LIABILITY OF ROAD BOARDS.

Taranaki Herald, Volume XL, Issue 9206, 7 October 1891, Page 2

LIABILITY OF ROAD BOARDS.

IMPORTANT JUDGMENT; Referring to our previous noticos of tho case, Bank of Australasia v. Manawatu Road Board, wo now publish tho judgment o£ tho Chief Justico and Mr Justice Richmond upholding the decision of Mr District Judgo Ketlle: — This is a claim for compound interest on an overdrawn banking account kept by tho Road Board of tho Manawatu Road District with the appellant. Tlio respondents aro the inhabitants of the Road District, who, under " Tho R?ad Boards Act, 1882," constitute a corporate body, tho affairs of which "are administered by the Board. Section 134 of the Act provides, amongst other things, that " Any contract which, if mado between private persons, would bo by law valid, although made by parol only, and not reduced into writing, the members of tho Board, or any two of them, acting by direction and on behalf of tho Board, oiay make by parol only without writing, and in the same manner may vary or discharge tlio same." Under section 112 tho Board is allowed, in anticipation of its current revenue, from time to titno to borrow moneys by way of Bank overdraft, subject to the limitation mentioned in tho section. It is admitted thai the appellant Bank failed in the District Court to prove any express contract mado in the uiannor prescribed by section 134 for the loan on overdraft; but it is contended on its behalf that tho course of dealing with the Board was such as to imply a contract binding upon the respondent body to repay tho principal money advanced, together with interest computed in tho usual way on an account with half-yearly rests. Tho principal money advanced has actually been repaid, and tho only question before us is as to the liability to interest. Thnt such a liability would, under the circumstances, have been incurred by private persons who, directly or through their agents, had dealt with the Bank as the Road Board has done, is not disputed. But the power of the Board to bind its constituents depends entirely upon the provisions of tho statute; and the members of the Board in their individual capacity cannot, nor can any number of them, bind the ratepayers. Tho District Judgo says: " The only evidence as to the manner in which the arrangements with tbe Bank wore made was that of the late Chairman of tho Board, Mr Buick, who. Baid that while he was Chairman, viz., from April, 1887, to September, 1889, it was the usual practice for the clerk to wait on the manager of the Bank at the beginning of each financial year with a memo of tho previous year'a revenue, nnd arrange for an overdraft ; and that the clerk usually reported to the Board what he had done. There was, however, no minute or evidence of any resolution by the Board confirming what the clerk had done. Mr Buick also said that the pass-book was, as a general rule, laid on the table by the clork at tho Board's meetings, to be examined by the members of tho Board if they desired to do so. There was no evidence us to how or by what authority, the money was drawn from tlio Bank, or expended. Mr Buick mads a general statement to tho effect that while he was in office tho money was expended by the Board for tho benefit of the defendants." Upon those facts it is evident that there never was anything which could bo called a proceeding of the Board authorising or ratifying the arrangements made from tijae to timo for an overdraft. No doubt every member of the Board in tho habit of attending its mootings must have been aware of the existence of such arrangements. This, however, in our opinion is not sufficient to bind the ratepayers. The ratepayers can only be bound by tho action of the Board, aB a Board, expressing its will in somo proceeding regularly taken in accordance with tho statute; and of such a proceeding thoro was no evidence whatever. Of tho cases cited in argument none is exactly in point. Hunt v. Wimbledon Local Board, 4 C.P.D., 48, and Young v. Mayor, &c, of Royal Leamington Spa, 8 App., Cas. 517, tohod upon by the respondents, turned on tho provision of tho Public Hoalth Act expressly requiring the common seal of tho defendant Corporation to bo affixed to contracts where the subject matter should exceed £50 in value or amount. On tho other hand, the casoß Clarke v. Cuckficld Union (21 L.J., Q.B. 349), Haigh v. North Briorly Union (E.B. and E. 873; 28 L.J., Q.B. G2); Nicholson v. Bradfield Union, Law Rep. (1 Q.B. 620), which may bo cited in support of tho proposition that a corporate body croatod for municipal purposes may bo sued upon a verbal contract for work or goods necessary forthoso purposes, when tho work has been dono, or the goodß have boon suppliod and accepted, are likewise distinguishable. In those cases there was no bucli circumstanco at that upon which our judgment now turn*. The goods and services had boon ordered at Board meetings duly constituted and held. In the two latter cases the report mentions that a rosolution.harl boon passed. There are other points of , distinction, but it is enough to refer to this one. In Young v. Mayor, &c, of Royal Leamington Spa, Lord Brarawell remarks- " tho Legislature has mado provision for the protection of ratepayers, shareholders, and others who must act through the agency of a representative body, by requiring the observance of certain solemnities and formalities which involve deliberation and reflection. That is tho importance of the seal." This observation applies with at least equal force to tho necessity for observing tho proper rules of corporate action as laid down by the Btatuto undor which the respondent body is constituted. In somo important a matter as tho anticipation of a whole year's income it is necessary that authority should bo regularly given by the Board to its agents dealing with the Bank, and that thouo agents should be, as required by the statute, members of the Board. We are of opinion that tho nonsuit was right. Appoal diamissed ; £20 costs.

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