Clarke v. Board of Supervisors — 12 N.Y. St. Rep. 311

Majority

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William V. Clarke, Appl’t, v. The Board of Supervisors of Saratoga County, Resp’t.^[1]

(Court of Appeals,

Filed December 13, 1887.)

Headnote

¡Counties—Liability of county on notes given by county treasurer —Principal and agent—When principal bound by act of agent— •When third parties charged with notice.

The county treasurer of Saratoga county, by resolutions of the board of supervisors, was authorized and did borrow in precise accordance with the terms of the resolutions money from the plaintiff among others. The treasurer misappropriated some of the money which he borrowed and issued notes far in excess of what he w„s authorized r to issue against the

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county. The plaintiff was during all that time a member of the boar! of supervisors. Held, that even if plaintiff was chargeable with notice of the-treasurer’s misappropriation, etc.', such facts would not constitute a defense to this action where it appeared that the money was honestly loaned and where it must be presumed in the absence of proof to the contrary that it was not misappropriated but was actually applied to the use of the-county. Following and applying Parker v. The same defendant, 11 N. Y. State Rep., 211.

Appeal from a judgment of the supreme court, general, term, third department, affirming the judgment of the. special term in favor of defendant.

L. B. Pike, for app’lt; C. S. Lester, for resp’t.

All the controlling facts in this case are like-those in the case of Parker v. The Board of Supervisors of Saratoga County, recently decided by us ( 106 N. Y., 392 ; 11 N. Y. State Rep., 211).. Both cases were tried before the same judge, and in that case he ordered judgment in favor of the plaintiff, and in this case against the plaintiff. In. that case it was held by us that the county treasurer was. authorized to borrow money and give notes therefor binding upon the county, but that his authority to borrow was. restricted as theré stated; that it is a well settled doctrine of agency, that whenever the act of the agent is authorized by the terms of the power, that is, whenever comparing; the act done by the agent with the words of the power, the act is in itself warranted by the terms used, such act is. binding on the constituent as to all persons dealing in good faith with the agent; that applying that test to the acts of the county treasurer, nothing was lacking to establish his authority in the transactions with Parker, except that as it was shown that he fraudulently borrowed money and issued obligations in excess of the limit fixed in the resolutions of the board of supervisors, and that those transactions may have been a part of the fraudulent dealings; that the acts of the county treasurer were within his actual authority until further evidence should be given by the defendant tending to identify the particular dealings with Parker as a part of the fraudulent dealings; that it was a. just rule supported by analogies, that when the act of the. agent apparently conforms to the authority and includes, the particular transaction, and is not in excess of the authority conferred, so far as third persons dealing with the agent can know, the act of the agent is presumptively within the authority conferred; that the burden of proving; that it was done after the authority was spent rests upon-the principal, and that the burden is not met nor the presumption overthrown by proof, that in the course of the agent’s dealings he fraudulently exceeded his authority, without showing or giving evidence from which a jury would have a right to infer that the particular transaction was

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unauthorized. There we sustained the plaintiff’s recovery on the grounds that the loans were made by Parker in good faith; that it did not appear that the treasurer misappropriated any of the money borrowed by Parker; that the indebtedness which the treasurer was authorized to extend at no time fell short of the loans made by Parker or the notes issued in renewal, and that the defendant had failed, to identify the transactions with Parker as in excess of the actual authority vested at the time in the treasurer.

Our decision proceeded upon the theory that the case was before us substantially the same as it would have been if there had been a finding based upon positive proof that-Parker had loarned the money to the county treasurer in. good faith; that the transaction was authorized by the resolutions of the board of supervisors, and that the money borrowed was actually appropriated to the purposes authorized by the resolutions.

The presumption raised by law was held to take the place of positive proof.

Precisely the same facts exist in this case. Beyond dispute the county treasurer was authorized by the resolutions-of the board of supervisors to borrow this money, and notes in the name of the county were given to the plaintiff in the same form as those which were held by Parker. There is no proof that at the precise time this money was, borrowed, it was not needed for the purposes specified in the resolutions, or that it was misappropriated. The presumption is that the county treasurer actually borrowed this money for the county, and applied it to the uses of the county, and, as we held in the Parker Case, we must, under precisely similar circumstances, therefore, hold in this, that this action is not well defended.

But judgment went against the plaintiff at the special-term, from the force and effect given to the proof that at the time he loaned this money to the county treasurer he was a supervisor of one of the towns of Saratoga county, and thus a member of the board of supervisors, and that he had been such supervisor during all the years from and •including the year 1863, to and including the year 1875, .except the year 1866, and chairman of the board of supervisors in the years 1868, 1869, 1870, 1875.

The trial judge found as matters of fact that the plaintiff, being a member of the board of supervisors and knowing the extent of the powers intended-to be conferred upon, the treasurer by the resolution of the board, was, in the exercise of ordinary care and prudence, bound to ascertain, what the treasurer had done under such resolutions, and. -that he was chargeable with knowledge of the amount oE

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the previous notes which had been issued by the county treasurer; that it was his duty as a member of the board of supervisors to inform himself as to the condition and -extent of the debt of the county, and that as supervisor he was presumed to have been acquainted with the condition and extent of the debt of the county during the times he was supervisor.

The plaintiff appears to have been defeated upon the ground that as a member of the board of supervisors he was wanting in the active diligence, vigilance and care which were due from him to the county, and that therefore he was responsible to some extent and in some way for the misconduct and misappropriation of the public money by the county treasurer, and hence that he should not be permitted to recover the money loaned by him to the= county.

We are unable to perceive upon what theory the plaintiff could as supervisor be charged with knowledge of what the treasurer had done under the resolutions or in violation of them before he borrowed plaintiff’s money. The plaintiff as a public official was bound only to exercise ordinary diligence, and there is no finding and just .inference from the evidence that such diligence would have disclosed to him the treasurer’s malfeasance, or the condition or extent of the county debt. The treasurer meant to cover up his misdoings and conceal them from the scrutiny of the board of •supervisors. He was an official greatly trusted by the people of his county, having been elected for five consecutive terms of three years each to the office of county treasurer. 'The plaintiff was not bound under such circumstances to believe or suspect that he was a criminal and to take extraordinary precautions to protect the people against his criminal misconduct. There is no evidence that the plaintiff did not as supervisor act in good faith and give to the discharge of his duties that degree of care and vigilance which the law exacts of such public officers dealing with other public officials, who also act under the sanction of an’ oath .and the authority of law.

But we do not perceive what bearing the facts which were supposed to distinguish this case from the Parker Case can have, or how they can furnish a defense to this action.

Upon the proof, as it appears in this record, and as we .are bound to take it, it is shown that the county treasurer, by resolution of the board of supervisors, was authorized to borrow, and did borrow, in precise accordance with the terms of the resolutions, this money from the plaintiffs, and actually applied it to the use of the county; and we cannot comprehend how the plaintiff’s carelessness or misconduct as a member of the board of supervisors furnishes

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any defense to a cause of action for the money thus loaned. Even if he was chargeable with notice that the treasurer had misappropriated some of the money which he borrowed, and had issued not far in excess of what he was authorized to issue against the county, yet such facts would not constitute a defense to this action where it appears that the money was honestly loaned and where it must be presumed in the absence of proof to the contrary that it was actually applied to the use of the county. If it had appeared that the county treasurer when he loaned this money was acting in excess of his actual authority, and that he had misappropriated the money, and the plaintiff was seeldng to hold the principal and maintain this action because the agent in the transaction with him acted within the scope of his apparent authority, we would have a different case to deal with, and then there would have been some room for the application of the principles of law upon which the plaintiff has thus far been defeated.

We are therefore of opinion that the judgment should be reversed and a new trial granted, costs to abide event.

All concur, except Peckham, J., not sitting, and Ra-absent.