Chaska Co. v. Board of Supervisors

By the Cowrt — Atwatee, J. — From the pleadings and finding of the Court in this case we are led to believe that both parties entered into the special contract set up in the answer, in good faith, and each believing the Defendants had legal authority to issue the bonds, which should be binding upon the county. The answer avers the bonds were made, executed and delivered in “due form,” and were worth the sum of thirteen thousand dollars. The reply alleges that the Defendants before and at the time of the making of the said bonds, and the delivery of the same, pretended and stated to said Plaintiff, that they were duly authorized by law to execute and deliver said bonds to the Plaintiff, for the purpose of negotiation, and that the same would be of binding force upon the Defendants and upon the county of Carver. But that in fact, said bonds never had any binding force upon Defendants or said county. The validity of the bonds was therefore the principal question of fact at issue. The Defendants seek to escape the liability charged in the complaint, solely on the ground, (so far as appears from the pleadings,) that they have — 213 — ■complied witli their contract, in delivering to tbe Plaintiff thirteen bonds of the par value oí $13,000, This is the consideration which they claim to have paid ior the Plaintiff’s labor, merchandise, &c., (so much as is admitted or proved,) .and if they have not paid this consideration, they do not claim to have paid any, and consequently it would seem, must be held liable for the value of the materials furnished by the Plaintiff. The question of the validity of these bonds however, has not been decided by the Court which tried the case, the Judge holding, “that having sold one of said bonds, and hypothe-cated four others, to secure the payment of moneys borrowed, the said Plaintiff is estopped from charging or showing that said bonds are of no value.” Upon this point we think the learned Judge who tried the case has fallen into an error. The estoppel spoken of by the Judge in his decision is in pais, and if any exist, it must be of that kind, as the pleadings disclose none by deed, or record. Eor the purposes of this case, the definition of an estoppel m pais, as given in Dazell vs. Odell, 3 Hill., 219, may be deemed sufficiently accurate, to-wit: that there must be, 1st, an admission inconsistent with the evidence which he has proposed to give, or the title or claim which he proposes to set up; 2d, au action by the other party upon such admission ; 3d, an injury to him, by allowing the admission to be disproved. It may be ques tioned whether any one of these requisites to constitute an es-toppel exist in the case at bar; at all events, the last two appear to be entirely wanting. Even if it could be claimed that the disposal of the bonds by the Plaintiff was an assertion by him of their validity and value, to any extent, it does not appear that the Defendant has acted upon or in any respect changed his position in consequence of such admission, and consequently has not been prejudiced by reason thereof. Indeed, from the nature of the case, it would seem that the Defendant could not in any event, be in a position go raise this objection against the Plaintiff, since the bonds originate with the Board of Commissioners, for the very purpose of being negotiated, and if it were possible that the Defendant could be injured by using them for such purpose, it would not lie — 214 — in bis month to complain thereof. It is unnecessary to inquire at present what position the Plaintiff may occupy with reference to the parties to whom he has sold or hypothecated these bonds, as this is not an action to recover their value as against the Plaintiff. As against the Defendant, the Plaintiff is not estopped from showing that the bonds are without value. As we hold that the Judge who tried ihe case committed an error upon this question of estoppel, it becomes necessary to examine the' main issue raised in the pleadings, — that of the validity of the bonds issued by the Board of Commissioners of Carver county. As this question has never been passed upon, by the Court below, we might appropriately send the case back, for a finding upon it by the Judge who tried the case. But as counsel have argued the question in this Court, and a decision from this Court is desired upon it, and will probably be necessary for its final determination, it will be examined in this connection. The validity of these bonds is questioned solely upon the ground, (as we understand the argument of counsel,) that the Board of Commissioners of Carver county had no authority to issue them, and that the county is not liable therefor. No objection is raised that they are not in proper form, nor that if the Commissioners have power to execute such instruments, for the purpose mentioned, it has not been properly exercised. Such, at all events, is the issue raised by the reply, which states in this behalf, that “said bonds were issued without the authority of law, that they have not now, and never had any binding force upon said Defendants or upon said county of Carver, that they are totally void and worthless for any purpose whatever.” It is therefore to this question of the authority of the Board of Commissioners to issue these bonds, that our examination will be confined. It appears from the pleadings and finding of the Court, that the Plaintiff, in consideration that the Defendants would make, issue and deliver to the Plaintiff thirteen bonds for the sum of one thousand dollars ea -.h, payable to bearer, at the times specified therein, would furnish all the moneys, materials and labor to build and complete a Court; Uortse and Jail — 215 — in and for said county of Carver. And tbe Court finds that tbe Defendant did issue said thirteen bonds as agreed upon, and that tbe same were received and accepted by said Plaintiff in full performance of tbe agreement by said Defendants. In other words, these bonds were issued and delivered to Plaintiff, in payment of a Court House and Jail, to be erected and completed by Plaintiff, in consideration of such payment. The powers and duties of County Commissioners are specified in Sec. 13, p. 153, Comp. Stat., and it is therein provided among other things, that they shall “provide for the erecting and repairing of Court Houses, Jails, and other necessary buildings for the use of the county.” No other authority than this is claimed for the action of the board in issuing these bonds, as no special act of the Legislature was ever passed, authorizing the issue thereof. It will be observed that the section above mentioned, is an amendment of the law previously existing, which read as follows, (Rev. Stat., p. 50, sec. 13): “The several boards of County Commissioners are authorized and required, — to provide for the erecting and repairing of court bouses, jails, and other necessary buildings for the use of the county ; but no tax shall be assessed, nor any debt created for the erection of Court Houses or Jails by said Board, without being first authorized so to do by a vote of the electors of the county.” The amendment was adopted March 6, 1852, and is important, as removing a restriction which existed in the law as it was originally passed. Boards of County Commissioners are public corporations, invested with subordinate legislative powers, to be exercised for local purposes connected with the public good. (Comp. Stat., p. 153, sec. 6; Kent's Com., vol. 2, p. 309.) As such, they are subject to the legal rules governing these bodies, and must derive all their powers from the law which creates them, or from some other positive statute. But it is to be understood that a corporation is not limited to the exercise of the powers specifically granted, but possesses in addition all such powers as are either necessarily incident to those specified, or essential to the purposes and objects of its corporate existence. The statute above cited, authorizes and requires the County — 216 — Commissioners to erect court bouses and jails and other necessary buildings for the use of the county. The Defendants therefore in entering into the contract for the erection of a court house and jail for the use of Carver county, were engaged in the discharge of one of their legitimate duties, were exercising a power specifically conferred upon' them by statute. The statute not only authorizes but absolutely requires them to provide for the erection of these buildings, and there can be no question, that in providing for these buildings they did not exceed the authority vested in them by law. The only doubt it would seem, which can reasonably arise as to the action of the Commissioners in the premises, is in regard to the manner in which they have exercised their authority, to-wit: in creating a debt for the purpose of erecting these buildings. No specific authority is granted in the statute to a Board of Commissioners to issue bonds or any evidences of debt for this purpose. The objection is not to the form of the instrument, but is based upon the entire want of authority on the part of the Commissioners to bind the county by any written promise to pay in futuro for such improvements. Ido not think the objection is tenable. The power of corporations in general to make contracts and incur debts in the prosecution of their legitimate business, and to give their promissory note for such indebtedness, would seem to be firmly established, not only by universal practice, but by repeated judicial decision. To attain its legitimate objects, it may deal precisely as an individual who seeks to accomplish the same end. It may contract for labor and materials, and make purchases, and borrow money for such objects, and give notes, bonds and mortgages towards payment. (2 Kent’s Com., 278, note c; Mott vs. Hicks, 1 Cow., 513; Moss vs. Oakley, 2 Hill., 265; Kelly vs. The Mayor of Brooklyn, 4 Hill., 263; Moss vs. McCullough, 5 Hill., 131; Attorney General vs. Life and Fire Insurance Co., 9 Paige, 470; McCullough vs. Moss, 5 Denio, 567; Ketcham vs. The City of Buffalo and Austin, 14 N. Y, 356; 15 N. Y., 9; Halstead vs. The Mayor &c. of New York, 5 Barb., 218; Brady vs. The Mayor of Brooklyn, 1 Barb., 584; Angell & Ames on Corp., sec. 111. — 217 — The case of Ketchum vs. The City of Buffalo, 14 N. Y., 356, is closely analagous to the one at bar, although the existence of the authority claimed by the corporation in that case, was more questionable than in this. Under a provision in the charter of the city of Buffalo, authorizing, (not requiring,) the common council to establish and regulate markets, it was held, that the common council was authorized to issue the bond of the city for the purchase of lots on which to establish a market, thus sanctioning the right of the corporation to purchase real estate, and that too on credit, for that purpose. As the only question here, is as to the right of the Commissioners to create a debt, or use the, credit of the county for the purpose of erecting these buildings, the remarks of Selden, J., in giving the opinion of the Court in the case last above cited, are entirely pertinent to the point here in issue. “ To deny,” says he, “to such corporations the power to use their credit in any case, would scarcely comport with the object for which they are created. Under such a rule they could not procure materials for the repair of a bridge, unless the money had been raised in advance. The affairs of no municipal corporation were ever conducted, I presume, without incurring obligations for vaiious purposes, in anticipation of its revenues. It may be said that there is a distinction between incurring debts for the ordinary and current expenses of the corporation, to be defrayed by the expected annual income, and debts upon an extended credit, for objects of a permanent character, as, for instance, that a debt may be created for the repair of a bridge or market, but not for the erection of, or procuring a suitable site for such market. I am unable to' discover any solid basis for such a distinction, or any definite line by which it could be marked.” The opinion throughout is a clear exposition of the law upon this subject, and the case was decided without a dissenting vote. The same principles are recognized in Curtis et als. vs. Leavitt, 15 N. Y., 9; and in Barry vs. Merchants’ Exchange Company, 1 Sand. Ch. R., 280. Nothing opposed to these views was advanced in School District vs. Thompson, 5 Min., 280, as that case (so far as the point here in question is concerned,) held that when a promissory note, made by Trustees of a School District, is — 218 — set up as a cause of action, it must be shown affirmatively, by tbe party pleading it, to have been given for a debt which the Trustees were authorized to contract. But the authority of a Board of County Commissioners to create a debt for the purpose of erecting a court house and jail, does not in this case depend alone upon general principles applicable to all municipal corporations clothed with like authority by express statute. The action of the Legislature upon the same subject, previous and subsequent to the enactment of the statute under which these bonds were issued, is impoi*-tant and expressive, and is in effect scarcely less than specific authority by the Legislature to create such debt. It will be observed that by the terms of the original act (as above quoted from the Revised Statutes,) it was provided that “ no tax shall be assessed, nor any debt created for the erection of court houses or jails by said Board, without first being authorized so to do by a vote of the electors of the county.” This restriction was removed by an amendment in 1852, and as the only purpose of the amendment was the removal of the restriction, no other construction can be reasonably placed upon the action of the Legislature than that it intended the Commissioners' should have authority to create a debt for the purpose of erecting these buildings if necessary. This view is strengthened by the consideration of the provisions of “ An Act to provide for County Organization and Government,” approved February 28th, 1860. (Sess. Laws 1860, p. 130.) Sea. 22 of Art. II, of that act provides that “no tax shall be assessed, nor any debt created by said Board for the erection of court houses, jails or other county buildings, without being first authorized by a vote of the electors of the countythus restoring the law as it stood previous to the amendment of 1852, and amounting to at least an indirect expression of the Legislature, that without such amendment the Board of Commissioners had authority to create such debt. This view I think is placed beyond any reasonable doubt, by the last clause of the said section, which declares that “nothing herein contained shall be construed so as to prohibit the issuing of bonds by any county for the purpose of paying debts and liabilities already existing, or to take up bonds or orders already — 219 — issued.” This section was amended by sec. 2 of chap. VI, 4 Laws, 1861, some parts being omitted, but retaining tbe clause above quoted. In view therefore of the well settled legal principles applicable to municipal corporations, and especially of the Legislative enactments in this State bearing upon this question, I think the Board of Commissioners of Carver county had undoubted authority to issue the bonds specified in the pleadings, and that, for aught that appears to the contrary, the same are valid and binding upon the county. As the Court has found that these bonds were received by the Plaintiff in full satisfaction of the agreement on the part of the Defendant, and that the Plaintiff has not yet completed the buildings, in accordance with his agreement, he fails to show a cause of action against the Defendant. And, indeed, it is admitted by the Counsel for the Plaintiff that if these bonds are legally binding upon the county of Carver, then the Plaintiff has no cause of action. The reply alleges that the Defendant at all times since the execution of said bonds, has refused to pay, and still refuses to pay either interest or principal of the same, or any part thereof, and that long before the Plaintiff ceased to make the advances charged in the complaint, the said County Commissioners, by a formal vote when acting for said county of Carver, and by a formal resolution, repudiated said bonds, and decided that they would not pay them, either principal or interest. If the bonds had a legal and valid inception, and were binding upon the county when delivered to the Plaintiff, they conld not of course, be invalidated by any such action on the part of the Commissioners. The Court below however, in its finding, is silent as to this allegation, (except as to the refusal to pay interest,) and it is therefore unnecessary to inquire how the Plaintiff may be affected by such action of the Defendant, if the allegation be found true, either as to his duty of negotiating the bonds, or his right to abandon the contract and sue upon the common counts. As the case is here presented, the judgment below must be affirmed.