Burns v. Essling
| Decision Date | 24 April 1925 |
| Docket Number | 24,276 |
| Parties | H. L. BURNS v. VICTOR E. ESSLING AND OTHERS |
| Court | Minnesota Supreme Court |
After the former appeal reported in 154 Minn. 304, 191 N.W. 899 the case was tried before Freeman, J., who ordered judgment in favor of defendant city against the individual defendants for $86,694 and the two surety companies for $4,000 and $2,000 respectively. Defendants other than the city appealed from an order denying their motion for a new trial. Affirmed.
Councilmen of city of Eveleth not immune from liability for public funds illegally appropriated.
1. Under the charter of the city of Eveleth, the city council is not a purely legislative body and, when called upon to make restitution of public funds illegally appropriated, its members cannot escape liability by claiming legislative immunity.
In voting for illegal expenditures councilmen, as matter of law were not acting in good faith.
2. Loans of the city's credit and all contributions and donations are expressly prohibited by the charter. In disregard of the prohibition and without seeking the advice of counsel, large sums of money were appropriated to subsidize a baseball and a hockey team, to pay bills for board and lodging for the players, and to pay for lumber used to erect a hockey rink. Held that the trial court was justified in holding, as a matter of law, that in voting to expend public money for these purposes the members of the city council did not act in good faith.
Immaterial that citizens petitioned the council for such appropriations.
3. Evidence that the citizens of Eveleth knew the facts and that a number of them petitioned the council to make the appropriations, and that other cities were spending money for the same purposes, was immaterial.
Councilmen absent when money was so voted liable when members of association which received the money.
4. Councilmen, not present when certain appropriations were made, were members of a voluntary association which received the moneys appropriated. They were properly held liable for the repayment of these moneys, as well as moneys which they actually voted to appropriate.
Motive of plaintiff taxpayer in bringing action immaterial.
5. Evidence of the motives by which a city taxpayer was actuated in prosecuting an action to compel restitution of public funds is not material.
Appellants not misled by statement of court.
6. Appellants were not misled to their prejudice by the statement of the court and of respondent's counsel, made in the course of the trial, that evidence of good faith was not material.
1. See Municipal Corporations, 28 Cyc. pp. 316, 470.
2. See Municipal Corporations, 28 Cyc. pp. 470, 1535, 1748 (1926 Anno).
3. See Municipal Corporations, 28 Cyc. p. 1748 (1926 Anno).
4. See Municipal Corporations, 28 Cye. p. 470.
5.See Actions, 1 C.J. pp. 971, 972, § 66; Municipal Corporations, 28 Cyc. p. 1734.
6. See Appeal and Error, 4 C.J. p. 955, § 2937; p. 957, § 2938.
J. C. McGilvery, Boyle & Montague, John J. Fee and George H. Spear, and Fryberger, Fulton, Hoshour & Ziesmer, for appellants.
Givlin & Manthey, for respondent.
A former appeal in this action is reported in 154 Minn. 304, 191 N.W. 899. The case is here now on an appeal from an order denying defendants' motion for a new trial.
The assignments of error question the sufficiency of the findings to support the conclusions of law, the sufficiency of the evidence to support the findings, and certain rulings on the admission of evidence.
The charter of the city of Eveleth provides that the governing body of the city shall be a council composed of the mayor and four councilmen, and grants to the council the power to legislate concerning municipal affairs. The council has control of the city's money, which can be paid out only upon the affirmative vote of three-fifths of the members and by an order signed by the mayor and countersigned by the city clerk. Loans of the city's credit and all contributions or donations not authorized by the charter are prohibited, and the mayor is directed to see to the due enforcement of the provisions of the charter.
The court found that the council made the appropriations and expenditures mentioned in the opinion on the former appeal, that the city received no consideration therefor, and that the money was expended illegally and in fraud of the rights of taxpayers.
Appellants' first point is that, in voting for the appropriations and for the allowance of the bills referred to, the council acted in a legislative capacity and its members incurred no personal liability.
The rule that legislators cannot be called to account for their legislative acts has been applied to village councilmen who in good faith exercise their discretion in voting for a resolution void because of legislative limitations upon their power, Village of Hicksville v. Blakeslee, 103 Oh. St. 508, 22 A.L.R. 119; and to members of a city council who voted to issue bonds in excess of the limit fixed by the state Constitution, Lough v. Estherville, 122 Iowa 479, 98 N.W. 308. In the latter case doubt was expressed as to whether the rule was applicable where municipal funds were appropriated without form of justification or excuse.
The city council of Eveleth is not a purely legislative body. Claims against the city must be audited and allowed by the council before they can be paid. Bills for lumber, for freight charges and for board furnished to baseball and hockey players were allowed by the council, and the city's money withdrawn from the treasury to pay them. This was not legislative action and appellants should not be allowed to escape liability on the plea of legislative immunity.
In expending the city's money, the power of the council was circumscribed and appellants were bound to look to the charter to ascertain the extent of their authority. Section 74, which forbids the making of contributions or donations, leaves no room for argument. Not only was there a clear lack of authority for the expenditures, but a positive prohibition thereof. The doctrine of the Ohio and Iowa cases cited should not be extended so far as to permit city councilmen to vote public funds away in defiance of the express command of the city charter, without incurring any personal liability for their misconduct. Thus to extend it would expose the city treasury to danger of raids by removing one of the safeguards the law sets about it.
The second point raised is that appellants acted in good faith, and that this is a complete defense. The court found to the contrary, and the first inquiry is whether good faith is a defense, and the second, whether the evidence required a finding in appellants' favor on this point.
The mayor and councilmen D. A. Murray and William Murray each testified that he believed when he voted for the appropriations and for the payment of the bills in question that the city had a right to expend money for games and sports; that there was no consciousness on his part of any wrongdoing; that he did not intend to violate the law; that there was a public demand for baseball and hockey, and that the money was spent to satisfy the demand. Is this a good defense?
In Chippewa Bridge Co. v. Durand, 122 Wis. 85, 89 N.W. 603, 103 Am. St. 931, it was said of municipal officers who entered into a bridge contract in disregard of the provisions of the city charter, that they had no other motive than to secure a bridge for the city as cheaply as possible and that in that sense they acted in good faith. Nevertheless the court characterized them as lawbreakers, guilty of a wrongful appropriation of the people's money. It was said that officers who knowingly use such money contrary to law, but otherwise to accomplish a legitimate purpose, are guilty in a legal sense of acting in bad faith and of an actionable misappropriation of such money regardless of their good intentions.
Wilcox v. Porth, 154 Wis. 422, 143 N.W. 165, is to the same effect. There the mayor and councilmen audited and allowed an unverified claim against the city. The charter provided that no claim should be allowed unless it was verified. The taxpayers sued the officers to recover the amount which the city had paid to satisfy the claim. The answer pleaded good faith as a defense, but a demurrer to the answer was sustained. See also City of Blair v. Lantry, 21 Neb. 247, 31 N.W. 790.
Analogous cases are those which deal with the directors of private corporations. If such directors do acts clearly beyond the scope of their authority, whereby loss ensues to the corporation, or if they dispose of the property of the corporation or pay away its money without authority, they are personally liable to the corporation. 3 Cook, Corp. § 682. Thus in Jones v. Morrison, 31 Minn. 140, 16 N.W. 854, it was held that the authority conferred by statute on the directors of a corporation is subject to the implied condition that it shall be exercised solely in pursuance of the company's chartered purpose and for the benefit of the stockholders; it does not extend to giving the property of the...
To continue reading
Request your trial