Allen v. Intendant and Councilmen of La Fayette

• Decision Date: 30 May 1890
• Citation: 8 So. 30,89 Ala. 641
• Parties: ALLEN ET AL. v. INTENDANT AND COUNCILMEN OF LA FAYETTE ET AL.
• Court: Alabama Supreme Court

8 So. 30

89 Ala. 641

ALLEN ET AL. v. INTENDANT AND COUNCILMEN OF LA FAYETTE ET AL.

Supreme Court of Alabama

May 30, 1890

Appeal from chancery court, Chambers county; S. K. MCSPADDEN Chancellor.

The bill in this case was filed by the appellants against the appellee, and sought to enjoin the payment of warrants by the town treasurer. The cause was submitted for decree upon the motion of the defendants to dismiss the bill for want of equity, and another motion to dissolve the injunction for want of equity in the bill, and upon the sworn denials in the answers. Upon consideration, the chancellor overruled the motion to dismiss the bill, but sustained the motion to dissolve the injunction, and decreed that the injunction be dissolved. The complainants prosecute this appeal, and assign this decree of the chancellor as error.

N D. Denson and Tompkins & Troy, for appellants.

Samford & Chilton, for appellees.

MCCLELLAN J.

The intendant and councilment of the town of La Fayette on or soon after March 18, 1889, purchased from one Schuessler a brick college building and grounds, situate in La Fayette, and took a quitclaim deed of the property to themselves, the said intendant and councilmen. Only a small part of the purchase money was paid out of the funds of the town, and the balance, about $1,300, was borrowed from Mrs. S. A. Frederick by the town authorities, and paid to Schuessler. For the repayment of this loan, warrants were regularly drawn against the treasury of the town for the sums of $659.40 payable January 1, 1890, and $667.72, payable March 1, 1890, respectively, and delivered to Mrs. Frederick. The present bill is exhibited by resident property owners and tax-payers of the town of La Fayette, and seeks to enjoin the payment of said warrants on the grounds (1) that the municipality of La Fayette was without authority to purchase the school-house or college building, and that the money was loaned by Mrs. Frederick with full knowledge that it was to be used in that behalf, and warrants taken by her with full knowledge that it had been so applied; and (2) that the intendant and councilmen of the town of La Fayette had no power under its charter to borrow money for any purpose.

2. Assuming that the theory of the bill as to the powers of the municipality, and as to the character of the transaction between the intendant and councilmen on the one hand, and Mrs. Frederick on the other, is sound, the right of these complainants to maintain the suit is, as a general proposition, fully supported by the authorities, and not seriously controverted by the appellees. 2 High, Inj. § 1237 et seq.; 2 Dill. Mun. Corp. § 914 et seq.; 1 Pom. Eq. Jur. §§ 258-260, 270, 273; 10 Amer. & Eng. Enc. Law, 963.

3. The first ground upon which the prayer for relief is based is in our opinion untenable. The charter of La Fayette empowers the municipal authorities to purchase and hold, or dispose of, for the benetfi of the town, real, personal, and mixed property, to the value of $15,000. Power is also conferred to maintain public schools within the town; and to this end, as well as to defray the ordinary expenses of municipal government, the corporate authorities may levy an annual tax not exceeding one-half of 1 per cent. on the assessed value of the property thereof. Acts 1880-81, p. 420; Acts 1888-89, p. 1061. We do not doubt that under these grants of power the municipality of La Fayette was fully authorized to purchase and hold a school-house such as the present bill alleges to have been purchased by the intendant and councilmen of the town. 2 Dill. Mun. Corp. § 561 et seq.

4. The taxing power is conferred on municipal corporations, of course, for the purpose of providing means with which to meet their current expenses incurred in the performance of the duties resting on them as governmental agencies; and it may ordinarily be assumed the means thus provided are adequate to the ends in view. Yet, in the nature of things, it is impracticable, if not indeed impossible, for the powers of such, or any, corporations to be exercised without incurring liabilities beyond the funds immediately in hand, and thus anticipating corporate revenues. In recognition of a necessity of this kind, it may be said that the law has come to be well settled to the effect that municipal corporations may create debts in the accomplishment of any object clearly within their powers, and reasonably essential to the attainment of their charter purposes. Custom of long standing and universal adoption, if not express law, has sanctioned the evidencing of such debts by the drawing of warrants therefor on disbursing officers in favor of creditors. Applying these principles to the exigencies which presented themselves to the intendant and councilmen of La Fayette, when, in their judgment, the good of the town demanded the purchase of a school-house, we do not question that it was competent for them to buy the property which they did buy on a credit, and thus incur a debt to the extent of the price they were to pay, the value of the property as measured by the price not being in excess, when added to the value of other property already owned by the corporation, of $15,000, and the property being of a class and character appropriate to corporate uses in the discharge of legitimate municipal functions. Nor do we doubt that, for a debt thus created, warrants might legally have been drawn on the town treasury, payable at stated dates to the vendor. Had this been done, these evidences of the indebtedness might have been sold and transferred by the vendor to Mrs. Frederick, and she thereby subrogated to all the rights of the first holder. The case alleged by the bill and admitted in the answers differs from the case hypothetically stated in this, and only in this, in substance and effect, that Mrs. Frederick, instead of paying the money to the town creditor, paid it to the town itself, and the latter immediately, and as upon prearrangement known to all parties, paid to Schuessler, and in consideration thereof received a conveyance of the college building. Slight as the difference appears on its face to be, it has, in our opinion, the important operation of converting the transaction into a loan of money by Mrs. Frederick to the corporation, and left in her hands a contract for its repayment which, as such, she cannot enforce, for the reason that this contract is ultra vires the town of La Fayette. Its charter nowhere expressly confers power on the corporate authorities to borrow money for any purpose, or under any circumstances. And whatever may be the decisions of other courts, and however variant may be the judicial opinion in other jurisdictions, on the point, the doctrine is thoroughly well settled in Alabama that, the power to borrow money is not incident to municipal corporations, and that, if it exists in any instance, it must be by the force of express legislative grant, or at least by force of legislative investment of power coupled with the imposition of duties which are incapable of exercise and performance without the borrowing of money. We need not enter upon a discussion of the reasons which underlie this doctrine. They are many and cogent, and most clearly stated by Judge Dillon, Justice BRADLEY, and in former adjudications of this court which establish the proposition. 1 Dill. Mun. Corp. §§ 117, 126; Mayor v. Ray, 19 Wall. 475; Simpson v. Lauderdale Co., 56 Ala. 64; Wetumpka v. Wharf Co., 63 Ala. 611.

5. The intendant and councilmen of La Fayette had no authority, therefore, to borrow this money, nor had they any authority to draw the warrants which were drawn and delivered to Mrs. Frederick. They were the trustees for the inhabitants of the town. Their action in excess of the power with which the trust relation clothed them, and in violation of the duties they owed to their cestuis que trustent, the present complainants, among others, was of no manner of efficacy in fixing a liability on those for whom they thus usurped the power of acting. The warrants in the hands of Mrs. Frederick are as if they were not, and had never been. Neither the municipality of La Fayette, nor any of its officers or agents, is under any obligation, legal, equitable, or moral, to pay those warrants, or to fulfill the contract out of which they sprung. But back of that contract, and back of those warrants, there is, on the facts presented by the bill and accentuated by the answers, not only a moral but a legal liability resting on the municipality of La Fayette, and on its officers, to repay the money which came from Mrs. Frederick, and has been used by the corporation for authorized corporate purposes. In other words, the town of La Fayette is liable as upon an implied assumpsit, not under, but wholly apart from, the unauthorized contract, and not for the amount its officers borrowed from Mrs. Frederick, but for the amount of her money which they received and applied to the purchase of a house which the charter authorized them to buy and the town to hold, which was reasonably necessary to the exercise and performance of expressly granted and imposed functions and duties, and which the use of her funds had enabled the corporation to acquire and devote to its legitimate purposes.

The authorities are not uniform to this proposition. It is however believed to be eminently sound in principle, and has the support of some of the most distinguished law-writers and of courts of marked ability and learning. It is thus formulated by Mr. Brice with general reference to both public and private corporations: "Persons who have in any way advanced money to a corporation, which money has been devoted to the necessaries of the corporation, are considered in chancery [and, also, it would seem to follow, in...