Vernon v. Board of Police

SlMRALL, J. : The fund in controversy is a part of the school funds of Tippah county, the administration of which was committed by the legislature to the board of police. It is parcel of the Chickasaw school fund, derived from lands donated by Congress for the support of schools, in the district of country ceded by the Chickasaw tribe of Indians to the United States. The law had dedicated the principal to be so invested as that the'income therefrom only should be used for the purposes of the charity. The duty of the board of police is prescribed in the act of 1850, 12th March, which, among other things, enacts that the board of police of Tippah county should loan out the school fund, looking exclusively to the security of said fund, and the prompt collection of the interest, loans to be made on unincumbered real estate. (See 12th sec. p. 142.) Under this authority, the board loaned to Vernon $500, taking a deed in trust, (county treasurer, trustee,) on a parcel of land. There was also personal security on the note. In 1868, the board of police made an order directing the county treasurer to surrender to Vernon his note, and to cancel and satisfy the deed in trust, on his executing a conveyance to tbe president of the board, of another tract of land named in the order. All of which was done. By this transaction it is averred that the school fund of the county largely lost, and the board exceeded its authority. The fund was by law committed to the board of police, as trustee, to be safely invested in real estate, the interest to be promptly collected and applied to the maintenance of schools. The injunction was to look exclusively to the safety of the principal, and prompt receipt of interest. No favoritism or friendship, or enmity, were to influence them in making investment; nothing was to be looked to but a sure preservation of principal, and faithful use of interest. [186] It is fair to presume that the incumbents of the board in 1861, did their duty, and that the security was on unincumbered land, ample to protect the debt. But in addition, there were two names upon the notes, as securities. The scope of the authority of the board was to call in the principal from time to time, and reinvest. It was to deal with a fund, put out on investment to yield interest. The interest was the means to dispense education. The act of 1855, does not suggest, or intimate the idea that the money may be converted into lands, which, by rental, or otherwise, shall provide means to support schools. Such administration would be a perversion of the trust, an excess of authority under this statute, and might result in the embarrassment, if not defeat, of the entire scheme of the charity. But it is said that the act of the board in 1868 is authorized by the statute of December 2, 1865, p. 162, sec. 3. It must be noted that this statute was passed just after the close of the war, and before the extent of the losses which it entailed, public and private, had been fully realized. The purpose of the act was two fold: to gather up an inventory of the school funds in the several counties; and secondly, to take measures to secure such portions as might be in danger of loss. The third section is directed to the last object, which makes it “ the duty of the president of the board of police in each county to secure the payment of all dues to the school fund, by lien, mortgage, purchase, or judgment, in real estate. In the original act, the word is, “ on ” real estate; as printed in the acts, it is “ or.” The title is “the better to secure the payment of the school funds, and for other purposes.” It must be noted that the school funds throughout the state, were not controlled and administered by a uniform law. Different modes were applied to the counties, or several counties together. This act so recognizes the state of the law ; therefore, where the moneys were not secured, or safe, [187] the president of the board shall take lien, mortgage, purchase or judgment on real estate. The implication is that he shall place the debt under a better, and more permanent security; and this he shall do within twelve months after the passage of this act. He shall secure the payment of all dues, in some one of the modes. indicated. There is no authority to surrender a lien or mortgage security already given; he may take security to protect the debt. It may be doubtful whether the power entrusted to the president extended beyond the twelve months after the passage of. the act. Does the arrangement made by the board with Vernon, in 1868, come within the letter or reason of this 3d section ? The debt was already secured by a deed in trust on real estate. It is not pretended in the order of the board to the county treasurer, that the security was insufficient, or that the personal sureties were insolvent. The allegation of the bill is that the change of the debt into the land, put a heavy loss on the fund; if that be true, the board are chargeable with a breach of trust, unless the act done be within their discretion. It would not be doubted, that an investment of five hundred dollars, or any other sum in the purchase of land, would be a breach of the trust, and in excess of their authority. The principle is the same, if they convert a solvent debt into land. The beneficiaries of this munificent grant to Tippah and the other Chickasaw counties, are the successive generations of children, in those counties. The boards of police or supervisors of the several counties are the administrators of the fund. They must be kept within the line of duty, strictly. Hogan v. Barksdale, 44 Miss. 191 ; McLeod v. First National Bank, 42 ib. 113. Fiduciaries and trustees, if they exceed or violate the authority confided to them, are responsible, although no bad faith prompted their acts; and those who deal with them are aware that they exercise limited and [188] delegated power; and must see to it, that they confine themselves within the scope of their authority. (Authorities, supra.) If the arrangement made in 1868 is set aside and annulled, it is equitable, (especially as actual fraud was not meditated,) that Vernon should have restored to him the lands conveyed to the president of the board, and the deed canceled, or a reconveyance made. We think the complainants, by their bill, ought to make an offer to do this. It would not be. fair and equal, to reestablish the note and deed in trust, without at the same time putting Vernon in statu quo as to what he had parted with. White v. Trotter, 14 S. & M. 45. The demurrer is well taken on this point; but on the return of the cause to the chancery court, the complainants should be permitted to amend their bill. It is urged by the counsel of the appellant, that the suit ought to have been brought by the cestui que trusty or some of them, as representatives of all who have interest in the fund. Whilst a suit might well be sustained .in that form, it seems to us, that the present board, as administrators of the fund, and direct representatives of the beneficiaries in its control and use, do for all essential prarposes, represent all concerned in it. The exception taken on this point is purely technical, and does not touch the substantial rights of parties. If the board of supervisors were about to misapply the money, or had done any act with respect to it, violative of their duty, and injurious, — then a representative suit might be brought, and would be propier, by one or more of the beneficiaries, for all, to restrain the proposed misapplication, or to annul the excessive and injurious act. But if a subsequent board propose by bill to rectify the errors and wrongs of their predecessors, it seems that if the suit be in good faith, and justice can be done, there is no solid reason why it should not proceed. For the -error indicated, the decree will be reversed [189] and cause remanded, -with leave to complainants to amend their bill.