Opinion
No. 31475.
January 7, 1935.
COUNTIES.
County supervisors held not personally liable for transfers from county road and bridge bond sinking fund to other unrelated county funds, since transfers were "loans" within statute authorizing county boards to lend county sinking funds, notwithstanding that transfers were irregular, in that statutory requirements for loans from sinking funds were not complied with (Code 1930, sections 247, 251, 252, 5987).
APPEAL from the Chancery Court of Greene County.
May, Sanders, McLaurin Byrd, of Jackson, for appellant.
In the instant case there was no purchase of securities and no loan on real estate. The transactions in this case were merely transfers by the board of supervisors from the sinking fund to various county and district funds, without any notice of any kind, without any evidence of debt being executed, and without any provisions being made for the repayment of said funds, and without any authority of law for the repayment of the funds.
The whole defense of the defendants may be summarized in the statement that the money is claimed to have been appropriated to an object authorized by law. That having been appropriated to an object authorized by law the inquiry can proceed no further under the various decisions of this court. We submit that this cannot be the law.
It is for a diversion of money from its legitimate objects, and not for appropriation to a proper object, although in an irregular or unauthorized manner, that liability is imposed on members personally.
Paxton v. Baum, 59 Miss. 531; Paxton v. Arthur, 60 Miss. 832; Monroe County v. Strong, 78 Miss. 565; Board of Supervisors of Winston County v. Mrs. L.W. Adams, Chancery Clerk, 141 So. 476.
J.A. Covington, Jr., of Meridian, for appellees.
Where a statute imposes its own liability for violation or non-observance other statutes relating to liability generally do not apply.
Gully v. McClellan, 153 So. 524.
Section 197 of the 1930 Code provides that each member of a board of supervisors shall give bond and prescribes the penalty thereof. It further provides that such bond shall be a security for any illegal acts of such member of the board of supervisors and that recovery may be had "for any injury by such illegal acts of such member."
Section 2888, Code of 1930.
As the particular statutes governing the loaning of funds do not prescribe any specific penalties, we must fall back on section 197, which governs the liability of supervisors generally for illegal acts. It is well settled that the liability on such an official bond is for consequential damages caused by the particular illegal act and that the obligation is to indemnify the county for any loss or damage proximately caused by the illegal act.
Lizana v. State, 69 So. 292; Walton v. Colmer, 147 So. 331, 148 So. 635; Phillips v. Morrow, 97 So. 130; Dow v. Humbert, 91 U.S. 294, 23 L.Ed. 368; Gully v. Bew, 154 So. 284; Sections 197 and 5987, Code of 1930.
Under the common law the individuals composing a board are not individually liable for acts of the board as an entity and under the law in this state, in the absence of fraud or corruption, the individuals composing the board of supervisors are not liable for acts done by the board unless there is a statute specifically prescribing individual liability.
22 R.C.L. 487; 15 C.J. 478; Hydraulic Pressed Brick Co. v. School District, 79 Mo. App. 665; Bassett v. Fish, 75 N.Y. 303; Monnier v. Godbold, 40 So. 604-5, L.R.A. (N.S.) 463, 7 Ann. Cas. 768; Blanchard v. Burns, 152 S.W. 63, 49 A.L.R. (N.S.) 1199; Pidgeon-Thomas Iron Co. v. Leflore Co., 99 So. 677; McDermott v. Board of Commerce, 110 N.E. 237; Reese et al. v. Isola State Bank, 105 So. 636; Miller v. Tucker, 105 So. 774; National Surety Co. v. Miller, 124 So. 251.
It is well settled in this state that if the board has jurisdiction of the subject-matter, or in other words, if the action taken was one belonging to the general class of cases within the cognizance of the board that the individual members are not liable so long as they act in good faith unless they make an appropriation to an object not authorized by law.
Paxton v. Baum, 59 Miss. 531; Section 259, Code of 1930; Paxton v. Arthur, 60 Miss. 832.
Where a board of supervisors, in making appropriations for work done on public roads, are advised and honestly believe that the facts exist which authorize the appropriation, the members are not personally liable for the money so appropriated, although mistaken in their beliefs as to the existence of such facts.
Miller v. Tucker, 105 So. 774; National Surety Co. v. Miller, 124 So. 251; Gully v. McClellan, 153 So. 524; Gully v. Bew, 154 So. 284, 721.
A county bond is of course an outstanding obligation of a county but is no more sacred than any other outstanding obligation of a county.
Section 5977, Code of 1930; Chapter 133, Laws of 1904, section 334, Code of 1906, chapter 121, Laws of 1918, section 334, Code of 1906, chapter 227, Laws of 1920, section 251, Code of 1930.
A good test of what is an object authorized by law seems to be whether or not the appropriation falls within a class of appropriations that the board is authorized to make.
It will be observed that the bill does not allege that the board of supervisors of Greene county has exhausted its power to levy taxes under the limitations prescribed by law. The allegation in the bill that there is no authority of law for the replacement is nothing but a conclusion of the pleader and no facts are charged to support this conclusion.
Town of Crenshaw v. Jackson, 84 So. 912; Sections 214, 247, 252 and 5977, Code of 1930.
The mere fact that the interest and sinking funds were transferred without making any provision at the time for repayment, certainly does not mean that they can never be restored.
Section 5987, Code of 1930; Town of Crenshaw v. Jackson, 84 So. 912; Y. M.V.R.R. v. Grenada County, 115 Miss. 238, 76 So. 154.
The state tax collector has no right to bring suit against these defendants for the recovery of any sum by way of damages or otherwise for failure to levy any tax, special or general, under the authorities.
Chapter 168, Code of 1930; Town of Crenshaw v. Jackson, 84 So. 912.
It is apparent that counsel for the appellants have confused legal power with jurisdiction, as if synonymous; whereas, in respect to the question here in hand power is distinguished from jurisdiction.
Bradley v. Fisher, 20 L.Ed. 651; National Surety Co. v. Miller, 124 So. 251.
Watkins Avery, of Jackson, for appellees.
There is no liability on appellees even though acts complained of were illegal.
It cannot be concluded from the record or otherwise that Greene county has sustained a loss.
Under Senate Bill 490 of the Laws of Mississippi of 1932, the Mississippi Legislature authorized and validated the transfer of said funds and thereby corrected the procedural defects in connection therewith.
J.W. Backstrom, of Leakesville, for appellees.
It is our contention that the bill of complaint does not state a cause of action, and the decree of the lower court was correct.
Any irregularity in making the transfer, as alleged in the bill of complaint, was cured by Senate Bill 490, of the Laws of 1932.
It is not alleged by the state tax collector that any of these funds, after being transferred, were used or appropriated to an object or objects not authorized by law, and in the absence of such an allegation it must be presumed that the funds, after being transferred, were used for objects or purposes authorized by law.
Paxton v. Baum, 59 Miss. 531; Smith v. Miller, 115 So. 900; Gully v. McClellan, 153 So. 524; Gully v. Bew, 154 So. 284.
A county is a public corporation existing only for public purposes connected with the administration of the state government, or, in other words, it is an arm of the state government and its revenues are subject to the control of the Legislature.
11 Cyc., sec. 3; 7 R.C.L., p. 296, sec. 6; State ex rel. Knox v. Board of Supervisors of Grenada County, 105 So. 541, 141 Miss. 701; 7 R.C.L., p. 926; County of Stark v. County of Henry, 326 Ill. 535, 54 A.L.R. 777; Jackson County v. Neville, 95 So. 626, 131 Miss. 599; 15 C.J., sec. 283, p. 581; Bell v. Cummings, 130 Tenn. 566, 172 S.W. 290, L.R.A. 1915D, page 274.
If the Legislature could have in the first instance authorized the transfers here as made, and certainly the Legislature could have authorized such transfers unless prohibited by the constitution, then the Legislature certainly had the authority to validate the transfers.
Chapter 424, Laws of 1916; Robertson v. Board of Supervisors of Leflore County, 76 So. 852, 112 Miss. 54; 6 R.C.L., p. 320, sec. 309; Memphis Charleston Railroad Co. v. Bullen, 121 So. 826, 154 Miss. 536.
There is a marked difference between a fixed liability and a statement of facts upon which the court might fix a liability. A fixed liability is a liability that is fixed by law, or a liability that has been adjudicated and fixed by a competent court having jurisdiction of the parties and the subject-matter. In the case at bar if the tax collector had sued the board of supervisors and the sureties on their bonds and the court had fixed the liability by adjudicating and finding that the board of supervisors and the sureties on their bonds were liable for the transfer of the funds, and after the adjudication the Legislature had attempted to validate the transfer or to remit or release the fixed obligation, then certainly it would be violative of section 100 of our Constitution.
Johnston v. Reeves Co., 72 So. 925, 112 Miss. 227.
The transfer herein complained of not being a fixed liability, Senate bill 490 is a bar to the further prosecution of this suit by the state tax collector.
This is an appeal from a decree of the chancery court of Greene county sustaining demurrers to an amended bill of complaint filed by the appellant against certain former members of the board of supervisors of Greene county and the sureties on their official bonds.
The bill of complaint, as amended, charged that bonds of Greene county in the sum of one hundred thousand dollars were issued and sold for the purpose of providing funds for the construction of roads and bridges, that, as a condition of the issuance of said bonds, it was recited in the order providing therefor that the board of supervisors would annually levy sufficient taxes to pay the interest on said bonds as it became due, and to provide a sinking fund for the retirement of the bonds at maturity, and that said special tax levy would be used for no other purpose.
The bill further charged that it was the statutory duty of the board of supervisors to annually levy a special tax to provide a fund for the payment of the interest on said bonds, and to create a sinking fund for the payment of the bonds at their maturity in the year 1946; that the board of supervisors was not authorized by law to lend said bond and interest fund, except on real estate security as provided by section 5987 of the Code of 1930; that, after about fifty-one thousand dollars had been accumulated in the fund, the board of supervisors, at various dates during the year 1931, transferred therefrom to various other county funds amounts aggregating fifty thousand five hundred dollars; that the transfers were without authority of law and illegal, for the reason that under the provisions of the law under which the bonds were issued the said sinking fund could be used for no purpose other than the payment of principal and interest of said bonds, or for loans on improved real estate, and for the further reason that no previous notice was given of the intention of the board of supervisors to borrow said funds, and the use of the funds was without compliance with any statute authorizing the loan thereof. The bill further charged that no authorization existed for making such transfers, and that no provision was made for the repayment of said bonds, and that, because no levy can now be lawfully made to repay the transfer so made, the county has sustained a loss of the said sum of fifty thousand five hundred dollars, and prayed for a decree for said sum against the individual members of the board and the sureties on their official bonds.
In Paxton v. Baum, 59 Miss. 531, wherein it was held that members of boards of supervisors are personally liable only for appropriations of public funds to objects not authorized by law, in stating the test of personal liability, the court said: "It is for money appropriated to something for which the law does not permit it to be appropriated at all, in any way or under any circumstances, that members are personally liable." By sections 247, 251, 252, and 5987, Code 1930, jurisdiction of the subject-matter of lending the sinking funds of counties is conferred upon boards of supervisors, Gully, State Tax Collector, v. Bew (Miss.), 154 So. 721, and the transfers of sinking funds involved in the case at bar were in effect mere loans of such funds to other county funds, although in an irregular and unauthorized manner. Sections 251 and 252 authorize the boards of supervisors of counties of the class of Greene to borrow not to exceed fifty thousand dollars in one year from the county treasury out of any funds therein not otherwise appropriated, and to issue their negotiable notes therefor bearing interest at not to exceed six per cent. per annum, while sections 247 and 5987 authorize the boards to lend sinking funds upon conditions and security therein prescribed.
In making these transfers from the sinking fund to other unrelated county funds, which were essentially loans of such fund, the board did not comply with the statutory requirements for such loans, and consequently these transfers were unauthorized. But, in view of the fact that the board was fully vested with jurisdiction to lend such fund, the fact that its power and jurisdiction was exercised in an irregular, unauthorized, or illegal manner does not of itself constitute such an appropriation of the funds to objects not authorized by law as to render the members of the board personally liable therefor. There was no charge of fraud or dishonest motive, or that such funds were appropriated to objects not authorized by law other than by the transfer to other county funds, and we conclude that the decree of the court below, sustaining the demurrers and dismissing the bill of complaint upon failure of the complainant to amend within the time allowed, was correct.
Affirmed.