First National Bank v. Union School Township

Woods, J. Complaint in six paragraphs, of which the first and second were dismissed, and a demurrer sustained to each of the others ; the court gave judgment for the appellee, the appellant excepting and refusing to amend. These paragraphs are, in substance, as follows: Third. “The said plaintiff further complains of said defendant and says, that at the time hereinafter mentioned, and for a long time previous thereto, the said defendant was and still is a corporation for school purposes, duly organized pursuant to the laws of the State of Indiana, in such case made and provided; and that John E. Eobinson was the trustee of said corporation, duly elected, commissioned and qualified as such. That said defendant is indebted to the plaintiff in the sum of twenty-seven thousand dollars for moneys loaned ; that the saméis due and remains unpaid,” — bill of particulars, etc. The fourth paragraph alleges, inter alia, that the school township was largely indebted to different persons, for “build [362] ing and repairing of school houses in said township, and for fuel, furniture, school apparatus, etc., and being so indebted, and having no money with, which to pay the same, did (in anticipation of the taxes for special school purposes, etc., then levied upon the taxable property in said township and thereafter to be collected therefrom, and for the purpose of paying such indebtedness), borrow from the plaintiff the sum of $27,000.” The fifth paragraph is like the fourth, with the additional allegation, that, upon a settlement between the parties, there was found to be due the sum of $6,000, and for such sum the appellee gave the appellant its promissory note, payable six months after date, with ten per cent, interest and attorney’s fees. The sixth paragraph is like the fifth, with the additional averment, that the moneys so borrowed by the appellee for the purpose of paying the corporate indebtedness, the appellee “did apply the same in the payment of such indebtedness.” Copy of note: “$6,000.00; Ceaweoedsville, Ind., June 27, 1876. “One hundred and eighty days after date, for value received, we jointly and severally promise to pay to the order of B. Wasson, Cashier, at the First National Bank, of Crawfordsville, Ind., six thousand dollars, with ten per cent, interest after maturity and attorney’s fees, if this note should be collected by attorney, without relief from valuation or appraisement laws. The drawers and endorsers severally waive,” etc; “Union Township, Montgomery County. “John R. Robinson, Trustee.” The principal question here involved has been recently-decided by this court, in the case of Wallis v. Johnson School Township, post, p. 368, wherein, after a full and careful consideration of the authorities, including those cited in this case, and of the provisions of the statute relating to the subject, it was held that the trustee of a school town [363] ship has no power to borrow money ; but at the same time the rule was recognized, as declared in Biclcnell v. Widner School Township, 73 Jnd. 501, that for money borrowed and actually used for the benefit of the township, in a legitimate way, the township may be held liable. It follows that,, in sustaining the demurrers to the third, fourth and fifth paragraphs of the complaint, the court did right; but erred in sustaining the demurrer to the sixth paragraph, which is good, not because of the note therein set forth, but because it shows that the moneys so borrowed, for the purpose of paying the corporate indebtedness, the appellee did .apply in the payment thereof. The liability to repay these moneys arises not from the act of the trustee in borrowing and giving a note for them, but from the obtaining and application of them to the appellee’s lawful uses. The judgment is reversed, with costs, and with instructions to overrule the. demurrer to the sixth paragraph of the complaint. «