State Ex Rel. Boone Nat'l Bank Of Madison v. Manns.

• Citation: 126 W.Va. 643
• Decision Date: 21 March 1944
• Docket Number: (CC 683)
• Court: Supreme Court of West Virginia
• Parties: State ex rel. Boone National Bank of Madison v. Jesse Manns et al.

126 W.Va. 643

State ex rel. Boone National Bank of Madison

v.Jesse Manns et al.

(CC 683)

Supreme Court of Appeals of West Virginia.

Submitted February 22, 1944.

Decided March 21, 1944.

Officers

In the absence of a statute so providing, there is no liability on the commissioners of a county court or the sureties on their official bonds to one who has furnished labor or materials to such court pursuant to a purported contract, or upon an order of such court on the sheriff in payment therefor, which would create an obligation in excess of the amount allocated for that purpose in the levy order for the current year or in excess of funds available for current expenses, where such commissioners have not clearly assumed such personal liability and have not fraudulently induced the making of such contract or order.

Certified by Circuit Court, Lincoln County.

Action of debt by the State, on the relation of Boone National Bank of Madison, against Jesse Manns and others, Commissioners of the County Court of Lincoln, and the sureties on their official bond, to recover on an order on the sheriff in favor of defendant J. H. Pelfrey for repairs to courthouse, which order was assigned to relator. The demurrer of defendant National Surety Corporation was overruled and trial court certified the questions raised upon the demurrer.

Reversed.

Fox and Lovins, Judges, dissenting.

H. W. B. Mullins and H. G. Shaffer, for plaintiff. Sam Silver stein, for defendant.

Rose, President:

The Circuit Court of Lincoln County has certified to this Court the questions of law arising upon the overruling of a demurrer filed by one of the defendants in an action of debt pending in that county of the State of West Virginia suing for the use and benefit of the Boone National Bank of Madison against the members of the County Court of Lincoln County, the sureties on their official bonds and another. The facts as shown by the declaration and as necessary to be considered here may be briefly summarized.

The defendant, Jesse Manns, R. Sias and Elza Vickers were Commissioners of the County Court of Lincoln County. The defendant, The Accident and Casualty In- surance Company of Winterthur, Switzerland, was surety on the official bond of Manns; the defendant, Standard Accident Insurance Company, on that of Sias; and the defendant, National Surety Corporation of New York, on that of Vickers. The defendant, J. H. Pelfrey was the payee and assignor of a certain order directed to the Sheriff of Lincoln County for $2250.00, issued by the said county court and now owned by the Boone National Bank of Madison.

On the 7th day of October, 1940, the said county court, with all members present and acting together, approved and allowed the claim of Pelfrey for $2250.00, for which an order on the sheriff of the county was issued on December 2, 1940, signed by Manns, as president of the court, and by the clerk thereof, payable to the order of said Pelfrey "out of general county fund". This order was in purported payment for repairs to the court house of the county made by Pelfrey, pursuant to a contract between him and said county court, entered into on the 7th day of October, 1940. No sum for such repairs was included in the estimate or levy for the year 1940, nor was there at any time any balance from preceding years available for that purpose.

On the 21st day of December, 1940, Pelfrey "by writing his name across the back thereof" assigned the said order to the Boone National Bank of Madison, receiving therefor the face value of the order. Subsequently, the bank presented the order for payment to the Sheriff of Lincoln County, who refused payment thereof on the ground that the order was illegal and void.

It is claimed by the plaintiff that the making of said contract for the repairs to the court house and the issuing of the order in payment thereof constitute a breach of the official duties of the commissioners of the county court and of the conditions of their official bonds, thereby rendering them, and each of them, and the sureties on their respective bonds, liable to the bank, as the holder for value in due course and without notice of any infirmity in said order, for the amount thereof with interest thereon.

The defendant, National Surety Corporation, filed a demurrer to the declaration, assigning eight grounds, which was overruled. The certificate to this Court is in blanket form covering all questions raised or arising upon the demurrer, but only those briefed here will be considered.

The Boone National Bank of Madison is not a "holder in due course" or an innocent purchaser for value without notice of the infirmities of the order in question. That order was not a negotiable instrument, but a mere voucher to the sheriff as treasurer and disbursing officer of the county court. Huddleston v. County Court of McDowell County, 98 W. Va. 706, 128 S. E. 925; Shinn v. Board of Education, 39 W. Va. 497, 20 S. E. 604; Davis v. County Court of Wayne County, 38 W. Va. 104, 18 S. E. 373; Rat- liff v. County Court, 33 W. Va. 94, 10 S. E. 28. Moreover, this order bore on its face the limitation that it was payable "out of general county fund". An order for the payment of money out of a particular fund is not negotiable. Code, 46-1-3. This order and any other claim which Pelfrey may have had, however, were assignable. Doss v. O'Toole, 80 W. Va. 46, 92 S. E. 139. As assignee of Pelfrey, however, the bank must stand precisely as he stood, subject to be defeated by any fact or law that would have defeated him.

The contract made and the order issued by the county court being obligations in excess of the levy for the current year and all funds available for the discharge thereof were expressly inhibited by statute. "A local fiscal body shall not expend money or incur obligations: * * * (3) In excess of the amount allocated to the fund in the levy order; (4) In excess of the funds available for current expenses." Acts of Legislature, Regular Session 1933, Chapter 38, Article 8, Section 20, as amended by Acts of 1933 Second Extraordinary Session, Chapter 67, Article 8, Section 26. "Any indebtedness created, contract made, or order or draft issued in violation of sections twenty-five and/or twenty-six of this article shall be void.'" Acts of Legis- lature, Second Extraordinary Session 1933, Chapter 67, Article 8, Section 27. It is platitudinous to remark that no action can be predicated upon a contract of any kind or in any form which is expressly forbidden by law or otherwise void. Any recovery in this case must be based on something other than this contract and order, or any part thereof.

The bank would find a sufficient basis for its action in the breach of their official duties by the commissioners in making the contract for the repairs, and in issuing the order in purported payment thereof.

Courts have long had to deal with this proposition, and are in substantial agreement in their conclusions. No public officer is liable to one dealing with him for the ill-performance of an official act, if he is legally vested with discretion, or must use his own judgment, as to the manner or method of performing such act. Judicial and legislative officers are, accordingly, ordinarily immune from such liability, and are not even required to give bond. Other officers in performing acts which involve official discretion likewise incur no personal liability in the absence of fraud. This principle is announced in many old cases: Kendall v. Stokes, 3 How. (U. S.) 87, 11 L. Ed. 506; Fausler v. Parsons, 6 W. Va. 486; Bevard v Hoffman, 18 Md. 479; Burton v. Fulton, 49 Pa. 151; Water- ville v. Barton, 64 Me. 321; East River Gas-Light Co. v. Donnelly, 93 N. Y. 557. A multitude of subsequent cases do not depart substantially from this principle.

A corollary to this rule is that a public officer is not liable on a contract in excess of his power, in the absence of fraud, a special assumption of liability, or a statute creating specifically such liability. This principle finds frequent expression in text books and encyclopedias. For instance, 46 Corpus Juris, under the head of "Officers" at Section 332, has this statement: "Nor, unless he sustained other relations toward the transaction than those existing by virtue of his official character, will an officer be held liable on a contract made by him in behalf of the govern- mental body which he represents, because he has acted in excess of his legal authority since, such authority being fixed by law, those who deal with him are bound to know it." And in 2 McQuillan on Municipal Corporations, Second Edition, Section 560, in discussing officials of municipal corporations specifically, this general statement is found: "Ordinarily, however, when an officer or public agent contracts in good faith with parties having knowledge of the extent of his authority or who have equal means of knowledge, especially where the authority of the officer is prescribed by law, he will not become individually responsible unless the intent to incur liability is clearly expressed, although it should be found that, through ignorance of the law, he may have exceeded his authority."

In the case of Coberly v. Gainer, 69 W. Va. 699, 72 S. E. 790, we recognized and followed this rule. That action was for the price of certain books sold to the board of Education in 1904 to be paid for from funds to be levied in 1905. The contract was therefore void. The seller brought action against the members of the board individually. This Court said: "That said contract was made by the board of education in its official capacity, and, notwithstanding it was in excess of authority, the law then in force imposed no individual liability on account thereof"; and, "In the absence of a statute imposing individual liability upon a public officer for attempting to create a public debt in excess of his authority, he cannot be held personally liable therefor, except upon his agreement."

Moreover, Pelfrey...