RICHARDSON tI. COUNTY OF GRANT.
496
points directly and unequivocally to the origin of the contents of the packages. There is not 8 particle of proof that the defendants have attempted topractice deception upon the public, or to perpetrate any fraud upon the plaintiff; but, on the contrary, the defendants' entire good faith is affirmatively shown. There is, then, no ground whatever for granting relief to the plaintiff. That the bill must be dismissed, is a conclusion in consonance with well-considered and authoritative decisions. De8mond'8 Appeal, 8upra; Gilman v. Hunnewell, l22 Mass. 139; Manufacturing Co. v. Trainer, 101 U. S. 51. Let a decree be drawn dismissing the bill, with costs.
RICHARDSON
v.
GRANT
Co.
«(}GrMtit (Jowrt, D. Indiana. December 28, 1883.) 1. MUNICIPAL CORPORATIONS -ILLEGAL CONTRACTS MERUIT. LIABILITY ON QUANTUH
Municipal or public corporations are not liable. on the quantum 'TMT'Uit, for the value of materials furnished under illegal or forbidden contracts, when the municipality cannot choose whether or not it will retain or reject the benefit of such work or materials.
2.
SAME-COUNTY BOARDS IN INDIANA-CONTRACTS FOR CONSTRUCTION OF LIC BUILDINGS.
PuB-
Contracts for the construction of court·houses and other public structures, to cost more than $500, unless let to the lowest bidder upon plans and specifications theretofore adopted,being forbidden. the county will not be held liable for the value of a court-house constructed, upon public ground, under a con tract made in disregard of the statute, notwithstanding the use of the building by the county. The statute which forbids contracts for the construction of county buildings to cost more than $500, unless made with the lowest bidder according to plans and specifications, applies to contracts for parts of such structures; and If, in the course of construction under a legally-made contract, any alteration or addition to the plans. exceeding $500 in cost, 'is made without specifications and bids, the county will not be liable for the price or value thereof.
3.
SAME-ALTERATION OF PLANS IN COURSE OF CONSTRUCTION.
At Law. McDonald, Butler II Mrrson, for plaintiff. Harrison, Miller II Elam, for defendant. WOODS, J. The complaint charges an indebtedness of the defendant to' the plaintiff in the sum of $24,001), for materials furnished, work and labor done, skill bestowed, and money paid out by the plaintiff, at the special instance of the defendant's board of commissioners, in the construction of a court-house for the defendant. A proper bill of particulars is filed, and it is,averred that the board of commissioners for the county, has received, and is in the enjoyment,·of, the said work and labor and materials. The fourth paragraph of:auswer
FEDERAL REPORTER.
is to the effect that no plans and specifications for the work were ever made and adopted by the board of commissioners, and filed 8s required by law, and no advertisement made for bids for doing the work and furnishing the materials; nor were any bids presented to, or received by, the board. To this answer the plaintiff has demurred for want of facts stated sufficient to constitute a good defense to the action. By the first section of an act of the Indiana legislature, which took effect August 24, 1875, it is provided that "it shall not be lawful for any board of county commissioners in this state to make any contraot for the construction of any court-house, jail, or any other county or township building or monument, until plans and specifications have been adopted by such board, and · · · deposited in the office of the auditor of such county, and open to the inspection of the people of such county. All contracts attempted to be made in violation of the foregoing provisions shall be null and void." The next section provides that when such plans and specifications shall have been adopted and filed, the board shall not contract for or let the proposed work "until it has advertised such letting, and requested bids for the same," in a manner prescribed, "with a reference to such plans and specifications: provided, that the provisions of this act shall not apply to buildings when the cost of the same shall not exceed five hundred dollars." The next section requires the board to let tbe contract to the lowest bidder, and to require of him bond and security for the faithful performance of the work according to the plans and specifications so deposited. Rev. St. 1881, §§ 4243-4245. It is conceded, as I understand, that under these statutory pro;visions no special contract for the work done by the plaintiff, not made in substantial conformity with the statute, could be enforced; but the plaintiff insists that, upon the averment that tbe board of commissioners, acting for the county, had received and was in the enjoyment of the work done and materials furnished by bim, he is entitled, upon the common count, to recover the quantum meruit. Neither upon authority, nor in reason, as it seems to me, can this be so. In the common count it is necessary to aver, and the plaintiff has averred, tbat the work was done at the special request of the defendant; that is to f'lay, of its board of commissioners. This statute, however, expressly forbids such request or assent on tbe part of the board. Of this the plaintiff was bound to take knowledge, and consequently is placed in the attitude of one who has done a voluntary service, for which he can legally claim rio recompense. The common count or claim. to recover a quantum meruit must rest npon an implied promise or liability; but where a municipal body is required to make certain contracts in a prescribed way, and forbidden to make them in any other way, there is left· no room for an implied obligation. In this case the statute, in express terms, declares any attempt to make a contract, without the plans and speci-
lUCRARDSON t7. COUNTY OJ' GRANT.
497
ncations required, null and void; but without this, the effect of the express prohibItions of the act would doubtless be, in this respect, the same. The board being forbidden to make such contracts, it would seem could not, by any act of ratification, create an obligation upon the county. Private corporations may doubtless incur liability by reason of contracts made in excess of their powers, and even pub. lie or municipal corporations may be liable in supposable cases fo!' money or property received upon coutracts into which they had no power to enter; but in respect to services rendered which cannot be rejected or returned, and in respect to work and labor done and rnaterialEO furnished in the construction of public buildings, erected on public grounds, there being in the nature of things no choice whether or not there shall be an acceptance or rejection of the work, the rule ought to be, and as I understand is, different. This is certainly so when the liability is sought to be established upon transactions done "in disregard of positive prohibitions." Dill. Mun. Corp. §§ 381387, and authorities cited. It follows that the demurrer to the answer should be overruled. So ordered. (April 24, 1886.) On Motion for Rehearing. WOODS, J. A rehearing upon the demurrer is asked; counsel for plaintiff now insisting, notwithstanding the requir,ements and inhibitions of the statute, that during construction of a court-house or other county building, under a contract made in accordance with the law, changes may be made in the plans and contracts for additional work entered into, though the cost thereof be greater than $500. I cannot concur with this view. Under such a construction, the law would apply only to contracts for the construction of an entire building, and could be evaded and practically nullified in most cases by without plans and specifications, and without ad· vertiscment, separate contracts for the different parts of the structure. Rehearing denied. v.27F.no.6-32
498
DDERAL .BEPORTBBo
STANTON 'D. SmPLEY.
(Oircuit Oourt, D. Indiana. April 29,1886.) 1. CIRCUIT COURT PAYEE. JURISDICTION NON-NEGOTIABLE NOTES AsSIGNlllB AND
In the United States circuit court an action on a non-negotiable note assignee, not averring the citizenship of the payee, must fail for want risdiction.
bl juan 0
9. SCHOOLS AND SCHOOL-DISTRICTS-SCHOOL ToWNSHIP NOTES-NEGOTIABILITY.
Notes payable from a particular fund, issued by a school township, endowed only with restricted powers for special and purely local purposes of · non-commercial character, are not negotiable by the law-merchant. Paper in negotiable form, issued by a school trustee, if not void, has only the force of a single obligation.
8.
SUrE-LIABILITY OF SCHOOL TRUSTEES-!:NDIANA STATUTE,
4.
SAME-LIABILITY, HOW MEASURED.
The liability declared by the second section of " An act touching the duties of township trustees in certain particulars" (Acts Ind. 1883, p. 114) is measured, Dot by the sum named in the forbidden contract or writing, but b.y the amount of the indebtedness evidenced thereby; and the right of action IS given, Dot upon the paper, but to the holder thereof. Liability OD "official bond" is not the same as personalllabiIlty, and does not necessarily include the bondsmen.
II.
SAME-LIABILITY OF BONDSMEN.
SAME-ACTION ON NOTES-PLEADING-CONSIDERATION.
In an action on notes issued by a school trustee. in violation of the Indiana statute, (Acts 1883, p. 114,) a complaint which does not aver the real considerationor indebtedness for which the notes were made is substantially defective.
et
Olaypool et Ketcham, for plaintiff. James H. Jordan, Adams et Newby, Duncan, Smith et Wilson, Grubbs Parks, and McDonald, Butler et Mason, for defendants.
At Law.
WOODS, J. Complaint upon the official bond of Jacob A. Shipley, as trustee of Gregg townShip, in Morgan county, Indiana; the defendants before the court being the sureties upon that bond. The plaintiff, who claims as assignee by delivery after indorsement in l/lank by the payee, seeks to charge the defendants with the amount of eight promissory notes alleged to have been made by said trustee in violation of the second section of "An act touching the duties of township trustees in certain particulars," approved March 5, 1883. Acts 1883, p. 114. That section provides "that any township trustee in any county of the state of Indiana, who shall contract any debt in the name or in behalf of any civil or school township of which he may be the trustee, contrary to the provisions of sections one and two of an act approved March 11, 1875, (the same being sections numbered six thousand and six and six thousand and seven of the Revised Statutes of the State of Indiana,) shall be personally liable, and liable on his official bond, to the holder of any contract, or other evidence of such indebtedness, for the amount thereof." Section 6006, referred to, is to the effect that whenever it becomes
ftANTON
SHIPLEY.
499
necessary for the trustee of any township to incur any debt or debts aggregating more than the fund on hand to which the debts are chargeable, and the like fund to be derived from taxes assessed for the year, the trustee shall procure from the board of county commissioners an order authorizing him to contract such indebtedness; and in the other section (6007) it is provided that such order shall be granted only upon a petition of the trustee showing the object and proximate amount of the debt or debts to be incurred,and upon proof that notice has been given in a prescribed manner of the pendency of the petition. . The notes in question, except the amounts for which they purport to be given, are all of the same tenor. The one set out in the oomplaint as Exhibit B reads as follows: "$763.50. STATE OF INDIANA, COUNTY OF MORGAN. "TltUSTEE'S OFFICE, GREGG SCHOOL April 11, 1885. "ThIs is to certify that there is now due from this township to R. B. Pollard, or order, seven hundred .and sixty-three 50-100 dollars for school supplies bought for and received by this township, and payable out of the special school funds for which taxes are now levied, at the First National Bank of Martinsville, Indiana, on the twentieth day of December, 1886, with interest at 8 per cent. per annum, on the amount from date till paid, and attorJACOB A. SHIPLEY, School Trustee of Gregg Township. ney's fees. "P. O. Wilbur, Ind."
To this (and likewise to each of the notes) is appended the following (or similar) certificate: "This is to certify that Gregg township school warrant of Morgan county, Indiana, dated April 11, Hl85, for seven hundred and sixty-three 50-100 dollars, payable to R. B. Pollard, or order, due on or before December 20, 1886, at 1st National Bank, Martinsville, Ind., was given by myself as trustee of said school township for school supplies, which have been received and accepted, and that said warrant was issued according to law, and will be promptly paid when due. The entire indebtedness of said township is less than two per cent. of its assessed valuation. . "JACOB A. SHIPLEY, Trustee of Gregg School Township. "P. O. Addrpss, Wilbur, Ind. "Dated at Wilbur, Ind., April 17, 1885."
It may be noted that each certificate bears a date subseqt1ent to the date of the note to which it is attached. The complaint shows that each of these obligations was issued in violation of the statutory provisions already referred to, but contains no averment in respect to the real consideration or indebtedness for which they were made. The first question in order is one of jurisdiction. The plaintiff is shown to be a citizen of New York, and the defendants all to be citizens of Indiana; but the citizenship of Pollard, the payee of the paper, is not averred, and counsel for the defendants, asserting that the notes are not negotiable by the law-merchant, insist that the
000
F,EDERAL REPORTER.
plaintiff can come into this court only by showing .that .Pollard might also sue them here. By the act of congress no circuit or district court ean "have cognizance of any suit founded on contract in favor of an assignee, unless a suit might have been prosecuted in such court to, recover thereon if no assignment had been made, except in cases of promissory notes negotiable by the law-merchant, and bills of exchange." If the plaintiff's suit be regarded as founded upon the notes set out in the complaint, and his counsel have insisted that the action is; in a sense, upon the notes, I think there is a want of jurisdiction. That the notes are not negotiable by the law-merchant Ithink clear, for two reasons: First, each purports to be payable out of a particular fund; second, they purport to be the notes of a school township, a municipal corporation existing under public laws, and endowed only with restricted powers, granted for special and purely local purposefl of a non-commercial character. Such bodies, as everyone must take notice, have no power, without express or clearly-implied grant, to make negotiable paper; and, if their officers or agents attempt to put out corporate paper in commercial form, it will be deemed void, or at most a simple obligation of which the true consideration may be shown against any holder or purchaser. Police Jury v. Britton, 15 Wall. 566; Mayor, etc., v. Ray, 19 Wall. 468; Reeve School Tp. v. Dodson, 98 Ind. 499; Union School Tp. v. First Nat. Bank, 102 Ind. 464; S. C. 2 N. E. Rep. 194; Middleton v. Greeson, 5 N. E. Rep. 755, (Ind. Sup. Ct.) There can be no doubt, I think, that a township trustee, in Indiana, within the scope of his powers in respect to township affairs, may excute notes which shall be binding upon his township. It was explicitly so held in Johnson School l'p. v. Citizens' Bank, 81 Ind. 515, following Sheffield Schooll'p. v. Andress, 56 Ind. 157, and is distinctly implied in earlier and later decisions; but that he cannot make obligations which in the hands of innocent purchasers will not be subject to just defenses seems to have been put beyond dispute; some of the later cases even containing dicta to the effect that a trustee cannot execute a writing which will be, in itself, primajacie evidence of township liability. Counsel, however, have argued that this rule has been modified by the act of 1883, supra, which, they insist, was designed, upon considerations of public policy, to give greater commercial credit to township obligations; especially to obligations like these in suit, which are made (as is asserted) absolutely payable to theidull amount, by the trustees who issue them in disregard of the law, by their bondsmen, as if put forth by them as their individual obligations. If this view be adopted, then the liability of the defendants must be strictly according to the terms of the notes sued on, disregarding only the clause in respect to payment out of public funds or taxes. But while this might make the paper commercially negotia-
STANTON· ".SHIPLEY.
601
ble, and eliminate the question of jurisdiction, it would be fatal to the action on the merits, because by their terms the notes in suit are not yet due. This construction of the statute, however, does not meet my approval. It would lead to the conclusion-indeed, it means-that an original holder or payee of such paper, though made without consideration, or made for fraudulent purposes, to which he was a party, may recover the amount thereof, not only from the trustee, who may or may not have intended a wrong, but from his bondsmen, innocent of any wrongful act or purpose. So interpreted the statute would be highly penal, and, by the rule of strict construction, I should be inclined to hold that liability in such cases does not attach to the Bureties on such bonds at all. The language of the act is "that any township trustee * '" '" shall be personally liable, and liable on,his official bond." The bondsmen, if included, are included only by implication, and the implication by no means impel'ative or necessary. A personal liability and a liability on an official bond are different, and the remedies to be bad in a suit upon one are different from those available in an action upon the other; and consequently the provision for liability on the bond is not meaningless or useless, ihough the sureties be not included. But, in my judgment, the liability declared by this statute is measured, not by the sum named in the forbidden contract or writing, but by the amount of the indebtedness evidenced thereby. By its terms the act applies to transactions in which a trustee "shall contract any debt;" and he is made liable, to the holder of the "evidence of Imch indebtedness, for the amount thereof." The indebtedness, therefore,-the value of the consideration recElived by the township, or, possibly, of that received by the trustee for the township,-is the measure of liability. The right of action is given, not upon the paper, but to the holder of it. It would seem to follow from this, and, as I nnderstand, it has been conceded in argument, that the right of action is transferable with the paper to successive holders; but I think it clear that an assignee acquires no different or better right, as against the trustee or his bondsmen, than that of the first holder. And while, in this view, the suit is not, in a strict sense, founded on the contracts expressed in the notes, it is, perba ps, so far incident thereto as to bring the case within the rule that the assignee of a contract cannot sue in a federal court when llis assignor could not. It may be, however, that the plaintiff's right of action, if any he has, is purely statutory, and not to be regarded in any sense as "founded on contract;" and if this be so, there is apparently no valid objection to the court's jurisdiction in the case. But, whatever be the ·right view of this subject, it is proper to decide the further question, fully argued by counsel, whether or not the complaint shows a cause of action upon the merits; because there are other cases pending, which were submitted and argued at the same
