Bloomfield v. Charter Oak Bank - 121 U.S. 121 (1887)
U.S. Supreme Court
Bloomfield v. Charter Oak Bank, 121 U.S. 121 (1887)
Bloomfield v. Charter Oak Bank
Argued January 5-6, 1887
Decided April 4, 1887
121 U.S. 121
A town in Connecticut cannot make a contract, or authorize any officer or agent to make one in its behalf, except by vote of the inhabitants at a meeting warned by publicly posting a notice specifying the subject of the vote, and anyone who relies upon a vote as giving him rights against the town has the burden of proving such a notice although the selectmen and town clerk have neglected their duty of filing and recording the notice and although the record of the meeting states that it was "legally warned."
The property of any inhabitant of a town in Connecticut may be taken on execution upon a judgment against the town.
Neither the selectmen nor the treasurer of a town in Connecticut have general power to make contracts, to borrow money, or to incur debts in behalf of the town.
The reports made to an annual meeting of a town in Connecticut by the selectmen and treasurer, as required by statute, are not, unless acted on by the town, evidence to charge it with debts which those officers had no authority to contract in its behalf.
A promissory note, made by the treasurer of a town in Connecticut to a bank, of which he has borrowed money without the knowledge of the town, does not bind the town unless authorized or ratified by a vote of the town at a meeting warned for the purpose, and is not made valid, nor the town estopped to deny its invalidity, by the acceptance at an annual meeting of the reports of the selectmen and treasurer showing various sums paid to other persons or received "on town notes," and an "indebtedness of the town by notes" or by a vote at a subsequent meeting, duly warned, authorizing the selectmen to pay certain notes made by the treasurer to other persons, and by the selectmen's paying those notes accordingly.
This action was brought June 5, 1880, by a national bank against the Town of Bloomfield in the State of Connecticut upon three promissory notes dated June 20, June 21, and July 1, 1879, and payable three months after date, for the aggregate sum of $19,433.30, and all alike in form, the first being as follows:
"Hartford, June 20, 1879. $5500. Three months after date, The Town of Bloomfield promise to pay to the order of S. J. Mills fifty-five hundred dollars at Charter Oak National Bank. Value received."
"S. J. MILLS, Treasurer"
The answer denied that the defendant made the notes, or that Mills, as its treasurer, had authority to make them in its behalf.
A trial by jury was had, resulting in a verdict for the plaintiff in the full amount of the notes and interest, and a bill of exceptions was tendered by the defendant and allowed by the court, so much of which as is material to be stated was as follows:
The Town of Bloomfield was incorporated in the usual manner of Connecticut towns, by a resolve of the Legislature of Connecticut, in May, 1835, by which the inhabitants of the
town, and their successors forever, residing therein, "shall have and enjoy all the powers, privileges, and immunities which are enjoyed by other towns in this state." It was admitted that Mills was elected treasurer of the town on October 5, 1868, and was reelected annually, and acted as treasurer until July 16, 1879, when he resigned, and that he made and signed the notes in suit, and endorsed them to the plaintiff. The defendant objected to the admission of the notes in evidence, because the plaintiff had shown no authority from the defendant to Mills to borrow money or execute notes. But the court, against the defendant's objection and exception, admitted the notes "subject to the duty of the plaintiff to prove such authority."
The plaintiff then offered in evidence a copy, certified by the town clerk, February 16, 1877, of the record of this vote of the town:
"At an annual town meeting, legally warned and held at the usual place, October 5, 1868, S. J. Mills, moderator; H. W. Rowley, assistant town clerk, voted that hereafter the town treasurer be authorized and empowered to borrow money for the use of the town."
The defendant objected to the admission of this vote because the plaintiff offered no evidence that the warning of that meeting specified any such object as was contained in the vote. It was admitted that the warning had not been recorded by the town clerk, and was not on file in his office.
The court overruled the objection and admitted the vote in evidence
"not as showing a legal or valid vote of the town, but subject to the duty on the part of the plaintiff to prove that the town at its meetings, by its affirmative acts and conduct, had assented to and treated as authoritative the power of the treasurer under said vote to borrow money for the use of said town, or for the purpose of establishing that by the course of conduct of the town in its town meeting, it had practically established the authority of the treasurer under said vote and of establishing an estoppel in pais against the power of the town to treat as invalid a vote the validity of which
had been affirmatively declared by its acts if it should appear that the defendant had intentionally caused the plaintiff to believe in a state of facts which it now claims not to exist and induced it to act on such belief."
To this ruling the defendant excepted.
The plaintiff thereupon,
"for the purpose of proving that the town had made the said Mills its general agent in fact to borrow money, and had at its town meetings, and by its affirmative acts in said meetings, treated the treasurer as authorized under said vote to borrow money for the town,"
offered the following evidence:
"1st. Forty-four notes, for the aggregate sum of more than $64,000, made by Mills as treasurer, in behalf of the town, to sundry persons, other than the plaintiff, and mostly citizens of Bloomfield, between the times of the passage of that vote and of his resignation, all of which bore endorsements of payments of interest, and had been paid and taken up."
"2d. Copies of the annual printed reports made by the selectmen of the town, together with the treasurer's annual reports, to the annual town meetings from 1869 to 1878 inclusive, and the records of the town meetings, showing the action of the town thereon."
The reports of those officers, in 1869, showed sums paid for "interest on town notes" to sundry individuals named, $1,507, and to two of them, for "town notes taken up," $1,646.58; "indebtedness of town by notes, $27,100;" and "amount received on town notes $6,559.88." The reports in the subsequent years showed similar items, varying in amount, and the "indebtedness of the town by notes" gradually increasing to $48,416.28. It was admitted that the sums paid for interest included the payments of interest on the 44 notes aforesaid.
The records of the town meetings showed that at an adjournment of the annual meeting of 1868 it was "voted that the selectmen be directed to have the report of items of account printed yearly, 500 copies;" that at the annual meeting in 1869, the reports of the selectmen and treasurer were "read and accepted;" that in 1870, "the reports of selectmen and
town treasurer, being in printed form, were not called for;" and that there was no record of any action of the town at the subsequent meetings with reference to such reports. But it was admitted that the printed reports were in fact distributed to all who attended those meetings.
"3d. A vote of the town, passed at a special meeting, duly warned and held May 29, 1880, authorizing the selectmen to make and deliver notes in the name and behalf of the town to take up and cancel 'certain memoranda of indebtedness, signed by the selectmen or other officers of said town, and all bearing date July 1, 1879,' for money lent to the town and unpaid; also evidence that, in pursuance of this vote, the selectmen took up twenty notes, some signed by Mills as treasurer and others both by him as treasurer and by the selectmen, amounting in all to $45,184, and given by him in their presence on July 1, 1879, to various persons, in renewal of or substitution for notes which he had previously given to them, and that these notes were afterwards taken up and paid by the selectmen."
The defendant objected to all this evidence as irrelevant and immaterial, but the court admitted it for the reasons above stated, and the defendant excepted to its admission.
The bill of exceptions proceeded as follows:
"The plaintiff's account with Mills as such treasurer commenced in March, 1871, and continued until July, 1879. The first note which he procured to be discounted as such treasurer was discounted on March 24, 1871, and thereafter he continuously obtained discounts and renewals of old notes until the date of the last note, when the three notes in suit were outstanding. The aggregate of his account was over $250,000."
"In this account he deposited moneys of the town, and, without the knowledge of the plaintiff, small amounts of his own, and checked out from said account, both for the use of the town and, without the knowledge of the plaintiff, small amounts for himself."
"The plaintiff offered evidence and attempted to trace each note in suit, so as to show that nearly the whole amount of the proceeds of said notes went to the use of the town, and that
nearly all of the checks drawn against said proceeds were given to inhabitants of the town in payment of town orders given by the selectmen. But no evidence was offered to show that the town, in its town meeting assembled, knew that Mills kept his bank account with the plaintiff or that he was borrowing the money represented by these notes, or those of which these were renewals, of the plaintiff."
"The plaintiff disclaimed any advantage by virtue of being endorsee of the notes, rather than payee, and did not claim that it stood on that account in any other relation to the defendant than if it had been the payee."
"The plaintiff also offered evidence which the defendant claimed showed that at the time when the plaintiff first obtained a copy of said vote of October 5, 1868, from the town clerk of said town, viz., on February 22, 1877, all the moneys represented by the notes in suit had been advanced to said Mills, treasurer, except the sum of $1,500, and the notes in suit, except so far as said $1,500 was concerned, were renewals of notes made before said date, and before the plaintiff knew of said vote from the record itself. The plaintiff denied the validity of said claim."
"It sufficiently appeared from the evidence in the case that the plaintiff supposed or thought that Mills was authorized to borrow money for the use of the town and give its notes therefor, from the commencement of the account of the plaintiff with Mills as such treasurer."
"There was no other evidence in regard to any affirmative acts of the town in its town meetings assembled which would constitute an agency in Mills or raise an estoppel against the town, other than those which are hereinbefore contained, and this comprised all the evidence in the case in regard to estoppel, ratification, or agency, the court having confined the plaintiff in its testimony to acts of the town in town meetings, and excluded any acts or knowledge of the selectmen."
The plaintiff thereupon rested its case, and the defendant again objected to the admission in evidence of the notes sued on and the vote of October, 1868, on the grounds above stated; also on the grounds
"that no sufficient evidence had
been offered to prove a ratification by the town of the said vote or to establish any estoppel against the town which would prevent it from setting up the invalidity of said vote, or, in connection with said vote, to prove a general authority given by the town to Mills to borrow money for the town, and give notes therefor, sufficient to make the town liable on the notes in question; . . . that the town, as a municipal corporation, had no inherent power to borrow money or give notes therefor, nor had any special authority therefor been proved; that even if it had such power, it could only exercise it by a vote specifying objects for borrowing money which were within the duties of the town to perform, and limiting the amount so to be borrowed, and that, even if the town had such power, it could not delegate to its treasurer power to borrow money, unlimited either in object or in amount; . . . that, by proper construction of said vote, it did not authorize any person who might thereafter be treasurer to borrow any sum of money which he might think fit and make the town liable therefor, and did not authorize Mills to borrow the money and give the notes in question;"
"that, even if the town had given authority of Mills to borrow, it had not given him power to give negotiable promissory notes like those in suit for the money so borrowed."
But the court overruled the objections and admitted the notes and the vote in evidence, and to this ruling the defendant excepted.
The defendant introduced evidence tending to show that the warning of the town meeting of October 5, 1868, did not in fact contain any notice that the matter of authorizing the treasurer to borrow money would come before the meeting, and also evidence tending to show that Mills, during all the time from 1868 to 1879, was largely in default to the town, having embezzled large sums of money belonging to the town, in addition to the sums obtained by him from the plaintiff, and that the moneys obtained by him from the plaintiff were not used to pay debts of the town, or, if so used in part, only to pay debts for the payment of which the town had furnished him sufficient money, which he had embezzled
as aforesaid, and so were in fact obtained and used by him for his own purposes, to cover such embezzlement.
The defendant also put in sundry votes passed by the town in 1862, 1863, and 1864 authorizing the selectmen to borrow money to pay bounties to soldiers, and to give orders on the town treasurer or notes of the town therefor, which votes has been ratified and confirmed by the Legislature of Connecticut before the town meeting of October 5, 1868, as well as evidence that at the meeting of May 29, 1880, and before the passing of the vote above mentioned, one of the selectmen read to the meeting a list of the notes signed by Mills as treasurer, either alone or with other officers of the town, which contained no notes given by Mills to the plaintiff. Before the charge to the jury, the defendant renewed its objections by requests for instructions, which the court refused to give.
The court instructed the jury that in the absence of all testimony, there was no presumption that the warning of the town meeting of October 5, 1868, specified the subject of giving authority to borrow money, and that the vote of that meeting, "standing alone, did not give general authority to borrow money, and to act as general agent in that regard;" but submitted the evidence in the case to the jury as sufficient to authorize them to find that the defendant, by continuous and affirmative action and conduct in its town meetings, knowing that its treasurer had generally and freely borrowed money and given notes under that vote, had made him in fact its general agent for that purpose, had held him out to the plaintiff as such, and had ratified his acts, and was estopped to deny their validity.
The defendant excepted to the refusal to instruct as requested, and to the instructions given, and sued out this writ of error.