Commercial Trust Co. of Hagerstown v. Burch

• Decision Date: 23 July 1920
• Docket Number: 174.
• Citation: 267 F. 907
• Parties: COMMERCIAL TRUST CO. OF HAGERSTOWN v. BURCH et al.
• Court: U.S. District Court — Southern District of Georgia

267 F. 907

COMMERCIAL TRUST CO. OF HAGERSTOWN v. BURCH et al.

No. 174.

United States District Court, S.D. Georgia, Western Division.

July 23, 1920

Jones Park & Johnston, of Macon, Ga., for plaintiff.

Hall Grice & Bloch, of Macon, Ga., M. H. Blackshear and Burch &amp Daley, all of Dublin, Ga., for defendants.

SIBLEY District Judge.

In this suit at law in six counts the plaintiff seeks to hold personally liable the county commissioners, clerk, treasurer and attorney of Laurens county because of their connections with the issuance of certain repudiated notes of the county given for borrowed money. Each count is demurred to. The main facts alleged in each are these:

On January 10, 1918, the county commissioners passed a resolution declaring that there was 'a casual and temporary deficiency in the public funds in the treasury of the county of Laurens, and a casual and temporary need of money to meet the current expenses of the county government' and authorizing a loan of $75,000. Notes were executed in the name of the county by the treasurer and county commissioners, attested by the clerk, referring to the resolution as authority, and accompanied by a certified copy of it, and by a statement which referred to article 7, Sec. 7, of the Georgia Constitution as the authority of law for the loan, and showed the assessed taxable property of the county to be $9,380,654. The notes also contained general recitals to the effect that every required condition precedent had been performed, and that the note was within every debt limit prescribed by law. The defendant Blackshear, signing as attorney for the county, attached a certificate that 'in his opinion the note is a binding obligation of the county. ' The Commercial Bank of Dublin offered, in a writing accompanying the notes, to hold their proceeds as a special fund to be disbursed only in taking up valid county warrants, which were to be surrendered to the county only after the notes were paid. These various papers are all exhibited in the petition, and are more fully set out in an accompanying opinion upon plaintiff's suit on the notes, which at maturity were refused payment. 267 F. 901.

1. While public officers are agents, for reasons of public policy their individual liability is governed by rules differing from those applying to other agents. They may not be held personally on contracts made in behalf of the public (Georgia Code, Sec. 3612, Tucker v. Shorter, 17 Ga. 620), though executed in such form that the rule of descriptio personae would render an ordinary agent suable (Ghent v. Adams, 2 Ga. 214); and if they act without or in excess of authority, personal liability does not follow (Huthsing v. Bousquet (C.C.) 7 Fed. 833; Huthsing v. Bosquet (C.C.) 17 F. 54; N.Y. & Charleston S.S. Co. v. Harbison (C.C.) 16 F. 688), for their authority is fixed by laws which those who deal with them are as much bound to know as are the officers themselves. Otherwise, not only would it be difficult to get responsible men to fill public office, but there would be constant temptation to yield officially to unlawful demands, lest private liability be asserted and enforced. But, although officers, they may not be rascals, and liability may arise for tortious conduct. In matters of ministerial duty they may even be liable for nonfeasance as well as misfeasance, for mistakes and neglects (11 Cyc. 410; Amy v. Supervisors, 11 Wall. 136, 20 L.Ed. 101); but in matters of judgment and discretion they are liable only if they act willfully, corruptly, or maliciously (11 Cyc. 411). In Georgia Code, Sec. 901, a personal liability as to municipal officers is stated for 'official acts * * * if done oppressively, maliciously, corruptly, or without authority of law'; the language being taken from the case of Pruden v. Love, 67 Ga. 190. The concluding expression, 'without authority of law,' does not refer to the making of unauthorized contracts or overturn the rules above announced, but refers to excesses of jurisdiction and to acts of unwarranted trespass, as will appear from the facts in the Pruden Case, where a house had been wrongfully destroyed. For willful fraud, therefore, officers may be personally liable. 20 Cyc. 86. These rules hold for county commissioners. 11 Cyc. 411, 412.

2. The first count is for deceit in the recital of the resolution that there was a casual deficiency in funds to meet current expenses. The negativing allegations in paragraphs 8 and 12 are that there was in fact 'no casual deficiency in revenue,' as was well known to the defendants, and that in consequence the notes were not issued in conformity to the Constitution. As pointed out in the opinion in the suit upon the notes (267 F. 897), there is a vast and vital difference between a 'deficiency of funds to meet current expenses' and a 'casual deficiency in the revenue.' The former is regarded by the Constitution as the normal and safe condition in which to keep the treasury during the fiscal year, and borrowing money to obviate it is forbidden. The latter is the unexpected failure of the revenue laid for the fiscal year to cover its expenses, and may be remedied by a limited temporary loan to balance the budget. Had the commissioners, their clerk, and the treasurer falsely and fraudulently asserted the latter, there would have been such a false statement of material fact as would support an action for deceit. But in that case there would also have been an estoppel on the county that would have prevented damage to the plaintiff, and for their misconduct the officers would have been answerable only to the county, if any damage accrued. The assertion of a deficiency in funds to meet current expenses, whether true or false, is of an immaterial matter, for such deficiency would give no validity to the loan. The very section of the Constitution which forbids the loan was referred to in the accompanying papers as the law under which it was made. The general recitals in the notes of a compliance with the Constitution, in view of the explicit facts disclosed as to what had really been done and its futility, amount to no more than an opinion of law that the Constitution did not mean what the Supreme Court of Georgia had always said it did mean. The plaintiff was equally bound with the defendants to know the law, and know it correctly, and cannot complain of incorrect statements about it. 20 Cyc. 19.

The case of the attorney is somewhat different. He formally certified to an opinion that the notes were valid, when the petition alleges he knew they were not. He was not a county officer, and had no official duty in the premises. The validity of a public bond, like that of a title to land, may be ascertained with reasonable certainty by a skillful person, and a representation about it may be more than the mere expression of an opinion. See Gordon v. Butler, 105 U.S. 558, 26 L.Ed. 1166. That it purports to be only an opinion will not always save it from the penalty of deceit if made the vehicle of successful fraud. 11 Cyc. 18; Sniveley v. Meixsell, 97 Ill.App. 365; Scott v. Burnight, 131 Iowa, 507, 107 N.W. 422. Knowledge of such matters is supposed to belong peculiarly to lawyers, and their opinion is commonly taken and acted on. This attorney was not the attorney of plaintiff, and owed it no duty of skill and diligence, and could not be held liable for want of either, nor for the grossest ignorance of fact or law regarding these notes. But if, posing as a lawyer, for the purpose of inducing investment in these notes, he deliberately and formally, though gratuitously, certified to an opinion that they were valid, when he knew they were not, there is involved more than the mere expression of an opinion, for the opinion of an expert on such a subject has the value of a fact. It disarms suspicion and stifles inquiry. If it were falsely stated, with the purpose to deceive, that a reputable lawyer had said his opinion was that the notes were valid, it would unquestionably be a fraud. Why the less one when the lawyer himself, for the same purpose, says he has that opinion, when he has not? He misrepresents an important...