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employed by the state, and not by the de- The act of 1912 under which this suit fendant board, and was the attorney of the has been brought contains no such proviso state, and not of the defendant board. The as that which was contained in the act of suit was by the state to forfeit the charter 1906. It simply declares, without proviso of one of her corporations. The defendant or condition, that "it is hereby made the board not only was not a party to it, but, legal duty of the sewerage and water board for over a year after it had been brought,

to pay to Benjamin Rice Forman a was not even in existence. The following just compensation for his services rendered authorities are distinctly in point, and are in the case of the State of Louisiana v. conclusive against a right of action of any New Orleans Waterworks Company,” that kind, equitable or legal, arising in favor what may constitute such “just compensaof an attorney at law for legal services tion" shall be determined by consent, or, without his having been employed. if the parties are unable to agree, by final Knowing how arduous and valuable and judgment of court, and that the payment meritorious were the services of Mr. For- of the judgment may be made by the sewerman, it is with regret that the court finds age and water board, or enforced against itself compelled to decide against him.”

it, in a particular way. So far, therefore, And it was held (quoting from the sylla- as the courts are concerned, the duty which bus) that “the right of an attorney at law the act purports to impose upon them is to demand payment for his services depends ices rendered by Mr. Forman, and give

merely to determine the value of the serv. upon whether he was or not employed. He judgment accordingly; and all that stands cannot recover from one who did not em- in the way of the discharge of that duty is ploy him, however valuable the result of the plea of res judicata, predicated upon the his services may have been to such person, judgment above cited, and herein filed by and especially if the person was not even a the sewerage and water board, and the obparty to the suit.”

jection interposed by that board, that the provide for the organization of cities and There is a class of claims against a muvillages by general law. It may, in the exer- nicipal corporation which under the Consticise of such power, attach such conditions tution cannot be legalized by statute, and or obligations to the grant of municipal these claims are invalid or void because they powers and privileges as it sees fit, and may do not arise from the performance of a compel the recognition and assumption of "county, city, town, or village purpose" as obligations not binding in law, but just provided by the Constitution. and equitable in their character.

Thus, a statute requiring a city to pay

counsel fees expended by an officer in sucClaims neither moral nor equitable. cessfully defending against a proceeding to

remove him from office or to convict him of The legislature, however, has no power a crime is in matter of Chapman v. New to compel a municipal corporation to pay York, 168 N. Y. 80, 56 L.R.A. 846, 85 Am. a claim against it, which it is under no ob- St. Rep. 661, 61 N E. 108, held unconstituligation, moral or equitable, to pay; nor tional as contravening that provision of the can the legislature require a court to ren- Constitution which declares that no county, der judgment for such claim upon proof of city, town, or village shall give any moneys, the amount thereof. McQuillin, Mun. Corp. or lend its name or credit in aid of any in§ 237. See also FORMAN V. SEWERAGE & dividual or corporation, nor be allowed to WATER BD.

incur any indebtedness, except for a counThus, an act which assumes to create and ty, city, town, or village purpose. The court impose on the county a liability for services stated that there was no legal liability or not rendered to it, but to private indi. moral obligation on the part of the city to viduals, in a contest in which they were in pay his expenses, which were not necessary antagonism to the county as a political for the common good and general welfare entity, and in which the official representa of the municipality, nor public in character, tives of the county were their adversaries, nor

as appears sanctioned by its is unconstitutional. Thus, it was held in citizens. Warren County v. Cowan, 60 Miss. 876, 45 So, the passage of a statute authorizing Am. Rep. 424, that the legislature could the issuance of revenue bonds to be met by not compel a county to pay for services ren- taxation, for the payment of the necessary dered by attorneys employed by taxpayers expenses which had been previously into lower a tax rate, the court stating that curred by a municipal officer in defending if the right of the legislature to compel himself from a charge of official misconduct, payments of a moral claim is conceded, such is precluded by a constitutional provision concession will not support this act, for no forbidding any municipality to give any sort of obligation exists upon the county money to any individual, or to incur in question to pay for services rendered indebtedness for other than municipal against the county as a political organism. purposes. Ibid. In the above case the The laborer is worthy of his hire, but to court stated that no benefit was conferred be paid by his employer.

upon the city, ard there was never a legal or

so far

act of 1912 is unauthorized and unconsti-, anywhere that can now so change the situatutional.

tion as to give the heirs of Mr. Forman The plea of res judicata covers part, but the status of creditors, in any sense, of not the whole, of the case here presented, the sewerage and water board for the comsince the judgment relied on as supporting pensation here claimed. it merely held that neither the services The remaining question, and the only rendered by Mr. Forman nor the act of question left for decision, then, is whether 1906 created any cause of action, legal or it is competent and constitutional for the equitable, in his favor, and against the general assembly to require, and for this sewerage and water board; whereas the suit court to decree, that the sewerage and now before the court is prosecuted under water board shall devote a fund which the the act of 1912, and, upon the pleadings of Constitution has placed under a particular the defendant, presents the questions control for a particular use, to the payment whether that act, purporting, as it does, to of a claim, the holder of which, as thus create such cause of action, is competent ascertained and determined by final judgand constitutional legislation.

ment, has no right, legal or equitable, in It is clear that the judgment, to the ef- or to such fund. The learned counsel for fect that Mr. Forman had no claim, legal plaintiffs, however, ignore the narrow comor equitable, against the sewerage and wa- pass within which the case here presented ter board, is conclusive upon that issue, must be restricted, and, arguing at length and as entirely beyond legislative control to show that their clients have an equitable as is any other final judgment of this court, claim against the defendant, cite authoriquoad persons and issues with respect to ties in support of the power of the general whom, and to which, the court was vested assembly to compel its payment. Thus with jurisdiction, and, as completely beyond they say: "Briefly stated, our contention the control of the court as of the legisla- is that the sewerage and water board, beture; and hence there is no power lodged 'ing a municipal corporation, is subject to inoral obligation on the part of the city to compensation, and directed the employment pay the claim in question.

of the city funds for other than city purSo, it is not within the power of the legis. poses. lature to require a city to pay the legal The board of apportionment was in Peoexpenses of an official who has successfully ple ex rel. Pomeroy v. Green, 63 Barb. 390, defended himself against an indictment, the directed to audit and allow a claim against city being under no legal or moral obliga- the city of New York for services of a pubtion to reimburse the official. Re Straus, lisher performed under color of legal au44 App. Div. 425, 61 N. Y. Supp. 37, see thority, and necessary and beneficial to the also Re Jensen, 25 Misc. 378, 59 N. Y. Supp. city, such services coming within the 653, affirmed in 44 App: Div. 509, 60 N. Y. provisions of an act requiring the compSupp. 933, and set out in note in 48 L.R.A. troller “to allow and pay the bills of the 476.

proprietors of the newspapers in A statute rendering a municipality lia- said city and county, for all city and county ble to a de jure officer for salary paid to a advertising actually done prior to January de facto officer is held unconstitutional in 1st, 1872.” The object of this act, said the Stemmler v New York, 179 N. Y. 473, 72 N. court, so far as the newspapers were conE. 581. The court in the above case states cerned, evidently was to provide an apthat, while this case might fall within the propriate procedure with an adequate broad doctrine laid down in Guilford v. remedy for the speedy liquidation and pay, Chenango County, 13 N Y. 143, and similar ment of all strictly legal obligations, and cases, yet with the amendments of the Con- also of all just and honest claims of an stitution of 1846, adopted in 1874, the rule equitable, if not of a technically legal, charis now quite different. Those amendments acter. There was the fullest intention of were new, and for the first time forbade any providing for publishers who had acted city to give or loan its money or credit in under legal authority, or at least in good aid of an individual, prohibited the legis- faith under color of such authority, but not lature or any city from granting any extra of presenting any part of the public funds compensation to public officers, and prevent to those who had acted in palpable violaed them from employing or requiring the tion of law and without a shadow of auuse of city funds for any but city purposes. thority. Further on the court said that a The statute in question clearly falls within large part of the publications for which the inhibition of the Constitution as amend- claims were presented were made apparented in 1874, as it required the city of New ly without any contract, express or implied, York to pay an amount for which it was and without any legal authority or even not liable, legally nor in equity or in jus- official request. The allowance of such tice. It in effect provided for a mere gra- claims would be a pure gratuity, and the tuity or extra compensation to a public court would not by mandamus—a writ officer who had performed no service for which issues only in cases of unquestionable the city, and had done nothing which en- legal right-direct the board even to contitled him, as against the city, to any such 'sider them.

J. D. C.




the control of the legislature in all respects, they could hope to own a system which had save in so far as the act creating it was previously owned them. . embedded in the organic law of the state “There can be no question that it (the and thereby taken beyond the domain of claim here asserted] is founded on the relegislative control. The dedication of the ceipt and acceptance of property and the funds arising from the tax to the purpose obligation, thence arising, to pay for the of acquiring a water system either by construction or purchase was, no doubt, crys- "As to the point that 'the sewerage and tallized in this manner, and therefore re- water board was not in existence when the moved from the possibility of legislative suit [to forfeit the charter of the waterinterference. But that crystallization went works company) was brought,' there is nothno further. It did not preclude the legis- ing to it. If there is such an equitable lature from applying those funds to the foundation for the act to Warrant very purposes to which the tax was dedi. the legislature in directing payment for the cated. Some control over the subject-mat. service, it may impose the duty upon the ter by the legislature was undoubtedly re- | board, whether then created or not.” served. This reservation justly appears in They then quote McQuillin on Municipal the carefully reserved right to amend the Corporations, vol. 1, § 237, p. 536, to the act of 1899, a right which is expressly rati-effect that “the payment of legitimate fied and confirmed by the constitutional claims against the municipal corporation amendment itself. The purpose was served, may be compelled by the legislature. The no doubt; the make-up of the board was courts permit the legislature to use the sacred."

power of compulsory taxation for this purBoth points were so decided in State ex pose. The payment of a debt may be enrel. Saunders v. Kohnke, 109 La. 838, 33 forced when equitable in character, although So. 793; but beyond this the legislature it may not be binding in law, and even unwas free. Let us now ascertain what the enforceable in law or equity." “sacred purpose” was. It was:

"To ac

But, no doubt, considering it inapplicable quire by construction or purchase a water to eir case, the counsel do not quote the works system for the city of New Orleans." following from the same volume and sec

A recognized part of such an undertaking tion, to wit: “But the legislature has no was the clearing of “the ground for the power to compel a municipal corporation to new edifice.

pay a claim made against it, and which it “Before the new water system could be is under no obligation, moral or equitable, constructed, it was essential to clear the to pay; nor can the legislature require a site. The site was obstructed by the mo- court to render judgment for such claim nopoly franchise of the old waterworks com- upon proof of the amount thereof." pany. The removal of that obstruction was The instant case is the more clearly withso plainly necessary, and the cost of the in the rule last above stated, for the addiremoval so plainly a part of the object for tional reason that the fund from which it which the special tax was levied, that act is proposed that the claim of the plaintiff No. 6 of 1899 carried, as § 15, a special shall be paid, and the only fund upon which provision expressly authorizing the pur- the sewerage and water board can draw, chase, or the expropriation, of that fran- is placed, not by legislative action alone, chise, and expressly reciting that same but by the Constitutica of the state, in could be paid for by the assumption of the the custody of the board of liquidation outstanding bonds of the old company. The of the city debt, to be drawn upon only for public valued the property of the old com- the establishment and maintenance of the pany at between $2,000,000 and $3,000,000. water, sewerage, and drainage systems of If, therefore, the site had been cleared by New Orleans, and for the payment in prinexpropriation, that clearance would have cipal and interest of the bonds issued in cost the special tax fund that sum of that behalf. The contention that the commoney.

pensation of Mr. Forman should, from an "If Mr. Forman's services in removing

equitable point of view, be regarded as the monopoly franchise of the New Or not the sole, issue in the case heretofore

among those uses presented the main, if Jeans Waterworks Company were not strict. decided, and that issue, as we have seen, ly in line with the purpose of the people was decided adversely to the contention, and and their petition to construct a water, became a “thing adjudged.” The decisions sewerage, and drainage system, there is cited by the learned counsel support the nothing 'strictly in line with it.

It was

doctrine as stated in the excerpt from Mcthe suit brought Mr. Forman that pro- Quillin, quoted by them, but do not bear voked and inspired the taxpayers' petition. upon this case, since the defendant now be

1 The people awoke to the fact that maybe'fore the court incurred obligation


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whatever with respect to the cost of the pro- | to deny the entries on the books of the ceeding by the state to withdraw the mo- bank, their sworn published statements, and nopolistic franchise which it had granted to their sworn representations to the state the waterworks company, when it found examiner of state banks concerning a dethat company violating the terms of the posit to the credit of another insolvent

bank, where the state examiner, the degrant and using the franchise as a means of oppression; and we find no authorities and the public have accepted and acted upon

positors and creditors of the insolvent bank, which hold that a legislature can compel such sworn published statements. Public the diversion of a fund, the destination of policy requires that the bank should be which has been fixed by the Constitution, bound by the acts of its officers. to the payment of a claim which quoad, and contradictorily with, the parties by and

(February 8, 1915.) against , there has been a final judgment decreeing A of the Judicial District Court for the

PPEAL by defendant from it to be neither legal nor equitable. The judgment appealed from is therefore af- Parish of Washington, in favor of plain

tiff and intervener in a suit to prevent the firmed.

payment to the special liquidator of the O’Niell, J., takes no part, not having Commercial Bank of a certain amount apbeen a member of the court when the case

pearing on the books of the Bank of Angie was argued.

to its credit as a deposit. Reversed.

The facts are stated in the opinion. Petition for rehearing denied November

Mr. St. Clair Adams, for appellant:

Officers and directors of a bank who have 16, 1914,

made sworn statements to the stat' examiner of state banks, and published the same, cannot be permitted thereafter to contradict

these statements and testify as to the falLOUISIANA SUPREME COURT.

sity of the record so made by them.

Wright v. Gurley, 133 L.. 745, 63 So. 310; H. H. KENNEDY

Pauly v. O'Brien, 69 Fed. 460; Brodrick v. Brown, 69 Fed. 497; Briggs v. Stafford,

14 La. 381; Florance v. Twichell, 5 La. W. L. YOUNG, State Examiner of State

Ann. 16.
Banks, Appt.

A bank officer is estopped from denying
J. S. BROCK, Jr., Intervener. his sworn statements, published reports,

books, and papers, upon which the state ex(136 La. 674, 67 So. 547.)

aminer of state banks, third persons, and

the public in general have acted. Estoppel of bank to deny statements

Wright v. Gurley, 133 La. 745, 63 So. of ollicers.

310. The officers of a bank will not be heard

The courts will not extricate a bank from Headnote by SOMMERVILLE, J.

a situation created by the deceit, fraud, Note. Right of bank to contradict en- , dent wrote to the defendant bank explain

tries in its books or statements in ing the situation and proposing to give his public reports.

personal note to defendant for $30,000,

which gum was to be credited to his bank It will be observed that this note is not in a special account not subject to check, concerned with the personal liability of of- but to be kept until the note was retired; ficers of the bank, but only with that of the that the proposition was accepted, the note bank itself.

taken and credited to the president's perAs to the power of a bank officer to bind sonal account with defendant, in whichoachis bank by an agreement that the liability count the money of the Guthrie bank was of a party to commercial paper shall not be habitually kept as a special deposit, apart enforced, see State Bank v. Forsyth, 28 from the general deposit subject to check ; L.R.A. (N.S.) 501, and note.

that the president then gave his check The only case found in which the facts against the account to the Guthrie bank, are similar to those involved in KENNEDY which credited it to bills receivable, the v. You'ng is Rankin v. City Nat. Bank, 208 whole amount on deposit with defendant, the U. S. 541, 52 L. ed. 610, 28 Sup. Ct. Rep. general deposit subject to check, and the 346, affirming 75 C. C. A. 343, 144 Fed. 587, special deposit not subject to check, being in which it appeared that the National made to appear on the books aggregated Bank of Guthrie had made excessive loans as a general account, obviously for the to certain individuals; that the bank ex- purpose of deceiving the bank examiner; aminer complained and directed that the the objectionable loans were then taken loans be reduced; that thereupon the presi- ' off the books; but it does not appear and misconduct of its officers, but will The plaintiff, H. H. Kennedy, a depositor "leave him bound who has bound himself." in the Bank of Angie to the extent of some

Pauly v. O'Brien, 69 Fed. 460; Landwirth $7,000, presented a petition to the said exv. Shaphran, 47 La. Ann. 336, 16 So. 839; aminer, objecting to the payment to the Wright v. Gurley, supra.

special liquidator of the Commercial Bank Messrs. Ott, Johnson, & Ott, for appel- of the sum of $11,000, appearing on the lees:

books of the Bank of Angie to the credit The cashier of a bank has the authority of the deposit account of said Commercial to pledge the bank's deposits to secure its Bank, for reasons which may be stated as obligations.

follows: Coats v. Donnell, 94 N. Y. 168.

That said sum is and was held by the The mere bringing of the suit in support Bank of Angie as collateral security for a of which the estoppel is invoked cannot be loan of $11,660 from said bank to the Comsaid to constitute the change of position mercial Bank; that said loan was negowithin the meaning of the law of estoppel. tiated by H. D. Bickham, president of the

Des Allemands Lumber Co. v. Morgan Commercial Bank, who on January 7, 1913, City Timber Co. 117 La. 1, 41 So. 332. signed a note for said sum in favor of the

Bank of Angie, and the proceeds, the sum Sommerville, J., delivered the opinion of $11,000, were placed directly to the credit of the court:

of the Commercial Bank, under a contemThe Bank of Angie and the Commercial poraneous agreement between said BickBank of Bogalusa, being in insolvent cir- ham, president, and the president and cashcumstances, were closed by order of the ier of the Bank of Angie, that the same state examiner of state banks, and special were for the benefit of the Commercial agents were duly appointed to liquidate Bank, and were to remain on deposit in them.

the Bank of Angie without being subject whether the notes evidencing them were judge, that they did not contend that the actually surrendered by the bank; it fur. contract was illegal, a disclaimer repeated ther appears that when the $30,000 note to us, and in view of the possibility that the became due it was replaced by a demand facts were found as they were with that note for $25,000 signed by the president agreement in view, we shall not consider personally, and the same agreement as to that aspect of the case. It would not help the special deposit was renewed in writing the plaintiff.” Rankin v. City Nat. Bank, signed by the president for the Guthrie 208 U. S. 541, 52 L. ed. 610, 28 Sup. Ct. bank; that later, without knowledge of the Rep. 346. Guthrie bank's failing condition, defendant While the transactions involved in this charged the demand note to the special ac- case and in KENNEDY V. Young were quite count, returned the note canceled, and closed similar, both as to the objects sought, i. e., the account, and on the same day the Guth- the deception of the banking officials, and rie bank failed.

the methods used, and, in view of the stateThis suit was brought by the receiver to ment of the Supreme Court in the Rankin recover the amount of the deposit, claiming Case as to the illegal feature of the transthat the transaction was a loan to the presi action, there would seem to be room for dent with an attempted pledge of a deposit an inference that it would have decided the of the Guthrie bank, and that defendant KENNEDY CASE differently than did the suhad unlawfully appropriated the deposit to preme court of Louisiana, there is the disits own

in payment of the note. In tinguishing feature in the facts of the addition to the agreement being signed by KENNEDY CASE as found by the court, that the president of the Guthrie bank as presi- the agreement that the deposit should not dent, that bank recognized the special de actually be subject to check, though ostenposit in the statements of account between sibly so, was made between the Bank of the banks. The court found that as between Angie and the president of the Commercial the banks no one got any money, the trans- Bank as an individual, not in behalf of his action being merely a juggle with books bank, so there was some ground for holding and paper to deceive the bank examiner; that the Commercial Bank was not a party that the defendant received nothing of value, to the fraudulent transaction, and that its and the Guthrie bank parted with nothing books represented the transaction as it supof value, unless it did in fact surrender the posed it to be, while actual fraudulent renotes evidencing the objectionable loans, ports of it were made by the bank of Angie, which, if it did, was a transaction between while in the Rankin Case the defendant bank it and its president with which defendant apparently carried the account in question had no connection; that the transaction on its books as a special deposit not subconcerning the credit was made between the ject to check, and the bank of which plaintwo banks, and therefore defendant was not tiff was receiver fraudulently falsified its liable. As to the illegality of the contract books to deceive the bank examiner by enthe court said: "In view of the statement tering the amount in question as a general of counsel at the argument, to the circuit | deposit.

R. L. S.


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