has laid aside its sovereignty and that his available defenses are the same as against any ordinary suitor, is obviously unjustifiable. Moore v. Tate,
[7] 2. With respect to services performed for the Insurance Department. In March, 1933, $43,875.94 was transferred from the "Insurance Department Fund" to the "General Revenue Fund." The State's pleadings questioned only the propriety of making the payments out of the appropriation for the Legal Department. The case was tried below on the theory that the services were bona fide rendered the State and the expenses were bona fide incurred; that the amounts involved are reasonable and should have been paid out of the appropriation for the Insurance Department; and that the State Auditor, on the vouchers of the Attorney General, unauthorizedly directed their payment out of the general revenue appropriated for the Legal Department. The technical issue involves a defendant's common law right of recoupment; a purely defensive matter growing out of the transaction constituting a plaintiff's cause of action, available only to reduce or satisfy a plaintiff's claim, and permitting of no affirmative judgment for defendant. Section 11417, Revised Statutes 1929 (Mo. Stat. Ann., p. 7804), permits one sued by the State to set-off claims against the State which "have been exhibited to the State Auditor, and by him allowed or disallowed" etc. The modern set-off is of statutory origin. A recoupment is, in a sense, a restricted set-off; but technically they are not the same. For most practical purposes the distinctions have ceased to have importance. [Cf. Set-off and Counterclaim 57 C.J., pp. 358, et seq. secs. 1-3, 11, 15-17; 24 R.C.L., pp. 792-796, secs. 1-5; Fricke v. Fuetterer Battery Supplies Co.,
[8] The State here relies upon the holding in State v. Thompson,
If defendant establishes his lawful right to receive payment, his defense of recoupment may be effectively interposed.
3. What we have just said disposes of the $3000 item for "opinions." There was no appropriation out of which lawful payment could be made.
The judgment should be affirmed with respect to the $3000 item and reversed and remanded with respect to the other items involved. It is so ordered. All concur. *861
Addendum
The Thatcher case involved the propriety of allowing and paying fees to attorneys representing the Attorney General out of the funds of a charitable trust, the subject matter of the litigation. Aside from the fact that a reading of the Thatcher case does not disclose that Laws 1931, page 18, section 7, was involved, we think it clear that the quoted observations had no reference to the $30,000 appropriated "for operation" under said Section 7 but referred to the $50,000 item under appropriations "For Personal Services" for such counsel as the Attorney General deemed necessary in the defense or prosecution of proceedings wherein the State of Missouri was a party in interest. The factual, as well as the legal, issues sufficiently differentiate the cases.
Appellant Weatherby rendered personal services in furnishing "opinions." By distinctly specifying the sums appropriated for enumerated personal services rendered the Legal Department, the General Assembly evidenced an intent within Section 19, Article 10, of our Constitution in the enactment of said Section 7 not to pay for "personal service" out of moneys appropriated for "operation" of the Legal Department.
The motion is overruled. *862