Page images
PDF
EPUB

[No. 2.

Vol. I.]

GRAVEs v. LEBANON NATIONAL BANK.

it was resolved by the board of directors to receive the same, with the indorsement of Messrs. Burton, Mitchell & Co., and the cashier was directed to transfer the same to the books of the National Bank." From the depositions of the president of the bank, of Wilson, a director, and of Wilkins, who was first the clerk, and is now the cashier of the insti. tution, it is manifest that the most cursory examination of the bills, notes, and accounts, turned over to the bank by Burton, Mitchell & Co. would have disclosed a deficit of more than $12,000. The proof forces the conclusion that the directory either was advised of the discrepancy in Mitchell's account, or that it relied upon his representations and the indorsement of Burton, Mitchell & Co., and made no examination, notwithstanding the notes, bills, and accounts purchased amounted to more than half as much as the capital of the institution for which they were acting. The directors may not have been bound to notify the sureties of the manner in which this transaction was conducted, but certainly the latter had the right under the circumstances, to presume that in the first business transaction of the bank, involving so considerable an amount, the directory exercised at least slight diligence, and this presumption was greatly strengthened by the published report appearing on the 23d of October. A fraud may be perpetrated as well by the assertion of facts that do not exist, ignorantly made by one whom the person acting upon the assertion has the right to suppose has used reasonable diligence to inform himself, as by concealing facts known to exist, which in equity and good conscience ought to be made known.

The publication as to the resources and liabilities of the bank on the 9th of October, 1869, does not purport to have been made from its books. It was styled “Report of the condition of the National Bank of Lebanon at the close of business, October 9, 1869," and there is nothing in it to indicate that it was founded upon the books of the association, but, on the contrary, the clear import of the language used is that it exhibited the actual condition of the affairs of the bank. Though the forms furnished by the comptroller of the currency may have authorized the reports to be made out from the books, yet it is not shown that the sureties knew anything about these forms, and looking to the law defining these duties as well of the comptroller as of the officers of the bank, they would acquire no such information. The 34th section of the currency act, as amended, requires every association organized under its provisions, at stated times, to make reports to the comptroller, which “shall exhibit in detail and under appropriate heads the resources and liabilities of the association," on five certain specified days in each year, and publish these reports in a local newspaper, and authorize the comptroller to call for special reports from any association whenever in his judgment it shall be necessary, " in order to a full and complete knowledge of its condition.” It seems, therefore, that before the delivery and acceptance of the cashier's bond, and before appellants had become surety for his diligence, honesty, and fidelity, the association, pursuant to the provisions of the law to which it owed its existence, published to them and to the world a statement of its condition, from which it appeared that its affairs were being prudently and honestly administered, and from which they and the public had the right to believe that the cashier to whom had been intrusted the money, notes, and valuVol. I.]

Graves v. LEBANON National Bank.

[No. 2.

ables of the bank, had up to that time acted as a trustworthy person. If the sureties acted upon the impression thus created by the affirmative act of the party now claiming to enforce the stipulations of their bond, it is plain that they should be discharged from liability.

We have already decided that it should be presumed that the sureties did read and examine the report published October 23, 1869, and it remains to be determined whether the bond was accepted before or after that time. It bears no date except “ the day of — 1869.” The legal presumption therefore is, that it did not become binding on the bondsmen until the last day of that year. The bank fails to show the exact date of its delivery. One of the directors thinks it was about the 1st of October, 1869, while the president and another director fix it at about the first of November. The directory itself was not willing to fix the date of the acceptance of the bond, and, in an order entered upon the minute-book, purporting to record the action of the board at the time of its approval, neither the month nor the day is given. Considering the presumption arising from the want of specific date to the bond, and the preponderance of the testimony offered by the bank itself, we conclude that it was not accepted earlier than the 1st of November, 1869, about one week after the publication of the report of October 9, of that year.

We have, therefore, a case in which the directory of the bank held out to others as a trustworthy officer a man who had been guilty of repeated embezzlements and frauds, all of which might have been discovered by the exercise of slight diligence. However innocently the publication tending to show that Mitchell was an honest and faithful officer may have been made, the fact remains that the public had the right to act upon the presumption that the three directors, attesting the accuracy of the statement contained in the publication, had made some investigation, at least, to inform themselves as to the matters to which it related. The effect of the published report was to inspire the public with confidence in the officers of the bank, to disarm suspicion, and to prevent inquiry.

The losses occasioned by the defalcation of Mitchell, after the acceptance of his bond, must fall either on the association or his sureties. The latter are free from blame, and acted with reasonable prudence and discretion. They relied upon the truth of the representations made by those having the right to speak for the bank. These representations have turned out to be untrue. Had the sureties suspected they were untrue, it cannot be supposed that they would have entered into the contract of suretyship. Such being the case, the contract must be adjudged invalid.

The judgment against the surety is reversed, and the cause remanded, with instructions to dismiss appellee's cross petition.

Reversed and remanded.

Vol. I.

SUPERVISORS OF CARROLL Co. v. U. S. EX REL. REYNOLDS.

[No. 2.

SUPREME COURT OF THE UNITED STATES.

[OCTOBER TERM, 1873.]

MUNICIPAL CORPORATION. — JUDGMENT UPON COUNTY WARRANTS. —

MANDAMUS.

BOARD OF SUPERVISORS OF CARROLL COUNTY v. THE

UNITED STATES, EX REL. JOHN REYNOLDS. In Error to the Circuit Court of the United States, for the District of Iowa.

Held: that mandamus will not lie against a county to compel the levy of a tax to

pay a judgment recovered upon ordinary county warrants where the power to levy a tax for county purposes is limited to a specified amount, and a tax equal to such an amount has already been levied.

MR. JUSTICE STRONG delivered the opinion of the court.

On the 13th day of May, A. D. 1869, the relator obtained in the court below a judgment against the County of Carroll for the sum of $19,946.76. The judgment was for the amount due upon sundry county warrants issued for the ordinary expenditures of the county, and all of them issued after January 1, 1865. An execution having been awarded upon the judgment and returned “ nulla bona," the relator sued out this writ of mandamus to compel the board of supervisors of the county to levy a specific tax, sufficient to pay the debt, interest, and costs, and to apply the same, when collected, to the payment. To this writ the supervisors returned in substance (after averring that the judgment had been obtained upon ordinary county warrants issued for the ordinary expenditures of the county), that they had levied a county tax for the current year of four mills on the dollar of the taxable property of the county, and that they proposed to levy a similar tax for each succeeding year until the judgment should be paid. They further returned that they had no power to levy a tax at any higher rate. A general demurrer to this return was then interposed, which the circuit court sustained. Hence, this writ of error.

It is very plain that a mandamus will not be awarded to compel county officers of a state to do any act which they are not authorized to do by the laws of the state from which they derive their powers. Such officers are the creatures of the statute law, brought into existence for public purposes, and having no authority beyond that conferred upon them by the author of their being. And it may be observed that the office of a writ of mandamus is not to create duties, but to compel the discharge of those already existing. A relator must always have a clear right to the performance of a duty resting on the defendant before the writ can be invoked. Is it then the duty of the board of supervisors of a county in the State of Iowa to levy a special tax, in addition to a county tax of four mills upon the dollar, to satisfy a judgment recovered against the county for its ordinary indebtedness? The question can be answered only by reference to the statutes of the State.

By an act of the legislature, enacted on the 22d of March, 1860 (Civil Code of 1860, § 302 et seq.), it was declared that in each organized

Vol. I.)

SUPERVISORS OF CARROLL Co. v. U. S. EX REL. REYNOLDS.

(No. 2.

county of the State there should be a board of supervisors, the duties of which were defined. Prior to that time, the financial affairs of the several counties had been by the law committed to the charge of a county judge. But on the 2d day of April, 1860, a further act was passed, to take effect on the 1st day of January, 1861, which enacted that all laws in force at the time of its taking effect, devolving any jurisdiction or powers on county judges, should be held to apply to and devolve such jurisdiction upon the county board of supervisors, in the same manner and to the same extent as though the words “ county board of supervisors ” occurred in said laws, instead of the words “ county judge.” Civil Code, $ 330. Whatever power, therefore, the county judge possessed, prior to that enactment, to levy taxes for any purpose, was devolved upon the county board, with all its limitations. They may levy those taxes which he was empowered to levy, and no more, unless larger authority has, by other statutes, been given to them. By the act of April 3, 1860 (Civil Code, 710), they are required to levy the following taxes annually upon the assessed value of the taxable property in the county : 1, for state revenue, one and one half mills on a dollar, when no vote is directed by the census board, and that board is prohibited from directing. a vote greater than two mills on a dollar; 2, for ordinary county revenue, including the support of the poor, not more than four mills on a dollar, and a poll-tax of fifty cents ; 3, for support of schools, not less than one nor more than two mills on a dollar; 4, for making and repairing bridges, not more than one mill on the dollar, whenever they shall deem it necessary.

This act confers all the powers which the county board possess to levy a tax for ordinary county revenue. It is not claimed that larger authority was ever given. And this, it is to be observed, is expressly limited to the levy of a tax of not more than four mills upon the dollar.

The board however have authority, in certain specified cases, to levy a special tax to defray certain extraordinary expenditures. Succeeding, as they did, to the powers and duties of the county judge, whatever he was authorized to do in this behalf, they may do. He had been empowered, by section 250 of the Code, to submit to the people of the county, at any regular election, or at a special one called for that purpose, the questions, whether money might be borrowed to aid in the erection of public buildings; whether the county would construct, or aid to construct, any road or bridge, which might call for an extraordinary expenditure; whether stock should be permitted to run at large, and, generally, any question of local or police regulation not inconsistent with the laws of the State.

He was also empowered, whenever the warrants of the county were depreciated in value, to submit the question whether a tax of a higher rate than that provided by law should be levied ; and the 252d section enacted that, when a question so submitted involved the borrowing or expenditure of money, the submission of the question should be accompanied by a provision to lay a tax for the payment thereof, in addition to the usual tax; and that no vote approving the borrowing or expenditure should be of any effect unless the tax was also adopted. Thus it appears that the statutes of the State have made provisions for ordinary county taxes, limiting them to a rate not exceeding four mills; and also

VOL. I.

Vol. I.]

SUPERVISORS OF CARROLL Co. v. U. S. EX REL. REYNOLDS. [No. 2.

for special taxes beyond that limit, inserting defined contingencies. No statute was in existence when this writ was sued out, authorizing the county board to levy a special tax for ordinary revenue, or for ordinary expenditure, or indeed, for any purpose except those we have noticed, unless it be found in section 3275 of the Code, to which we shall presently refer. And the legislature of the State has made a clear distinction between ordinary county taxation, which the board of county supervisors may, at their discretion, levy within prescribed limits, and special taxation for extraordinary emergencies which can only be imposed in obedience to a popular vote.

In this case the warrants upon which the relator's judgment was obtained were all ordinary warrants, drawn upon the treasurer of the county, and, as is admitted by the demurrer, drawn for the ordinary expenses of the county. None of them were issued in pursuance of a popular vote, or for any extraordinary expenditure. They were such instruments as the legislature contemplated might be employed in conducting the current and usual business of the county. The act which empowers a county board to levy a tax for ordinary county revenue speaks of them, and evidently intends that they shall be satisfied either from the proceeds of that tax, or by their being received in payment thereof. They are simply a means of anticipating ordinary revenue.

But it has been argued on behalf of the relator, that section 3275 of the Code confers upon the county board the power and makes it their duty to levy a special tax beyond the tax authorized by section 710, whenever a judgment has been recovered against the county, even though that judgment may be for ordinary county indebtedness. That section is found in a statute relating to executions, and it is as follows: “ In case no property is found upon which to levy which is not exempted by the last section (sec. 3274), or if the judgment creditor elect not to issue execution against such corporation (a municipal one), he is entitled to the amount of his judgment and costs in the ordinary evidences of indebtedness issued by that corporation. And if the debtor corporation issues no scrip or evidences of debt, a tax must be levied as early as practicable, sufficient to pay off the judgment with interest and costs.” The next preceding section bad enacted that public buildings owned by the State or any municipal corporation, and any other public property necessary and proper for carrying out the general purpose for which any such corporation is organized, should be exempt from execution; and that the property of a private citizen should in no case be levied upon to pay the debt of such a corporation. Neither of these sections declares that a special tax shall or may be levied to pay any judgment against a municipal body. All that is said is, that in certain contingencies a tax must be levied sufficient to pay off the judgment. But whether this tax is to be a special one, or the tax authority to levy which was given to the county board by the 710th section, the act does not say. It is certainly remarkable that if it was intended to grant a new power to levy a tax for the payment of ordinary county indebtedness, when that indebtedness has been brought to judgment, the power should be granted, in a statute relating solely to executions, without any direction by whom it should be exercised, and that the additional grant should be left to

« PreviousContinue »