State v. Fitzpatrick

• Citation: 5 Idaho 499,51 P. 112
• Parties: STATE v. FITZPATRICK
• Decision Date: 15 November 1897
• Court: United States State Supreme Court of Idaho

51 P. 112

5 Idaho 499

STATE v. FITZPATRICK

Supreme Court of Idaho

November 15, 1897

FORECLOSURE OF MORTGAGE-PERMANENT FUND.-The provisions of section 1266 of the Revised Statutes of 1887 are not applicable to the state in a suit brought by the state to foreclose a mortgage taken to secure the payment of a loan made from the permanent school fund of the state.

CONSTITUTIONAL LAW WITH REFERENCE TO SCHOOL FUNDS-ALSO INTEREST THEREON.-As section 3, article 9, of the state constitution declares that said permanent school fund shall forever remain inviolate and intact, and all interest thereon shall be expended in the maintenance of the schools of the state, the legislature is prohibited from enacting any law that would directly or indirectly divert either principal or interest to any other purpose.

BOARD OF LAND COMMISSIONERS-EXTENT OF THEIR AUTHORITY.-The state board of land commissioners has power to make legal contract in loaning the school fund, and cannot bind the state beyond the authority given them by law.

FORFEITURE-USURY.-The unauthorized acts of said board held not to work a forfeiture or impose a penalty directly or indirectly on the state.

DUTY OF DISTRICT ATTORNEYS-Under the provisions of section 3 of an act defining the duties of district attorneys (1st Sess. Laws 1890-91, p. 46), it is the duty of the district attorney to prosecute foreclosure cases where the state is a party.

BOARD NOT AUTHORIZED TO EMPLOY AN ATTORNEY.-Under the provisions of section 29 of an act defining the powers of the state board of land commissioners (2d Sess. Laws 1893, p. 139), the secretary of said board is not authorized to employ an attorney to prosecute the foreclosure of a mortgage wherein the state is a party, for the collection of a debt arising out of a loan from the permanent school fund of the state.

(Syllabus by the court.)

APPEAL from District Court, Ada County.

Reversed.

Attorney General R. E. McFarland and S. L. McFarland, for the State.

This is an action brought by the state of Idaho against Thomas Fitzpatrick to foreclose a mortgage which was given to secure the payment of a loan of school money made by the state to said Fitzpatrick, and evidenced by a certain promissory note executed and delivered to plaintiff by said Fitzpatrick. To said note are attached five coupon interest notes for the sum of $ 140 each. No testimony was offered by defendant. The court's findings were in accord with the allegations of the complaint, except that the court held "that the note and mortgage contracted for interest upon interest, which was not due at the date of said contract." The court erred in holding the rate of interest contracted for in the note and mortgage greater than is authorized by section 1266 of the Revised Statutes. Section 1266 is a penal statute. (Black on Interpretation of Laws, p. 293; Sutherland on Statutory Construction, sec. 356; Coble v. Shaffner, 75 N.C 42; Farmers' etc. Bank v. Dearing, 91 U.S. 29.) The provisions of said section do not apply to the state; for it is a fundamental principle of law that the state can do no wrong. (1 Cooley's Blackstone, p. 246.) General words in a statute do not include nor bind the government by whose authority the statute was enacted, where its sovereignty rights, prerogatives or interests are involved. It is bound only by being expressly named or by necessary implication from the terms and purpose of the act. (Black on Interpretation of Laws, p. 119, sec. 54; United States v Heron, 20 Wall. 251; United States v. Hewes, 1 Crabbe, 307, 26 F. Cas. No. 15,359, page 297; United States v. Hoar, 2 Mason, 311, 26 F. Cas. No. 15,373, page 329; Dollar Savings Bank v. United States, 19 Wall. 227; Hoge v. Brookover, 28 W.Va. 310; Broom's Legal Maxims, p. 66.) The fourth and last error assigned relates to the order of the court in awarding the costs herein against the plaintiff. Had plaintiff failed entirely to recover in this action, costs could not have been awarded against it. (State v. Kinne, 41 N.H. 238.) The court awarded plaintiff an attorney's fee of $ 200. Plaintiff proved the following facts, to wit: 1. That the attorney general and the secretary of the state board of land commissioners of the state of Idaho employed plaintiff's attorneys to commence and prosecute this action; 2. That plaintiff agreed and promised to pay its said attorneys for said services the percentage specified in said mortgage as an attorney's fee; 3. That said percentage is a reasonable attorney's fee for the services rendered in said case. We think the board had authority to exact this of the mortgagee. It is competent for parties to a mortgage to stipulate for the payment of a reasonable attorney's fee in case of foreclosure. (Hitchcock v. Merrick, 15 Wis. 522; Tallman v. Truesdell, 3 Wis. 443; Boyd v. Sumner, 10 Wis. 41; Avery v. Maude, 112 Cal. 565, 44 P. 1020; Broadbent v. Brumback, 2 Idaho 366, 16 P. 555; Sheffner v. Healy, 57 Ill.App. 90; Dorsey v. Wolff, 142 Ill. 589, 34 Am. St. Rep. 99, 32 N.E. 495; Behrens v. Dignowitty, 4 Tex. Civ. App. 201, 23 S.W. 288; Barry v. Guild, 126 Ill. 439, 18 N.E. 759.)

W. E. Borah, for Respondent.

It will be noticed from the record that there is no contention but what the mortgage in question is in violation of the statutes of Idaho with reference to usury, being section 1266 of the Revised Statutes. But the contention is that, notwithstanding this, upon the theory that the state can do no wrong or is not bound by penal statutes, the statute should not apply in this case. The state must be governed by the same rules of common honesty and justice which bind individuals. It is for its interests that its contract should be binding on all the parties thereto. If it can at pleasure violate or abandon its contracts in the absence of any stipulation authorizing it to do so, there will be such uncertainty and risk attending all its contracts that it will come into the market for work and material at a great disadvantage. (Danolds v. State, 89 N.Y. 36, 42 Am. Rep. 277; People v. Stevens, 71 N.Y. 549.) When a state becomes a party to a contract, the same rules of law apply to it as to private persons under like circumstances. (Davis v. Gray, 16 Wall. 203; Patton v. Gilmer, 42 Ala. 548, 94 Am. Dec. 665; Carr v. State, 127 Ind. 204, 22 Am. St. Rep. 624, 26 N.E. 778; Moore v. State, 47 Md. 467, 28 Am. Rep. 483; Black on Interpretation of Laws, sec. 54.) The same principle announced in the above authorities would cover the question of costs. Besides, our statute expressly provides for costs against the territory or state. (Idaho Rev. Stats., sec. 4917; Flint etc. Ry. Co. v. Board of State Auditors, 102 Mich. 500, 60 N.W. 971; Romine v. State, 7 Wash. 215, 34 P. 924.)

SULLIVAN, C. J. Huston and Quarles, JJ., concur.

OPINION

SULLIVAN, C. J.

This action was brought by the state to foreclose a mortgage against Thomas Fitzpatrick and James Gadsden. The state, through the state board of land commissioners, made the loan, secured by said mortgage, from the permanent school fund of the state, under authority given said state board by the constitution and an act entitled "An act defining the duties of the state board of land commissioners, to provide for the selection, location, protection, sale, rental, and general management of the public lands of the state, and for the investment of funds arising from the sale and leasing of such lands." (1st Sess. Laws 1890-91, p. 109.) As said loan was made on March 1, 1892, the acts of 1893 and 1895, amendatory of said act of 1891, have no bearing on this case. The complaint contains the usual allegations in foreclosure actions, and prays for judgment for the sum of $ 2,000, with interest thereon at the rate of seven per cent from the first day of March, 1893, to the first day of March, 1897, and interest thereafter at the rate of ten per cent per annum; for $ 93.32, taxes paid, and interest thereon; and an attorney's fee of ten per cent on the amount awarded the plaintiff on foreclosure of said mortgage; also for a decree of foreclosure, and for costs. Five interest coupon notes were given, each for $ 140, representing the interest agreed to be paid each year. Said interest notes and the principal note contain the following clause, to wit: "This note bears interest at ten per cent after due." The defendant Thomas Fitzpatrick answered, and denied, on information and belief, that the ten per cent provided for as attorneys' fees in said mortgage was to be paid to the attorneys for the plaintiff, or that a fee of that amount or any amount is reasonable or just, and that said agreement to pay attorneys' fees was without consideration and void, and that plaintiff has no right, power, or authority to collect the same; and, further answering, avers that said note and mortgage are in violation of the provisions of section 1266 of the Revised Statutes in that, according to the terms of said note and mortgage, they provide that the defendant shall pay interest upon interest; and prays that the plaintiff have judgment in accordance with the provisions for section 1266 of the Revised Statutes. A trial was had, and judgment and decree were entered in accordance with the prayer of the answer, and as provided for in said section 1266 of the Revised Statutes, and also for attorneys' fees, as prayed for in the complaint, and that the state pay the costs of the action. This appeal is from the judgment.

Four errors are assigned. The first three are to the same point and will be considered together. They raise the question as to whether said promissory notes and mortgage are usurious contracts, under the provisions of title 7, chapter 10 of the Revised Statutes of 1887. The title of said chapter is "Money of Account and Interest." Section 1263 of...