Long v. Lemoyne Borough

Opinion by

Me. Justice Beown,

The borough of Lemoyne was incorporate^. May 23,' 1905. The first meeting of its council was held July 26, following. The new borough being without funds to enable it to start properly on its municipal career, its council, on October 31, 1905, passed the following resolution: “Resolved, That the Borough of Lemoyne borrow from the Cumberland Valley Bank for general Borough purposes the sum of ($500) Five Hundred Dollars and that the President of Town Council and Borough Treasurer be authorized and directed to execute a note in the name of the Borough of Lemoyne, and attested by the Secretary, to said Cumberland Valley Bank for said loan of ($500) Five Hundred Dollars and all renewals of the same.” To secure this loan of $500 a judgment note was executed in that sum on November 3,1905, by the president of the town council and attested by the secretary, payable ninety days after date to the order of S. W. Long, the borough treasurer. A copy of the resolution of October 31, signed by the president of the town council and duly certified by the secretary, was presented to the bank and, upon the assignment of the note to it by Long as treasurer, the same was discounted by the bank and the proceeds placed to his credit as borough treasurer. The borough subsequently made three other loans from the bank in the same way, one for $1,000, one for $2,000-and the third for $1,000. The resolutions authorizing these loans were in the same form as the one of October 31, and the notes were in the same form as that given for $500 on November 3, the only difference being in the amounts. Shortly after the last loan was made, on February 27, 1906, all the notes were consolidated into one of the same form for $4,500, payable to the order of S. W. Long, treasurer, which he assigned to the bank. At the municipal election in February, 1906, new councilmen were elected, only one of the old members holding over. The new council refused to recognize the obligation for $4,500 held by the bank, and, when judgment was entered upon it, a rule was taken to show cause why it should not be opened and stricken off on the grounds, (1) that no legal action had been taken by the borough authorizing the loans; (2) that when the resolutions were passed authorizing the loans a majority of the members of council were members of a partnership association conducting the said Cumberland Valley Bank, and the loans were, therefore, void under sec. 66 of the Act of March 31, 1860, P. L. 382; and (3) that a portion of the money borrowed from the bank had been illegally expended by the borough in making improvements. The rule granted was discharged, and from the refusal of the court to interfere with the judgment we have this appeal.

No one of the four resolutions directing the loan to be made was presented to the chief burgess for his approval. It is true he was present when each of them was passed, and he personally applied to the bank for the loans. Under this state of facts the court below was of opinion that he had impliedly approved-the resolutions. But this is not the kind of approval recognized by the statute when approval is essential to the validity of an ordinance. The requirement of the Act of May 23, 1893, P. L. 113, is that every resolution shall be presented to the chief burgess and, if he approve it, he shall sign it. It must be expressly approved by him, and the evidence of such approval is that he has signed it. If the resolutions were of such a character as to require the approval of the borough’s chief executive, they never became operative, and the judgment for $4,500 against the borough was confessed by the president of the town council without authority. Whether the resolutions required the approval of the chief burgess depended upon whether they were legislative or ministerial. If legislative, approval was essential to their validity; if ministerial, it was not. That they were of a legislative character is clear. They did not direct the doing of something which had been provided for by prior municipal legislation, but, on .the contrary, each was an independent attempt at original municipal action. No one of them directed the performance of an executory, contract previously authorized by ordinance or resolution, but each was a ways and means act, passed for the purpose of authorizing the borough officers to make a contract with the Cumberland Valley Bank, and, therefore, required the approval of the chief burgess before it could confer authority upon the president of the council to create a municipal liability to the bank: Jones v. Schuylkill Light, Heat & Power Co., 202 Pa. 164. Without such approval the president of the town council was without authority to execute any kind of obligation in the name of the borough, and appellant’s contention that the judgment entered on the note given by him is void for want of authority to confess it, must, therefore, prevail. But while we are compelled to so hold, the borough will gain nothing by our reversal of the court below. Though the bank cannot recover on the judgment note given to it, because the attempt to do so is an attempt to enforce an express contract which no one had been properly authorized to execute on behalf of the borough, there is an implied obligation resting upon the municipality to pay back.what was lent to it in good faith. The council concededly could have authorized the borrowing of the money and the execution of an obligation to repay it to the bank, and, the borough having received, at its special instance and request, $4,500 from the appellee for its municipal needs, its implied legal obligation is to pay this honest debt. In an action against it for money had and received it will be the duty of the court, under the facts as developed in this proceeding, to direct a recovery: Rainsburg Borough v. Fyan, 127 Pa. 74. Municipal repudiation of honest indebtedness which the municipality intended to contract and could have lawfully contracted, is no more to be tolerated than individual repudiation of honest indebtedness merely because it was not incurred in pursuance of a duly executed express contract, unless the municipal charter or the statutes prohibit the municipality from incurring any liability by implication.

As to the second reason given by the borough for asking that the judgment be declared void, it is a sufficient answer to say that the act of 1860 is a penal one and must be strictly construed: Trainer v. Wolfe, 140 Pa. 279. It prevents a member of council from profiting by any contract “for the sale or furnishing of any supplies or materials” to his municipality. Money is not within its letter and certainly not within its spirit. For the use of money a rate of interest is fixed by statute, beyond which no lender can profit. In asking the court below to decide that a loan from a bank to a municipality is void if a member of the banking association making it happens to be a member of the town council authorizing it, the appellant was simply consistent in its narrow, technical and unconscionable attitude towards the honest claim of the appellee.

After the bank had lent the money to the borough in good faith, it was none of its concern how it was spent. A sample of the objections to paying the loan because the borough had illegally expended some of the money, is the hiring of teams from two of the members of the town council by the man who was making repairs on the streets. To discuss these objections would be to unduly dignify them.

As a general rule a judgment, regular on its face, will not be stricken off, but when it is entered wholly without authority it may be stricken off, for it is no judgment at all so far as it affects the rights of the defendant: Bryn Mawr National Bank v. James, 152 Pa. 364. This judgment was entered without authority, and the court below found that the entry of it had jiever been ratified. It cannot, therefore, remain on the record. The order of the court below is reversed and the judgment is stricken off.