Brown v. City of Newburyport

• Decision Date: 29 May 1911
• Citation: 209 Mass. 259,95 N.E. 504
• Parties: BROWN et al. v. CITY OF NEWBURYPORT.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

209 Mass. 259

95 N.E. 504

BROWN et al. v. CITY OF NEWBURYPORT.

Supreme Judicial Court of Massachusetts, Suffolk.

May 29, 1911

COUNSEL

J. L Thorndike and H. Ware, for appellants.

Arthur Withington, for appellee.

OPINION

RUGG J.

This is an action upon a promissory note of the following tenor:

'$25,000.

'Newburyport, Mass., April 13th, 1906.

'[Stamp $25,000$]

'For value received, the City of Newburyport, by its treasurer, promises to pay J. V. Felker, City Treas., or order, twenty-five thousand dollars, in six months without grace, at the First National Bank of Boston.

'Approved for Committee on Finance:

'J. V. Fellker, City Treasurer.

'W. F. Houston, Mayor.

'No. 795.

W. F. Houston, Mayor.

'In City Council, City of Newburyport, Mass.

'January 1, 1906.

'Ordered, that for the purpose of procuring a temporary loan to and for the use of the city of Newburyport, in anticipation of the taxes of the present municipal year, the City Treasurer is hereby authorized and directed to borrow from time to time, with the approval of the Committee on Finance, a sum or sums, in the aggregate not exceeding one hundred and sixty thousand dollars, with renewals thereof, and to execute and deliver the note or notes of the city therefor, payable within one year from the time the loan is made, with interest thereon or discounted at a rate not exceeding six per cent. per annum. The said debt or debts incurred by a loan or loans to the city under this order, are to be paid from the said taxes of the present municipal year.

'In Common Council, January 1, 1906.

'Order adopted by yea and nay vote and sent up for concurrence. Yeas 18, nays 0, absent 0.

J. Herman Carver, Clerk.

'In Board of Alderman, January 1, 1906.

'Order adopted in concurrence by a yea and nay vote. Yeas 7, nays 0, absent 0.

'[Seal of City.]

'George H. Stevens, City Clerk.

'Approved January 1, 1906.

'W. F. Houston, Mayor.

'A true copy. Attest:

'George H. Stevens, City Clerk.

'City of Newburyport, April 13, 1906.

'I hereby certify that the total amount borrowed under the above authorization, including note No. 795 of this date, is eighty-five thousand dollars.

'J. V. Felker, Treasurer.

'In Committee on Finance,

'January 9th, 1906.

'Ordered, that his honor, the Mayor, be authorized to approve for the Committee on Finance all notes of the city of Newburyport duly negotiated on any loan made for and in behalf of the city.

'Attest:

'George H. Stevens,

'Clerk of the Committee.'

Indorsement on back:

'J. V. Felker, City Treas.'

This note was the first of five numbered consecutively bearing the same date, aggregating $80,000, sold to the plaintiffs by the city treasurer of the defendant on the day of their date. The certificate of the city treasurer on each of the other four notes as to the amounts of indebtedness incurred under the order of the city council was increased by the face of each note and the aggregate of those preceding it. The city council and the committee on finance, which was composed of seven members of the city council and the mayor, passed respectively the two orders set forth on the note, and the committee on January 9, 1906, further voted 'that the mayor and city treasurer be authorized to negotiate notes under the provisions of the order of the city council passed January 1, 1906, from time to time as may be required.' Between January 17, 1906, and April 13, 1906, Felker had negotiated under the authority of said order and votes notes aggregating $98,475 upon forms substantially the same as that here in question, and had properly entered the proceeds from the sales of said notes upon the books of the city. The proceeds of the five notes dated April 13th were used by Felker to pay a single note for $80,000 dated November 13, 1905, and made in the name of the city, which note was the latest of many fraudulently issued and used to cover a series of defalcations made by him as city treasurer during a period of about ten years. No action was taken by the city council except to pass the order, copy of which appears on the note and no action was taken by the committee on finance respecting the note in suit, and no action whatever was taken by it under the authority of the order of January 1st except to pass the two votes on January 9th before recited. The sums embezzled by Felker were not entered upon the books of the city, and the blanks used for the fraudulent notes were torn from the end of the note book, while those used for legitimate purposes were taken in order from the front of the note book. No other city official knew of the fraud of Felker. The defendant resists liability on this note on two grounds: First, because it appeared from the face of the note that it was not approved by the committee on finance as required by the vote of the city council; and, secondly, because of overissue on the ground that the limit of borrowing authorized was $160,000 and the notes of April 13, 1906, of which this was one, brought the total up to $178,475.

All that appears in writing or print upon the note may be taken as a part of it.

The several certificates of the city treasurer and city clerk, are not in such form, and the phrase of the note itself is not such, as to indicate an assertion of their truth by the mayor and city treasurer in signing the note. Their terms import plainly that they are independent declarations by different city officials intended to stand on their own merits.

R. L. c. 27, § 9, required the notes of the defendant to be signed by its treasurer and countersigned by its mayor. In this regard the order did not follow the statute, but was of course by implication subject to its terms. So far as any recitals are concerned, which might bind the city touching notes, these are the officers inferentially designated by the statute as alone empowered to make them. We do not undertake to decide what might be the effect of a complete narration of facts as a part of the note, attested by these two officers, of the existence of facts which would show on its face a valid obligation binding upon the city. That is not the case before us. That point was left open by Agawam National Bank v. South Hadley, 128 Mass. 503, and has not since been decided by this court. We have merely a promissory note in common form without any recitals in its body, to which are appended several certificates. The signing by the mayor and treasurer of the note itself goes no further than the execution of the promise, and does not purport to be an authentication of the other statements upon the note. These derive all their strength from the signatures of the several officials affixed to them.

The issuance of the note was not itself equivalent to any recital of the existence of necessary precedent facts. Buchanan v. Litchfield Co., 102 U.S. 278, 26 L.Ed. 138; Hopper v. Covington, 118 U.S. 148, 6 S.Ct. 1025, 30 L.Ed. 190.

The copy of the vote of the city council, which alone was empowered to authorize the issuance of the notes, is attested by the city clerk. This vote does not purport to empower any officer to make recitals. All that appears upon the note therefore are statements of the city clerk and clerk of committee and city treasurer in way of assurance to purchasers of the existence of certain facts. None of them are made in execution of any legal duty. It was said by Mr. Justice Gray in Daviess County v. Dickinson, 117 U.S. 657, at page 664, 6 S.Ct. 897, 29 L.Ed. 1026. 'An officer's certificate of a fact he has no authority to determine is of no legal effect.' It is only as to facts within the power of the officers to ascertain and determine that this statement can affect the city. Bloomfield v. Charter Oak Bank, 121, 7 S.Ct. 865, 30 L.Ed. 923; Northern Bank v. Proter Township, 110 U.S. 608-617, 4 S.Ct. 254, 28 L.Ed. 258. A city clerk has a duty and authority as to authentication of records. But there is no statute which clothes a city treasurer with the power or duty to determine and certify the outstanding indebtedness of the municipality. If such power can be inferred from the right to execute notes, then it inherses in the mayor and city treasurer, the signatures of both of whom are required to validate a city note, and not in either acting separately. Hence it is unnecessary to consider whether Presidio County v. Noel-Young Bond Co., 212 U.S. 58, 65, 66, 29 S.Ct. 237, 53 L.Ed. 402, and the cases there cited announced principles of law controlling in this commonwealth, for there the recitals were in the body of the instrument and were signed by all the officers whose signatures were required to make valid the obligation. Its validity must therefore depend upon the matters stated on the note, giving to each the force to which each is entitled, and not covering them all with the blanket of authority of the city itself acting through the city treasurer and mayor as agents duly empowered to execute notes.

The point to be decided is whether under this principle the city is concluded by what appeared upon the note, or whether enough appears there to show the validity of the note. This requires an analysis of the several statements on the note. The order of the city council bounded the liability to which the city could be subjected under the statute.

In this commonwealth a municipality has now no inherent power to borrow money or to issue notes. It can incur debts only in the manner and within the limitations prescribed by the statutes, which have somewhat narrowed powers previously possessed. Agawam Nat. Bank v. South Hadley, 128 Mass. 503, 505. A prerequisite to the borrowing of any money in anticipation of taxes by the defendant was an authorizing vote of the city council. R. L. c. 27,...