Ray County ex rel. Common School Fund v. Bentley , 49 Mo. 236 ( 1872 )

Wagner, Judge,

delivered the opinion of the court.

The material question that arises in this case regards the action of the court in sustaining the motion to strike out the replication. It appears from the record that Bently and Easter as principals, and Barr as surety, executed to the county of Ray their bond in consideration of a loan of school money. Bently and Easter also made and executed a mortgage on real estate, with the usual statutory power of sale, to secure the payment of the debt. Default being made in the payment of the principal and interest, the County Court of Ray county ordered the mortgaged premises to be sold, and, when the same was put up, authorized the county clerk to bid thereon.

The clerk bid the amount of the principal and the interest on the debt, and the property was struck off to him for the county on whose behalf he assumed to act. Immediately afterward the court, being of the opinion that it had no power to purchase the property in the name of the county, set aside the order of sale, and ordered the sheriff to proceed and re-sell.

At the second sale, Barr, the surety, bid in the property at a price considerably less than the amount of the debt and interest, and this action was brought to recover the residue.

The answer of the defendants stated that the property was sold, and that the plaintiff bid in the same for the full amount of the principal and interest, and alleged that that was a complete satisfaction of the debt.

The replication averred as new matter the proceedings of the County Court in setting aside the first sale, the re-sale by the sheriff and the purchase by Barr, when the property was re-sold. This replication, on motion, was stricken out.

The essential question raised by the replication, and which must be determined in this case, is whether the court possessed the power to buy in the land in the name of and for the use of the county. The money for which the debt was contracted and the mortgage was made belonged to the school fund, and was not the property of the county.

The statute provides that the County Courts, respectively, shall have the care and management of the school funds of the several townships within their jurisdiction, and that they shall cause accounts thereof to be stated and kept, so as to exhibit the funds of each township separately and the disposition thereof. Provision is also made for loaning out the school fund, and it is required that its payment shall be secured by the borrower giving a mortgage on unencumbered real estate, with a. bond and additional personal security. The mortgage taken, must be in the ordinary form of a conveyance in fee, and must recite the bond, and contain the condition that if default shall be made in. the-payment of the principal or interest, or any part thereof, at the-time when they shall severally become due- and payable, then, the-sheriff of the county, upon giving notice, may proceed without suit to sell the mortgaged premises or any part thereof, to satisfy the principal and interest, and make an absolute conveyance thereof in fee to the purchaser, which shall, be as effectual, to all intents and purposes, as if such sale and conveyance were made by virtue of a judgment of a court of- competent, jurisdiction foreclosing the mortgage. Whenever the principal, and interest, or any part thereof, secured by mortgage containing a power to sell, shall become due and payable, the-County Court has power to make an order to the sheriff, reciting the debt, and interest to' be received, and commanding him to levy the-same, with costs, upon the property conveyed by the mortgagor-, which shall be-described as in the mortgage; and a. copy of such order, duly certified, being delivered to the-sheriff, shall have the effect of a-. fieri facias on a judgment of foreclosure by the Circuit Court, and shall be proceeded with accordingly. Where the money is collected it is to be paid into the county treasury, and it is the duty of the treasurer to give duplicate receipts therefor, one of which is required to be given to the clerk of the County Court, whose duty it is to file and preserve the same in his office, charge the treasurer with the amount, and credit the payment to the party on whose account it is made on his- bond and mortgage.. (2 Wa.gn. Stat. 1259-61, §§79, 81, 88, 8-7-9.)

In all cases of loan the bond is made payable- to the county for the use of the township to which the fund, belongs. {Id.,. § 82.) The county is not the owner of the fund; the title is simply vested in it as trustee, for convenience, to carry out the policy devised by the law-making power for the appropriation and distribution of the fund. In the care, management and control of the fund, the County Court acts purely in an administrative capacity, not as the agent of the county, but in the. performance of a duty specifically devolved upon it by the laws of the State. There is nothing judicial in the exercise of its functions in this respect. The County Court does not derive its powers from the county, and it can exercise only such powers as the Legislature may choose to invest it with. Whatever jurisdiction is conferred upon it is wholly statutory. It acts directly in obedience to State laws, independently of the county. Where it acts for and binds the county, it exercises its authority by virtue of power derived from the State government, and it obtains authority from no other source. (Reardon v. St. Louis County, 36 Mo. 555.)

The principle is well settled that a corporation can exercise only such powers and employ such agencies as its charter may permit. But counties have not the powers of corporations in . general. They are merely quasi corporations, political divisions df the State, and they act in subordination to and as auxiliary to the State government. (Hann. & St. Jo. R.R. Co. v. Marion County, 36 Mo. 303; State v. St. Louis County Court, 34 Mo. 546; Barton County v. Walser, 47 Mo. 189.) They have no power to purchase land or hold the same unless it is given to them by statute. Nor have they authority to assume the exercise of this right, in a case like this, by implication. For obvious reasons the law never intended that the County Court should buy in real estate for the county to satisfy a school debt.

The county is not the creditor, and it has no right to bid in the property and undertake to manage it for the benefit of the school fund. The County Court is not a fit or appropriate body to deal as a real estate agent, and whenever the principle is established the school fund will inevitably suffer.

There is no force in the argument so strenuously advanced, that if this power of purchasing real estate is denied to the County Court, debts will be lost by reason of the mortgaged property in some cases decreasing as a security or selling for less than its value, and by that reason failing to satisfy the encumbrance. The answer to this is that if the courts do their duty as the law directs and contemplates, such a contingency cannot happen. The statute gives the County Court power to examine into the solvency of the debtors, and require additional security to be given on the bond when deemed necessary for the better preservation of •the fund. If the additional security is not given, then proceedings for sale should be instituted at once. If the court faithfully performs its duty, there is little danger of any loss happening. Erom what has already been said, it necessarily follows that the County Court had no warrant for authorizing its clerk to bid in the property, and that the county was entirely incapable of taking it by purchase. Such being the case, the first sale was simply a nullity, and the property was rightly put up and sold a second time. The court below, therefore, erred in striking out the replication.

But it is contended further that Barr, the surety, is released because he has suffered injury by the action of the County Court in bidding in the property; that during the time intervening between the first and second sale the property decreased in value and greatly deteriorated. The established rule, that a surety will be discharged whenever the creditor commits acts which operate to his injury or disadvantage, cannot apply in this case.

In Marion County v. Moffett, 15 Mo. 604, it was held that the failure of the County Court to take a mortgage in fee on real estate free from all liens and encumbrances, to secure the payment of school money loaned, as required by the statute, did not discharge the surety. It was said in that case: “ The school lands were vested in the State, in trust for the benefit of the inhabitants of the township in which they are respectively situated. The State vested in the County Courts the management of this trust. Those 'courts are the agents of the State for this purpose.” The principle that the State is not affected by the laches of her agents was sanctioned by this court in the case of Parker v. State, 7 Mo. 194. So in the case of a corporation, where the acts or omissions from which injury results are done or omitted in the exercise of a corporate franchise conferred upon the corporation for the public good, and not for private corporate advantage, the corporation is not liable for the consequences of such acts or omissions on the part of its officers and servants. (Murtaugh v. City of St. Louis, 44 Mo. 479.) The County Courts are intrusted with the management and care of the school fund for the public good, and not for any private gain that will accrue to either them or the counties. The State can only act through her officers, and great losses would result if it should he maintained that she was liable for the negligence or omissions of those to whom she is compelled to confide the management of her pecuniary concerns.

With the concurrence of the other judges, the judgment will be reversed and the cause remanded.