Leavitt v. Town of Somerville , 105 Me. 517 ( 1909 )

Savage, J.

In March, 1887, at a legal meeting of the inhabitants of the defendant town, it was voted "to issue coupon bonds running twenty years, or at the option of the town to pay sooner, . . . . amount of bonds not to exceed $18000.” The purpose I of the issue was stated in the vote in these words , — "Said bonds is to fund the town debt. ”

Under this vote bonds were issued to the amount of $17000, and this suit is brought to recover payment for one of the bonds and its coupons.

The defendant denies that this bond ever became a binding obligation of the town, for the reason that the formalities of execution* prescribed in the vote of the town were not observed by the town officers who issued it. But we do not find it necessary to decide or consider this point. And we pass on to the more important question raised by the defendants’ second contention, which is, that the town debt to pay or fund which this series of bonds was issued, was, in part, at least, illegal, because created in excess of the constitutional limit of municipal indebtedness, as applied to Somerville.

The constitutional limitation is expressed in these words, — "No city or town shall hereafter create any debt or liability, which singly or in the aggregate with previous debts or liabilities shall exceed five per centum of the last regular valuation of said city or town; provided, however, that the adoption of this article shall not be construed as applying .... to any loan for the purpose of renewing existing loans . '. . . Constitution of Maine, Art. XXII.

It is admitted that at all times from 1876 to and including the year 1888 the valuation of Somerville was less than $100,000, of which sum five per centum is $5000. But the defendant town claims that when the foregoing constitutional provision became effective, January 2, 1878, it was already indebted to the amount of about $17,000, and in excess of the constitutional limit. And so the town contends that while it could afterwards renew or refund the debt which then existed, it could not constitutionally create any new or. additional debt, until the municipal debt was within the constitutional limit; and further that any new debt created in excess of that limit was unlawful and not binding upon the town. It claims, nevertheless, that additional and new, but unconstitutional, debts were created thereafter from time to time, until in 1887, when the bonds were authorized and issued, the total debt, old and new, was $22,763.99. And, finally, it contends that the vote to issue bonds "to fund the town debt” applied to the unlawful part as well as to the lawful part of the debt. And hence that the whole issue was unlawful, because the valid cannot be distinguished from the invalid.

If the defendant’s premises are correct, we think its conclusion follows. In fact this position is not controverted by the plaintiff, The town had the right to hire money to refund the debt which it owed in 1878 when the constitutional amendment took effect, even if it was in excess of the five per cent limit. But it did not have the power constitutionally to create a new or additional debt while the former debt remained unpaid, to the extent of the debt limit, nor to hire money to pay a debt thus unlawfully created. If it hired money to pay both classes of debt indiscriminately, the taint of the unlawful part permeated the whole loan, and made it uncollectible. It is impossible to distinguish the good from the bad.

But the plaintiff claims first, that there is in the case no admissible evidence that the town debt in 1887 exceeded the debt in 1878, secondly, that if there was an increase in the debt, it was due to the accretions of unpaid interest on existing lawful indebtedness, and not to the creation of new debts, and thirdly, as is conceded, that under the constitutional provision itself, the town could lawfully make "a loan for the purpose of renewing existing loans,” and the unpaid interest thereon.

The only evidence in the case touching the amount of the town debt in the different years are the records of the annual town meetings, containing the reports of the town officers, as accepted by the town. W.e have before us such reports for 1876, 1880, and 1882 to 1888 inclusive. It is admitted that there is no record of the town debt for 1877, 1878 and 1879. It is also admitted that there are no books in existence kept by the town treasurer or other town officers that would show the state of the town debt from year to year, in the years above given, except as reported to the town in the reports above mentioned.

The plaintiff claims that such records are admissible against the town to show a lawful indebtedness, and hence to show that this loan was made for the lawful purpose of paying a debt, but that they are not admissible in favor of the town to show an indebtedness in excess of the constitutional limitation, or to show an increase in V the debt after 1878. We are unable to concur in the latter view, j These records are not obnoxious to the rule which excludes the self« serving declarations of parties. They are public records of the official acts of public officers, concerning a matter of public moment, the financial condition of the town. The reports were accepted by the town, and have apparently stood unchallenged. The books of the town treasurer, or of the selectman, if in existence, might furnish more satisfactory evidence, but they are not in existence. We think that these records are probative in their character, and that they are at least prima facie evidence of the indebtedness of the town for the years given.

But there is another view of this question. It is the well settled law of this State that one who would recover a loan made to a town must show that the money was hired by the town for a lawful purpose. Lovejoy v. Foxcroft, 91 Maine, 367; Pierce v. Greenfield, 96 Maine, 350. It is incumbent on the plaintiff here to show that the town had a right to hire the money for which this bond was taken, for if not, it was not hired for a lawful purpose. In the process of proof the plaintiff begins with the record of the indebtedness in 1876, of $15,792.92, which we may assume, as the plaintiff does, was lawful indebtedness. But that is not enough. Since his bond was authorized in 1887 to refund the town debt, he must show that there was, in 1887, an existing town debt. He can do this only by the town records for 1887. But if he relies upon the record, we think he must take the whole of it. He cannot show an indebtedness by this record without showing the amount. They are inseparable. Hence we conclude that it is properly established that the town debt of Somerville in 1876 was $15,792.92, and in 1887, $22', 763.99.

Taking into account the history of the financial standing of the town, the plaintiff assumes, and fairly so, we think, that the indebtedness on January 2, 1878, when the constitutional limitation took effect, was in the neighborhood of $17,000 so that there had been an apparent increase of about $5,000 when the bond issue was.made. What occasioned this increase does not appear. Whether the town paid its current expenses for schools, roads and paupers and allowed the interest on indebtedness to accumulate, or whether it paid the interest and allowed other obligations to remain unpaid, or whether it paid part of both, is not shown. A comparison of the indebtediness, one year with another, shows that, at least, some of the interest was paid.

In this situation, the plaintiff relies upon a legal presumption, omnia rite acta prsesumuntur. His argument is that since the town could legally borrow to refund existing legal debts, and could not borrow for any other purpose, it should be presumed that the increase in indebtedness from year to year was occasioned by legally taking up or renewing existing indebtedness with interest, and not by illegally attempting to create new indebtedness.

We do not think there is any such presumption. The question is one of fact. There is no legitimate inference that the town officers paid current expenses any more than that they paid interest on the debt, or if they gave town orders, that they gave them on account of the debt alone, and not for other pecuniary obligations. It is a matter of proof, and as we have already said, the burden is on the plaintiff to show that the debt — all of it — which the loan his bond represents was taken to refund, was a lawful obligation of the town. This he has failed to do.

Judgment for the defendant.