Municipal Sec. Co. v. Baker County

• Decision Date: 13 August 1898
• Citation: 33 Or. 338,54 P. 174
• Parties: MUNICIPAL SEC. CO. v. BAKER COUNTY et al.
• Court: Oregon Supreme Court

54 P. 174

33 Or. 338

MUNICIPAL SEC. CO. v. BAKER COUNTY et al.

Supreme Court of Oregon

August 13, 1898

Appeal from circuit court, Baker county; Robert Eakin, Judge.

Suit by the Municipal Security Company against Baker county and others. There was a decree for defendants, and plaintiff appeals. Modified.

This is a suit the avowed purpose of which is to relieve certain Baker county warrants, owned and held by the plaintiff, from the operation of a decree entered in a suit in which plaintiff was not a party, whereby the county treasurer was not a party, whereby the county treasurer was enjoined from paying and the sheriff from receiving them in payment of taxes, and to restore them to their original condition. The warrants involved consist of Nos. 3,043 to 3,047, inclusive issued May 5, 1891, to George W. Borman, for $200 each; No 2,810, issued March 6th, for $25, and No. 2,676, issued July 16th, for $59, to the same party; thirteen of those numbered from 3,812, to 3,837, class L, inclusive, one of which is for $50, and the remaining twelve for $100 each, issued to George M. Chambers, August 17, 1891; nineteen, ranging in numbers from 3,284 to 3,302, class L, inclusive, for $25 each, issued to C.H. Whitney, May 15, 1891; No. 3,543, class K, issued to G.D. Barnard & Co., July 13, 1891, for $542.90; and No 3,646, class L, issued to James Ferguson, July 13, 1891, for $149.40. All these warrants were presented to the county treasurer soon after their issuance, and indorsed, "Not paid for want of funds." The warrants issued to Borman purport to be for indexing records; to Chambers, for purchase of poor farm; to Whitney, for work on county books; the one to Barnard & Co., for purchase of shelving for records; and the one to Ferguson, for insurance. The defendants, among whom are included many taxpayers of the county, interposed several defenses, among which are (1) that the Borman and Whitney warrants were issued in fraud of the county, and without authority of law, for pretended services of the said Borman and Whitney, which were never authorized; and (2) that all the liabilities created by the issuance of such warrants were voluntarily assumed by the county; and that, at the date of their issue, the county was indebted in about the sum of $200,000, of which more than $20,000 was voluntarily incurred, and not created for suppressing insurrection or repelling invasion, by reason whereof said warrants and the indebtedness imposed thereby are unconstitutional and void. In connection with these defenses, it is alleged that all of such warrants are outstanding and uncanceled, and are claimed by plaintiff to be valid and subsisting demands against the county, which said plaintiff is endeavoring to enforce, and prays that they be canceled as illegal and void, and the plaintiff enjoined from further attempts to enforce payment thereof. The further and separate reply alleges: (1) That, at the date of the issuance of such warrants, there were taxes duly and regularly assessed and levied upon the property subject to taxation in Baker county, and which was then due and collectible to the amount of $50,000, and which was thereafter collected in due course; (2) that much of the indebtedness which defendants claim to have been voluntarily incurred and outstanding at the time of the issuance of such warrants has since been paid by the regularly constituted authorities of the county, and has been recognized and treated as legal and valid, and that, by reason thereof, the defendants ought not now be heard to assert or allege the illegality of such as have not been paid, because voluntarily incurred; (3) that the county and defendants have received full value for all of such warrants, and retain and enjoy the use and benefit of the labor and property in consideration for which they were issued, and, therefore, that they should now be estopped to assert their illegality; and (4) that the whole of such indebtedness was recognized by the commission duly appointed to determine the just and pro rata proportion of the existing debt of Baker county which Malheur county should pay and assume, and that defendants ought thereby to be estopped from asserting the illegality of any part of it.

C.A. Johns and Wm. Smith, for appellant.

M.L Olmstead and H.E. Courtney, for respondents.

WOLVERTON J. (after stating the facts).

A question was made at the argument, and is somewhat insisted upon in the brief, that a court of equity is without jurisdiction to entertain the cause of suit set forth by the complaint, because plaintiff has an adequate remedy at law; but the defendants have themselves, by their answer, sought and demanded equitable relief, which precludes them from raising the question. Kitcherside v. Myers, 10 Or. 21; O'Hara v. Parker, 27 Or. 156, 39 P. 1004.

Plaintiff insists that all the indebtedness of the county, represented by the warrants in controversy, and which it is seeking to restore to their original condition, is such as was thrust upon it by operation of law, and that it is entitled to have them paid in due course, as other outstanding warrants are redeemed by the county. The defendants assert the contrary, and claim, further, that, at the time said warrants were issued and such indebtedness imposed upon the county, it was indebted upon demands voluntarily incurred in a sum largely in excess of the constitutional limitation of $5,000. While the latter proposition is not seriously disputed by the plaintiff, it contends that the cash assets of the county were then ample to meet all of such expenses, and hence that the indebtedness thus incurred does not come within the constitutional inhibition. These propositions include about all that is of vital importance touching the controversy. It was held by this court in Grant County v. Lake County, 17 Or. 453, 21 P. 447, that the constitutional inhibition touching indebtedness created by the counties of the state (Const. art. 11, § 10) applies only to such debts and liabilities as they might voluntarily incur or create acting in their corporate characters and as artificial persons, and that such as are thrust upon them by operation of law, and which they are powerless to prevent, as may be instanced the salaries of officers, the expenses of holding court, and the like, do not fall within the purview of its limitations. This construction was recognized in Wormington v. Pierce, 22 Or. 606, 30 P. 450, and still later approved in Burnett v. Markley, 23 Or. 436, 31 P. 1050; so that it may now be said to be settled law, and it simply remains for us to apply the organic law as thus interpreted to the facts of the case as disclosed by the testimony.

It is difficult to lay down a rule by which to discriminate clearly between debts voluntarily incurred and those imposed by law. The most important function of the county is to maintain a local government subordinate to, but as an arm of, the state. Now, the expense incident to and necessary under the laws prescribed by the state to organize and maintain such a government may be said to be thrust upon it by law, but such as the county court, acting in its capacity as fiscal agent of the county, has volition to contract, or such as may be wholly within its discretion to impose upon the county or not, as its judgment may dictate is that against which the constitutional inhibition is directed. The undoubted purpose of this particular clause was to effectually protect persons residing within the county from the abuse of their credit and the consequent oppression of burdensome, if not ruinous, taxation; and it ought to be clear that a county is powerless to prevent before it should be permitted to incur any indebtedness beyond the limits thereby imposed. We mean by this that if there is a doubt whether a debt has been cast upon the county by operation of law, or has been voluntarily created, those who have the burdens to bear consequent upon such determination should have the benefit of the doubt and the protection of the constitution. Officers intrusted with the management of public affairs, involving the expenditure and disbursement of public revenues, should be able to find a clear warrant of law for every such expenditure or disbursement.

The court below found that at the time of the issuance of all the warrants involved in the controversy, except Nos. 2,676 and 2,810, there was indebtedness outstanding against Baker county aggregating $40,535, evidenced by warrants issued to the following named parties, viz.:

May 11, 1885. J.E. Bacon, building bridge ................................ $ 3, Nov. 25, 1885. Pauley Jail Building Company, jail and cells ............ 10,000 Nov. 19, 1885, to Jan. 8, 1887. A.A. Houston, building jail, court house, and clerk's office ............................................. 9,844 April 18, 1886, to March 16, 1891. To various persons, bounty on scalps wild animals ............................................................ 860 July 20, 1888. J.S. Bingham, premium on insurance ......................... 200 July 14, 1890. G.D. Barnard & Co., shelving and boxing in vault ......... 1,003 Sept. 4, 1890, to March 11, 1891. G.W. Borman, indexing and platting county records ........................................................ 6,300 Jan. 16, 1891, to March 11, 1891. E.F. Voigt, plat book ................... 850 Jan. 16, 1891,to March 11, 1891. C.H. Whitney, experting county books ..... 900 March 11, 1891. Union County, bridge contract ........................... 1,107 July 13, 1889. John Dooley, purchase of toll road ....................... 1,500 June 10, 1889. S.J. Weatherby, purchase of toll road .................... 3,000 June 10, 1889. Wm. Parker, purchase of toll road ........................ 1,500

There is a further...