Court Opinion

ID: 7945043
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:19:21.339522+00
Date Added: 2024-06-11T16:33:53.009041
License: Public Domain

Ostrander, J.
(concurring). I do not find in the record any evidence of bad faith upon the part of the plaintiff, the board of supervisors, or the treasurer who issued to the plaintiff the notes of the county. It is not an unusual thing for boards of supervisors to borrow money in anticipation of taxes, and to authorize the giving of notes of the county as evidence of the loans so made. Usually such temporary loans are paid as fast as taxes are collected. If it had appeared in the case of Board of Sup’rs of Dickinson Co. v. Warren, 98 Mich. 144, that, instead of being about to bond the county for a large sum, the supervisors had voted the necessary moneys, and proposed to borrow only until such time as the taxes could be received, I think a different question would have been presented than the one decided. In any event, however, the decision of that case goes upon the ground, not merely that the county had no power given it to borrow money to pay current expenses, but that a proper construction of the statute indicated that the exercise of such power is prohibited. In the case at bar it *564does not appear that the loans were temporary or in anticipation merely of the collection of taxes already voted. The reasonable inference is rather that the loan was not merely temporary, but was such a one as this court held, in the case referred to, the supervisors had no power to make. Nor does it appear for what purposes the money was disbursed. I think, therefore, that the only debatable question presented is whether plaintiff may recover upon the count for moneys had and received — so much of his money as was received by the county treasurer within the period of the statute of limitations.
If we eliminate the theory of a recovery upon the original contracts, or upon a renewal or extension thereof, we must also eliminate the idea that the county has, by any acknowledgment of indebtedness, waived the provisions and operation of the statute of limitations. It is undisputed that as to one-half the sum claimed it was not received into the treasury of the county within six years before suit was begun. A careful examination of cases adjudicated by the Federal courts, and by the courts of this and other States, has convinced me, contrary to my first impressions, that plaintiff cannot be permitted to recover without setting aside rules as salutary as they are well established. Counties have no inherent general power to borrow money. They have no power to borrow money to pay current expenses. For such expenses they are remitted to the exercise of the power to tax. If, notwithstanding this want of power, money is borrowed to pay current expenses, it is of small consequence to deny the right of the lender to recover upon the express contract while raising an implied and enforceable duty on the part of the municipality to pay. The board of supervisors, having no authority to make the loan, have no authority to ratify the making of it, or to create a liability of the county by applying the money to the payment of expenses or to any other use. The people of the county have declined to ratify the transaction, in so far as a refusal to vote an issue of bonds for that purpose can be so consid*565ered. The rules which should govern the decision of the case are also well stated, with abundant references to authority, in the opinions in Agawam Nat. Bank v. Inhabitants of South Hadley, 128 Mass. 503, in Wells v. Town of Salina, 119 N. Y. 280 (7 L. R. A. 759), and in McDonald v. Mayor, etc., of New York, 68 N. Y. 23. See, also, Bogart v. Township of Lamotte, 79 Mich. 294. In Coit v. City of Grand Rapids, 115 Mich. 493, a case supposed to be favorable to the position of plaintiff, the court uses this pertinent language:
“If we conceded the premises assumed by defendant, viz., that the contract was wholly ultra vires, we might be compelled to reach the conclusion that the city could not be estopped to set up its invalidity.”
A distinction is drawn in argument, and there áre adjudicated cases which appear to recognize it, between an obligation implied by law to do what the illegal contract requires to be done and a duty to restore — give back— whatever has been received in pursuance of the original illegal contract; between the contractor an implied obligation to perform and the legal obligation to refrain from disaffirming the contract while keeping the benefit derived from it. There also are decided cases which are supposed to go upon the idea that a want of power to do a particular thing is to be distinguished from a prohibition of, or an express denial of the right to, the exercise of the power. The opinions in Argenti v. City of San Francisco, 16 Cal. 255; Allen v. Intendant, etc., of La Fayette, 89 Ala. 641 (9 L. R. A. 497), Hitchcock v. City of Galveston, 96 U. S. 341, and many others, among them some of our own decisions, contain statements which seem to support one or both of these propositions, while in Paul v. City of Kenosha, 22 Wis. 266, and in some other decisions, the theory of a total failure of consideration is made to support a recovery. In that case the city issued and sold its bonds, which were void for want of power to issue them. They were a part of an issue of bonds in aid of the construction of a railroad, were originally delivered *566to the railroad company, but in some manner afterwards came into the possession and ownership of the city, which sold them as the property of the city to the plaintiff, who paid into the city treasury cash or its equivalent therefor. In Hitchcock v. City of Galveston it was determined that the city had the power to make and to pay for the particular improvements and so to contract therefor. What it had no power to do was to issue bonds in payment of the contract price, and it was held that, while specific performance of its engagement to do the un-: authorized thing would not be enforced, the city was l liable upon its contract. So in Argenti v. City of San Francisco, it was found that the city had authority to order the improvements which were made, and in the opinion of Chief Justice Field, rendered upon an application for rehearing, he places his concurrence in the judgment theretofore rendered expressly upon the ground that the contracts made were valid. Page 282. He concludes his opinion thus:
“I admit that there are numerous authorities which conflict with these views. Indeed, upon the general subject of the extent of the liability of a municipal corporation, the authorities are a tangled web of contradictions, and it is difficult to assert any proposition with respect to the same for which adjudications on both sides may not be cited. As a general rule, undoubtedly the city is only liable upon express contracts authorized by ordinance. The exceptions relate to liabilities from the use of money or other property, which does not belong to her, and to liabilities springing from neglect of duties imposed by the charter, from which injuries to parties are produced. There are limitations even to these exceptions in many instances, as where the property or money is received in disregard of positive prohibitions; as, for example, she would not be liable for moneys received upon the issuance of bills of credit, as this would be, in effect, to support a proceeding in direct contravention of the inhibition of the charter. Other limitations may exist, but it is unnecessary to pursue the matter any further.”
In Allen v. Intendant, etc., of La Fayette, a bill was filed by the taxpayers to restrain the payment of warrants *567given for borrowed money. It appeared that the town purchased a schoolhouse and land, for which it took a quitclaim deed, paying a small part of the purchase price from funds on hand, and borrowing the remainder from one to whom warrants were issued. It was determined, first of all, that the town had power to own and maintain public schools. It is found, also, affirming previous rulings of the court, that the power to borrow money is not incident to municipal corporations, and that if it exists, it must be by force of express legislative enactment, or by force of the bestowing of other powers, coupled with the imposition of duties incapable of exercise or performance without borrowing money. It is further determined that the officers of the town had no authority to borrow the particular money or to issue the warrants which were drawn and delivered. But a legal liability is asserted to repay the money borrowed; it having been used for authorized corporate purposes. The court, in reaching this conclusion, relies upon Gause v. City of Clarksville, 5 Dill. (U. S.) 180, which in turn affirms Wood v. City of Louisiana 5 Dill. (U. S.) 122. The opinion thus concludes :
4 ‘ We cannot perceive that the doctrine is open to objection on the ground of its supposed evil tendencies and consequences. It is shorn of all perilous possibilities by the limitations which hedge it about. It cannot obtain where the charter, or other statute operating in the premises, contains a prohibition of the power to borrow money, since a promise cannot be implied in the face of express law, but only in cases where, as in this one, there is merely a defect of power. 1 Dillon on Municipal Corporations (4th Ed.), § 451. It involves no danger of the municipality being charged with moneys which have been appropriated by its officers to their own use, or even to the use of the corporation, except in the manner, to the extent, and for the purposes authorized by the charter, as in either case the implication will not arise, and corporate liability will not attach. None of the evils which are justly supposed to result from the power to borrow money, which are not also attendant upon the capacity to incur debts, and which therefore have led to a denial of the *568former power, unless expressly, or by necessary intendment, conferred, while the latter is admitted as incident to ordinary municipal functions, can possibly supervene, where the money which has been borrowed has also been honestly devoted to expenditures for which the corporate authorities might have incurred debt; and to declare liability in the one instance, and deny it in the other, on the ground of evils which pertain alike to both, would be an anomaly to which we cannot subscribe. Indeed we apprehend that the power to create debts may be productive of more evils in municipal government than could, in the nature of things, result from the doctrine we are considering, when would-be lenders of money come to understand that the return of their proverbially timid capital depends, not upon the contracts they make, but on the faithful application of the loan to certain specific objects, by persons over whom they have no control.
“From every point of view, therefore, we feel safe in affirming that, under the case presented by the bill and answer — there really being no dispute about the facts in this regard — Mrs. Frederick has a valid demand against the town of La Fayette for the amount of money advanced by her, not because the corporate authorities agreed to repay it to her, but because they have legitimately used it for the benefit of the town, in a way, and to an end fully authorized by its charter. The warrants she holds are not enforceable as such, yet they truly represent the amount of her claim; and, in the payment of that amount, the corporate authorities would do no more than equity and justice require of them. It would be an idle and useless thing, therefore, to enjoin their payment; and exercising that discretion which may always be indulged with reference to the grant or refusal of an injunction, when substantial equity does not demand the issuance of the writ, we decline to reinstate it in this case.”
Cases may be found where a like result has been arrived at by holding that the plaintiff, lender, was subrogated to the rights of the debtor, who had been paid with the borrowed money. If we were to admit the force of the reasoning employed by the Alabama court, and if the point for decision was now first presented to this court, it is manifest that plaintiff has not made a like case upon the facts. The case might be rested here. But the point pre*569sented, while important, is not novel. And if it appeared that the money borrowed from the plaintiff was lawfully disbursed for current expenses of the county, the decision must still be against the plaintiff. Some statements of the judges, unnecessary to the decision, aside the decisions of this court, have, with a single exception, recognized and enforced rules which deny, as between the municipality and an individual dealing with it, any remedy for municipal default in cases where the power to deal at all is lacking, as well as in cases where express statutory restrictions upon the manner of dealing have been ignored. The exception is found in Peterson v. City of Ionia, 152 Mich. 678, which is cited and relied upon by plaintiff. While the precise question involved in that case cannot be said to have been decided in McBrian v. City of Grand Rapids, 56 Mich. 95, the legal theory, according to which the case was determined, is precisely opposed to the one adopted in deciding Ely v. City of Grand Rapids, 84 Mich. 336, and Auditor General v. Stoddard, 147 Mich. 329. Both of these cases affirm that the charter requirement that certain public work shall be let to the lowest bidder is mandatory, and that a contract, made without complying with the charter provision, is void. In East Jordan Lumber Co. v. Village of East Jordan, 100 Mich. 201, 205, the rule is stated in this way:
“If, on the other hand, the contract be one which it was within the power of the corporation to make, the fact that informalities may be found in the proceedings does not prevent recovery, in a case where, as in the present, the , municipal corporation has had the benefit of performance by the other contracting party, and has from time to time ratified the contract, and audited the bills presented. * * * This rule is, of course, not applicable where express statutory restrictions have been ignored in making the original contract.”
That, when a municipality is forbidden to execute public works, except under contract with the lowest bidder, there can be no recovery, as upon an implied contract, for work done for the benefit of the municipality, but not *570actually contracted for, and that, to state the rule differently, a promise will not be implied, as against a municipal corporation, where it cannot contract expressly, is affirmed in City of Detroit v. Paving Co., 36 Mich. 335; City of Detroit v. Robinson, 38 Mich. 108; Niles Water Works v. Mayor, etc., of Niles, 59 Mich. 311; Mackey v. Township of Columbus, 71 Mich. 227; Spitzer v. Village of Blanchard, 82 Mich. 234; East Jordan Lumber Co. v. Village of East Jordan, 100 Mich. 201; and in other decisions of this court. The decision in Peterson v. City of Ionia, clearly lays down an opposed rule, and has the effect of overruling, without expressly so announcing, a large number of previous decisions. I think Peterson v. City of Ionia should be now expressly overruled. The case at bar does not present the question whether a municipal corporation may not be required to restore to the owner specific property which it has attempted without authority to buy or take, or whether an action lies for money paid by mistake, or upon a consideration which fails, or which was obtained through imposition. It is apparent, however, that in such cases a remedy might be afforded without in any way affirming the exercise by the municipality of a power it did not possess, and without rendering nugatory the express provisions of a statute. There is here neither failure of consideration, imposition, nor mistake. An express contract was voluntarily made. Recovery upon the express contract being denied, it is sought to recover the money upon an implied contract, as money had and received for the use and benefit of the lender. Except for the operation of the statute of limitations, the effect, in either case, would be the same, and the consequences those which the decisions of this court which have been referred to seek to avert.
I concur in reversing the judgment of the circuit court. Appellant will recover costs of both courts.
Montgomery and Hooker, JJ., concurred with Ostrander, J.