Clark v. Polk County

Cole, J.

i. plead-upon comity I. The defendant, for answer to certain counts, averred, “ that the said several warrants set out therein, anc^ each °f them, were issued without a recorded vote of the board of supervisors of Polk county, Iowa, and are therefore without any authority from defendant; nor are they, or any of them, binding on defendant.” To this count in the answer the plaintiff demurred, because the same did not constitute a defense as against the plaintiff, who is an innocent holder, without notice, and not charged with fraud. The District Court sustained the demurrer, to which the defendant excepted, and now complains of the same as error.

It will be observed, that the only averment in this count is, that the warrants named were issued without a recorded vote of the board of supervisors; the remainder of the count is a mere deduction of the pleader from the premise stated, a mode or pleading not to be commended. The only inquiry then, as far as this count is concerned, is whether, under any state of fact, a county warrant may legally issue without such recorded vote.

Revision, section 321, provides that “ the clerk shall not sign or issue any county order, except upon the recorded vote or resolution of the board of supervisors authorizing the same, except for jury fees, and every such order shall be numbered,” &c. The statute itself, it will be seen, provides for the issuance of certain orders, to wit: for jury fees, «without a recorded vote. There is no averment in this count,' that the orders to which the same applies were not issued for jury fees. The averment in this count of the answer may be true, and yet constitute no defense to the recovery upon the orders referred to in it. The demurrer was, therefore, properly sustained.

But, if there was no exception contained in the statute, or if the exception had been negatived, we are not prepared to hold that a recorded vote is necessary to authorize the issuance of a county order, in every possible case. If the vote had actually passed, and the failure to record it was a mere clerical omission, we are clear that such omission could not invalidate ati order otherwise legally and properly issued.

2'wa”raSI: noabie?otl" II. For a further answer to the same counts the defendant averred that said warrants and each of them were issued by order of a committee styling itself a “Court House Committee,” to certain persons named, under contract, copies of which are annexed; that said committee had no authority to make such contract for defendant, nor to order the issuance of said -warrants thereunder. To this division of the answer the plaintiff demurred for the same reasons as above stated, which was also sustained and exceptions duly taken.

There are several other divisions of the answer to the same count, and others setting up, in substance, the same defense. One division avers that the so styled “ Court House Comrhittee ”' agreed to and did, without authority, issue the warrants at the rate of seventy-five cents on the dollar, &c.

The demurrer to all these divisions rests upon the same point, the pivotal point, in the case, and the one argued by counsel and determined in the court below, to wit, are county warrants, issued by. the proper officer and made payable to order or bearer, negotiable instruments at the law merchant? If they are, it is conceded that these defenses are not sufficient as against the plaintiff a bona fide indorser for value before maturity. If they are not properly negotiable at the law merchant, but only assignable by force of our statute, then they are vulnerable to the same defenses in the hands of the plaintiff, an assignee, as they would be in the hands of the original payee, and the demurrer was not well taken.

In the examination of the question of negotiability it may be observed:

Argu.i._ p<S£k.° First. That the clerk of the board of supervisors is not the general agent of the county, but his powers and duties are specially conferred and prescribed by statute. He is possessed of just that authority and no more than is given him by the statute. His agency or authority is therefore limited, and being but a special agent, or clothed only with limited powers, he cannot bind the county further than he has express authority to bind it. And it is a general rule that, where an agent is invested with only limited powers, it is the duty of persons dealing with such agent to ascertain the extent of his authority, for if he exceed it, the principal is not bound. 1 Pars, on Contr., 40, and authorities cited; Chitty on Contr. (10 Am. from 6 Eng. ed.), 229, and authorities; Story on Agency, § 126, and authorities; Beals v. Allen, 18 Johns., 363. This rule is applicable and is rigidly enforced, even in cases where the authority of the agent is in parol, or if written, is in the possession of the principal or agent, and not made a matter of public record. It ought, therefore, a fortiori, to be enforced where the authority is derived from a public statute, which, in contemplation of law, is “known and read of all men.”

iíegotiibuT papí¡r. Secondly. It is a well settled rule of law that a special agent has no authority to bind his principal by a promissory S0I7 note, bill of exchange, or other negotiable paper. Indeed, Mr. Parsons says, that “ a general authority to transact business, even if it be expressed in words of very wide meaning, will not be held to include the power of making the principal a party to negotiable paper. * * * So carefully is this authority watched, that where power is given to do some things with regard to promissory notes or bills, it cannot be enlarged by construction to do other, though somewhat similar things.” 1 Pars, on Bills and Notes, 106, 107.

In Esdaile v. La Nauzie, 1 Young & C. Exch., 394, where a power of attorney gave the agent full power as to the management of certain real property, with general words extending those powers to all the property of the principal of every description, and in conclusion, authorized the agent to do all lawful acts concerning all the principal’s business and affairs, of wbat nature or kind soever, it was held, that this did not authorize the agent to indorse bids of exchange in the name of the principal. See also Gardner v. Baillie, 6 Term R., 591; Murray v. East India Company, 5 B. & Ald., 204; Wallace v. Branch Bank, 1 Ala., 565; Nichols v. State Bank, 3 Yerg., 107; Story on Agency, §§ 69-83; Smith v. Inhabitants of Cheshire, 13 Gray, 318. It would follow, therefore, upon these general rules and recognized authorities, that the clerk of the board of supervisors, whether he is the special or general-agent of the county, would have no authority to bind the county by a negotiable instrument, unless he is éxpressly authorized by statute so to do, or unless it is necessary for him to do so, in order to execute the power conferred or duty enjoined. There is no such statute, and it is not claimed, nor indeed can it be, that any such necessity exists. Upon principle, then, the clerk of the board of. supervisors has no authority to make or issue a negotiable county warrant, and such want of authority is conclusively presumed to be known to all persons, since all are presumed to know the law.

3. — cases examined, Thirdly. It may not be unprofitable to examine the question in the light of adjudicated cases. This precise question is a new one in this State, and in its x * # 1 determination, it is certainly prudent for us to avail ourselves of the light afforded by analogous cases determined in other appellate judicial tribunals. Especially is this the case where the question, as in this instance, is one of very great importance to the parties, as well as to many other counties and individuals. In Andover v. Grafton, 7 New Hamp., 298, the suit was brought upon a note made payable to plaintiffs, without words of negotiability, and it was contended that the town could not be made liable upon a note given by the selectmen. The court holds that the town was liable on the contract evidenced by tbe note, and says, “ nor is it any objection that if the contract may take this shape, it may be made negotiable, and tbe town thus be made liable to pay a third person. ■»■*** An indorser who should take such note, even .before due, would receive it subject to a liability to make tbe same proof respecting tbe authority of tbe selectmen to execute it, in that particular case, as would be required of tbe promisee; and of course must be chargeable with notice of all tbe facts, and tbe note in bis bands be liable to tbe same defense, as in tbe bands of tbe original promisee.”

In Smith v. Inhabitants of Cheshire, 13 Gray, 318, tbe suit was upon a “ town warrant,” issued to one Wescott or bearer, tbe payee having been collector of tbe town and indebted to it in a sum greater than the warrant. Tbe defendants resisted tbe action, on tbe ground that there was no authority conferred on tbe selectmen and tbe treasurer to make and accept such order. The court, per Bigelow, J., say: “ Tbe powers and duties of selectmen are not very fully defined by statute. * * * Speaking generally, it may be said that they are agents to take tbe general superintendence of the business of tbe town. * * * But they are not general agents. They are not clothed with tbe general powers of tbe corporate body for which they act. They can only exercise such powers and perform such duties as are necessarily and properly incident to tbe special and limited authority conferred on them by their office. * * * Tbe rule of law is well settled, that a special agent has no authority to bind bis principal by a promissory note, bill of exchange, or other negotiable paper. Such power can only be conferred by tbe direct authority of tbe party to be bound. To this rule there is but tbe single exception, that such authority may be implied where it is essential to tbe performance of tbe particular duty with which an agent is specially charged.

This well established restriction on the power and authority of agents is particularly applicable to public agents, especially to those acting in behalf of towns. It would lead to dangerous results, if selectmen might, at their pleasure, issue negotiable paper, on which the town might be held liable to any person to whom it might be passed. And the court held that the warrant was not negotiable, and the town was not liable to an action in the name of the assignee.

In The People ex rel., &c., v. Board of Supervisors of El Dorado County, 11 Cal., 170, the court say: “County warrants acquire no greater validity in the hands of third parties than they originally possessed in the hands of the first holder, no matter for what consideration they may have been transferred, or in what faith they may have been taken. If illegal when issued, they are illegal for all time. The protection which attends the purchaser of negotiable paper before maturity, without notice of the illegality of its consideration, does not extend to like purchasers of county warrants. Were this otherwise, it is easy to see that the county would be entirely at the mercy of the board.”

“In Bayerque et al. v. The City of San Francisco, 1 McAllister (U. S. C. C. Rep.), 175, which was an action brought upon city warrants negotiable in form, the court, on demurrer, “because they do not constitute any evidence of indebtedness,” say: “ The plaintiff does not sue upon them as agreements, setting forth the consideration, but as negotiable, as bills of exchange, which imply a consideration. We do not regard them as such. The defendant is not a private trading corporation, but a public, municipal one. * * * The instruments sued on are merely what they purport to be when legally issued^ Warrants or authority to the officer to pay out public money in his custody. They axe drawn by one officer of a corporation upon another, and intended rather as a conditional payment of a preexisting debt already audited, than as instruments creating a new debt, or expressing a new promise. They are designed to give facility, regularity and security in the disbursement of the public mone3r. *.* * But in no sense do they constitute a promise on the part of the city to pay, as the drawer of a bill of exchange.” And the demurrer was sustained.

See also in support of the same general views, Board of Supervisors v. Cox, 6 Ind., 403; Thayers. The City of Boston, 19 Pick., 511; Hyde v. County of Franklin, 1 Williams (27 Vt.), 185; Averill v. Booker, 15 Gratt., 163. The only cases in conflict with this doctrine, which we have been able to find, are Dalrymple v. Wittingham, 26 Vt., 345 (which seems to be overruled by 27 Vt., 185, supra), and Lyell v. Supervisors of Lapeer County, 6 McLean, 446, which is only partially at variance with it. Clapp v. Cedar County, 5 Iowa, 15, is not an analogous case, and is, therefore, not in conflict with the authorities quoted; nor is Clark et al. v. City of Janesville, 4 Am. Law Reg., 591, which is in conflict with Clapp v. Cedar County, an authority in support of them. See also, for full discussion of this question, the opinion of Dillon, J., in Clark v. City of Des Moines, ante.

Argu. 4. ¿oS-Tpubíio poney, Fourthly. While public policy should not be made to override principle, nor yet to overturn or run counter to an unbroken current of authorities, it may , 7 J nevertheless be properly considered by judicial tribunals in determining a question whereon thb authorities are in conflict, or the principle on which it rests is more or less uncertain. Or, as in this case, it may be considered in fortifying the authorities, and the more unerringly to fix the principle bn which the case rests.

The clerk of the board of supervisors is the proper person to execute and issue county orders or warrants. As such he is intrusted with the seal, and is the custodian of the blank warrants usually prepared for the counties. There are certain cases in which, by the law, he may issue warrants (for jury fees, &c.), without any vote or order by the board óf supervisors. Suppose,. in such case, he should issue a warrant for a very large sum, thousands of dollars if you please, when only a few dollars or cents were justly due the payee; such warrant, in the hands of the payee, could be successfully defended by the county to the extent of the excess, on the ground of failure or want of consideration. But if it is a negotiable instrument, .and has passed to the hands of an innocent indorser for value, the county could not avail itself of such defense, and would be compelled to pay the full amount. And when it is remembered that the clerk might easily sign, seal and issue any number of such warrants, so as to completely bankrupt any county in one hour’s time, and they can readily be sold in market to innocent holders before the fact could be known to the public, the great importance of adhering to the strict limitation of his authority, is abundantly apparent. Unless his authority is rigidly construed so as to render him incapable of issuing negotiable warrants, the county could have no protection against the weakness or corruption of the clerk. How strong, then, are the claims of public policy for a strict adherence to the principle and authorities before stated and cited.

On the contrary, if such warrants are held non-negotiable, it is completely in the power of all persons to protect themselves from loss, since the law and the public records necessarily afford to every person the means of ascertaining the facts as to the legality and validity of every warrant issued, so that, by such non-negotiability, both the counties and individuals are abundantly and fully’ protected. There is no validity or force in the assumption that by such ruling the credit of the counties would be impaired, and their necessary municipal operations be impeded. No honest person would refuse to labor or furnish material to a county, because he could only receive a fair and just compensation, nor because, by judicial construction, it was furnished with a coat of mail, guarding it against the assaults and machinations of the dishonest. A warrant properly issued, if not as readily sold, would yield more value to the seller when sold.

In view of this concurrence of principle, authority and public policy, we have no hesitation in holding that county warrants are not negotiable at the law merchant. They are, of course, assignable under our statute, and suit may be brought thereon in the name of the assignee, but subject to any defense which might be made as against the payee.

It follows, therefore, that the court erred in sustaining the plaintiff’s demurrer to'defendant’s answer, in so far as the same set up matters of defense available as against the payee, it being the second and third divisions of each, the first, sixth and seventh counts as described in the demurrer.

‘3. eviD?oution of' written instrument. III. As to several of the counts in the plaintiff’s petition, upon as many warrants, the defendant, by answer, denied their execution, and averred that defendant did not, in any way, authorize or sanction the same, ' ** ** ' an(j wag not indebted to plaintiff in any sum therefor. The cause was tried to the court, and the plaintiff offered, without further proof, the warrant set out in said counts in evidence, with the indorsement thereon of “ presented for payment and not paid for want of money,” and the signature of the president thereto. The defendant objected to their introduction, because the warrants were not shown to have been drawn by order of the board of supervisors, there were no revenué stamps affixed, the indorsements were not proved or shown to have been' made by the proper officer. The court overruled the objections and admitted the evidence, and defendant excepted.

It is provided by section 2967 of the Revision, as amended by ch. 28 of Laws of 1862, that when an action is founded on a written instrument, a copy of which is filed with the pleading, the “ genuineness and due execution shall be deemed admitted,” unless denied by the adverse party, under oath; and that any other writing, a copy of which is filed with the pleading, “ may be read against such party as genuine and dxdy executed, unless he denies the same by affidavit, before the trial is begun.” This action is founded on written instruments, and if defendant desires to controvert their “ due execution,” it was necessary to do so by answer, under oath, or by affidavit. In other words, the statute is general, and the court would not be justified in making exceptions in favor of either trading or municipal corporations.

4. — osa-cate. ted So far as the indorsements and signature of the treasurer are concerned, they are expressly authorized and required by statute. (Rev., § 861.) And it may be staas a general rule, that where a statute authorizes and requires an officer to make a statement or certificate in writing, such writing is competent evidence of the fact stated or certified. As to the signature of the treasurer, it was competent under the provisions of Revision, § 2967, supra. No revenue stamp is required.

IV. The defendant made a motion to set aside the findings by the court upon the counts referred to in the last point discussed, for the same reasons, in substance, as urged against the admission of the evidence. This motion was overruled, and such ruling is here assigned as error. There was no error in admitting the evidence, and hence, none in overruling the motion to set aside the findings.

The defendant made the same objections, in substance, to the introduction in evidence of the other warrants sued on and also the same motion to set aside the findings of the court with like correct result.

„ .JS».,* of error. V. The defendant offered to show to the court, on the trial, by the records of the board of supervisors, that the several warrants were issued without a recorded vote of the board of supervisors, and aQy authority from defendant. The plaintiff objected to this proof, because, 1st. It was immaterial. 2d. The warrants were negotiable, and no evidence offered that plaintiff took them after due or with notice of defect; and, 8d. The statute requiring the clerk to issue no warrants except upon recorded vote was directory. These objections were sustained and the evidence excluded, to which defendant excepted. But upon this point, as well as upon ■ one or more others made by the record, there is no specific assignment of error in this court (Rev., § 8546), and hence we are not properly called upon to decide them. These questions, however, are fully disposed of adversely to plaintiff in what has already been said.

For the reasons stated under the second point discussed in this opinion, the judgment of the District Court is

Reversed,