'638
'FEDERAL REPORTER,
voL 42.
son for them.' Probably counsel will be able to agree as to the amotiht of unpaid purchase money, arid if they cannot do so it may be to refer the cause for the purpose of ascertaining the amount.
"
;
,
ez rel.VAN DYKE L I.
11. COLORADO CENT.
R.
CO.
et ale
(Oircuit OOUrt, D. OoZorado. June 27, 1890.) ll'BDllBJ.L CoURT-.J"URUlDIOTION-RllMOV'llD CASE-MANDAMUS.
WberE! a petition for. mandamu8 of whioh a J;las. is t:emoved to the federal court, the latter court W1U have JurlsdlCtlOn of the SUlt, though it would be beyond its jurisdiction if originally brought therein. In the absence of express authority by act of congress, a federal court has no jurisdiction to compel the operation of a railroad outside of the state in which the court sit41., Where a private person pet.itions for a manaamJU8 "on behalf of the people of the state," he must show in his petition and in the alternative writ that he is a citizen of, the /ltate, and that his interests as suoh citizen are inj uriously affeoted .by the acts complained of. An allegll.tion in the alternative writ that the defendant ran and operated a certain line Of railroad, and that said defendant was, a corporation of the state in which the Butt is brought, without showing when or for what purpose it was chartered, or wllat railroadt if any; it Quilt, or was authorized to build, is not sufficient to show that the defenaant was under any legal obligation to operate said railroad. The leasee of a railroad under a lease which all parties admit to be illegal, cannot be compelled by mandamu8 to operate,Buch road. '
SAME-TERRITORIAL LIMITS.
8. M.umAMUS-PLBADING.
4. RAILROAD COMPANIEB-RBGULATION-MANDAMUS-PLEADING.
II.
8AME;...ILLEGAL LEASE.
At Law. , On petition for mandamU8., On the 28th day of August, 1889, there was filed in the district court of Larimer county: in this state, a petition, the material parts of which are as follows: "Your petitioner, Isaac N. Van Dyke, on behalf of the people of the state of Colorado, respectfully represellts unto your honor that he is informed and believes that heretofore, to-wit, on the 12th day of May, A. D.1884, the Colorado Central Railroad Company was a corporation of the state aforesaid; that said railroad exttmded througb and from the city of Fort Collins to the northern line of said state, and fl'om said northern line of said state through and to the city of Cheyenne, in the territory of Wyoming, and was then being run and operated under one management from said city of Fort Collins to said city of Cheyenne, aforesaid, and was by its being run and operated of great financial yearly value to the plaintiff, the people of said state, which was then, and has been hitherto, and is now, well known to the defendants hereto."
The petition then alleges that the company mortgaged its road to the defendants Jay Gould and Frederick L. Ames; states that, about the 20th of February, 1879, the Coloral;lo Central Company leased its ra.ilroad to the defendant the Union Pacific Railroad Company for the term of 50 years, and sets out the terms of the lease, and avers "that the leasing of the said Colorado Central Railroaa to the Union Pacific Railroad Coinpany was done at the instance of Jay Goul<1 and Frederick L. Ames; that
PEOPLE ". COLORADO CENT. R. CO.
"39
when accomplished it was the selling and leasing ofa competing line, and done in violation of the statute laws of the state of Colorado." It is averred that for a period of "five years last past" the defendants have failed and refused to equip, operate, and run that part of the Colorado Central Railroad extending'from Fort Collins·to the northern line of the state of Colorado, and from thence to the city of Cheyenne, in the territory of Wyoming, and that, by reason of the failure to operate said line of road, "the people are compelled, when they wish to travel to Cheyenne, to go upon and use another line of railroad operated by the Union Pacific Railroad, making the distance.much longer, with loss of time, change of trains, and other inconveniences too numerous to enumerate." It is alleged the people have been damaged by the neglect and refusal to operate the Une of road mentioned. in the sum oU500,OOO, for which a judgment is asked; and the petition concludes with a prayer that the defendant may, by writ of mandamus, be required and compelled to put said line of road in repair and operation, and to operate the same. On the petition of the the Union Pacific Railroad Company, corporatiop ()f the United States, the cause was removed into this court on the authority of Pacific Railroad Removal 0ues,115 U. S. 1, 5 Sup. Ct. Rep. 1113. An alternative writ of mandamus, substantially in the terms of the petition, issued out of this. court. The respondents filed a general demurrer and. answer to the alternative writ. Among otJIer defenses,the following are set up in the answer: "That the relator in this case _ no right or authority whatever to make has or file the petition herein, or to maintain this Bction. That this aqtion purports to relate to a Hne of railroad from Fort Collins, in the state of Colorado, to Cheyenne; in. the territory of Wyoming. and that this court has no Jurisdiction over the subJect-matter stated in the petition and writ herein. Admit that there may-atone time have been a lease made by the Colorado Central RallroaCl Compapy to the Union Pacific Hallroad Company, but deny that it is as stated in said petition and writ; -and allege that. if there ever was any sucb lease, tllllt· the same was never in effect or operative on said eompanle8; and further allege that the said the Colorado Central Hailroad Company had no right or authority to lease, and the said the Union Pacific Railroad Company had no right to take a lease of, said premises, and that, as a matter of fact, it never did take the same; and that such lease. if any there is or was. is not now, and never has been. in force or effect. That defendants -are not. neither is either of tbem,nnder any obligation Whatever to construct, maintain. oroperate said railroad under their charter or cbarters or otherwise. That there is nO necessity whatever for the repairing. maintaining, and operating of said raHroad described in said petition and writ. That the peOple of Fort Collins and Vicinity have direct and adequate railway connections with said Cheyenne · by railroad constructed, operated, and maintained Collins and said Cheyenne by way of Oreeley,and thence directly to Cheyenne, and that they have not been damaged in any way or manner whatsoever. That said railroad between said Fort Collins and Cheyenne rllns through a very thinly settled country. and there are very few settlers along the linl/of said railroad. and veryHttle local travel. and that the same could not. when operated, and could Dot now,it'repaired. maintained. and operated, be to pay the runDing expenaes,thereof;and this is especially true from the fact that all of the );lusine8slsnow; done without any inconvenience wbakver over and by W&y of the line of railroad above de8cl'ibed.· . ' J -"
640
FEDERAL REPORTER,
vol. 42.
has been taken from which it appears that the line of road fVOID Fort Collins to Cheyenne was operated until the year 1882, when
trains were discontinued, and have not since been run; that the country between Fort Collins and Cheyenne is sparsely settled, and that the road between these points could not be made to pay running expenses; that the citizens of Fort Collins and vicinity can reach Cheyenne by rail via the Greeley, Salt Lake & Pacific and Denver Pacific Railroads,-the distance by these roads from Fort Collins to Cheyenne being 79 miles, and by the line of the Colorado Central, as fonnerlyrun, 48.1 miles. The general direction of the Denver Pacific and the Colorado Central between Fort Collins and Cheyenne is the same, but to reach the Denver Pacifi( from Fort Collins passengers have to pass over the Greeley, Salt Lake & Pacific Railroad, a distance of 24 miles, in a south-easterly direction, to Greeley. Isaac N. Van Dyke, for the relator. Teller &: Orahood, for respondents. CALDWELL, J., (after stating the fact8118 Move.) The writ of mandamWl is no longer a prerogative writ, but it is now regarded as in the nature of an action by the relator against the respondent for the enforcement of a legal right or duty which cannot be fully or adequately enforced in any other mode. It is used only to compel action and enforce the performance of a pre.existing duty. One who invokes its powers must show a clear legal right to ha,ve the act performed, and performed in the manner prayed for, and by the person or corporation sought to be coerced. Every to the e:x;ercise of the jurisdiction must be distinctly stated, and the relator's rightto the relief he seeks must be clearly made to appear by the averments of the petition and alternative writ. It must be made to appear that the writ will be effectual as a remedy, and that the CQurtgranting it has the jurisdiction to enforce compliance with its' commands. Whether a writ of mandamus shall be issued is in every case a matter resting largely in the discretion of the court, and depends upon all the surrounding facts and circumstances. Mor. Priv. Corp. § 1134. These well-settled principles must be applied in the decision of the case at bar. The circuit court of the United States can exercise no original jurisdiction by tnlJ,ndamWl, except when the jurisdiction is specially conferred by an act of congress, as was done by the act of March 3, 1873, (17 St. 509.) U. S. v. Railroad Co., 2 Dill. 527, 3 Dill. 515, and 91 U. S. 343. In those courts the writ is granted only in aid of an existing jurisdiction, but this cause was removed from a state court into this · court; and it has been decided by Mr. Justice MILLER on the circuit that a petition for a tnlJ,ndamus in a state court is "a suit of a civil nature at law," within the meaning of the act of congress of March 3, 1873, and that it "is a suit within the language and purpose and policy of the removal act." Washington Imp. Co. v. Kansas Pac.R. Co., 5 Dill. 489. If it is "a suit" which can be removed into this court, then this court must have jurisdiction to try it. The object of removing a case from the state to the federal court is to try it in the latter court. Any cause
PEOPLE·t1. COLORADO CENT. R. CO.
641
that cannot be tried in the federal court after it is removed into that court for want of jurisdiction is not a removable case. The cause being one that is removable under the removal acts, thiB court has jurisdiction to try and determine it, although its nature is such that it could not have been brought origimilly in this court.: It is the settled law in this court that a private person, whose rights are affected in common with fQose of the public, may, without the interventionof the attorney general, move for a mandtl/mus to compel a railroad company to operate its road as required by law. Railroad Co. v. HaU, 91 U. S. 343, 3 Dill. 515. But when a private person moves for a mandam.u8, "on behalf of the people of the state," he must show that he is one of them, and that his interests as a citizen of the state are injuriously affected by the wrong complained of. In the petition, and the alternative writ in this case, the relator's' name alone is given. It is not stated that he is it citizen or inhabitant of the United States or of this state, or that he, personally, has been. injured by the alleged wrong, or that he has any interest whatever in the controversy he has set on foot. And the petition and alternative writ are equally defective in describing the defendant the Colorado Central Railroad Company and its legal obligations to the public. These defects are not helped by anything in the respondent's answer. The only allegation in the petition concerning the Colorado Central Railroad ·Company, upon which alone, if upon any one, rests the obligation to operate the line of road in question, is the following: "On the 12th day of May, 1884, the Colorado Central Railroad Company was a corporation of the state aforesaid; that said railroad extended through and from the city of Fort Collins to the northern line of aaid state, and from said northern line of the state to and through the city of Cheyenne, in the territoryof Wyoming, and was being run and operated under one management." And the allegation in the alternative writ is briefer still, being "that on the 10th day of August, 1884, the Colorado Central Railroad Company ran and operated a line of railroad from Fort Collins, in the state of Colorado, to Cheyenne, in the territory of Wyoming." When the company was chartered, for what purpose it was chartered, where it was authorized to build a railroad or railroads, and what railroad or railroads, if any, it did build, is not stated, and nowhere appears in this record. It is stated "that on the 12th day of May, 1884, the Colorado Central Railroad Company was a corporation of the state aforesaid;" but it is nowhere averred that that corporation ever builttl. foot of railroad. It is not stated, and in this proceeding cannot be implied from what is stated, that the road from Fort Collins to Cheyenne was built by the defendant, or that it was built by any company under a charter granted by this state. It is obvious that a part of it was not ,BI,> built, for this state could not grant a charter to a company that would authorize it to exercise in Wyoming the powers indispensable to buildin,g a railroad in that territory, particularly the right of eminent domain. Not the slightest reference is made to any charter or other obligation or v.42F.no.12-41
··jEJEDl:RAL: REPORTER,'
.£
oon'tra(\tthaVimposed r on the Colorado Central Railroad· (Jotnpany any' obligation either to build or to operate this orariy other railroad in this) argument, the court asked for the charter of the ColoMb :Central Railroad Company, and counsel fQr the defendant handed the court a pamphlet which i.t was' said contained iti but, upon an inspecfionof that document, the court is unable, unaided by testimony not in the record,to say that .this roac1 was built under the charter. Indeed·, the name given to the corporation in that charter, is not the name by which the defendant is sued. The references in the petition and. al-: terl1ative writ to executed by the Colorado Central Railroad CompanY,and the·claim for $5QO,QOO damages, and the proofs on that sUbject,arl'l all irrelevant in this proceeding, and do not require further. consideration. .! . , The Union Pacific Railroad Compa:ny is made a defendant as a lessee of) the rond,and it is' alleged ·that jUs bound by the covenants of. the kaseto operate the rOlld. But the petition of the relator a:vers that this * *. * when accomplished, was the selling or leasing of a competing line, and done in violation of the statute laws of the state ofC<>loradOJ": The defendants strrkehands with the relator on this poin't{undaver i1;ltheir a.nswer that,.jf there eVer was any such lease, was' Jieverineffect or operative on said companies; that the'<EIoloradoClintral Railroad Oompany'had no right Or authority to and 'the had no right to take a leas&-of; said premises;' and that, as a matter of fact, it never did take the same, and that such lease, if any there is or was, is not now, and nevercllll.Sbeen, in JQrceor ·effect."As.the relatOl:and respon<lents are agreeciftliat thelease''W88 void, that ends the case as to the Union Pacific RailroadOlnipany; fo-r.ifthe lease,is void it imposes no obligation on the, Union Pacific ComptiHytooperate the road. Where both parties to Ii suit agree that a given instrument is void, the court will not, on: its own motion I uphold andenfor.ce that instrument in that case. It is weUsettled that the ·'railroad company cannot lease its road in the absenceofexpress authority. Whether such authority existed in this case the court does not inquit:eor decide, because :the parties in their pleadings have advised the court that it did not. Asageneral rule, 8,.railroad compahy accepting a charter from the rstllitei'Ulider'and in pursuance of which it builds its road, may be compelled to operate it after it is built,and will be compelled to do so if it haB recdived state aid jO'r if its chartedn terms imposes this obligation. State v. Railroad Cb.,29 Conn. 538j Statev. Railroad Co., 7 Neb. 357; Mor. Pri,\". Corp.§§ 1115, 1116; In: Morawetz·on Oorporations (section 1119) it is said: I
!
company tooper.ate its road reqUires it merely to wants exigencies' It there is not sufficient traffic over a PI,lFticq,l/J,r lU18 ofroadtR"p,ay for tbe ,expense of running trains, tbis is lluffi· cient. evidence that the pUblic do not reqUire it to be kept in operation, and in such'case ple company may cease operating the road, .unless this be contrary to the express tenlls of its 'charler.... . . 8
I!1eeqp,.
of
pEoPLE"., COLORADO
CEST.R.' CO.
643
Such is the rule in Massachusetts. ann; ,v. Railroad Co., 12 Gray, 180. In the case last cited the court says: "Again, it is to be considerM that' tne respondent corporation has under its charter other roads to maintain and other duties to the pu;blic to discharge, and on these branches might exhaust its resources, the running of and render it incapable of discharging these other duties., It would seemto only its right, but its dutYI t? a.sound discretion in be therefore the use of its capital,lest,by exhausting itijpon trains that were not required by the pUbliC wants, it should deprive itself of the means of rUbnillg at reasonable rates those that 'were. 'fhe point is made in the argument for the commonwealth that, because the respondents ,have for,a time maintained ,the roads in running regular ,trains for freight and passengers, they are bound to continue.to run until a\lthorized by the legislature to ;stop.. We cannot l!iee that a beginning to run'these trains rendered their con tinuance, at whatever , ' . cost or sacrifice, a legalduty.-" But whether the c!lses that hold that a railroad company which has not received state aid, and which is not bound by the express terms of its charter to operate Us road, may cease to operate it, if it cannot, by prudent management, be made to pay running expenses, and whether that doctrine is applicable to this case,we ,are not called upon to decic;lei and do not decide; because, giving to the relator's petition and the alternative writ the most liberal constructioIl , they do not s,how that tl;le Colorado Central Railroad Company is under any obligation to operate this road, in any state of case or upon any conditions whatever. In a word, the alternative writ is so barren of the qualities essential to a good writ, is such an imperfect skeleton, that the court, by the most liberal intendment, cannot award a. peremptory writ upon it. It leaves everything to conjecture. and that is. too uncertain to found a judgment upon. In Morawetz on Private Corporations (section 1134) it is said: "It maybe doubted, therefore, whether it be a rule applicable in all cases, that the courts will compel a railroad company to operate its line of road, even though the duty of the company be clear. The difficulty of supervising un· willing agents in the performance of a continuing duty, ofso complicated a 8 railroad, involving the exercise of ,8 nature as that of properly large amount of discretion and technical skill, would in many cases prove l'& serious obstacle in the way of such an attempt. Whether a writ of mandamus shall be issued is in every case a matter resting largely in the discretion of the court, and depends upon all the surrounding facts and circumstances." . And the court, in the exercise of this discretion, will never attempt to compel the specific performance Of an obligation when it is apparent that the attempt would prove unavailing. Id. The specific object of the relator set out in the petition, and the niandatory clause of the alternative writ, is to compel the defendant to operate a railroad from Fort Collins, Colo., to Cheyenne, Wyo. This is the gravamen of the relator's case. Communication with Cheyenne is what is wanted. The operation of the road to the state line would not accomplish what the relator seeks, and is not what is asked for. It is highly improbable that this state ever to defendant a charter by virtue of which it built or coulq. have built a railroad beyond the limits of the statej and it is quite certain no sitting in
64 4
FEDERAL REPORTER, \
can, by mandamus, compel the construction or operation of a railroad in any other state or territory of the Union. Nor can a United States court such a jurisdiction, except' it be specially conferred by act of 'congress in respect ofa federal corporation, as was done by the act of :March 3, 1873. This'objection alone is fatal to the relator's case in its The rule on this subject is that the mandatory clause of present the' alternative writ, should state the averments of title or right which form, the inducement,pfthe writ, and should be in conformity with the legal obligation of the respondent.. If it exceeds the limits of such legal obligation, it is void. High, Extr.Rem. § 539. everything that is stated in the alternative writ to be true, the court could nota:'Yard the peremptory writ. It is not a case of merely defective pleading which can be cured by ,amendment. If it were,so, we would direct the proper amendments to be made, although leave to amend has not,been asked. The defects relate, many of them, to matters of substance, and include nearly or quite every averment essentialto maintain the action; and to make amendments that would show a prima; facie case would be to make an entirely new case. The peremptory writ is denied, and the alternative writ quashed, and the case dismissed, at the costs of the relator, without prejudice to his right to bring another action, as he may be advised.
DISTRICT
OF DOON.
(Oircuit Oourt, N. D. IowC!', W. D. May 6,1890.) 1. 80HOOL-DISTRICTS-RlIIl'UNIlING INDEBTEDNESS-IssUE OF BONDS.
" Tb,e refunding of an outstanding valid bonded indeJ>tedness of an independent Bclj,ool-dist,rict, under Act Wth Gen; ABSem. Iowa, c. 132, allQwing any independent , Bchool-district, having'a bClniied indebtedt:less outstanding, toissue negotiable bonds for the purpose of i\lndlngthe Battle, ill not the creation of a debt, within the inhibitien of Canst. Iowa" 11, § ll"p,roviding that "no or other political or mllJ;llcipal corporation, sh,ll;ll be, ,allow.ellto indebted in any manner, or for any purpose, to an amount III the aggregate exceedmg five per centum on the value of the 'taxable property within such 'courity or corporation. "
9. SAl\IE'-'INORE'A.SE OFINDiEl'ITEDNESS-BuBDEN: OF PROOF. In,an, actionagainstthe qistrict on such Tefu)J.ding bonds, the burden is on de. fendant to show that at the date of the original issuance the outstanding indebted'nells of the district the constitutional limitation. , , 8. S.U4E"'7",APPl<ICATION OF-PURCHASER. The ngtit of the Owner recover on sucl]. bonds cannot be defeated because a part of ,tl:te proceeds of their sale was misapplied. The statute authorizes a sale of the bonds ill ,open market, and 8 pqrQhaser' cannot be chargeq with the duty of seeing th,at tJ;1eproceeds of ,the sale are' properly applied.
At!Law.' Action on interest coupons. Davis & Gdult, for plaintiff. V'anWagener & McMillan and: Kaufmann & Guernsey, for defend-
ant.
tached
based 'upon. certain interest Coupons atissued by the dedisinct in the in this state. The :Qf 'bonds. for the, sum
CUMMINS
v.
DISTRICT TOWNSHIP OF DOON.
64.5
fense is that the bon,ds were issued without consideration, without authority of law, and in violation of section 3, art. 11, of the constitution of Iowa, which provides that no municipal or political corporation within the state shall be allowed to become indebted in a sum exceeding 5 per cent. of the assessed valuation of the taxable property within the limits of the corporation, as shown by the last preceding state and county tax-lists. By written stipulation a jury was waived, and the cause submitted to the court upon the evidence taken in writing, and after full and able arguments by counsel upon the legal questions involved. From the evidence submitted, I find the following facts: (1) The defendant, the district township of Doon, is a school-district in Lyon county, Iowa, created under the provisions of the laws of the state of Iowa, having power to contract in its corporate name, to issue negotiable Donds, and to sue and .be sued in its corporate name. As originally constituted, the district included six congressional townships of land. From time to time other districts have been set off therefrom, until it now includes only two congressional townships. (2) That the affairs of the district township from the date of its organization have been badly managed, and, through fraud and incompetency on part of the officers of the district, indebtedness to a very large extent has been created against the district, part of which was evidenced by bonds of the district, part by judgments against the district, and part by warrants or orders drawn on the different funds. (3) That on or about the 14th day of June, 1881, the then officers of the district determined to undertake the refunding of the outstanding bonded indebtedness of the district, and to that end the board of directors of said district, on the 9th day of July, 1881, adopted the following resolution by an unanimous vote: "JULY 9th. 81. "Be it hereby resolved that the resolution of the board passed June 14, 1881, at a special session, be hereby set aside and declared void. and the following resol ution be passed: That as there is a large bonded judgment debt upon the district of Doon, and as the recorus fail to show the total amonnt of said bonds outstanding and unpaid. and as we deem it for the best interest of the district that all of this debt should be under one form, that the full amonnt may be known, and th-e rate of interest lowered, be it resolved, that we issue bonds for the purpose of funding the outstanding bonded indebtedness of the district to an amount not exceeding twenty-five thousand dollars, and, in the event of a less amount being needed. then only such an amount shall be issued as shall be required to take up all said debt. said bonds to be issued as authorized by chapter 132 of the acts of the 18th General Assembly of the state of Iowa, authorizing the funding of outstanding bonded indebtedness of school-districts. That said bonds shall bear seven per cent. interest, payable semi-annually, said interest payable at bank of Rock Rapids, Iowa. Said bonds shall run for ten years, payable after five years, at the pleasure of the district. That the treasurer shall keep a record of the bonds issued, in numbers and amounts, and the name of the parties to whom sold, with their post-office address. That B. L. Richards, cashier, is hereby appointed refunding- agent to negotiate said bonds. That all indebtedness ot the district before mentioned· Shall be taken up by said Richards, only upon order from the treasurer of the district. That all of the said indebte(lness
;646
FEDERAL' NiJPORTER,
vot 42.
snaIl be paid by said Richards,a,4 he shall render a statement itemized Of and surrender vOUGhers, whenever demanded by the school 'bqard of this district. Onm9tiQn of Claflin above motion unanimously adopted." ., "
(4) That, in pursuance of said resolution, negotiable bonds, with in,tel'est: ,coupons attacbed, were prepared and duly signed by the proper officers of the district; said bonds having printed thereon chapter 132 of, the Acts of the 18th General Assembly of the state of Iowa. The following is a copy of'the statute, and of the bonds and coupons: "Be it enacted bytbe general assembly of the state of Iowa: Section 1. :That any independentschoel-district or district township, now or hereafter l!a.vinga bonded indebtedness outstanding, is hereby authorized to issue negotiable bonds at any rate of interest not exceeding seven percent; per anI1um. payable for the purpose of funding said indebtedness ; said bonds to be issued 'upon a resolution of the board of directors of said district: provided, that said resolutiorishall not be valid unless adopted by a twothirds vote of said directors. "Sec. 2. The treasurer of snch district is hereby authorized to sell the bonds provided for in this act llt not les8,than their par value, and apply the proCl'!eds. tpereof to the payment of the outstanding bonded indebtedness of the dIstrict, or he may exchange such bonds for olltstanding bonds, par for par; but the b.onds herebya;uthorized shall be issued for no other purpose than the fiIndmg of outstanding bonded indebtedness. The actnal cost of the engraving and printing of such bonds to be paid for out of the contingent fund of such district. ,"Sec. 3. Said bonds shaUrun not more than ten years, and be payable at the pleasure of the distl,"ict after five years from. the date of their issue: provided,that, in order to stop interest on them. the treasurer shall give the owner of said bonds ninety days' wl'itten notice of the read i ness of the district to pay, and the amount it desires topay; said notice to be directed to the postoffice address of the owner of the bonds: provided further, that the treasurer shall keep a record of the parties to whom he sells the bonds,06nd their postoffice address, and notice sent to the address as shown by said record shall be sutllcient. "Sec. 4. Said bonds shall be in denominations of not less than one hundred dollars, and not more than one thousand dollars; and said bonds shall be gi ven ill the name of the independent district or district township, and signed by the president and countersigned by the secretary thereof; and the principal and interest may be made payable wherever the board of directors may by resolution determine. "Sec. 5. When said. bonds are delivered to the treasurer to be negotiated, the president his receipt therefor, and the treasurer shall stand charged on his official bond with the amount of the bonds so delivered to him. "Sec. 6. The tax for the payment of the principal and interest of said bonds shall be raised as provided in section 1823, c. 9, tit. 12, Code: provided that, if the difltrict shall fail or neglect to so levy said tax, the board of supervisors of the connty in which said district is located shall, upc;m application of the owner of said bonds, levy said tax., "Sec. 7. All acts and parts acts in conflict with this act are hereby reo pl,laled· .,".'Sec. 8. This act, bjeing deemed of immediate importance, shall take effect in force after its publication in the lowa.State Register aDd State newspapers published at Des Moines, Iowa. A,ppJ;oVIld March: 25, 1880."
1
I,
CUMMINS "'. DISTRICT TOWNSHIP OF DOON.
IOWA SCHOOL BOIm. No.1. "The school-district of Doon, Lyon cOUlity, Iowa, for value received, promises to pay to - - - or - '- , at the Bank of Rock Rapids, Iowa, on the 11th day of July, 1891, or at any time before that date, after the expiration of five years from date of issue, after, ninety days' notice, at the pleasnre of said district, the sum of one thousand dollars, with interest at the rate of seven per cent. per annum, said interest payable semi-annually on the 11th day of January and July in each year at the bank of Rock Rapids, on the presentation and surrender of the interest coupons hereto attached. Thi,s, bond is executed and issued by the board of directors of said school-district in pursuance of and in accordance with chapter 132, Laws 18th Gen. Assem. Iowa, is in accordance with the laws and constitution of the state of Iowa, and in conformity with a resolution of said board of .directors passed in accordance with said chapter 132, at a meeting thereof held 9th day of JUly. 1881. In testimony Whereof the said school-district, by its bpard of directors, have caused this bond to be signed by the president, and attested by the retary. this 11th day of July. 1881. ' "J. SHATSWELL, President.' "LoN H. WAGNER. Secretary." "(Exhibit 7.) .' "$35.00. The treasurer of the school-distriCt of Doon, Lyon Co., IoW'a, wfll pay to the bearer hereof, January 11, 1886, at Bank of Rook Rapids,thirty-' five dollars, for interest on bond No.7, dated July 11,1881. issued under provisions of chapter 132. Laws of the 18th Gen'l Assembly. "J. SlU.TSWEI,L. President. "L. H.WAGNER. Secretary."
i'$I,ooo.
(5) ,That B. L. Richards, named in the resolution of the directors of said district as the refunding agent to negotiate said bonds, sold on or about July 25, 1881, $10,000 of the bonds to plaintifJ', who thence..' sided at Lincoln, Ill., and on or about August 11, 1881, sold a further amount of $10,000 to said plaintiff, who paid in cash the par value of said bonds, or in all the sum of $20,000 therefor. In making the purchase of said bonds the plaintiff relied upon the representations made to him by the said Richards that said bonds were a good investment; that they were issued in accordance with the provisions of the resolution of the board of directors of July 9, 1881, and in pursuance of chapter 132, Acts 18th Gen. Assem. Iowa. (6) That by section 3, art. 11, of the constitution of Iowa, adopted in 1857, it is provided that"no county or other political or municipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount, in the aggregate, exceeding five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax-lists, previous to the incurring of such indebtedness." (7) That the supreme court of Iowa in Winspear v. District 7P. of Holman, 37 Iowa, 542, has decided that a district township of the nature' of the defendant corporation is apolitical corporation, within the mean:'ingof the constitution, and is therefore subject to the above limitatIon. c (8) That the total valuation of taxable property within the district township of Doon, as shown by the state and countytax-listB made dot
648
next previous to the issuance of; the bonds in question, was the sum of 8131,038. This is the vahlatioq of the property included within the territorial limits of the district of Doon, as the same were in 1881, at the date of the issuance of the bonds and Call pons sued on. The assessed valuation of the property withillthe district of Doon is not shown at any other date or period prior tol880. (9) That the evidence fails to show the exact amount of bonds issued by defendant outstanding on the 9th and 11th and 25th days of July, 1881. and on the 11th day· of August, 1881. It appears, however, that there was at least $18.000 of bonds outstanding, :upon which there was due on the 11th day of July, 1881, including interest evidenced by coupons, over $20,000. (10) It appears that in 1873 fhedefendant employed one James H. Wagner to build four school.housEls in the district for the sum of $2,500 each. As built, the school-houses were not worth tQ:.exceed $1,500. The houses were accepted, however, and warrants issued therefor. These warrants were sued upon, and judgments rendered thereon in 1873 against the district aggregating $10,100. These judgments were bonded, as well as some other small ones rendered about the same time; the bonds therefor being issued in 1873. It is probably true that, the judp;ments not having been all canceled upon the records, a furtherissueof bonds was made upon part of them in 188tt The evidence further shows that large amounts of warrants were issued from time to time for various purposes, a portion of which, at least, was fraudulent. (11) When the bonds of defendant were purchased by plaintiff in July and Augllst, 1881, there were standing upon the record unsatisfied judgments against the defendant as follows: NoOn:. S. S. Bradley .. Chas. Schultz ;.......................... . . M. Wakefield........ · .. National 8". F. Co ; ! . Wm. Larrabee " .. Wm. Larrabee .. :\t. M. Pelle . C. E. Dickerman / .. J. N. Perry : 1 J. F. Eggleston .. Hersey, Bean &; Brown .. DATlil Oil' JUDG'T.
AMT. $1,950 00 628 29 180 00 54852 8,27050 1,30426 62:i 80 42260 500 00 78 201 40
CoSTS.
June 25. '73 Feb. 18, '79 " u
" 5, " May " '75 Nov. Il, '75 Dec. Il, '79 Feb. 18, '811 Feb. 18,'80
$2950 600 350 595 5 95 375 595 575 645 625
May 11l,'SO
(12) The evidence shows that. from the creation of the district township of Doon its financial affairs have been badly managed, and that many frauds have been perpetrated by its officers, and that thereby the amount ofindebtedness evidenced by its bonds and by judgments against it has been fraudulently increased. The evidence fails to show that, as against the holders of the bonded. indebtedness in July and August. 1881, a successful defense could have been interposed on behalf of the ant. The evidence fails to sho,w whether, at the date of the issuance of any of the bonds outstanding on July 11, July 25, and August 11,1881,
CUMMINS t. DISTRICT TOWNSHIP OF DOON.
649
and issued prior to July 9, 1881, the amount of the indehtedness of the district exceeded 5 per cent. of the taxable valuation of the property within the district; and it does not, therefore, appear that any of the bonds outstanding when the bonds bought by plaintiff were issued were void because of the constitutional limitation contained in section 3, art. 11, of the constitution of Iowa. . (13) The cash paid by plaintiff for the bonds sold to him in July and August, 1881, to-wit, $20,000, was received by B. L. Richards, the financial agent named in the resolution of the board of July 9, 1881, and also the further sum of $5,000, realized from a sale made December 20; 1881, pf $5,000 of bonds to the Socif'ty for Savings of Cleveland, Ohio. Richards, on the 6th day of March, 1882, made a repdrt to the board. of directors of defendant, which was accepted and approved, showing that he had paid out the sum of $19,174 in taking up honds, coupons, judgments, 'warmnts, and orders drawn on the teachers,' contingent, and school-house funds. The balance in his hands, of $6,485.79, was paid to the treasurer of the defendant. (14) That, for four years after the issuance of said bonds bought by plaintiff, the district paid the semi-annual interest coming due thereon, thus retiring eight of the coupons attached to each bond. That the defendant failed to pay the' coupons coming due January 11, 1886, July 11, 1886, January 11, 1887, July 11, 1887, January 11, 1888, July 11,1888, January 11,1889, and July 11,1889, upon each of said bonds, being eight coupons on each bond, or 160 in all; each coupon calling for $35. That said coupons are those declared on in this action, were due when this suit was brought, and that there is now due thereon, including interest at 6 per cent. up to the 5th day of May, 1890, the sum of $6,462.40. What judghient should be pronounced by the court upon the foregoing facts? . The production of the coupons forming part of the bonds issued by the defendant, they being due and unpaid, makes out a prima facie case for plaintiff. The evidence shows that the bonds were issued by the defendant, that the plaintiff paid full value therefor, and there is nothing to connect the plaintiff with' any alleged fraud in the issuance thereof, so that the defense of wllnt of consideration is not S11Stained. ' The main reliance of the defendant is upon the constitutional provision limiting the indebtedness of municipal and political corporations to 5 per cent. upon the taxable valuation of the property within the corporate limits. Under the rulings of the supreme court of the United States, the corporation is not estopped, by the recitals in the bond, from showing that the issuance of the bonds in fact increased the corporate indebtedness beyond the constitutional limit. Dixon 00. v. Field, 111 U. 'S. 83,4 Sup. Ct. Rep. 315; Lake v. Graham, 130 U. S. 674, 9 Sup. Ct. Rep. 654. The question is whether the defendant has in fact made out the defense relied upon. The bonds purchased by plaintiff wei'eissued under the provisions of the act of the eighteenth general assembly of the state of Iowa, passed for the purpose of enabling !'lehool-
650
FEDERAL -RF-PORTER,
to refund th,eir outstandi!1g bonded indebtedness. If the provisipns,.of the were followed,the issuance of bonds under its terme WQuld not the existing inde1;>tedness ofa district. For au illustra.ti,9J,l" ifon the 11 th dRy of July, 1881, there enforceable bonded against,the district of Doon of $20,000, and the same had been refunded by the issuance of $20,000 of bonds of that date, could the, latter be defeated by simply llhowing that the same exceeded in amount 5 per (,lent. !ofthe taxable property in the district at tht:tt date? refQnding of an existing enforceable debt cannot be said to be illthe inclebtedness,and a mere change in the evidence of the debt ;ooe bond to another, Or fropl a judgmentinto ahond, is not,withiri. inhibition. Austin v. Distri<;t 'J'p.. oj (J()7nny, 51 Iowa, lj),2I Jj./lp,iJ,road Co. v. County of Osceola, 45 Iowa.t68. ';1 While the evidence .shows recklessness,Jackof business man9ro:ent;,aIj.d fraudulent practices had doubtless greatly swollen tbe,oImll:lptedness of the district, it is not made.,to that a single dollar of the bonds agai.nst the in July, 1881, could the hands of thethen holders thereof. The;j)v,i,dence shows. tpatthe exbmt of the. district of Doon had IQhanged lleveraltijlles by theJormation ofother districts, and there i$,no showing,theamoup.t of taxllble. property according to the the1;>onds 011 July It. 1881, were iSsued. It.islijotshowl),therefore, that;any of the b()llds, inexistence on July ,Uij i wer!" voidwl:lep reason of the constitutional limitathe phtilltiffknew all that the evidence a,dduced in ttmUJase now displQses, .it could 119t be said tbat he knew, or sbould the bonds proposed to refund were not enforceable against the district. True, if it had been proposed to issue hQudt! for ijle purchase of property. ,then acquire<i. or for the erection Of sch:OQl-houses, or for apy purpose ,otber than refunding existing indebtthe plaintiff would have been bound tokIlOW that the amount 9fbopdlil.proposedto be issued was,in excess of 5 per cent. oOhe taxa.bleWlJ.)l1ation of the"property at that date inclqded within the limits of and that such of qo.nds must of necessity increase the ip,dehmdl);ess of beYOlld the constitlltiQnal limitation. The proposition made to plaintiff, however, was, in effect, that contained in ;resqlution of J \}ly9;;1881. He, was informed that the bonds offered ,hiij;l issued under: and in accordance witb tbe provisions of the act tbe purpose of rduo.ding the Ibcimla t1J,en Qutstanding against the district. statute authorized the .diBttri¢t to such purposes. Having bought the bonds· in ,good faithjJtllq paid full· value. therefor under 'suob circumth.e.Yl:Lre.celJ4t-inlyva)id bis bands. unless it is shown that lt4ltY;\Vere issuance thereof increllsed the indeQ.tedness JQf..,tt¥t Q(>Dstitutiona} amount. ,'Under the made the; i;)urdenof,s);lOwingt1;lis is upon the .Tp,ol ,ffplony" 51 1:awa. 102;·. The plaintiff, inpurQha.shad right. toaS1'lQme that of
CUMMINS V. DISTRICT TOWN8HIP OF DOON.
the district were acting in good faith;' or, in the language of the supreme court of Iowa in Railroad Co. v. County of Osceola, 45 Iowa, 175: "There is a presumption that those charged with public trusts act honestly and in good faith. The whole theory of the law rests upon this assumption." Recognizing the fact that the burden of showing the invalidity o( the bonds waS upon the defendant, the latter introduced a large amount of evidence. touching the indebtedness of the district, and the manller .of its creation. While, as already said, this evidence shows many frauds and much loose management in the conduct of the financial affairs of the district, it fails to show that any particular bond or series of bonds outstanding July 11, 1881, was invalid in the hands of the then hold.er thereof, or that when issued it increased the indebtedness of the district beyond 5 per cent. of the taxable valuation of the property included within the limits of the district as then constituted. The evidence, ,therefore, on the one hand, shows· that on the 11th day of July, 1881, when the directors authorized the issuance of the bonds, and on the days when plaintiff bought the bonds, there was outstanding a bonded iI)debtedness exceeding $20,000 in amount, and on the other, fails to show that any part of this could not be enforced against the district. Under these circumstances, it cannot be claimed that it is proven 'that the Issuance of bonds for the purpose of refunding this existing bonded indebtedne.S8 . .;. was a violation of the constitutional limitation. It is further urged thatin fact part of the proceeds realized from the' sale of the bonds was used for paying indebtedness of the district other than that evidenced by its. bonds and coupons. I do not think the plaintiff was charged with the duty of seeing to the proper application . of the proceeds realized from the sale of the bonds. The statute 8uthor-·' the sale of the bonds in open market. It would be an impossibility to thus sell the same, if the validity of the bonds thus soldwfis made' dependent upon the proper use of the moneys realized from the sale' thereof.· . It could not be expected that a purchaser could be found who· would buy the bonds and part with his money, if his right to recover! on the bonds was to be determined by the use made thereof by the district aftei'the money had passed into its possession, and beyond the can'" trol of the purchaser. The conclusion reached upon the facts in the evidence is that it is not made to appear that the bonds bought by plaintiff were void for want of consideration, nor that the same', being refunding bonds, were in violation of section 3, art. 11, of stitutionof the state of Iowa; and, it appearing that ,the coupons declared on were and are parts of said bonds, and that the same are due and unpaid, the plaintiff is entitled to judgment for the amount thereof, , with i I;!'
I
662
FEDERAl, REPORTER,
HARDIN
CASS COUNTY.
(Cvcuit Oourt, W. D. Mis8ouri, W. D. June 9, t890.) 1. LIMlTA'l'ION OF ACTIONS-RUNNING OF STATUTE-NoNSUIT.
Where plaintifl', in an action in the federal court on county bonds, declares on fictitious ponds in addition to those held by him, merely for the purpose of giving the court jurisdiction of thtl amount,a1;ld takes a voluntary nonsuit, the institution of such sUit: and bringing of another su.it within one year, as provided by Rev. St. Mo. § 6784, aoes not arrest the running of the statute of limitations. The equitable construction given the statute allowing a new action after sufl'ering a nonsuit cannot be invoked by one who knowingly practices a fraud on the jurisdiction of the court. After a successful plea of the statute of limitations to a part of plaintifl"s claim, judgment may be rendered for the balance, though it is less than the amount necessary to give the court jurisdiction, and though the petition on its face shows that the part of the claim agatnst which the statute was pleaded was barred at the commencement of the action; since plaiJ;ltiff in bringing the suit was not boun.d to anticipate that defendant would plead the statute. ,
S. JURISDICTION-JUDGMENT FOR PART OF DEMAND.
At Law.
Action on bonds. '
Karnes, Holmes Krattthoff, for plaintiff. W. S. Shirk and J. F. Lynn, dl'lfendant. PHILIPS, J. This is an nction founded on certain ,bonds and coupons issued by the defendant couuty. The petition contains three counts. bonds, of $500 each, issued August 26, 1869, The first counts on due si:l(,years,after date. The counts on three bonds and twentythree coupons, two bonds for $500 each, and one for $250, dated July 11, 1870, due nine years after,date, with interest at 10 per cent. after maturity. The answer interposes tpe plea of the s14tute of limitations. It is conceded that the statute has run against the bonds set out in the first count, and the cause of action, therefore, is bll.rredas to them. The statute of limitations is also interposed as to the c!1use of action set up in the second count of the petition. It appears that the statute of limitations has run as to coupons from 6. to 20, inclusive, attached to bonds 1, 2, and 13, described in the count, and the cRuse of action as to said coupons is therefore barred. , , The more important question arises on the third count. At the time this action was begun the two bonds numbered 25 and 26 were prima facie barred by the statute of limitations. To avoid this plea, the plaintif;f alleges that on the 5th day of July, 1889, 13 days before the statute of limitatipns had, completed the bar, he instituted suit in this court on said bonds 25 and 26, and on the 12th day of September, 1889, he took a voluntary nonsuit therein, and instituted the present suit January 29, 1890, within the year allowed by the state statute after such nonsuit. To this defendant makes answer that in such action begun by plaintiff on the 5th day of July, 1889, he alleges "that he was the owner and holder for value of bonds number 23 and 24, and of the bonds herein described as Nos. 25 and 26, and that said bonds remained due and unpaid, amounting in the aggregate to the sum of $2,000, and prayed judg-
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