Action to recover interest claimed to be due from defendant as county depository.
The plaintiff filed its suit in the Circuit Court of Cole County, April 6, 1920, alleging that at the May term, 1917, it advertised for bids from banking corporations, etc., for the privilege of being selected as county depository; that said bids were opened at said May term, and the defendant, having submitted a bid of four and three-fourths per cent annual interest for one equal part of the county money advertised to be let on that day, the county court designated the defendant as a depository for all the money of the county belonging to the road construction fund, defendant being the highest and best bidder for said fund; that defendant filed its bond in accordance with the statute, and received from the county treasurer money of the county in the sum of $266,487.17; that defendant accepted the money May 10, 1917, and from that date to July 1, 1919, acted as depository. The petition sets out the amount of deposits to the credit of the county with defendant during various periods extending from May 10, 1917, to July 1, 1919, and alleged that the amount of interest computed upon the daily balances, as provided by the statute, during the different periods, was $15,963.61; that defendant at divers times had paid the interest by placing to the credit of the county different sums of money amounting to $8086.79, leaving a balance due of $7876.82, for which the defendant asked judgment.
The defendant makes here some objections to the sufficiency of the petition. It is unnecessary to consider those objections, as the questions thus raised will be considered below in connection with the record introduced by plaintiff for the purpose of making out a case.
The answer of the defendant and the evidence offered and admitted by the court in support of the answer *Page 230 shows that in February, 1917, long before the county was authorized by law to select at the May term, 1917, a depository for its funds, the county was in difficulty on account of $300,000 bonds which has been voted by the people for the construction and maintenance of roads in Cole County. Those bonds could not be sold because of some irregularity in connection with their authorization. They bore five per cent interest. The county court had let contracts for road construction amounting to nearly $50,000, but had no funds on hand to meet the contracts because no bids were offered when they attempted to sell the $300,000 bonds.
Thereupon the defendant, February 15, 1917, offered to take all the $300,000 issue of bonds, provided the county would refund them at four and three-fourths per cent interest with other bonds presumably free from the technical objection to the first issue. This reduced rate of interest on the refunding bonds — manifestly to the advantage of the county — was arranged upon condition that the defendant should become the depository of all the money in the road construction fund. In order to avoid the payment of daily balances as required by statute, the defendant agreed to pay four and three fourths per cent, which was far in excess of the rate then prevailing, provided the money on deposit would be represented by time certificates. The county was to estimate the different times at which money would be needed to pay on road contracts; the time certificates of deposit were arranged to fall due at such time, and it was understood that the defendant was not to pay interest on the checking account. In this way, if the money had been required by the county as was contemplated when the arrangement was made, it would have received a far greater amount of interest at the rate of four and three-fourths per cent on the time certificates than it would have received on daily balances at the prevailing rate of 2.15 per cent. It happened, however, that the war came on, the county could not make contracts for construction *Page 231 as rapidly as it expected, and after the time certificates became due considerable sums in the checking fund were left on deposit with the defendant and were not used by the county for some time.
It was shown that at the time the defendant became the depository the county was receiving 2.15 per cent on daily balances. Members of the county court testified that it was impossible to secure a greater rate than that on daily balances, and the interest actually paid by defendant under the arrangement mentioned was several hundred dollars more than the county would have received if the county had received from defendant the prevailing rate of 2.15 per cent on daily balances. It is claimed by the defendant, and the evidence shows without contradiction, that this arrangement was carried out; that it was very much to the advantage of the county, that no objection was made to it until in 1919 when the new county court was elected and it was discovered that the statute providing for interest on daily balances had not been complied with, and this suit was brought.
All this evidence was objected to by the plaintiff. The objection was overruled by the trial court, and that ruling constitutes the main assignment of error presented by the appellant. The record and the evidence in relation to the contract which the respondent seeks to establish will be considered below.
This outline of the facts as shown by the record is not complete, because it will be more convenient to consider the issues and the record in connection with the points raised.
The judgment of the trial court was for defendant and the plaintiff appealed.
I. The plaintiff plants its case upon the doctrine that the county court speaks only by its record. It insistsRecord upon the strictest application of the rule andContract. strenuously argues that no evidence can be heard to supplement the record. *Page 232
Apply that principle to the evidence offered by the plaintiff in making out his case.
The statute, Section 9582, requires that the county court in letting the funds of the county to depositories, "shall, byorder of record, divide said funds into not less than two nor more than ten equal parts, and the bids herein provided for may be for one or more such parts."
The section then provides that notice shall be published and outlines the procedure when bids are received.
Section 9584 provides that at the May term in each year the county court shall open the bids, and "cause each bid to beentered upon the records of the court," and select as county depository the corporations or individuals, "whose bids respectively made for one or more of said parts of said funds shall in the aggregate constitute the largest offer for the payment of interests per annum for said funds."
The section then provides for interest to be paid on daily balances. The evidence offered by plaintiff I mention in its logical order:
The advertisement for bids published beginning April 12, 1917, stated that the county court desired to select depositories for the ensuing two years, and continued: "Said county funds will bedivided into two equal parts, and sealed proposals for one orboth of said parts will be received by the clerk of said court on or before the first Monday, the 7th day of May, 1917." The notice then said that the interest is to be computed on the daily balance and that each bid is to be accompanied by a $300 check.
The bid of the Merchants' Bank was offered. It stated that pursuant to the notice mentioned it would give 2.15 per cent per annum for one of the two equal parts proposed to be let on the 7th day of May, 1917.
The bid of the Central Missouri Trust Company, the defendant, was offered, as follows:
*Page 233"To the Honorable County Court, Cole county, Jefferson City, Mo.
"The Central Missouri Company bids four and three-fourths per cent annual interest for one equal part of the county money advertised to be let by your body Monday, May 7, 1917. Enclosed find check for $300 called for in your advertisement.
"Respectfully, SAM B. COOK, president."
The proceedings of the May term, 1917, of the county court, from May 7th to May 9th, appear in the record as follows:
"May term, 1917. Monday, May 7, 1917, twenty-second day.
"At a regular term of the county court begun and held on Monday the seventh day of May, 1917, there were present Hon. I.D. Bond, P.J., J.R. Taylor, a J., A.B. Richter, sheriff, and C.A. Dirckx, clerk, when the following proceedings were had, to-wit:
"Ordered by the court that the Central Missouri Trust Company be and is hereby designated the county depository for all moneybelonging to the `Road Construction Fund' of the county, for a period of two years, said Central Missouri Trust Company being found by the court to be the highest and best bidder for saidfunds.
"May term, 1917. Wednesday, May 9, 1917, third day.
"Court met pursuant to adjournment with all members present, when the following proceedings were had to-wit:
"Now at this day the court proceeds to open bids as peradvertisement for `County Depository' and finding the Merchants' Bank of Jefferson City to be the highest and best bidder, said bank is hereby declared to be the County Depository for all the county funds except the moneys belonging to the `Road Construction Fund' for a period of two years at an interest rate of 2-15-100 per cent.
"Comes now the Central Missouri Trust Company by Howard Cook, and presents its bond as `County Depository' for the `Road Construction Fund' which bond *Page 234 the court examines, finds sufficient and orders approved and filed.
"Ordered by the court that Peter J. Schell, County Treasurer, transfer to the Central Missouri Trust Company all moneys in his hands belonging to the `Road Construction Fund' of the county.
"Now at this day the court proceeds to open and file bids on road and bridge work as per advertisement.
"Ordered court adjourn to nine o'clock to-morrow morning.
"I.D. BOND, Presiding Judge."
This is the entire record offered to show a contract between the plaintiff and the defendant. It will be noticed that the bids received pursuant to the advertisement were opened May 9th, and the bid of 2.15 per cent by the Merchants' Bank of Jefferson City was approved, and that bank was selected as depository for all the money of the county except the road construction fund.
The appellant contends that the bid of the Central Missouri Trust Company (copied above) was in response to the advertisement and was so conclusively shown by the record, because it is a bid for one of the equal parts of the money advertised — one-half the money which the county had to deposit; and that the record cannot be impeached by testimony showing that the bid was not in response to the advertisement.
Just here the plaintiff encounters difficulty in making out its case. The record does not show that that bid was accepted by the county. Let the record alone speak and it shows that on May 7th — two days before the opening of any bids in response to the advertisement — the county court selected the Central Missouri Trust Company as depository for the money in the roadconstruction fund. Every entry in the record relating to the defendant refers to the road construction fund alone.
Thus the order selecting defendant is a variance from the bid for several reasons: (a) The order does not mention the defendant's actual bid, nor any feature of it. (b) It was made before the bids were opened; before *Page 235 there was any consideration or comparison of the competitive bids; before the county court knew what the bids of the county funds were; before they had any authority to select a depository. (c) The alleged acceptance is not for one equal part of the county funds, as the advertisement and the bids read, but it is the selection of a depository for the whole of one distinct fund.
Before a contract can be entered into by reason of a proposition and acceptance, the minds of the parties must meet upon all the terms of the contract. The rule was stated by this court in the case of State ex rel. v. Robertson, 191 S.W. l.c. 991, where this court said: "The proposition presented by the one must be accepted by the other in the form tendered; and if the acceptance omits, adds to, or alters the terms of the proposition made, then neither party to the negotiation is bound."
This is the condition if we let the record alone speak. It must be borne in mind that the plaintiff is not suing upon the contract which was acted upon and recognized by the parties, but suing upon the contract which was never recognized as valid between the parties and was never acted upon. Suppose that after that order was made the County Treasurer had refused to deposit the money with the defendant; and suppose the Trust Company had sued to compel such deposit, the answer of the County Treasurer and the County Court would have been:
"The county has made no contract with you for several reasons: first, the statute requires that before we can let the money we must by order of record divide it into equal parts; we must advertise for bids and receive sealed bids and accept thehighest bids for one or more of such equal parts. Those things were not done. The county had no authority to make any contract without dividing the money into equal parts, and if it had divided it into equal parts, it had no authority to let all of any particular fund without a showing by the record that the money let was one of the equal parts.
"Thus the record fails to show that the county had *Page 236 power to make such a contract, because the Central Missouri Trust Company was selected in defiance of the law, before it could lawfully be done, without consideration of competitive bids, at variance with the advertisement and bid, and for a fund which the county had no right to deposit in that way."
Such answer of the county court in such a suit would have stated a complete defense. A contract is notImpeached Record binding unilaterally, it must be binding uponEvidence of True both parties to it.Facts and RealContract.
II. Further, the plaintiff impeached its own record:
In the progress of the trial this colloquy occurred:
"THE COURT: I take it for granted these bids were fixed up anyhow as a mere formal compliance —
"MR. WESTHUES: Of the law; sure.
"THE COURT: Yes.
"MR. IRWIN: The county court didn't make it competitive.
"THE COURT: The absolute proof doesn't conform to the recordmade out and the bids filed.
"MR. WESTHUES: Inconsistent with it.
"THE COURT: Certainly it is inconsistent.
"MR. WESTHUES: Yes.
"THE COURT: The record appears all right on its face in a way, but it occurs to me there is a lot of this record made here and bids filed after everything had been settled for the purpose of making it appear and show —
"MR. WESTHUES: That they had conformed with the law?
"THE COURT: Yes.
"MR. WESTHUES: When in fact they had not?"
This was not an inadvertent or casual occurrence. Here is a solemn admission in open court by counsel for the plaintiff that the record, which is now claimed to import absolute verity, did not speak the truth at all, but was entered three or four days before the trial, innocently *Page 237 enough no doubt, but for the purpose of furnishing evidence in the case.
Counsel for appellant claim that this admission relates only to the order following:
"Ordered by the court that the county clerk be and is hereby ordered to enter upon the court record all the bids on file for the year 1917 and 1919 during May terms of said years for the county funds, as required by law, with reference to county depositories. Laws of 1915, p. 249."
But the admission relates to much more than that. The statute requires that the bids shall be entered upon the records of the court at the time they are opened and considered, so that people may know what bids have been received, but this record was made four days before the trial, February 4, 1921, nearly four years after the bids under consideration here were received and opened.
The bid of the defendant offered in evidence bore a file mark, May 7, 1917. The deputy county clerk, Charles Smith, testifying for the plaintiff, said that the file mark was put on that bid "the other day." That is, at the time the above order was made, four days before the trial. Further, Smith said that it had no file mark on it prior to that, and there was no record showing when it was presented to the county court. The record of the proceedings of the county court was signed by Presiding Judge I.D. Bond of the county court, a few days before the trial and about four years after the record was made.
Having impeached its own record regarding the date of filing defendant's bid, the plaintiff was not in position to object to evidence showing when in fact the bid was filed. This is true particularly because the plaintiff's attorney endeavored to show that the bids had been "on file all the time." That is a rather comprehensive period and the plaintiff's counsel did not designate any date to be recognized as the beginning of "all the time." *Page 238
This record, which must import absolute verity in order to sustain the plaintiff's contract, includes the file mark madefour days instead of four years before the day of the trial. The file mark is comprehended in the naive admission of plaintiff that those records were arranged "for the purpose of making itappear and show" that they had conformed to the law, "when infact they had not."
The significance of this date of the presentation of the bid is apparent.
It was shown without contradiction that it was presented February 15th, two months before there was any advertisement for bids, and before the county court could even consider the letting of money to depositories, which must be done at the next May term. It was not a sealed bid as the notice required. The bid then could not have been in response to the notice, but was gotten up for the purpose of giving the appearance of regularity to the proceeding which all recognized to be irregular. It was not a bid at all, because it was not a sealed bid and was not competitive. Taking the record introduced, the admission of plaintiff's counsel, and proof of the time at which the bid really was presented, we have all the evidence presented by the plaintiff in making out its case. It fails to make out a case because it lacks two links in the chain of negotiation necessary to close the contract sued on; the bid was not in response to the advertisement, and the letting of the funds was not an acceptance of the bid. This is true even if the county court had had authority to make the contract on which it sued.
Since the plaintiff showed that the record did not speak the truth and showed that the county court did not make the contract which was sued on, there appears to be no legal reason why the defendant should not be permitted to show thePresumption of real contract between the parties, the one thatRegularity. was acted upon, — not for the purpose of enforcing *Page 239 it, but for the purpose of showing that the parties did not make the contract sued on, and that the county profited by the departure from the law. Of course, certain presumptions may be indulged in favor of the regularity of the proceedings of the county court. That is especially true when it is attempted by the record to sustain the validity of a transaction which has been acted upon. But this is not that kind of a case. This is an attempt to nullify a transaction upon which the parties acted to their mutual satisfaction, as plaintiff's evidence shows, and to the definite benefit of the county, long after the matter was a closed incident so far as the performance of the arrangement was concerned. The plaintiff does not seek to recover on the justice of its claim but upon a bare technicality, because the defendant, through favorable treatment of the county, became involved in a legal snarl.
It may be said that the defendant used the money and therefore should pay for its use, according to the statute. Even if the county could recover interest computed according to the statute on money not deposited under the statute, the petition does not count on such recovery. The plaintiff seeks to recover on a specific contract which it has not proved.
III. Respondent contends that plaintiff is estopped to deny the contract set up in the answer and proved by the defendant, and that the trial court for that reason correctlyEstoppel. admitted the evidence. This is on the theory that the county received and retained certain benefits from the contract alleged proven by the defendant:
(a) The county, through the instrumentality of the defendant, was enabled to negotiate its road-construction bonds, when otherwise it was unable to dispose of them.
(b) It negotiated at par the $300,000 refunding bonds at a lower rate of interest than it would have had *Page 240 to pay if it had said the original road-construction bonds.
(c) Under the arrangement it received more interest from the defendant as the repository of the road-construction fund than it would have received if the money had been let to the highest bidder under the statute, and interest paid on daily balances.
Judge Happy of the county court testified that the court was receiving 2.15 per cent from the depository at that time, and that 2.15 per cent was all it was able to get; the evidence showed that was the prevailing rate. The defendant paid 4.75 per cent; more than double — and in explanation Mr. Cook said they would not have though of paying that rate except under the arrangement whereby they were to pay interest on time certificates and not on checking accounts. Had it not been for the intervention of the war, which delayed the construction work, the county would have received even more than it did from the depository. The defendant invested $300,000 at par in the bonds and paid four and three-fourths per cent interest. The investment, or an amount of it equal to the deposits on hand from the county, yielded nothing to the defendant because it paid the same rate of interest on the money deposited that it was receiving for the bonds.
As a general rule it is correct that circumstances and facts which would estop an individual usually do not estop a county in its official capacity. But a county may be estopped to deny a contract which it entered illegally.
The rule is stated in 21 C.J. 1215: "Where the act or contract of a municipal or quasi-municipal corporation is not one which it is without corporate power to make, but is unenforceable merely because of an irregular exercise of power, in the making or execution of it, it may be estopped to deny the validity of the contract where it has accepted the benefits thereof."
This court said, in the case of Mullins v. Kansas City,268 Mo. 444, l.c. 459, a case cited by the appellant: *Page 241 "We recognize that the modern doctrine is tending more and more toward the view that a municipality, no more than an individual, ought not to be allowed to so act towards others as to induce them to pursue a course harmful to them and then in the end refuse to comply with the promise inducing such action."
The St. Louis Court of Appeals in the case of Edwards v. Kirkwood, 147 Mo. App. l.c. 615, in speaking of estoppel by municipal corporations, said: "There is a distinction made, too, in some of the cases where the doctrine of estopel is invoked as to contracts which had been performed in good faith by one dealing either with a municipal or private corporation, and the infirmity lies in a defect of power with respect to a matter not prohibited by law."
See also Sparks v. Jasper County, 213 Mo. l.c. 243-244; Simpson v. Stoddard County, 173 Mo. l.c. 465.
Now in this case the county court had authority to loan the county's money, including that particular fund which the defendant received. The arrangement which the defendant made with the plaintiff was in form and method unlawful. The only irregularity of which the plaintiff complains was the arrangement for the payment of interest by departing from that statutory requirement. The county obtained a benefit by that departure, has retained it to this day, and does not seek in this proceeding to put the defendant in statu quo. It may be said that because this is a contract which the county court had no authority whatever to make, it was not a mere irregularity, but a nullity from the start and the county could not be estopped. The same may be said with equal propriety of the contract which the plaintiff sought to prove. The county had no authority whatever to let money to a depository except under the terms of the statute, in equal parts, and the designating of the defendant as a depository by the county court without such division by order of record was entirely without authority of the law. *Page 242
The county having received the benefit of the illegal contract which it actually entered into a benefit far in excess of any it would have received by a proceeding according to the statute and having retained that benefit, the arrangement having been acted upon in good faith by both parties and completely performed by the defendant to its own detriment, the county is estopped to deny the arrangement.
The judgment, accordingly, is affirmed. Woodson, C.J., andRagland and Graves, JJ., concur; James T. Blair, J., concurs in Paragraphs I and II and the result; Walker, J., dissents in separate opinion in which David E. Blair, J., concurs.