Board of County Commissioners v. Clapp

86 N.W. 775, 83 Minn. 512, 1901 Minn. LEXIS 732

• Court: Supreme Court of Minnesota
• Decided: June 21, 1901
• Docket: Nos. 12,579 — (141)
• Status: Published

Opinions

LEWIS, J.

This is an action brought to recover the sum of $11,750 from respondents, alleged to be wrongfully detained by them.

The facts stipulated for the purposes of this trial are as follows: From the year 1883 to 1894, inclusive, personal, property taxes were assessed and levied against one Sophia M. Bristol, a resident of the state of New York, on certain credits due to her in the county of Washington, Minnesota. She died in 1894, and her will was probated in Ramsey county. No part of the taxes was ever paid by her, and they accumulated in an amount of over $60,000-In order to recover this sum, the board of county commissioners of Washington county authorized the county attorney to procure such legal assistance as he deemed necessary, and, pursuant to> this authority, respondents were employed by the county attorney for the purpose of collecting the debt. Thereupon the county’s claim was filed against the estate in the probate court of Ramsey county,, and proceedings with reference to its collection were then taken in the United States courts, which finally resulted in a judgment of $41,535.86 against the estate. It was stipulated that the reasonable value of respondents’ services as attorneys in the prosecution of the claim and in the procurement and collection of the judgment was the amount of $12,500, of which respondents retained in their possession the sum of $11,750, $750 having already been paid. The balance of the amount collected, $29,785.86, respondents paid over to the county, and it was received by it without prejudice.

The county contends for the position that the attorneys had no right to retain this money in payment of their services, for the reason that under the provisions of Gr. S. 1894, § 6194, they could not acquire any lien upon the money in their possession, and for the further reason that their claim for services against the county was not subject to offset as against the fund then in their possession. It is argued that an attorney’s lien did not attach to the funds in the hands of respondents, for the reason that municipal corporations, in levying taxes, are instrumentalities of the government, and taxes levied against them are, in legal effect, levied by the state; that in this case the county, in collecting these taxes against the Bristol estate, was the instrumentality of the state, and what the attorneys did for the county was the act of the state; and that section 6194, supra, should not be construed to include within its appropriation and effect the sovereign state.

It is unnecessary at this time to determine whether or not respondents could enforce a lien under the statute. We do not rest this decision upon that ground, and, under such circumstances, the effect of that statute upon the common-law rights of the parties should be left for future consideration. It may be conceded that an attorney cannot offset his claim for services against public funds, by virtue of G-. S. 1894, § 5237. Peirce v. City, 3 Metc. (Mass.) 520; Trenholm v. Charleston, 3 Rich. (So. C.) 347; Johnson v. Howard, 41 Vt. 122, 98 Am. Dec. 584; Apperson v. City, 2 Flip. 363, Fed. Cas. No. 497. The taxes in question were levied for the benefit of the state and the several governmental subdivisions, and whatever amount is finally realized upon the judgment will belong to and be distributed to such governmental divisions according to their pro rata share. We may concede that if the money in the hands of respondents was in fact money belonging absolutely to the state, county, city, and various school districts, in certain proportions, then an offset could not be made, as against those governmental divisions, because respondents had no mutual contract relations with them, and, there being no mutuality of obligation, there could be no right to retain the money, either by virtue of an attorney’s lien, a set-off, or upon any other theory.

But we do not consider the claim against the Bristol estate, afterwards merged into a judgment and converted into money, as funds, absolutely, of the different governmental subdivisions, until the proper amount was determined and ready for distribution. That amount could not he determined until the expenses connected with its collection were known and deducted. The balance, whatever it was, should be credited to those several funds.

For the purpose of levying and enforcing the payment of taxes, the county is the authorized agent or trustee of the various municipal divisions; and, if taxes are not voluntarily paid, their collection is enforced through the county machinery, and the board of county commissioners has exclusive jurisdiction to authorize such proceedings as were taken by respondents in this instance. It is clear, therefore, that, unless prohibited by some statute, neither the state, city, nor school districts have any claim upon money collected in excess of the amount actually realized by their representative and agent, the county. It follows that it is of no concern to those various municipal subdivisions in what manner the county paid for such services. The county had the power, implied by virtue of its position as such trustee or agent, to authorize the collection of the tax debt either upon a commission basis, or by contract, express or implied, for compensation to the extent of the reasonable value of such services.

We are referred to Laws 1895, c. 282, as a limitation upon the county to pay for such services as were rendered by respondents out of county funds only. And it is claimed that the words “county funds” mean moneys actually belonging to the county, and do not include .any part of moneys collected from the Bristol estate, for the reason that such moneys belonged exclusively to the various governmental subdivisions mentioned. The chapter referred to is the only authority we are aware of by which county commissioners are authorized to employ assistant counsel, the first section of which reads as follows:

“That in any suit or proceeding where any county is a party the board of county commissioners may, when they deem it for the interests of the county so to do, employ the services of any attorney at law to assist the county attorney or to appear for the county and protect its interests therein, or to advise the county commissioners in relation thereto, and pay for such services out of the county funds.”

In our opinion, the words “county funds” refer to those matters in which the county is the exclusive party interested, or to such matters as are within the absolute jurisdiction' of the county for the purposes of the employment of the services therein mentioned.

As already stated, the county is the only instrumentality for the collection of the debt in question. It has the power to enforce that collection. Under this statute it has the power to employ additional counsel to assist the county attorney for the purpose of conducting such proceedings, and it necessarily follows that, because of such jurisdiction and power, the funds so collected through its instrumentality and by reason of its exercise of power are, for the time being, and until the amount is finally determined, county funds, within the meaning of this act. Any other construction would be unjust and uncalled for. If by the term “county funds” is meant only the actual funds of the county, then in this case the state, city of Stillwater, and the various school districts are entitled to receive their pro rata share of the entire amount of the judgment of $41,535.86; and, while the county is entitled to receive only its pro rata share thereof, yet it must pay the entire amount of the expense of collecting the same.

There is no sound distinction to be drawn between money expended in such proceedings in the way of disbursements and in the way of attorney’s fees. If in such proceedings the county is compelled to pay the fees of attorneys from its own fund, then it may be compelled to pay out for such purposes a much larger amount than it would receive from the sum realized. And what justice is there in requiring the county to pay out of its own money the legal expenses of recovering money for the benefit of other municipal branches? This was a doubtful debt. . Neither the state, city,mor school districts would ever have received a dollar of their interest in this large amount unless the county, as their representative and trustee, took such steps as were taken in this instance. There is nothing compulsory about the statute. In such cases the commissioners are not required to employ counsel, but they may do so when they deem it for the interests of the county. If the legal adviser • of the county is not equal to the task, such a debt must go uncollected, unless, as in this instance, the county commissioners proceed and employ additional counsel. As we understand the statute, it treats the county, in a general sense, as representing whatever interests are imposed upon it by law; and the funds collected from defaulting taxpayers are, within the meaning of this act, until they are finally collected and adjusted, and the amount of final distribution determined, to all intents and purposes, county funds. We therefore hold that under and by virtue of this act the county commissioners were the representatives of the various municipal divisions,' and had authority to make the contract with respondents through the county attorney and to compensate them for their services out of the funds collected.

But it is claimed the respondents were not entitled to retain the amount of their fees from the moneys collected by them; that under the provisions of G-. S. 1894, § 687, they must file their duly-verified claim with the county commissioners, and allow the same to take its course, the same as other claims against the county: It being admitted that the amount so retained was just and reasonable, respondents were not guilty of conversion or wrongfully diverting the money by paying themselves out of the fund which was legally applicable for that purpose. Such right of application existed under the common law by virtue of the relations of attorney and client, and we can see no distinction in that respect between a private party and a governmental subdivision such as the county. Such distinction did not exist at common law. It may be termed the right of equitable lien or set-off. In re Paschal, 10 Wall. 488; The Siren, 7 Wall. 152; State v. Ampt, 7 Am. Law Rec. 469. It must be noted that the doctrine is founded upon the fact that such fund is created by the exertions of the attorney, and grows out of his contract relation with reference thereto, and has application only to such a condition. .

The statute (§ 687 supra) does not prohibit such application as was made in this instance by respondents. If they had not retained their fees, but had paid over to the county the entire amount collected, then the method of collecting their claim against the county would be regulated by the section- cited. As stated in Old Second Nat. Bank v. Town of Middletown, 67 Minn. 1, 69 N. W. 471, the statute was enacted in furtherance of public policy, to prevent needless litigation, and to save unnecessary expense, by affording an opportunity amicably to adjust all claims before suit is brought. It was competent for the legislature to' suspend the right to bring suit until the claims are first presented to the auditing board. But it has not been necessary for respondents to commence a suit. Their claim has been paid, and there is nothing due them. This action is for money had and received, and the parties are in the same position they would be had respondents failed to pay over to the county any of the funds collected, and suit had been brought to recover the entire amount. In such case respondents would, upon the theory of equitable set-off, be entitled to retain an amount equal to the reasonable value of their services; but, as the case stands, respondents have been paid, and there is no law requiring that to be done which would be useless.

Judgment affirmed.