Auerbach v. Salt Lake County , 23 Utah 103 ( 1901 )

Having stated the case as above,

Baetoh, C. J.,

delivered the opinion of the court.

The appellant insists that error was committed in rendering this judgment; that when the court found that the warrant in dispute was void, it followed that the judgment must be for the defendant; and that the only way a county can be made liable at all is expressly by contract made, and liability created, in the manner prescribed by statute; and that no liability as to a county can be implied.

It is true the county court was wholly a creature of statute and, that, as a general proposition, the acts of such a court, and of a board of county commissioners, are void and without force or effect, when the statute is not pursued. This is so well settled as to need no citation of authorities. It does not follow, however, that, under no circumstances, can a liability be created when the statute is not in all respects pursued, or when some of the members of the county court are guilty of fraud with reference to some part of a transaction. Conceding that the contracts of March and May, tainted not only with the most reprehensible but with criminal conduct and acts of some members of the county court, were void, still it is not a necessary sequence that, by subsequent proceedings and acts of that court, of which some of'the members were acting in good faith, and were innocent of the fraud and corruption, in relation to the furniture — the same subject-matter of the fraudulent transaction, a liability, on the part of the county, could not be created in favor of an innocent holder of á warrant. We apprehend that the creation of such a liability by the court was possible notwithstanding the fraudulent contracts, to which some of the members of the court were parties, and it, therefore, becomes important to look into the subsequent proceedings and acts of the county officers.

Erom the evidence it appears that at a meeting of the county court held on June 19, 1894, at which all the members were present, a resolution was adopted which reads: “Resolved that the county clerk be and he is hereby directed to draw a warrant in favor of A. TI. Andrews & Company of Chicago, for the sum of $15,000 and deliver the same to M. Hayken, as agent of said A. IT. Andrews & Company, upon the execution and delivery to said clerk of the indemnity bond duly signed by the said A. H. Andrews & Company, as principal, and by Frank Enox, E. W. Duncan and G. S. Holmes, as sureties, and upon the filing by the said clerk, of the documentary authority of said Hayken to sign said bond on behalf of said A. H. Andrews & Company.”

In accordance with this resolution, the undertaking therein mentioned was filed, and in the obligatory part thereof, it was stated: “Now, therefore, if the said A. H. Andrews & Company shall at their own expense and risk transport to and deliver in the said building the said furniture, fittings and appliances mentioned and specified in the said contract, to the value of $15,000, in the specifications or schedules therein referred to, and set up the same in said building as required in said contract as soon as they or their agent shall be notified so to do by the architect of said building, or the county court of said county, and shall in all respects perform all the things in said contract required and stipulated to be by them performed, to the value of $15,000, then this obligation shall be void; otherwise to remain in full force and effect.”''

Notwithstanding the fact that the minutes of the court, showing the passage of this resolution, and the bond, were introduced in evidence over the objections of the appellant, we are of the opinion, that, under the pleadings, they were properly admitted, as tending to throw light on the whole transaction, and to show what steps were taken to secure the delivery of the furniture, which, the evidence shows, had been completed and was ready for shipment. Whether this action of the county court, and the compliance therewith by Andrews & Company created a valid contract, and whether it authorized the issuance of the warrant, or whether the warrant issued in pursuance thereof is absolutely void, are questions which, from the view we have taken of the case, we do not deem important or necessary to decide. It is doubtless true and may be admitted that the appellant could have rescinded all these transactions, relating to the purchase of the furniture, the last one included because the resolution and bond refer to the former fraudulent contracts, but it has not seen fit to do so. On the contrary, it received and accepted the furniture, pursuant to the contract of June 19, had it set up in the city and county building, and ever since has used and exercised ownership over the same, and has never attempted to rescind the contract, or returned or offered to return the furniture, or paid or offered to pay to Andrews & Company, or Auerbach & Brother, or the plaintiff, who must be regarded as the equitable assignee of Andrews & Company to the extent of the amount paid for the warrant, any part of the actual value of the furniture, although in its counterclaim the defendant admits that the actual market value of the furniture was $27,000, and simply asks for a deduction, from the amount of plaintiff’s claim, of $7,640, thereby admitting that the balance of the $15,000, at least, was due the plaintiff. Even after the change in the personnel of the county court, when the same was composed of members, none of whom were parties to the corrupt contracts of March and May, and after they had discovered the fraud, no effort whatever was made to rescind the contracts, or to return the goods, or pay the actual value therefor.

Under such circumstances the defendant can not be permitted to retain and use the goods, and at the same time refuse to pay the fair market value therefor to an innocent holder of a warrant.

In Argenti v. City of San Francisco, 16 Cal. 256, Mr. Justice Cope, delivering the opinion of the court said: “Erorn an examination of the authorities, it is evident that the doctrine contended for by the counsel for the city can not be maintained. The theory is, that a municipal corporation can only be bound by a contract to which it has expressly assented, and that such a corporation is exempt from the operation of the rules which relate to and govern the contracts and liabilities of individuals. We readily admit that the powers of a corporation are derived solely from the act creating it; and that as a general rule, these powers must be exercised in the particular mode pointed out by the charter. It doés not follow, however, that even a want of authority is, in all cases, a sufficient test of the exemption of a corporation from liability in matters of contract.”

In the same case, Mr. Justice Eielu, concurring in the judgment announced by the court, said: “If the city obtain the money of another by mistake, or without authority of law, it is her duty to refund it — not from any .contract entered into by her on the subject, but from the general obligation to do justice which binds all persons, whether natural or artificial. If the city obtain other property which does not belong to her, it is her duty to restore it; or if used by her, to render an equivalent to the true owner, from the like general obligation., In these cases she does not, in fact, make any promise on the subject, but the law, which always intends justice, implies one; and her liability thus arising is said to be a liability on an implied contract, and it is no answer to a claim resting upon a contract of this nature to say that no ordinance has been passed on the subject, or that the liability of the city is void when it exceeds the limitation of $50,000 prescribed by the charter. The obligation resting upon her is imposed by the general law, and is independent of any ordinance and the restraining clauses of the charter. It would indeed be a reproach to the law, if the city could retain another’s property because of the want of an ordinance, or withhold another’s money because of her own excessive indebtedness. In reference to money, or other property, it is not difficult to determine, in any particular case, whether a liability with respect to the same has attached to the city. The money must have gone into her treasury, or been appropriated by her, and when it is property other than money it must have been used by her, or be under her control.” 1 Dill. Mun. Corp. (4 Ed.), secs. 460, 461; McClure v. Jefferson, 85 Wis. 208.

The deduction above referred to, was doubtless ashed on the theory that there are other warrant holders, and that the plaintiff should share a proportionate loss occasioned by the fraudulent excess charged for the furniture, as per the contracts of March and May. The answer to this is that it is admitted that the warrant in 'dispute was the first one issued for. any of the furniture, the first presented for payment, and the-first one registered. In the absence of a rescission of the contract, the liability of the county became complete, for the claim represented by the warrant, the moment furniture had been delivered and accepted of the fair market value of $15,000, and, as we have seen, it is admitted that $21,000 worth was delivered, accepted and ever since used by the county. All the holders of subsequent warrants must therefore be presumed to have had notice of the prior claims for which the warrant in dispute was issued, as the facts in relation thereto were matters of record. Under these circumstances the maxim, cjui prior est tempore potior est jure, controls. This is so even though the equities between all the holders are equal. 2 Pom. Eq. Jur., secs. 693, 695; Board of Education v. Pressed Brick Co., 13 Utah 211; Price v. Elmbank, 72 Fed. Rep. 610; In re Gillespie, 15 Fed. Rep. 734; In re Mahaska Coal Co., 64 N. W. Rep. 405; Shirk v. Pulaski County, 4 Dill. 209.

The appellant further contends that, even if the respondent is entitled to recover the reasonable value of the goods, he can not recover in this action, because the complaint fails to allege that a claim duly itemized and verified, had been presented to the county court, or board of county commissioners, and by them rejected before suit was instituted.

This point, as appears, was made for the first time in the appellate court, and therefore, can not avail the appellant, there being no statute in this state which expressly prohibits the bringing of an action on any claim before it has been so presented and acted upon. Such an objection simply goes in abatement of the action, and, to have effect, must be urged by proper plea, or in some appropriate manner in the trial court, or the objection will be regarded as waived.

In Jaquish v. The Town of Ithaca, 36 Wis. 108, where a similar question was raised, Mr. Justice LyoN, speaking for the court, said: “Without deciding whether the claim should have been presented for audit to the town board before an action upon it can be maintained, it is sufficient for the purposes of the case to say, that this objection, which is made for the first time in this court, comes too late to be available to the defendant. Conceding the objection, if taken at the proper time, to be a valid one, it only goes in, abatement of the action, and should have been made on the trial, either by motion for a non-suit or in some other appropriate manner.” Gould on Pl., ch. 5, p. 284; Brown v. Cayuga & S. Ry. Co., 12 N. Y. 486.

We are of the opinion that, in the second count of the complaint, the allegations, in the absence of any special plea attacking their sufficiency, can not be successfully assailed after judgment.

Nor do we think the appellant’s objection to the allowance of interest from February, 1895, is well taken. The trial court found that the members of the county court' “commenced an investigation with the result that, as early as February 15, 1895,” they “became convinced” that.the contracts were fraudulent and void and determined to contest the payment of the warrants issued thereunder, and “also elected to retain the furniture,” and we can not say that there is no proof to support such finding, and therefore can not disturb it. Nor under these circumstances can we interfere with the allowance of interest from that date.

Other questions have been presented but from the view we have taken of the case, further discussion is not deemed important.

We find no reversible error in the record.

The judgment is affirmed, with costs.

Miner and Baskin, JJ., concur.