State v. Conley

Being unable to subscribe to the court's holding that the defendants' special plea does not present adequate defense to the action, I respectfully dissent.

The state seeks to recover from the members of the Board of the School Fund, in office in 1929, the sum of $58,917.66, balance due the State on an investment of $75,000.00, made by the board that year in bonds of a commercial corporation.

The state does not charge defendants with bad faith or corruption. There is no allegation that any of the defendants profited in the slightest degree from the investment.

By their special plea, the defendants say that in good faith, in furtherance of the discretion reposed in them by law in the exercise of their official duties, and in pursuance of a long established interpretation of the pertinent provisions of the law, they invested the sum of $75,000.00 in first mortgage bonds of the Consolidated Fruit Company, a corporation, whose real estate, bound *Page 534 by the mortgage, was fairly appraised at $225,000.00, at the time the loan was made.

Of course, the board did not then know that just ahead there was a terrible economic depression that would emasculate the values of real estate throughout the country, including the properties which had been mortgaged to secure the bonds herein considered.

In my opinion, the circuit court was right in holding that the allegations of said plea, if sustained by proof, would constitute full defense to the action.

It is settled law that, though a public officer clothed only with ministerial authority may be forced to respond in damages because of misfeasance or malfeasance in the administration of his office, an official whose functions are judicial orquasi judicial cannot be called on to respond in damages for the honest employment of his judgment, however erroneous it may have been. "One serving in a judicial or other capacity in which he is required to exercise a judgment of his own, is not punishable for a mere error therein, or for a mistake of the law. His act, to be cognizable criminally, or even civilly, must be willful and corrupt." 1 Bishop's New Criminal Law (8th Ed.), section 460. Of like import: Mechem's Public Offices and Officers, section 638; Warren v. Commonwealth, 136 Va. 573,118 S.E. 125; Salt Lake County v. Clinton, 39 Utah 462,117 P. 1075; Roerig v. Houghton, 144 Minn. 231,175 N.W. 542; Comanche County v. Burks, (Tex.Civ.App.) 166 S.W. 470;Guillot v. State Highway Comm., (Mont.) 56 P.2d 1072.

Official conduct is termed quasi judicial when, being less than fully judicial, it nevertheless involves discretion. Goff v. Wilson, 32 W. Va. 393, 402, 9 S.E. 26, 3 L.R.A. 58. In the discharge of quasi judicial duties, an official must exercise judgment and is not called on to follow a fixed routine.

Were the defendants at bar, in the exercise of their duties as members of the Board of the School Fund, clothed with the discretion of determining whether school funds under their care should be in public securities or *Page 535 otherwise? Or were they confined by the letter of the law to investment in public securities only? In my judgment, the law clothed them with authority to exercise discretion respecting the nature of the investments. My reasons for this conclusion are here presented.

Section 4, Article XII of the State Constitution provides that funds in the control of the Board of the School Fund shall be invested "in the interest-bearing securities of the United States, or this State, or if such interest-bearing securities cannot be obtained, then said 'School Fund' shall be invested in such other solvent, interest-bearing securities as shall be approved" by the board. At the time that provision was written, this State had not issued any securities, and whether there would ever be any was a matter necessarily beyond the ken of the framers of the constitution. But, when the document was written, interest-bearing securities of the United States were in existence and could be obtained for investment purposes. Also, the makers of the constitution and the people who ratified it, cognizant of the ways of national governments of the world respecting the issuance of securities, cannot be deemed to have closed their eyes to such generally known facts. They must be considered to have anticipated when the constitution was written, and later adopted, that probably there never would be a time when interest-bearing securities of the United States government would not be available for the investment of funds in the custody of the Board of the School Fund. On that background, the requirement that the school funds should not be invested in other solvent securities unless interest-bearing securities of the United States "cannot be obtained" is a vain and useless inhibition, unless the provision was intended to involve some degree of discretion on the part of the board in charge of the funds. The fact is that at all times since the framing of the present state constitution, United States securities have been available for investment. What significance, then, can be given to the provision "if such interest-bearing securities cannot be obtained?" We must presume that some practical meaning was intended to be attached *Page 536 thereto. In my opinion, an enigma is avoided and the language made entirely intelligible if the phrase "cannot be obtained" be interpreted to mean cannot be obtained on a basissatisfactory to the board, or, as the circuit court phrased it,cannot be prudently obtained. The framers of the constitution, knowing that governmental securities might at times be procurable only at impracticable or prohibitive prices, may reasonably have considered that in those circumstances such securities could not be obtained on a basis satisfactory for investment of school funds, and therefore, the board would deem it better business to invest in commercial securities.

Another approach. It is to be presumed that public officials act in good faith. Where, in good faith, they have placed an interpretation on the law and acted accordingly, their actions should not be proscribed unless they were manifestly wrong. "The construction, given to a statute by those charged with the duty of executing it, ought not to be overruled without cogent reasons." Daniel v. Simms, 49 W. Va. 554, 39 S.E. 690, 695. From the special plea of the defendants, it appears that under several state administrations prior to the Conley administration, the Board of the School Fund had interpreted the pertinent constitutional provision and the sustaining statute as authorizing the board to make investments in commercial securities when the board deemed such investments preferable to the purchase of governmental securities. Such practice, of course, did not have the effect of making law, but it afforded substantial background of practical interpretation of the law. This interpretation should not be cast aside unless it is indefensible.

Thus, in my opinion, the constitutional provision should be held to place reasonable discretion in the Board of the School Fund to determine in good faith when commercial securities would afford more satisfactory investment than governmental securities. Discretion thus being reposed in the members of the board, their action in pursuance thereof is quasi judicial, and they are not personally responsible for a mistake of judgment. Of *Page 537 course, public securities are to be preferred and should receive the primary consideration of the board.

So far as bears on the question now before us I am impressed that, respecting the funds invested, we are concerned only with the fact of the investment and not with the source from which the funds were derived, whether from investments matured or securities sold. In the instant case the bonds purchased paid a higher interest rate than could be obtained from federal or state securities.

Complementary to the principles herein discussed is a matter of serious portent, in the light of the rigidity of construction which the court has applied in the decision of this case. The constitutional provision under discussion provides for the investment of school funds in securities of the United States or of this State. The statutes, in purported exemplification of the constitutional provision, have provided for investments not only in securities of the United States or of this State, but, as well, in securities of any county, city, town or village, or school district of this State. Acts of the Legislature of 1925, Chapter 49; Code 1931, 18-9-5. Suppose an investment of school funds in bonds of a county, city, town, village or school district should result badly? An unconstitutional statute affords no protection to public officials relying thereon. Mechem's Public Offices and Officers, section 662. Where is the basis for the statutory enlargement? Clearly not in the constitutional provision unless it is read therein by interpretation. Perhaps such would be done, but what must be said of successive interpretations of the same constitutional provision which in one circumstance, treats it as adamantine, and in another, would consider it as characterized by the qualities of plasticity and expansion?

The whole matter considered, I am constrained to the belief that the ends of justice would best be conserved by pronouncing in this case a basis for interpretation of said constitutional provision, in accordance with the principles I have herein advocated. *Page 538