Union School Township v. National Bank

On Petition foe a Rehearing.

Elliott, J.

We have again given the questions in this-case careful consideration, and the result is that we are strengthened in the conviction that our conclusions heretofore announced were right.

We are clear that the trustee of a school corporation is a special agent of very limited authority. Hot only is he a special agent, but he is also one whose authority is only such as a public statute confers upon him. This our decisions have-often affirmed, as appears from the cases cited in our former opinion. That this conclusion is a just one can not be doubted by one who considers the nature of a school corporation and the character of the authority of its agent, the trustee. The •corporation is itself organized for a limited and local purpose, it is not a corporation with general powers; it has neither the general power to contract debts nor to buy property. Its power is to conduct the local school affairs, and to do this with the money derived from the revenues set apart for school purposes. There is, in strictness, no power in the corporation to obtain or to expend money derived from any other source than the school revenues. Wallis v. Johnson School Tp., 75 Ind. 368. Thus is the power of the corporation itself ■circumscribed, and its agent, the trustee, can by no possibility possess authority that is not possessed by his principal. It is perfectly obvious, therefore, that one who deals with a school trustee must, at his peril, ascertain that the trustee is acting within his authority. It is incumbent upon a person seeking to hold the corporation liable for a debt created by the trustee in the name of the corporation, to affirmatively show that it was one he had authority to incur. In this case this essential fact does not appear; for we think it too clear for argument, that where the trustee has funds of the corporation in his hands, he can not plunge it into debt. It is his duty, and his duty bounds and limits his authority, to apply the money of the corporation to payment for articles purchased for the corporation, and not to go into bank and borrow money in the name of the corporation. This the bank was bound to know, and it could not avoid knowing that at the time it lent money on the notes signed by its depositor as school trustee, he had school funds in his hands, for this information public records and the law made known. It was its duty to know that there were no school funds in his hands before it advanced him money. It follows from what we have said that, conceding that the money furnished Robinson was put in his hands by the bank to pay claims against the school township, still there can be no recovery; but this is a concession not justified, for the money was placed directly to the credit of Eobinson as an individual, and was so drawn from the bank by him. The money, therefore, was paid to Eobinson directly, and went to his benefit as a depositor of the bank.

It needs no argument to prove that the school corporation, with no power to obtain money except from the public revenues set apart for that purpose, ought not to be charged with interest on money borrowed by its special agent when he has funds of the corporation in his hands supplied from the proper source. The law contemplates no such procedure. It is his duty to disburse the funds entrusted to him, and not to impose the burden of a debt upon the corporation.

It is true, that we have held that where the money received on notes executed in the name of the school corporation goes to pay for property received by it, the person advancing the money will be subrogated to the claim of the person who actually furnished the property, but we have steadily held that it is only in eases where the school corporation actually received the property purchased, that subrogation can take place. It is well known that subrogation arises, not by contract, but by force of equitable principles, and only in cases where good conscience requires that it should take place in order to prevent injustice. In this instance there is an entire absence of equity in the plaintiff. It can not be claimed with any tincture of reason, that the creditor of a special agent, with restricted and plainly defined statutory powers, can have an equity against a principal who has placed money in the hands of such an agent to pay all claims.

The evidence does tend to show, as claimed by counsel, that Eobinson had no public money to his credit on the books of the bank, but this is very far from showing that he was not provided with funds from the public revenues. The question is not what money he had in bank, but what money of the public did he have in his hands ?

There are, perhaps, some items which it is shown were paid on legitimate claims, and paid on the checks of Robinson as an individual to the holders of these claims; this, however, does not make out a case, for the facts still remain that Robinson was furnished with public money, and that all money obtained on the notes executed by him as trustee went to his individual credit. These facts lie across the road to a recovery. The bank did a general business with Robinson as an individual, and lent him money without proper inquiry as to his authority to execute the notes of the school township, and it can not recover without other evidence than that adduced.

It is a mistake to suppose that the school corporation was estopped by the statement of Robinson. He was not the corporation; he was merely its agent, and that, too, with limited statutory powers. City of Valparaiso v. Gardner, 97 Ind. 1 (49 Am. R. 416); Strosser v. City of Ft. Wayne, 100 Ind. 443, see page 449; Axt v. Jackson School Tp., 90 Ind. 101; Reeve School Tp. v. Dodson, 98 Ind. 497.

It is a fundamental principle that a governmental corporation is not estopped by the act of an officer in cases where the act is beyond the scope of his authority.

Public corporations stand on an essentially different ground from private ones, and the rules which apply to the one class do not apply to the other in cases where the doctrine of ultra vires is invoked. Driftwood Valley T. P. Co. v. Board, etc., 72 Ind. 226; Cummins v. City of Seymour, 79 Ind. 491, see page 497 (41 Am. R. 618). But the power of a school corporation is much more limited than ordinary public corporations, for there is no general power to incur debts or execute evidences of indebtedness, and, certainly, no such power exists where the school trustee is provided with money from the school revenues. The school corporation is, in truth, one of Unusually limited powers, for the only source from which it can derive money is the school fund, or school revenues, and, strictly speaking, its only power is to receive and disburse the funds allotted to it. The authorities cited, in cases of actions against private corporations, are not applicable to public governmental corporations such as school townships.

We said, in our former opinion, that Robinson did not borrow the money for the specific purpose of paying claims against the corporation, and this we repeat after again reading the evidence. The money borrowed did go to Robinson as an individual, and the bank became his debtor for that money as its depositor. There is no evidence that the money was borrowed to pay any specific claim; on the contrary, it was placed to his credit and was held subject to his general check as an individual.

We said that no claim existed against the school corporation, and we were right. Where the school trustee has money of the corporation in his hands there can be no claim created by him by borrowing money. This the lender of money is, as the authorities cited abundantly establish, bound to know.

Counsel say that the question of the right to a new trial was not argued, but in this they are in error. We copied in our former opinion an extract from the brief of counsel for the appellant, showing thát they did press this question. It is true they did not argue it at length, but they did make the question squarely. Their argument was mainly upon what the face of the record showed to be a duly signed special finding; but to have again argued the question on the motion for a new trial would have been to simply repeat what had been before fully and elaborately urged. The special finding, as it appears on the face of the record, seems to have been duly signed; but in return to a certiorari the original finding was sent to us, and from that it appears that there was no signature. Under such circumstances, it would be rank injustice to declare that there was no brief.

We acted upon the evidence deemed credible by the trial court, and this, as has many times been decided, is the rule of this court. Gathright v. Burke, 101 Ind. 590; Julian v. Western U. Tel. Co., 98 Ind. 327; Cain v. Goda, 94 Ind. 555; Arnold v. Wilt, 86 Ind. 367. We did not depart from the long established rule that we will not weigh evidence, but we took the evidence before us and found that .in law it was not sufficient to entitle the appellee to a recovery. We simply applied the law to the evidence, and, as matter of law, decided that there could be no recovery.

Some technical objections are presented in the brief on the petition for a rehearing, but, under well settled rules, these come too late.

Petition overruled.

Filed Sept. 15, 1885.