State Ex Rel. Bank of Commerce & Trust Co. v. Forbes

174 So. 67, 179 Miss. 1, 1937 Miss. LEXIS 12

• Court: Mississippi Supreme Court
• Decided: May 3, 1937
• Docket: No. 32640.
• Status: Published

Opinions

Smith, C. J.,

delivered the opinion of the court.

The court below sustained ’ demurrers to the appellant’s declaration, and on its declining to plead further, dismissed its action. The action was brought by the Bank of Commerce & Trust Company on a cause of action said to have accrued to Ralph May, deceased, and assigned to it by the administrator of May’s estate. The declaration alleges in substance that in January, 1928, the county of Marion issued and sold 150’ negotiable loan warrants or notes, for the sum of $1,000' each, payable to bearer, as follows: Notes numbered 1 to 10, both inclusive, payable March 15, 1929; 11 to 15, inclusive, March 15, 1930; 16 to 25, inclusive, March 15, 1931; 26 to 35, March 15, 1932; 36 to 50, March 15, 1933; and so on to March 15, 1936. The notes numbered 26 to 35, inclusive, were purchased by Ralph May, and were issued under chapter 768, Local and Private Laws of 1928, the validity of which is not here challenged, which provides: “That the board of supervisors of Marion county, be and are hereby authorized and empowered in their discretion, to borrow money or sums of money, not to exceed the total .sum of one hundred and fifty thousand dollars ($150,000.00), for the purpose of constructing public roads in Marion county, Mississippi, and aiding in the construction of federal aid roads in said county, and to issue the negotiable loan warrants or notes of the said county of Marion therefor, bearing interest at not more than six per cent per annum, and payable semiannually, and to be due and payable in amounts not exceeding the following each year, to-wit: $10,000.00' in 1929; $5,000.00 in 1930; $10,000.00 in 1931; $10,000.00 in 1932; $15,000.00 in 1933; $30,000.00 in 1934; $35,-000.00 in 1935, and $35,000.00 in 1936, and said board is also authorized and empowered to make a special tax levy annually at the time provided by law for making the general tax levy for the purpose of paying said loan warrants or notes at maturity, together with the interest thereon. ’ ’

The resolution under which these notes were issued declares “that the board of supervisors hereby obligates itself to levy a special tax each year as provided by the terms of the act of the legislature authorizing and empowering said board to issue these notes, and as provided by law, in a sufficient amount to pay the principal and interest of said notes on the due date thereof.”

In February, 1932, the board, pursuant to a resolution theretofore entered on its minutes declaring that the county was without funds to pay the notes held by May and some other outstanding notes of the county aggregating $35,000, issued and attempted to sell negotiable refunding bonds for the payment thereof. It was unable to sell the bonds, and May refused to accept any portion of them in lieu of the bonds held by him. On the maturity of the notes held by May he presented them to the Hanover National Bank, at which they were payable, but it declined to pay them, having no funds of the county in its hands for that purpose. They were afterwards presented to the board of supervisors of Marion county, which also declined to pay them; whereupon they were collected by means of an action thereon in a federal court. May employed attorneys to prosecute his federal court action, paying them therefor the sum of $1,500. The members of the board of supervisors of Marion county for the years 1928, 1929, 1930, and 1931 were H. T. Broom, W. L. Simmons, J. J. Sumrall, and L. A. Newsom. The members of the board of supervisors who assumed office on the first Monday of January, 1932, for a term of four years, were John T. Hutson, L. A. Newsom, B. W. Hammond, John E. Forbes, and John J. Beacham, all of whom, and the surety on their official bond, are parties defendant to the declaration, and each of whom filed a separate demurrer thereto.

The recovery sought is the $1,500 attorneys’ fee paid by May, hereinbefore set forth.

Section 3227, Code of 1930, provides that “the board of supervisors of each county shall, at its regular meeting in October of each year, levy the county taxes for the fiscal year, . . . but, if the board of supervisors of any county shall not levy the county taxes at that time, the board may levy the same at any other regular adjourned, or special meeting.”

Section 5977 of the Code provides that “every county in this state which has or may hereafter have legal and undisputed outstanding warrants or other obligations, and insufficient funds in the treasury to pay them or any of them, is empowered and required to at once prepare for, and take up such warrants and other obligations from the proceeds of serial bonds which shall be issued for such purpose, as is provided by law for issuance of bonds for the payment of outstanding obligations. . . . The prompt issuance of sufficient bonds to pay all of such legal and undisputed warrants or other obligations is made mandatory on such counties.”

Section 5986 of the Code reannounces section 5977 in so far as it relates to counties, and provides: “Such [refunding] bond[s] shall be issued in sufficient amount to pay and retire any existing bonds as they mature whenever funds available from taxes are not sufficient to pay said bonds whenever they mature.”

Section 5990 of the Code requires: “Whenever any county, road district, consolidated school district, rural school district, or other taxing districts controlled by the board of supervisors which has heretofore issued, or shall hereafter issue bonds or other obligations of which principal and interest shall be payable at some bank or trust company, or at some office other than the county treasury it shall be the duty of the clerk of the board of supervisors on the allowance of said board to issue a warrant'against the proper fund for the amount of principal and interest due and to forward exchange to the paying agent, said exchange to be sufficient in amount to pay said principal and interest and a reasonable fee to said paying agent for handling same, said fee not to exceed one-quarter of one per cent, of the amount of coupons paid and one-eighth of one per cent. of the amount of bonds paid. Said exchange shall be forwarded in time to reach the paying agent at least five days prior to the date on which said principal and interest shall become due, and the receipt of the paying agent for said remittance shall be sufficient voucher in the hands of said clerk for said remittance until the bonds or coupons shall have been paid and cancelled and returned to said clerk. ’ ’

The declaration and exhibits thereto do not disclose that the board failed to levy taxes in 1928, 1929, 1930 for the payment of the principal of these notes which matured in 1929, 1930, and 1931. On the contrary, these notes were paid off as they matured; it did not levy taxes in October, 1931, or thereafter, for the payment of the notes held by May which matured in March, 1932.

The grounds on which the declaration seeks a recovery are: (1) The failure of the board of supervisors to levy a special tax for the payment of the notes purchased by May; and (2) the failure of the board of supervisors to furnish the Hanover National Bank with money for the payment of the notes.

Chapter 768, Local and Private Laws of 1928, contemplates that these loan warrants or notes should be issued in 1928, and expressly provides that a designated portion thereof should mature in each year, beginning with 1929, and since neither it nor the resolution adopted by the board when issuing the notes expressly indicate an intention to build up a sinking fund by taxation for the payment of all the warrants or notes at their maturity, it seems clear that the only tax levy required by it is an annual levy thereof sufficient to pay the interest on the warrants or notes as it becomes due, and to pay the principal of such warrants or notes as become due before the time fixed by law for the next levy of taxes arrives. The board; therefore, was not in default in failing to levy a tax for the payment of the notes held by May prior to October, 1931.

It is said by counsel for the appellee that in October, 1931j the board had the option under chapter 768, Local and Private Laws of 1928, when construed in connection with sections 5977 and 5986 of the Code, to either levy a tax for the payment of these notes that were to mature in March, 1932, or to issue refunding bonds for the payment thereof. The permission given by section 5986 to issue refunding bonds is when, but not unless, “funds available from taxes are not sufficient to pay said bonds whenever they mature. ’ ’ Had a tax for the payment of these notes been levied in 1931, the presumption is that it would have been collected and the notes paid therefrom; in such event no necessity would have arisen for the issuance of refunding bonds. The board, therefore, was derelict in not levying a tax for the payment of these notes in 1931. The board that came into office in January, 1932, was confronted with the fact that because no tax had been levied therefor there were no funds-in the county treasury with which to pay the notes held by May. Whether the board then had the power under section 3227 of the Code to levy a special tax for the payment of these notes is doubtful, but that aside, it did issue refunding bonds for the purpose of paying the notes, which bonds were validated under section 312 et. seq. of the Code, and therefore the power of the board to issue them cannot now be questioned, and it cannot be now held to have been derelict in not levying a tax for the payment of these notes. Moreover, it is very probable that had the board levied a tax in January, 1932, for the payment of these notes the tax would not have been collected in time for their payment in March, 1932.

From this it necessarily follows that the demurrers of Hutson, Hammond, and Beacham, who did not become members of the board until the first Monday in January, 1932, should have been sustained, for it was through no fault of theirs that the county was without funds to pay the notes held" by May when they matured.

The other appellees, who were members of the board during the years 1928, 1929, 1930, and 1931, are here liable because of the failure of the board to levy a tax in 1931 for the payment of these notes if, but only if, a statute so provides.

Boards of supervisors are not mere ministerial agents of the state. Prior to the adoption of the State’s Constitution of 1832 many of the duties now imposed on such boards were discharged by a county court. They appear in the judiciary articles of the Constitutions of 1832 and 1890, in the first under the name of boards of police (article 4, sec. 20), and in the second under their present name (sec. 170), and are charged with duties judicial, legislative and executive; and in McNulty v. Vickery, 126 Miss. 341, 88 So. 718, it was expressly held that a member of the board of supervisors is not a ministerial, but is a quasi-judicial, officer. See, also, Haley v. State, 108 Miss. 899, 67 So. 498. The failure to levy the tax here in question was that of the board of supervisors in its corporate capacity: And the rule is “that a public officer, who is a member of the corporate body upon which a duty rests, cannot be held liable for the neglect of duty of that body. If there be refusal to exercise the power of such body, it is the refusal of the body, and not of the individuals composing it. The official action of its different members is merged into the official action of the board itself as an entity.” 22 R. C. L. 487. This excerpt from R. C. L. was quoted and applied in Pidgeon Thomas Iron Co. v. Leflore County et al., 135 Miss. 155, 99 So. 677, 680, wherein the members of a board of supervisors were sought to be held liable for the failure of the board to discharge a statutory duty.

Chapter 217, Laws 1918, provides “that any person entering into a formal contract with this state, any county thereof, municipality therein, or any political subdivision whatsoever therein, for the construction of -any building or work or the doing of repairs, shall be required before commencing same to execute the usual bond, with good and sufficient sureties, with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying labor or material therefor;” and further provides for a right of action on this bond by persons furnishing labor or material to the contractor. The board of supervisors of Leflore county failed to require such a bond of the contractor whom it had employed to construct a bridge for the county. This contractor failed to pay Pidgeon Thomas Iron Company for material sold him by that company, and used by him in constructing the bridge. Pidgeon Thomas Iron Company sued the county and the members of the board of supervisors for the damages thereby sustained. The court declined to permit a recovery against either the county or the members of its board of supervisors, saying with reference to the latter: ‘ ‘ The board of supervisors of a county is created by statute for special purposes, and it exercises only such powers as are conferred by statute, either expressly or by implication, and it is charged with the performance of such duties as are imposed by statute. In the discharge of the duties imposed upon the board the members thereof act in an official and not an individual capacity, and any neglect or failure in the exercise of its powers or discharge of its duties is the default of the board, and not of the individuals composing it, and they are not liable for such default unless made so by statute. Chapter 217, Laws of 1918, does not in terms impose any duty upon the members of the board as individuals, but only as officials representing the public, and it does not impose any individual liability for the defaults of the board in respect to the duties thereby imposed upon it. . . . In the absence of an express declaration of legislative intention to impose individual liability on the members of a board of supervisors for the defaults of the board, we think it is clear that none exists, and that the demurrer filed on behalf of the members of the board was properly sustained.” Pidgeon Thomas Iron Co. v. Leflore County et al., supra. As there, so here, the statute (chapter 768, Local and Private Laws of 1928) “does not in terms impose any duty upon the members of the board as individuals, but only as officials representing the public, and it does not impose any individual liability for the defaults of the board in respect to the duties thereby imposed upon it.” To the same effect, see McNulty v. Vickery, supra; Hydraulic Press Brick Co. v. School Dist., 79 Mo. App. 665; Bassett v. Fish, 75 N. Y. 303; Monnier v. Godbold, 116 La. 165, 40 So. 604, 5 L. R. A. (N. S.) 463, 7 Ann. Cas. 768; Blanchard v. Burns, 110 Ark. 515, 162 S. W. 63, 49 L. R. A. (N. S.) 1199.

Among the cases relied on by the appellant are Walton v. Colmer, 169 Miss. 182, 147 So. 331, 148 So. 635; Amy v. Barkholder (Amy v. Supervisors), 11 Wall. 136, 137, 20 L. Ed. 101; First Nat. Bank v. Filer, 107 Fla. 526, 145 So. 204, 205, 87 A. L. R. 267. Walton v. Colmer was an action brought by a district attorney for the benefit of a county against the members of its board of supervisors for the breach of an official duty, and of course has no relevancy here. We are dealing, not with the liability of a member of a board of supervisors to the county itself for the breach of his official duties, but with his liability therefor to a private individual. This distinction was expressly made in McNulty v. Vickery, supra.

In Amy v. Barkholder the members of the board of supervisors had been directed by writ of mandamus to levy a tax sufficient to pay a judgment and costs rendered against the county; a state statute also imposed this duty on them, and declared ‘ ‘ that a failure on their part to perform the duty enjoined, should render them personally responsible for the debt.” The court held them personally responsible to the judgment creditor therefor. If the court there intended to impose liability without reference to the statute imposing it, it was on the ground there pointed out that the duty to levy the tax because of tbe command in tbe writ of mandamus so to do.caused tbe duty thereby imposed to become one of purely ministerial character. This is the construction put on the case in Section 784 of Mechem on Public Officers (1890). The case, therefore, is not in point here.

In First National Bank v. Filer, an action was “brought by the holder of certain promissory notes issued by the board of public instruction of Dade county, Fla., to charge the members of the board issuing them with personal or individual liability thereon.” The notes had been issued by the board for the payment of property bought by it, without complying with the statute regulating such purchases, rendering the notes void. The members of the board were held personally liable for the payment of the notes, the court saying: “The general rule has been understood to be that a public officer, who is a member of a board or body corporate upon which a duty rests, cannot be held liable for the neglect of duty by the body or board of which he is a. member, it by no means follows that a public officer may not, upon the principles' of the adjudicated cases, decided in this state, and in states whose decisions we regard as highly persuasive, be held personally and individually responsible for the acts of public boards of official bodies, so far as he personally joins in and lends his efforts toward the accomplishment of the wrongful acts of the body or board itself as an entity.-”

It will be observed that the court thereby engrafted an exception on the general rule of nonliability of á member of a board for the acts of the board in its corporate capacity, i. e., he is liable “so far as he personally joins in and lends his efforts toward the accomplishment of the wrongful acts of the body or board itself as an entity.” Should it be held that such an exception exists, as to which we express no opinion, the declaration here does not allege that the appellees joined in the failure to levy this tax, or did anything to prevent its being levied.

■ The only statute said by the appellant to impose liability on the appellees for the damages sustained by May because of the failure by the board of supervisors to levy the taxes for the payment of his notes is section 5993, chapter 152, Code of 1930, which is as follows: “For failure or refusal to comply with the foregoing provisions any official charged with any duties hereunder shall be liable on his official bond to any holder of any bond or coupon for any and all expenses incident to the collection of same, and for all damages which may have accrued on account of the failure to pay same promptly at the place of payment at maturity.”

The only tax levy referred to in chapter 152 is for the payment of bonds authorized by that chapter; and the ■notes here in question were not issued under that chapter but under a special act conferring power to issue notes not included in any section of chapter 152 of the code, consequently section 5993 thereof has no application here.

Should that section of the Code be held to be applicable here, then it will also apply to a failure of the members of the governing board of any taxing district to levy taxes with which to pay any debt due by the district, thereby imposing a burden on the members of such boards which the Legislature did not intend to, and probably would not, impose.

The court below committed no error in sustaining the demurrers to the declaration.

Affirmed.