Opinion
Hearing Granted by Supreme Court August 15, 1927.
Appeal from Superior Court, Shasta County; J. B. Landis, Judge.
Action for a writ of mandamus to compel the drawing of a warrant for the payment of claims brought by H. G. Moody, transacting business under the name and style of the Searchlight, against H. H. Shuffleton, Jr., County Auditor of Shasta County. From a judgment for plaintiff, defendant appeals.
Judgment affirmed.
COUNSEL:
Jesse W. Carter, of Redding, for appellant.
Chenoweth & Leininger, of Redding, for respondent.
JUDGES: SHIELDS, Justice pro tem.
OPINION
SHIELDS, Judge
This is a proceeding in mandamus to compel the defendant, as auditor of the county of Shasta, to draw his warrant in favor of plaintiff in the amount of certain claims previously approved by the board of supervisors of that county.
The facts leading up to this proceeding and necessary to its understanding may be briefly stated. H. L. Moody, the father of the plaintiff, had been for many years prior to July 17, 1925, the owner and publisher of a newspaper known as " the Searchlight, " published in Redding, Shasta county. In connection with the Publication of this newspaper he conducted a printing and jobbing business, and owned and operated a general printing plant.
On that day H. L. Moody sold " the Searchlight," together with the entire job printing business and plant to his son H. G. Moody, for a consideration stated to have been $ 20,000.
H. G. Moody made no cash payment on account of this consideration, but gave in evidence of it certain promissory notes successively falling due. As security for the payment of these notes, H. G. Moody executed a chattel mortgage to H. L. Moody, by which he mortgaged all of the property conveyed to him, including the good will of the business, together with other newspaper property which need not here be described.
Prior to this sale, and on the 19th day of September, 1923, H. L. Moody became a member of the board of supervisors of Shasta county, and was and remained a duly elected and qualified member of such board up to the time of the trial of this proceeding, and was such a member at the time the work was done and the supplies furnished which are the subject of this action.
H. G. Moody conducted the business which he purchased from H. L. Moody under the name and style of " the Searchlight." After his said purchase, and between the 12th day of August, 1925, and the 16th day of October, 1925, the plaintiff under the name of " the Searchlight" did printing, job work, and publishing for various county officers of the county of Shasta, ordered by them under the provisions of section 4048 of the Political Code.
Claims for such work and supplies, only approved by the several county officers ordering them, were thereafter presented to the board of supervisors by H. G. Moody, doing business under the name and style of " the Searchlight," and these claims were allowed on the 3d day of November by the board of which H. L. Moody was then a member.
These claims so allowed were transmitted the defendant, auditor of Shasta county, with the request that he draw the usual warrant thereon, in favor of the plaintiff. The defendant was advised by the district attorney of Shasta county that the claims and their allowance were invalid, and that the same constituted no obligation against the county of Shasta because of the interest of H. L. Moody in such allowance, and thereupon and for that reason, on the 12th day of December, defendant refused, and has since continued to refuse, to draw his warrant therefor.
This action to compel him to issue such warrant thereupon followed. At the trial, judgment went for the plaintiff, and it is upon an appeal from that judgment that this matter now comes before this court.
[1] The principle of law invoked in this case is the very familiar one that no public official acting in a judicial or quasi judicial capacity can act in a matter in which he is interested. " The plain principle of justice that no one can be a judge in his own cause pervades every branch of the law, and is as ancient as the law itself." Paley on Summary Convictions (7th Ed.) p. 43. A modern statement of this rule is admirably made in Allinson v. General Council, etc., 1 Q. B. 750, where Lord Esher, M. R., at page 758, says:
" In the administration of justice whether by a recognized legal court, or by persons who, altogether not a legal public court, are acting in a similar capacity, public policy requires that, in order that there should be no doubt about the purity of the administration, any person who is to take part in it, should not be in such a position that he might be suspected of being biased."
In speaking of this principle, Justice Henshaw said:
" It is a principle whose strict observance is dictated both by natural justice and an enlightened public policy. For it is not enough that a judicial decision be sound. It is of next importance that the tribunal rendering it be free from the charge of interest or the taint of partiality, or else public confidence will be destroyed and judicial usefulness gravely impaired." Meyer v. City of San Diego, 121 Cal. 102, 53 P. 434, 41 L. R. A. 762, 66 Am. St. Rep. 22 .
The rule is strictly enforced and carried to extreme lengths. Any interest, even the slightest, comes within the prohibition of its terms. " The minuteness of the interest won't relax the objection, for the degrees cannot be measured. No line can be drawn but that of a total exclusion of all degrees whatsoever." Hesketh v. Braddock, 3 Burr. 1856. " The law seeks to avoid situations where public officers are tempted to sacrifice the interests of the public to their own which destroy faithfulness and fidelity in public service." Gillen v. City of Milwaukee, 174 Wis. 362, 183 N.W. 679. " There should be no encouragement to seeking public office for private ends." In re L'Abbe, 7 Ontario Law Rep. 230. The courts should not seek excuses for such alleged offenders. North Bloomfield v. Keyser, 58 Cal. 315. The challenge to the courts has been frequently made that they should not relax this ancient rule of justice, and should take a leading part in forming public opinion in its support. Dillon on Munic. Corp. (5th Ed.) § 772. This principle has been very generally written into constitutions, charters, and statutes.
In California it is expressed in all of its common-law strength in section 920 of the Political Code. More particularly applicable to this case is section 4322, Political Code, which provides, in reference to boards of supervisors, that:
" No member of the board must be interested, directly or indirectly, in any property purchased for the use of the county, nor in any purchase or sale of property belonging to the county, nor in any contract made by the board, or other person, on behalf of the county."
The courts of all common-law countries have vied with each other in the strictness with which the principle here involved, and such statutes as the above have been enforced. None of them has gone further than the courts of our own state. Berka v. Woodward, 125 Cal. 119, 57 P. 777, 45 L. R. A. 420, 73 Am. St. Rep. 31; Meyer v. City of San Diego, 121 Cal. 102, 53 P. 434, 41 L. R. A. 762, 66 Am. St. Rep. 22; Stockton Plumbing & Supply Co. v. Wheeler, 68 Cal.App. 592, 229 P. 1020; Nielsen v. Richards (Cal. App.) 75 Cal.App. 680, 243 P. 697; City of Vallejo v. Superior Court, 199 Cal. 408, 249 P. 1084; Lindsay-Strathmore, etc., Dist. v. Superior Court, 182 Cal. 315, 187 P. 1056; Hall v. Superior Court, 198 Cal. 373, 245 P. 814 .
[2] The courts have very frequently defined the interest which they have held to be a disqualification. It must not be a mere possible contingent interest, not an interest in the question or general subject to which the matter requiring adjudication relates, but one that is visible, demonstrable, and capable of precise proof. It must be a pecuniary or proprietary interest, a relation by which, as debtor or creditor or otherwise, he will gain or lose something by the result of the proceedings. It must be direct and personal and not merely possible or contingent. Northampton v. Smith, 11 Metc. (Mass.) 390.
" Where a statute speaks of 'interest' or being 'interested,' it in general but not always means a pecuniary or proprietary interest, by which a person will gain or lose something, in contradiction to general sympathy, feeling or bias." Dillon on Mun. Corp. note, p. 1146. " A mere sentimental interest, or an interest in the facts which the issues make it necessary for him to determine, which may tend to induce him to give more weight to the evidence for one party than to the evidence for the other respecting such facts, is not the interest which will disqualify him." Lassen Irrigation Co. v. Superior Court, 151 Cal. 357, 90 P. 709; Quatman v. Superior Court, 64 Cal.App. 203, 221 P. 666; Meyer v. City of San Diego, 121 Cal. 102, 53 P. 434, 41 L. R. A. 762, 66 Am. St. Rep. 22. Multitudes of cases have repeated these terms in varying forms, but, after reviewing them all, we find, as stated by Justice Henshaw, in the cage last cited, that the statements are mere definitions, and they leave the necessity still with us to find, within such definitions, if H. L. Moody, by reason of being a mortgagee of the business if H. G. Moody had such an " interest" as prevented him from acting in the allowance of the claims, or made it unlawful for any contract for the sale to the county of the property covered by the claims to be made by any person. What was H. L. Moody's relationship to the transaction?
[3-5] Prior to the purchases covered by the claims in question, H. L. Moody had sold his entire interest in " the Searchlight" and the printing and supply business to H. G. Moody. This sale was questioned in the pleadings, and some effort was made to reflect upon its bona fides at the trial, but the court found that the sale was actually made, and we will here treat it as so made and unimpeached. When, therefore, the claims came before the board of supervisors, H. L. Moody had no apparent or tangible interest in them. His chattel mortgage gave him none. In California, it is well established that such a mortgage conveys no title, nor gives its possessor any property interest in the subject of the mortgage. It creates only a lien on the mortgaged property for the payment of the indebtedness described in the mortgage. Section 2888, Civ. Code ; 5 Cal. Jur. p. 41, § 2. The parties to the mortgage bore to each other simply the relation of debtor and creditor. H. L. Moody was not connected in business with H. G. Moody; the latter was to him a complete business stranger. The fact that H. G. Moody was his son did not disqualify him; nor that he was interested in seeing him succeed, and to see his business grow and improve. Lewick v. Glazier, 116 Mich. 493, 74 N.W. 717; Gillen v. City of Milwaukee, 174 Wis. 362, 183 N.W. 679; Cason v. Lebanon, 153 Ind. 567, 55 N.E. 768; Devlin v. City of New York, 4 Misc. 106, 23 N.Y.S. 888. H. L. Moody did not own the shop in which the work was done nor the tools nor presses through which it was done. He apparently did not even hold a mortgage lien upon the materials used in preparing the cards, pamphlets, and " scratch pads" which were sold by H. G. Moody. Section 2955, Civ. Code. H. L. Moody was neither to receive nor share in the price which was to be paid for the goods sold, nor was that price to go or be applied in any way to his benefit or advantage. These things appellant substantially does not dispute. But he does contend that, as a direct result of the vote of H. L. Moody, a sale made by H. G. Moody was approved; that that sale added to the volume of business of the latter; that such patronage or increased business added to the value of the good will of such business; that this good will was mortgaged to H. L. Moody; and that through thus adding to the value of his security, it added to the value of his debt; and that thus he had an interest in consummating the sale. There is no warrant for this contention in any of the adjudicated cases. It will be observed that the benefit which H. L. Moody was to receive, and we will assume that the value of the good will of the business mortgaged to him was appreciably increased, was collateral and merely incidental to the sales involved and the allowance of the claims based upon them. A benefit that is thus merely consequential does not constitute a disqualifying interest. In the matter of claims, the board of supervisors and H. L. Moody, one of their members, were not dealing with the good of H. L. Moody's printing business. The question before H. L. Moody, when he voted to approve the claims, was whether certain goods which he did not own and upon which he did not have even a lien should be purchased by the county, for a price which he was not to receive and upon which he had no claim. In this matter H. L. Moody had no direct or indirect interest. The fact that another property, the good will of H. G. Moody's business, was increased as a result of such sale, was a wholly collateral consequence. See Newport, etc., Co. v. Drew, 125 Cal. 585, 58 P. 187; Beaudry v. Valdez, 32 Cal. 269 .
It will be recalled that section 4322 of the Political Code provides, not only that no member of the board of supervisors shall make any contract with the county, but that no other person may make any contract in which such supervisor is interested. Would H. L. Moody have been " interested" in a contract of sale by which the sheriff of the county had purchased the supplies in question from H. G. Moody, under an order from the judge of the superior court, under the provisions of section 144, Code of Civil Procedure?
Such a purchase would have been made by parties who were strangers to him. He would not have owned the goods sold or received the price paid for them, nor would the claim therefor have had to come before the board of supervisors. How can it be said that he would have been interested, in a prohibited way, in such a contract? If he would not have been interested in that contract, he was not interested in the one under review, because in legal effect they would have been identical. The fact that he voted to complete the contract before us would make no difference, as section 4322, Political Code, equally applies to contracts made by any " other person." If he was interested in the sale, the sheriff in the case suggested could no more have been a party to it than could H. L. Moody. But this discussion need not be continued. It is well established, as will hereafter appear, that such results as the increased value of the good will herein involved are collateral and incidental to such acts as the allowance of the claims before us, and that such probable increase does not of itself constitute a disqualifying interest; and, while it may be shown to be such by proper allegations and proof, no such additional facts were pleaded in this case, nor appeared in the evidence at the trial. Appellant cites the case of Foster v. City of Cape May, 60 N. J. Law, 78, 36 A. 1089, as supporting his contention. The decision in this case is rather loosely phrased, but can be distinguished by the very substantial considerations that the security there was a pledge and not a mortgage, and the pledgee in such a case " holds a special property" in the pledge, " not possessed by other lienors." 21 Cal. Juris. 290, § 2. The pledge holder thus had a " proprietary" interest in the stock, and also had a direct financial interest in it, as any dividends, which the corporation might be enabled to pay as a result of the contract he voted to them would be paid directly to him. In the English case of Queen v. Rand, 1 Law Rep. (Queen's Bench) 230, and the very ably presented Canadian case of In re L'Abbe, 7 Ontario Law Rep. 230, the disqualified party was voting directly on the subject-matter of the security, as H. L. Moody would have been doing if certain property mortgaged to him had, for example, been leased to the county and he voted to repair or improve it, or if he had voted to put money in a certain fund from which some claim of his own was to have been paid.
But in none of the multitude of cases dealing with disqualification has a single case been found where a judge has tried a case, or an official has acted upon a claim, which affected the general financial condition of a party who owed him money, or where the decision or allowance might contribute to the debtor's ability to pay such debt has it ever been held that the fact of such indebtedness, of itself, has disqualified such judge or officer.
The fact that by the decision or vote in such a case the ability of the debtor might be improved has always been held to be too remote an influence to constitute a disqualifying " interest." Other facts have to be shown tending to establish that such remote or collateral fact actually operated to prejudice the officer. Let us take the case of a judge or councilman who acts in the allowance of demand in favor of one who owes him money. There is no difference between such a case and the case before us. The fact that the improvement in capacity to pay was in one case of an unsecured debt and in the other of a secured debt, where the proceeds of the judgment or claim is not in any way applied for the benefit of the security, does not affect the identity of principle. In each instance, the increased ability of the debtor to pay followed as a result of the judicial act of his creditor. Yet such a fact has never of itself been held to be a disqualification.
In an early case the distinguished Chief Justice Bell of New Hampshire discussed disqualification for interest as it existed at common law, and stated that " a creditor, lessee, or debtor, may be judge in the case of his debtor, landlord, or creditor, except in cases where the amount of the party's property involved in the suit is so great that his ability to meet his engagements with the judge may depend upon the success of his suit." Moses v. Julian, 45 N.H. 52, 84 Am. Dec. 114. It will be noted that the mere fact of being a creditor does not disqualify--that depends upon other circumstances. Conkling v. Crosby (Ariz.) 29 Ariz. 60, 239 P. 506 .
In Northport v. Northport T. Co., 27 Wash. 543, 68 P. 204, it was shown that the officer, voting to allow the claims was not only a creditor of the claimant, but had an agreement with the latter by which he was to receive the very proceeds of the claim. By reason of this latter fact, and not because he was a creditor, the contract was avoided. But in the later case of O'Neill v. Town of Auburn, 76 Wash. 207, 135 P. 1000, where supplies were purchased by a contractor from a corporation in which the mayor and a councilman were stockholders, and were paid for in the ordinary course of business, and not from the proceeds of claims allowed by the city on account of the work, the allowance of the contractor's claim was held valid, and the advantage to the creditors through the allowance of claims which added to the ability of the debtor to discharge his debt was held remote and incidental and not to amount of itself to a disqualifying interest. In Webb v. Town of Eutaw, 9 Ala.App. 474, 63 So. 687, a bank had loaned a sum of money to the town to enable it to carry out a contract for street improvement. In an action against a property holder by the city to recover his share of the cost of such work, the trial judge was shown to have been a stockholder in the bank. The claim was made, as it is here, that the interest of the judge in the success of the city, which would thereby be better enabled to pay its debt to the bank, constituted a disqualification. The court held that this interest was too remote and contingent. In the absence of a showing that the bank was interested in the improvements made, or that the sum to be derived by the city from the success of its suit was to be applied to the payment of the bank's indebtedness, no disqualifying interest was shown. " The interest which will disqualify a judge must be direct and immediate" (Id.), and the court then say, as might with equal propriety be said here, " if the debtor is solvent, as, in the absence or any showing to the contrary, he is presumed to be (Jones on Evidence, § 57), his success in the suit," or in this case the allowance of the claims, " will not inure to the pecuniary gain of a creditor who is not a party to it, and his failure will not imperil or in any way impair the claim of such creditor."
In Kansas City Ins. Co. v. Jinkens (Tex. Civ. App.) 202 S.W. 772, a judge who held a policy of insurance in the insurance company was held competent to sit in the trial of an action against the company to recover on another of its policies. His interest in the financial success of the company in which he held a policy, in the absence of a showing that the company was a mutual one or that some fund in which he was entitled to share might be depleted by the issue of the case, was held " remote."
A member of a council may allow claims or vote to award a contract to a party who leases premises from a corporation in which the councilman is a stockholder. The allowance of the claims or the award of the contract undoubtedly added to the ability of the tenant to pay his rent, and the volume of business done on the leased premises through the allowance of the contract much more tangibly increased the rental value of the councilman's premises than did the sales in question in this case add to the value of the good will of H. G. Moody's business. But this collateral advantage to the councilman was held to be too remote to disqualify him, in the absence of proof that the lessee was insolvent, or that he had previously been unable to pay his rent, or that the premises could not have been let to some other person for an equal rental. Gillen v. City of Milwaukee, 174 Wis. 362, 183 N.W. 679 .
These decisions sufficiently state the rule in such cases as this, which is that, where the interest is directly involved, no matter how small, it disqualifies the person affected by it; but that, where the benefit in question is collateral, remote or consequential, the interest will not be presumed to have influenced the decision, in the absence of proof that it did, or of additional facts from which that fact may be inferred.
There being no proof here that the sale to H. C. Moody was not actually made; that H. L. Moody was to receive any of the proceeds of the claims allowed; that such proceeds were to go into any fund out of which the debt was to be paid; or that H. G. Moody, was insolvent--there was no showing of a disqualifying interest, and the judgment is, therefore, affirmed.