Belfast Nat. Bank v. Inhabitants of Stockton

• Decision Date: 19 August 1881
• Citation: 72 Me. 522
• Parties: BELFAST NATIONAL BANK v. INHABITANTS OF STOCKTON.
• Court: Maine Supreme Court

72 Me. 522

BELFAST NATIONAL BANK v. INHABITANTS OF STOCKTON.

Supreme Judicial Court of Maine.

August 19, 1881

ON REPORT, the law court to render such judgment as the law and evidence warrant.

Assumpsit upon the following town order:

" $2000. Stockton, July 16, 1878.

To Joseph Seger, town treasurer, or his successor: Pay to Belfast National Bank, two thousand dollars, it being for money hired for the year 1878.

C. C. ROBERTS ) Selectmen

E. H. CROCKER ) of

No. 68 F. J. MARDEN ) Stockton."

[Across face] " Accepted, Joseph Seger, treasurer."

The writ also contained the money counts, and was dated September 19, 1879.

Plea, general issue.

The material facts are stated in the opinion.

William H. Fogler, for the plaintiff, cited: Augusta v. Leadbetter, 16 Me. 45; Dennett v. Nevers, 7 Me. 399; Orneville v. Pearson, 61 Me. 557; Industry v. Starks, 65 Me. 167; Bessey v. Unity, Id. 347; Sanborn v. Deerfield, 2 N.H. 251; Andover v. Grafton, 7 N.H. 298; Pike v. Middleton, 12 N.H. 278; West v. Erroll, 58 N. H. (Reporter, June 11, 1879,; Dill. Mun. Corp. § § 384, et seq. 750; Green's Brice's Ultra Vires, (2 Am. ed.) 717, 729; Sedgwick Stat. and Const. Constr. 73; Dill v. Wareham, 7 Met. 438; Ganse v. Clarksville, (U. S. C. C. E. D. Mo.) 7 Reporter 579; The Mayor v. Ray, 19 Wall. 468; Moore v. Mayor, 73 N.Y. 238; Nat. Bank v. Mathews, 98 S.C. 6260; March v. Fulton Co. 10 Wall. 684.

A. P. Gould, for the defendants.

There are two counts in the writ.

The action cannot be sustained on the first count which declares on the order, because the selectmen had no authority to issue it. Parsons v. Monmouth, 70 Me. 262.

Nor can the count for money had and received be maintained. It was not shown that the money was needed, but it is said that it was needed, and convenient to pay the State tax and outstanding orders.

The selectmen, virtute officii, had no power to borrow money in behalf of the town, whatever the purpose for which it was obtained. The office is created, and certain specific duties not touching the question now at issue imposed. All the rest is left to inference or implication; see Smith v. Cheshire, 13 Gray 318.

In New Hampshire, selectmen have always been empowered by statute, " to manage all the prudential affairs of the town," still it was there held that " selectmen have not authority, ex officio, without a vote of the town, to borrow money upon the credit of the town. Rich v. Errol, 51 N.H. 350; see also, Sanborn v. Deerfield, 2 N.H. 251; Parsons v. Monmouth, supra; Hooper v. Emery, 14 Me. 375; Ganse v. Clarksville, 19 Alb. L. J. 253; Dill. Mun. Corp. § § 5, 81; 1 Daniel Nego. Instr. § 420; 2 Do. § 1530; Mayor v. Ray, 19 Wall. 468; Baileyville v. Lowell, 20 Me. 182.

To hold the town as for money received and appropriated to its legitimate expenses, the receipt and appropriation must appear by legal corporate action. The receipt and expenditure of it by the selectmen, is not sufficient, even though they may have used it in payment of debts of the town.

Wherever towns have been held for money borrowed by their officers, the appropriation has been by authority of the town previous or subsequent, evidenced by some corporate action, not by the mere act of its officers. In Ganse v. Clarksville, supra, and cases there cited, and Dill. Mun. Corp. § § 384, 750, and notes, corporate appropriation was shown, and Ganse v. Clarksville, clearly and expressly recognized the necessity of showing the appropriation of the money borrowed to lawful municipal purposes, by corporate action. S. p. Herzo v. San Francisco, 33 Cal. 134; Dill v. Wareham, 7 Met. 438; Mayor v. Ray, 19 Wall. 484; Argenti v. San Francisco, 16 Cal. 255; McCracken v. Same, 16 Cal. 591; Pimental v. Same, 21 Cal. 351.

" No person can make himself a creditor of another by voluntarily discharging a duty which belongs to that other." Salsbury v. Philadelphia, 44 Pa.St. 303; Siebrecht v. New Orleans, 12 La.Ann. 496.

An unauthorized contract or act on the part of the officers of a town or city, however advantageous, does not bind the corporation, or subject it to legal liability. Loker v. Brookline, 13 Pick. 343; Jones v. Lancaster, 4 Pick. 149; Haskell v. Knox, 3 Me. 445; Morrell v. Dixfield, 30 Me. 157; Moor v. Cornville, 13 Me. 293; Ingalls v. Auburn, 51 Me. 352; Field v. Towle, 34 Me. 405; French v. Auburn, 62 Me. 452; Kelley v. Lindsey, 7 Gray 287; Railroad Nat. Bank v. Lowell, 109 Mass. 214.

The payment of the State tax was unauthorized, and contrary to the statute provisions. R. S., c. 6, § § 38, 39, 60, 44, 123, 126, 127. It did not constitute a debt of the town, or a corporate liability of any kind.

SYMONDS J.

It may be regarded as settled in this State that one who lends money upon the representation of town officers that it is required for municipal purposes, in order to recover against the town therefor, must prove the appropriation of the money lent to the discharge of legal municipal debts, unless such officers were authorized by vote of the town at a legal meeting to effect the loan. " There can be no such thing as a general and unlimited authority in municipal officers, to borrow money on the credit of the town by which they are elected, without regard to the purposes to which it is devoted. To show money had and received to the use of the plaintiff by a town, it will not suffice merely to show money lent by the plaintiff, upon the representations of its officers, that it was required for legitimate expenditures." " But where the lender proceeds against the town upon this ground, we think he is bound, in order to recover, to show the appropriation of the money to legitimate expenses of the town." Bessey v. Unity, 65 Me. 342; Parsons v. Monmouth, 70 Me. 264.

" It is strongly implied in the two cases last cited, that the money thus advanced, and shown to have been actually appropriated to the discharge of legal liabilities of the town, would be held to be legally recoverable in an action for money had and received against the town. We see no good reason for excusing the town from refunding it, when it has been actually thus appropriated… .. It is the payment of the lawful debts of the town by its own agents with the plaintiff's money, which constitutes the cause of action." Billings v. Monmouth, 72 Me. 174.

The opinion of the court from which the last extract is taken, seems to determine the law of the present case, and to render unnecessary any further discussion of the legal principles involved, which had been elaborately argued in this case before that decision was announced. It is only upon the ground therein stated that the plaintiffs claim to recover. They do not argue that the town gave prior authority for procuring the loan from the bank.

We do not understand the opinion in Billings v. Monmouth, to be intended to contravene the maxim that no one can make himself the creditor of another by the unsolicited payment of his debts; or to hold the fact that the defendants, without their own act or will, have had the benefit of the plaintiffs' money to be the sole and sufficient ground of liability. Agawam National Bank v. South Hadley, 128 Mass. 503.

In order so to charge the town with liability, the use of the moneys loaned, their appropriation to the purpose stated, must have been by some person who stood in such relation to the town as to render his act of itself effective, as between the town and its creditor, to discharge the debt to which they were applied, or there must have been a ratification or acceptance of such payment on the part of the town.

Without corporate act or assent, or the agency of a person exercising some authority, there can be no such thing in a legal sense as the payment of the debt of a town. If a person having no authority assumes to pay a municipal debt, the payment is a nullity at the will of the town. Its relations to its creditor cannot be affected by a stranger against its will; and the act of the creditor alone, while it may destroy the evidence of debt, and deprive him of remedy, cannot (at least theoretically, if it may practically,) extinguish the legal obligation of the contract against the will of the other party. Nor can any arrangement between the creditor and a stranger, to this effect, be forced upon the acceptance of the debtor.

The language of the court, in the opinion cited, refers to a case where there was in fact and in law a payment of the debt of a town by the use of moneys hired without authority; where the debt was discharged not only in form but in effect. " The vital question of fact," it is stated, " is whether the plaintiff's money has actually been applied by the town officers to the extinguishment of legal claims against the town." If one without authority assumes to pay a municipal debt the town may object or may assent. It may, upon discovery of the fact, defeat the attempted discharge of its debts in that way. But neither by corporate action, nor by corporate inaction, can it knowingly retain the benefit of payments so made by its agents, with moneys hired in its name without authority, and thereby give effect so far as to release itself from the old debt, to the acts of its officers assuming more than their legal powers, and at the same time withdraw itself from liability for moneys so hired and used. This would be for the town tacitly to hold all that was favorable to itself in a single transaction, and openly to reject all that was not beneficial, although it was only a precise equivalent for the advantage gained. The act of the agent in procuring the loan and paying the debt is a thing to be accepted or rejected as a whole. The corporation owes either the old debt or the new, and...