Austin v. Dist. Tp. of Colony
| Decision Date | 26 April 1879 |
| Citation | 49 N.W. 1051,51 Iowa 102 |
| Parties | AUSTIN v. DISTRICT TP. OF COLONY. |
| Court | Iowa Supreme Court |
Appeal from circuit court, Adams county.
Action by Austin against the district township of Colony to recover on a school order. Judgment for defendant. Plaintiff appeals. Reversed.
McCaughan & Dabney, for appellant.
Davis & Wells, for appellee.
The order purports to be given for money furnished in the erection of a school-house. While the defendant district township questions the validity of the order, it does not do so by demurrer. We conclude, therefore, that it is considered that the order appears to be valid upon its face, and, if invalid, it is so by reason of the facts which the defendant sets up in its answer. The facts relied upon are as follows: The district township had voted to erect a school-house, to cost not more than $2,000. The money on hand and the taxes levied amounted to that sum. The directors proceeded to erect the school-house, and in doing so they paid more than $2,000, thereby exceeding the limit which had been imposed upon them. In the progress of the work they borrowed of the plaintiff $495, for which the order in suit was given. It is claimed by the defendant that the directors, in borrowing the money, acted beyond the scope of their official powers, and that the defendant is not bound thereby. It is not claimed by the plaintiff that the power to borrow money is expressly given to a district township, but it is said that it may erect school-houses, and that the directors may make all contracts necessary to carry out the vote of the district township; and such seems to be the law. Code, § 1723. If the act in question is valid, it is because it was a contract necessary to be made in the erection of the school-house which the district township had voted. The first question presented is as to whether the directors were authorized to proceed in the erection of the school-house in advance of the collection of the taxes. If they were, they had the power to pledge the credit of the district. In no other way could the school-house have been erected. Upon this point we find that the defendant took action, which is recorded in these words: “Moved and seconded that we proceed to build a school-house.” Under that authority it appears to us that the directors were justified in proceeding at once. There is certainly no statutory inhibition upon a district township to prevent it from erecting a school-house in advance of the collection of the taxes necessary to pay for it. It seems, indeed, that debts may be contracted in the erection of a school-house in advance even of the levy of the necessary taxes. Code, § 1717, subd. 3. In this case the directors did proceed in the erection of the school-house and did incur indebtedness. So far, we think, they were authorized. So far, indeed, their authority is not questioned by the defendant. Now, the evidence shows that the money borrowed of the plaintiff was used in paying indebtedness already contracted. Whether the indebtedness which the money was used in paying was in excess of the limit fixed by the district township to the cost of the school-house does not distinctly appear. While such fact is material, the burden is on the defendant to prove the fact. Bank v. Risley, 19 N. Y. 369; Safford v. Wyckoff, 4 Hill, 442;Trust Co. v. Clowes, 3 N. Y. 470. We will assume, then, that it (the indebtedness paid) was not in excess of the limit, and that the money was borrowed for paying, and was used in paying, legitimate indebtedness.
But it is contended that where a corporation has contracted illegitimate indebtedness it should be regarded as without power to borrow money even to pay legitimate indebtedness, because the money might be misappropriated. But this would certainly constitute no reason why a corporation should be allowed to escape liability where the money was actually used in paying legitimate indebtedness, as we show, in the absence of evidence, this must be assumed to have been done. The question, then, is as to whether the directors, in borrowing money for such purpose, were making a contract necessary to carry out the vote of the district township. It was, of course, for the directors to judge whether it was necessary to meet the indebtedness at that time. Possibly the payment of it at that time saved the district township from costs, or saved its credit when its credit was important to it. The fact that the directors borrowed money and paid the indebtedness is evidence that they deemed it necessary, and, as they were the proper judges of such facts, we must presume, in the absence of evidence to the contrary, that it was necessary. If so, it was a part of the appropriate and necessary means of carrying out the vote of the district township for the erection of a school-house. So far as the directors contracted indebtedness in excess of the limit fixed, such indebtedness was illegitimate. Reichard v. Warren Co., 31 Iowa, 381. They could not, of course, properly borrow money to pay such indebtedness. A legitimate debt could not be contracted for the purpose of discharging an illegitimate one. With this restriction, and one other which we are about to mention, it seems to us that the rights of the district township are sufficiently guarded. In Clarke v....
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