Goodnow v. Board of Commissioners

By the Cov/rt Wilson, Ch. J. -The complaint in this action does not state facts sufficient to constitute- a cause of action. The act of the legislature authorizing the county commissioners of Ramsey County to “ issue county orders to the persons named, for the amounts severally due them, subject to the same rules as other county orders issued by said county commissioners,” gave them no authority to issue bonds payable at a future day, with interest coupons attached. Such statutory power must be strictly construed. County orders are in legal effect, as well as in form, essentially different from such bonds, and whether the issuing of the bonds instead of county orders was advantageous to the county, was a question solely for the decision of the Legislature, and neither the courts, nor the county commissioners, had the right to question, or power to contravene that decision. What the county commissioners represented, or the plaintiff or his grantors believed, as to the validity of these bonds, cannot affect the rights of the parties in this case. No representation of the agent, as to the fact of his agency, or as — 40 — to the extent of Ms power, is of any force to charge the principal. The plaintiff was bound to take notice of the statute under which the commissioners acted, and is therefore presumed to have known the extent of their power. His erroneous view of the law cannot help him, or prejudice the county. Gould v. Sterling, 23 N. Y. 463-4; Bessell v. Michigan S. & N. Ind. R. R. Co., 22 N. Y. 289-309. But it is insisted that the improvement of the road in question was a legitimate county expense in the absence of the special act above refered to, and that therefore the county commissioners had the power to incur a debt for that purpose, and to issue evidences of such debt, including bonds and promissory notes. If this was admitted, we tMnk it would not help the plaintiff’s case, for whatever the power of the county commissioners may be generally, the special act above refered to was made the rule of their conduct in this case, and it is manifest from the complaint that they acted in the premises only in obedience to the mandate of said act. Nor can the claim of the plaintiff that he is a bona fide holder for value avail Mm. Ve think the position cannot be sustained, that counties in our State have generally the power to make such bonds or negotiable paper of any kind, the consideration or validity of which cannot be inquired into in the hands of any person. Corporations are the mere creatures of law, established for special purposes, and deriving all their powers from the acts creating them. The corporate acts must not only be authorized by the charter, but these acts must be done by such officers or agents and in such manner as the charter authorizes. 2 Kent’s Com. 299 and cases cited and note; Bard v. Chamberlain, 3 Sandf. Ch. 32; Broughton v. Manchester Water Works, 3 Barn. & Ald, 11; McSpeden v. Mayor, &c., 7 Bosw. 601; Perine v. Ches. & Del. Canal Co., 9 How. U. S. R. 172, 184; McCullough v. Moss, 5 Denio, 566; Williams v. Lash, 8 Minn. 496; Braily v. Mayor of N. Y., 20 N. Y. Rep. 312; Angell & — 41 — Ames on Corp. sec. 111, ib. 271; School Dist. v. Thompson, 5 Minn. 257. And we may here add, that counties, Hire towns and school districts, are mere quasi corporations, invested with corporate powers sub modo, and for a few specified purposes only, but deficient in many of the powers incident to the general character of corporations. Fourth School Dist. v. Wood, 13 Mass. 194; School Dist. v. Thompson, 5 Minn. 286; 2 Kent’s Com. 278; Angell & Ames on Corp. sec. 23. Sec. 13, page 59, Rev. Statutes, reads as follows : “ The several boards of county commissioners are authorized and required (1) to provide for the erection and repairing court houses, jails, and other necessary public buildings for the use of the county, (but no tax shall be assessed or any debt created for the erection oí court houses or jails by said board, without being first authorized so to do by a vote of the electors of the county,) (2) to lay out, alter or discontinue county roads and highways within their respective counties, and to do all other necessary acts relating thereto, (3) to license ferries and fix the rates of ferriage ; to grant grocery and other licenses authorized by law to be by them granted, (4) to fix the amount of taxes to be assessed according to the provisions of the law, and cause the same to be levied and collected, (5) to examine and settle all accounts of the receipts and expenditures of the county, (6) to have the care of the county property, and the management of the county funds and business, except in cases otherwise provided for, and shall have no other powers except such as .are or may be given by law.” Sec. 95, page 111, Rev. Statutes, points out the mode of raising a revenue for county purposes, and sec. 4, page 64, ib., provides that the county treasurer shall receive all moneys due and accruing'to the county, and pay and disburse the same on orders drawn by the county commissioners, “ cmd not otherwise?'1 Sec. 9 of the same chapter, provides for the payment of judgments against the county, but no provision is found for the payment of — 42 — bonds of this kind, or mercantile paper of any kind. If tbe power to make such paper exists, as we bave above seen, it must be conferred by statute, and we in vain look in tbe statute for tbe grant of any sucb power to tbe commissioners. The powers of tbe commissioners are defined, and tbe means to be used in tbe performance of tbe duties imposed designated, by tbe statute. Tbe specification of sucb means would seem to imply a prohibition of any other. Had it been intended to authorize tbe commissioners to make sucb paper, tbe county treasurer would certainly bave been authorized to pay it. But it is said that it is sometimes necessary to raise money for purposes not anticipated or provided for by a previous tax, and that sucb money must be borrowed, and negotiable securities given therefor. We think tbe statutory provisions above cited, construed fairly and according to tbe settled rules of interpretation, clearly negative tbe existence of sucb power, and tbe necessity of tbe case, bow great so ever it might seem to be, could not confer tbe power. But tbe necessity urged is more imaginary than real. It is not claimed that tbe commissioners cannot act until tbe money is in tbe treasury to pay tbe obligations incurred. Tbe statute contemplates sucb a contingency, and provides that county orders may be issued before funds are in tbe treasury to pay them, (sec. 8, page 651, Bev. Stab,) and practically, no difficulty is experienced in this respect. Nor is it denied but that tbe commissioners may contract debts for tbe payment of which tbe county would be bable, and then admissions, whether in writing or parol, would be evidence of sucb debt; but if in tbe form of bonds or promissory notes, they would be merely written evidences or admissions of debt, having none of tbe attributes of negotiable paper, and subject to be impeached for want of consideration in tbe bands of any person. "We do not here pretend to decide whether the county can, without express authority, borrow money; that question is not involved in tins case. — 43 — The same arguments drawn from convenience and supposed necessity that would extend these powers to counties, would also extend them to towns, school districts and other quasi corporations. In the case of School Dist. No. 7 v. Thompson, this court held that a school district could not make a promissory note. In New York each towii is a body corporate, having capacity to sue and be sued, and “ to purchase and hold lands within its own limits for the use of its inhabitants ; to make such contracts, and to purchase and hold such personal property as may be necessary to the exercise of its corporate or administrative powers, &c.” It is also further provided, that “no town shall possess or exercise any corporate powers except such as are enumerated, or shall be specially given by law, or shall be necessary to the exercise of the powers so enumerated or given.” Prom the powers conferred on said towns, the power to borrow money and make bonds, and notes may as naturally be inferred as from the powers conferred on counties under our law; but in New York the court of appeals have held that the towns of that State “ have not the general power to borrow money, nor are their officers, in the exercise of their ordinary duties, authorized to issue bonds, or any other evidences of indebtedness, in the name of the towns represented by them, for loans or other debts contracted or incurred on then- behalf; such power must be specially conferred by a grant of the Legislature.” Storm v. Town of Geneva, 23 N. Y. 449; Gould v. Town of Sterling, ib. 456. It would seem to be the law of that State that the county supervisors cannot make negotiable paper. Chemung Canal Bk. v. Supervisors of Chemung Co., 5 Denio, 517; Supervisors of Reno Co. v. Weed, 35 Barb. 136. The decisions in New York, and we believe in the other States, that corporations may make promissory notes without any special authority, are based on one of two grounds : (1) that the power is implied as the usual and proper means to — 44 — accomplish the purposes of'the charter, or (2) that corporations are mentioned in the Statute of Anne (6 Anne, 32) as “persons” who mwy make or indorse notes, and are also included in 'the statutes of the State which provide that all “ persons ” may, &c. This reasoning cannot apply to quasi corporations in our State, for we have seen that this is not the usual or authorized means to accomplish the objects of the enabling acts, and our statute as to promissory notes, if held to apply to them, would authorize them to draw bills or make notes payable outside of the limits of the State or United States. That this could not be within the scope of the powers of' such quasi corporations, is too plain to admit of argument. . "We conclude, therefore, that county commissioners have no power to bind their counties by written instruments, the consideration of which cannot be impeached either before or after maturity in the hands of amj person. The plaintiff therefore took these bonds subject to any legal or equitable defense the county might have ; and even if we admit that the commissioners issued them under then general power, and not under the special law above referred to, the plaintiff cannot recover. The complaint does not show that the road, for the making of which the bonds were issued, was legally established, or that any title was acquired to the lands over which it was laid. Sec. 3 of the act under which the commissioners proceeded, required them to cause a notice to be published once in each week ,'ilfor at least three weeks” of the assessment of damages. No such notice is alleged to have been given. This was a condition precedent, without -the performance of which they had no authority to appropriate or condemn the land over which the road was laid. The order overruling the demurrer to the complaint is reversed, and the cause is remanded.