Scollay v. County of Butte

McKee, J. In the year 1876, Butte County was the owner and holder of two hundred railroad bonds of the California ¡Northern Railroad Company, secured by mortgage, the principal and interest of which had become due and payable; but the company would not pay, and the county was desirous of collecting them. Under those circumstances two persons, W. S. Watson, and William Corcoran, proposed to the board of supervisors of the county that they would collect them without attorney’s fees, expenses, or costs to the county, for fifty cents on the dollar. The board accepted the proposal, and on the 3d of October, 1876,a written contract to that effect was drawn and signed by the chairman of the board in the name of the county, and by Watson and Corcoran; and the contract thus signed was ratified by the board.

By the terms of the contract the bonds were to be delivered to Watson and Corcoran for collection; they were to commence within sixty days, “proceedings,” or “ negotiations,” or “a proper suit,” for their collection and “prosecute the matter without any unnecessary delay,” without costs or charges, or attorney’s fees, and when collected retain to their own use fifty per cent of the amount collected “in full payment of themselves, their agents, attorneys, and employees employed or engaged in the matter.” It was- also “ mutually understood and agreed that either of the parties hereto may compromise the matter of paying said bonds with said railroad company, upon such terms and conditions as they may deem just and equitable, but no compromise so made shall be final or binding without the express written consent of the parties hereto.”

[252]On the 2d of December, 1876, foreclosure proceedings upon the bonds and mortgage were commenced against the railroad company.. These were continued for about seven years without other result than the recovery of a final judgment for the principal and interest due upon the bonds; but for the execution of this judgment, so far as appears from the complaint, no steps were taken; and under these circumstances the board of supervisors of the county on the 15th of May, 1883, compromised and settled with the railroad company without the consent, written or otherwise, of Watson and Corcoran, and received from the company $20,000, which it accepted in full satisfaction of the bonds and release of the mortgage. It is alleged that “ when this settlement was made there was due and payable on said bonds the sum of $47,058.80, which could and would have been collected and received by the county but for the unauthorized compromise and settlement by the board.” Five months after this settlement Watson and Corcoran assigned the contract to the plaintiff and appellant, who presented a claim to the board of supervisors for $23,329.40, due upon said contract. The claim was rejected. and hence this suit. The answer of the county to the complaint is that the contract was ultra vires.