Otis v. Inhabitants of Stockton

Peters, C. J. Although the question was not so distinctly presented in some of the earlier of this class of cases, it is now well settled that an action for money had and received will not lie against a town for money loaned to its officers upon the supposed credit of the town, but without the authority of the town, although the money be applied to the payment of the debts and liabilities of the town, unless the town make the act valid by its subsequent sanction and consent. If there be no precedent authority for the action of the town officers, it must be affirmatively proved that the town has subsequently approved and ratified their acts. Any other doctrine fails to extend to municipal corporations the privileges and immunities that are accorded by the law to any and all other classes of contracting parties. It might be subversive of municipal prosperity and of all orderly administration in municipal affairs, if town officers had the power to transform the town’s contracts of indebtedness, in the particulars of time and place of payment, rate of interest, and the persons to whom payable, as they pleased. It is not perceived why such a power might not be exercised, if at all, to [508] the extent of transforming an indebtedness upon a long term of years into an immediate liability. It is admitted that the town has not ratified the orders, and there being in the case no evidence of any ratification of the act of borrowing or of appropriating the money, the action cannot be maintained. The learned counsel for the plaintiff contends that the town has ratified the claim of the lender as a claim for money had and received. But how? The case shows no act done directly or indirectly. Just the simple fact appears, (taking the offer to prove as proof), that the money was appropriated to the payment of the legitimate debts of the town. Stress is placed upon the word "payment,” used in the offer. But that does not imply in this connection any act of the town. If the town had done anything affecting the question it would have been specifically shown. Payment here means an application or appropriation of the money, not by the town, but by the officers of the town, acting without authority. Their act is not the act of the town. There must be some act of the town. The mere acts of others do not bind the town. The contention of the plaintiff is, virtually, that the town, by not expressly repudiating the unauthorized acts of its officers, thereby accepts their acts. That is to say, if the town takes no steps either to accept or deny, it accepts. Inaction is action. This position, if a correct one, would require a town meeting, every time an officer undertakes to impose an unauthorized liability upon the town, to enable the town to prevent ratification. There must be something more than mere silence upon the part of the town to create an estoppel. Of course, that fact in connection with other facts may become material. There may be occasions when a town should act or speak, or when it does speak by the force of circumstances. The doctrine of assent by silence does not apply so strongly to municipal corporations as to business corporations and individuals. The latter can act readily, while the former act upon formal occasions and in public meetings, in all unusual matters. It would be difficult to formulate any general rule or definition of corporate ratification. It must largely depend upon the facts peculiar to the individual [509] case. Here no circumstances or particulars are disclosed. There is no evidence of ratification. Lincoln v. Stockton, 75 Maine, 141; Agawam Bank v. South Hadley, 128 Mass. 503. It becomes unnecessary to consider the other point presented by the case. Plaintiffs nonsuit. Walton, Virgin, Libbey, Emery and Haskell, JJ., concurred.