State v. Kimball

• Decision Date: 05 December 1950
• Citation: 77 A.2d 115,96 N.H. 377
• Parties: STATE v. KIMBALL.
• Court: New Hampshire Supreme Court

Page 115

77 A.2d 115

96 N.H. 377

STATE v. KIMBALL.

Supreme Court of New Hampshire.

Dec. 5, 1950.

Kenneth F. Graf and Stanley M. Brown, Manchester, for plaintiff.

Thomas L. Marble and Mayland H. Morse, Sr., Concord, for defendant.

LAMPRON, Justice.

The plaintiff based its action upon the manner in which specific payments of capital budget funds totalling $658,725, and of general funds in the amount of $5,069.90, were made by the defendant as State Treasurer during the period of January 3, 1947 to March 3, 1948. The Trial Court found that 'each disbursement concerning which claim is made by the plaintiff was made by the defendant prior to the receipt by the defendant of a Governor's warrant authorizing the specific expenditure of public funds from the state treasury, and the moneys were issued by the defendant out of the treasury of the state and disposed of, prior to the receipt of any such warrant authorizing specific disbursement.' 'The defendant made all of the disbursements complained of, and issued the moneys out of the treasury and disposed of the same, on manifests which did not contain the signatures and certificates of the heads of departments concerned and subordinate officers responsible within the department. * * * These manifests were initiated and executed by the Comptroller or his subordinates.'

The defendant does not contend that the above findings are without support in the evidence but excepts to them as immaterial because, among other reasons, the Court further found that '[i]n making disbursements of public funds of the State of New Hampshire in advance of receipts of Executive Warrants, * * *' and '[i]n honoring Manifests signed by the Comptroller or by some individuals in the comptroller's office instead of by heads of departments, the defendant acted in good faith.'

The verdict of $237,518.55 is the total amount of public funds 'used, expended, disbursed, issued out of the treasury and disposed of to the said Cote organizations in excess of specific appropriations [of capital budget funds] for the specific capital improvements and long term repairs * * *' provided for by Laws 1945, c. 210 and Laws 1947, c. 294.

The Constitution, Part Second, Article 5, authorizes the General Court to levy taxes 'to be issued and disposed of by warrant, under the hand of the [governor] of this state for the time being, with the advice and consent of the council, for the public service, in the necessary defense and support of the government of this state, and the protection and preservation of the subjects thereof, according to such acts as are, or shall be, in force within the same'. Article 56 provides 'No moneys shall be issued out of the treasury of this state, and disposed of, * * * but by warrant under the hand of the governor for the time being, by and with the advice and consent of the counsel, for the necessary support and defense of this state, and for the necessary protection and preservation of the inhabitants thereof, agreeably to the acts and resolves of the general court.'

R. L. c. 22, § 9 provides that 'The treasurer shall pay, out of any moneys not otherwise appropriated, all sums due by virtue of general or special appropriations of the legislature, on warrants drawn by the governor, and the principal or interest on all loans which may at any time become due.'

The constitutional and statutory procedure by which moneys shall be 'issued out of the treasury of this state' is plainly established. It requires that there be an appropriation, or equivalent direction for payment, by the Legislature, R. L. c. 22, § 9, Ib. c. 27, § 1; In re Opinion of the Justices, 72 N.H. 601, 603, 54 A. 950; that all accounts to be presented to the governor and council for the issuance of warrants shall be pre-audited by the comptroller who is charged with keeping the 'central or general accounts of the state', R. L. c. 23, § 14(1), (4); and that payment shall be made by the treasurer only upon warrant 'under the hand of the governor * * * with the advice and consent of the council'. Const. supra. The State Treasurer may not lawfully pay claims against the State 'of his own motion'; he may 'only draw out the money under an executive warrant, which presumably would not be given except in accordance with a statute authorizing it.' Bow v. Plummer, 79 N.H. 23, 24, 104 A. 35.

The provisions of the Constitution and statutes concerning the issue of money out of the state treasury are not without purpose. Their function is 'to insure that no payments should be made from the public treasury except for public purposes and in accordance with the law.' Willar v. Commonwealth, 297 Mass. 527, 529, 9 N.E.2d 405, 406. The Constitution of Massachusetts contains provisions identical with Articles 5 and 56 of our Constitution. Const. Mass. Pt. II, c. 1, § 1, art. IV; c. 2, § 1, art. XI. Established for more than mere convenience, the requirements constitute a safeguard against unlawful payments from the treasury. Their dictates are not lightly to be disregarded.

The warrant of the Governor is the Treasurer's authority to make payment. Addressed to him, it directs him to 'pay to the persons named on the annexed schedule or their order, the sum set against each name, amounting in the aggregate to _____ dollars for which this shall be your sufficient warrant.' Such an instrument is not peculiar to New Hampshire. 'A warrant is the command of the * * * official whose duty it is to pass upon the validity and determine the amount of the claim * * *, to the treasurer to pay money out of any funds in the * * * treasury which are or may become available for the purpose specified, to the designated person whose claim therefor has been duly adjudged and allowed.' 2 Dillon, Municipal Corporations (5th ed.) 1283; County Excise Board v. Gulf Pipe Line Co., 156 Okl. 103, 9 P.2d 460. See also, Hornblower v. City of Pierre, 8 Cir., 241 F. 450, 453.

The warrant serves a double purpose. Beside safeguarding the public treasury, it protects the treasurer as to payments made by him in compliance therewith, at least without knowledge of any defect therein. We do not subscribe to the theory that the liability of the treasurer is that of an insurer. See Brown v. Collins, 53 N.H. 442; Bowdler v. St. Johnsbury Trucking Company, 88 N.H. 331, 333, 189 A. 353; Cf. Bird v. McGoldrick, 277 N.Y. 492, 14 N.E.2d 805, 116 A.L.R. 1059. 'We are not to be understood as holding that a public treasurer, who disburses public money on warrants, * * * fair upon their face, in good faith, and without knowledge of the facts showing the illegality of the claim upon which the * * * warrant purports to have been issued, may be made liable for a return of the money upon a showing that the claim was not in fact a legal charge against the municipality he represents. In such a case he would undoubtedly be protected.' Town of Buyck v. Buyck, 112 Minn. 94, 100, 127 N.W. 452, 454, 43 Am.Jur. 111. See also, Kelley v. Noyes, 43 N.H. 209; State v. Weed, 21 N.H. 262.

In the absence of reasonable ground to think otherwise, the State Treasurer may assume that the Governor and Council will not draw warrants upon the treasury in a particular case unless some existing act or resolve of the Legislature authorizes payment. In re Opinion of the Justices, 72 N.H. 601, 54 A. 950. If in good faith and without knowledge of the absence of an appropriation, he pays out public funds in compliance with duly executed warrants, he will incur no liability. Kelley v. Noyes, supra.

When, however, as in this case, the treasurer chooses to disburse funds in his custody with knowledge that the required authorization by the Governor and Council is lacking, he takes the risk of liability for his irregular action. The payments for which the verdict against the defendant was returned were payments for work done on property of the state, and exceeded any appropriations made by the Legislature. For these excess payments the state was under no liability and could not have been sued. In re Opinion of the Justices, 72 N.H. 601, 603, 54 A. 950; Bow v. Plummer, 79 N.H. 23, 24, 104 A. 35. Moreover the value received by the state for work done was less than the amount of the appropriations for such work. Thus, it cannot be doubted that the contractor received payments at least in the amount of the verdict which he was not entitled to receive and for which the state received no value, and for which he could not have sued the state.

In this situation we think it plain that the defendant's liability is established. In Lowell v. Massachusetts Bonding & Ins. Co., 313 Mass. 257, 47 N.E.2d 265, 146 A.L.R. 750, conflicting views upon the liability of a custodian of public funds for disbursement of the same without warrant were carefully analyzed. In adopting the view which held a municipal treasurer liable for irregular disbursement of funds in payment of obligations for which the municipality would not have been liable, but allowing credit for benefits for which it would have been liable, the Court 313 Mass. at page 271, 47 N.E.2d at page 272, 146 A.L.R. 750, said: 'It does not mulct in punitive damages the official who satisfies valid obligations of the city * * *. It does not allow the city to make a profit out of his irregular conduct in the satisfaction of obligations which the city was bound to pay.' Since the verdict represents payments which satisfied no valid obligation of the state, the defendant was properly held liable unless the payments were otherwise authorized. Lowell v. Massachusetts Bonding &c., supra; State v. Baetz, 44 Wis. 624. See also, Savage v. Neal, 151 Tenn. 70, 268 S.W. 375; Annotation 146 A.L.R. 762, 769; 4 McQuillin, Municipal Corporations (3rd ed.) s. 12.217.

The defendant argues that he was expressly authorized to make payment in anticipation of executed warrants by virtue of two resolutions of the Governor and Council, pursuant to the provisions of R.L. c. 14, § 13, as...