Miller v. Henry

• Decision Date: 21 May 1912
• Citation: 124 P. 197,62 Or. 4
• Parties: MILLER v. HENRY, County Judge, et al.
• Court: Oregon Supreme Court

124 P. 197

62 Or. 4

MILLER v. HENRY, County Judge, et al.

Supreme Court of Oregon

May 21, 1912

Appeal from Circuit Court, Union County; J.W. Knowles, Judge.

Injunction by George Miller against J.C. Henry, County Judge, and others. From an order of dismissal entered upon the sustaining of a demurrer to the complaint, plaintiff appeals. Affirmed.

In the year 1908, John Frawley, treasurer of Union county, had on deposit in the Farmers' & Traders' National Bank of La Grande the sum of $21,146.31 of county funds. The bank failed, and a receiver was appointed by the Comptroller of Currency to wind up its affairs. In the end depositors including Frawley, received 55 per cent. of their claims leaving $9,515.84 unpaid, and for which Frawley and his bondsmen were liable to the county. The Legislature passed an act in 1911 authorizing and directing the county court of Union county to cancel any claim against the treasurer or his bondsmen on account of such liability, and to refund any amount paid by him to the county by reason thereof. The preamble to the statute recites at length the deposit of the money, the failure of the bank, and sets forth that the county authorities, over the protest of the treasurer refused to demand the funds from the receiver, but allowed them to be converted into the general funds of the bank and to be used in liquidating its ordinary indebtedness, and that the treasurer was not in any way responsible for the failure of the bank. This suit is brought by a taxpayer to enjoin the cancellation of the claim on the ground that the statute (chapter 26, p. 42, Laws 1911) is unconstitutional. A demurrer to the complaint was sustained, and an order entered dismissing the suit, from which order plaintiff appeals.

John S Hodgin, for appellant.

Turner Oliver, F.S. Ivanhoe, and T.H. Crawford (Robert Eakin, on the brief), for respondents.

McBRIDE J. (after stating the facts as above).

This case has been very fully and ably presented by both parties and presents a situation at once difficult and delicate--difficult because the courts of this country are not in accord as to the extent to which the Legislature can go in matters of this character, and delicate because we are called upon to pass upon the constitutionality of an act of a co-ordinate branch of the state government.

It may be premised that courts will not pronounce an act of the Legislature void or unconstitutional unless such unconstitutionality clearly appears beyond a reasonable doubt. Cline v. Greenwood, 10 Or. 230; Kadderly v. Portland, 44 Or. 118, 74 P. 710, 75 P. 222; State v. Walton, 53 Or. 557, 99 P. 431, 101 P. 389, 102 P. 173; Straw v. Harris, 54 Or. 424, 103 P. 777.

The particular provisions of the Constitution to which the act in question is said to be repugnant are: (1) Article 1, § 21, which prohibits the passage of any law impairing the obligations of a contract; (2) article 1, § 32, which requires that taxation shall be equal and uniform; and (3) article 9,§ 3, which provides that "no tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied." We will consider these objections in the order above stated.

It is contended that the bond of the treasurer is a contract with the county, and that this act releases him from the obligation of the bond, and therefore impairs the obligation of the contract. We cannot assent to this view of the law. A county is a subdivision of the state, created by the Legislature for administrative purposes, and except as limited by the Constitution is subject at all times to legislative control. No citizen has any vested right in its revenues. These may be changed or diverted from one public use to another by legislative authority, and no citizen can complain that his contract rights are thereby impaired. The Legislature might in the first instance have directed that county funds be deposited in banks, and, in such event, that the treasurer should not be liable for their loss or diminution. What the Legislature can do in the first instance it can afterwards ratify. Its action does not involve a question of power, but of public policy, of which it must be the sole judge. McSurely v. McGrew, 140 Iowa, 163, 118 N.W. 415, 132 Am.St.Rep. 248, and cases there cited.

It may further be observed that the only bond required of a county treasurer is given, not to the county, but to the state of Oregon. L.O.L. § 2963. While it is true that a right to have the benefit of the security, in certain instances, inure to the county, yet the fact that the Legislature has required it to be taken in the name of the state indicates a purpose to retain in the lawmaking power a right to direct in some degree, not inconsistent with private rights, the instances in which the security may be utilized by its administrative agents.

The decisions of the various courts upon this subject are not harmonious, but it is believed that the great weight of authority as well as the better reason is to the effect that the Legislature possesses the power to cancel liabilities of officers for money lost by them, when such loss was not occasioned by their unfaithfulness or willful misconduct. The following authorities support this view: 37 Cyc. 724; Meachem on Officers, § 913; Dillon on Munic. Cor. (3d Ed.) § 75; McSurely v. McGrew, 140 Iowa, 163, 118 N.W. 415, 132 Am.St.Rep. 248; Pearson v. State, 56 Ark. 148, 19 S.W. 499, 35 Am.St.Rep. 91; Mount v. State, 90 Ind 29, 46 Am.Rep. 192; Sinton et al. v. Ashbury, 41 Cal. 525; Creighton v. Board of Supervisors, 42 Cal. 447; Board of Education v. McLandsborough, 36 Ohio St. 227, 38 Am.Rep. 582; Town of Guilford v. Board of...