DODGB . fl.
ern
OJ' KJD(PHIB.
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lion, but the exception was a general one. A decision is not placed upon the ground that the exception was general, because it may be said there the court permitted such an exception. Whatever may be the proper consequences of this omission upon a writ of error, it is of no importance in this CMe upon a motion for a new trial, for the omission resulted in no injury to the defendants. The only question in dispute was that of fraud, and the affirmative testimony in regard to this point was abundant and perfectly Convincing. The deposition of Kitts left no doubt of the· untruthfulness of the agent's assertions, and 16sti" mony of the agent in his own favor, though he was carefully led by the defendants' counsel, had no weight with those who heard it. A charge in regard to the burden of proof, in this case, would have beeD a mere formality. The motion for a new trial is denied.
DODGE t1. CITY OF MEMPHIS.
(Ctrcwtt Oourt, E. D. Missouri., N. D. May It, 1891.) HmnOIPAL CORPORATIONS-ULTRA VIREs-NEGOTIAllLB BONDI.
Where;a1;own, in pursuance of statutory authority, sUbscribes for stock in a ran. way company, but, without such authority, issues negotiable bonds in payment therefor, such bonds are absolutely void, and no suit can be maintained on them on the theory that they are valid as nonnegotiable instruments.
At Law. Action by James B. Dodge against the city of Memphis, Mo., on certain municipal bonds. Heard on demurrer to the plea. Overruled. Felix T. Hughes, for plaintiff. The contract of subscription in the case at bar was valid, and expresslyau. thorized, and the bonds were not wholly void, but valid, except as to their commercial quality, in which case the contract will be enforced in so far as is valid, and the provision in the contract of subscription to pay in bonds be beld, in effect, a contract to pay in money at the time and under the ditions imposed in the order of sUbscription. Gelpcke v. Dubuque, 1 Wall. 222; autbor's views, subdivision 6, 125, (4th Ed.) Dill. Mun. Corp.; Mayor v. Ray, 19 Wall. 468; .Hitchcock v. Galveston, 96 U. S. 350; Little Rock v. Merchants' Nat. Bank, 98 U. S. 308; Wall v. Monroe 0o., 103 U. S. 78; Olaiborne 00. v. Brooks, III U. S. 400,4 Sup. Ct. Rep. 489; Wells v. Supervisors, 102 U. S. 625; Norton v. Dyersburg, 127 U. S. 160,8 Sup. Ct. Rep. 1111; Hill v. Oity of Memphis, 134 U. 8.198,10 Sup. Ct. Rep. 562; Gause v. Oity ofOlarksville, 5 Dill. 177; Babcock v. Goodrich, 47 Cal.488; State Board v. Oitizens' St. Ry., 47 Ind. 407; Allegheny City v. McOlmkan, 14 Pa.St. 81; Maher v. Ohicago, 38 Ill. 266; Oneida Bank v. Ontario Bank, 21 N. Y. 490; Argenti v. Oity of San Francisco, 16 Cal. 256; Bank v. North, 4 Johns. Ch. 370; Ketcham v. Oity of Buffalo, 14 N. Y. 356; Evansville, etc., R. 00. v. Oity of EtJansville, 15 Ind. 395; Mullarky v. Oedar Falls, 19 Iowa, 21; Sheffield School Tp. v. Andress, 56 Ind. 102; opinion by Mr. Justice STORY in Bank v. Patterson, 7 Cranch, 305; Knapp v. Mayor, 39 N. J. Law, 394. The promise to give bonds in payment was, at furthest, only ultra vires, and, in such case, though specific performance of an engagement to do a thing
:tranigr'sstve:of(,!fslooipoi:ate liable :()Q,
:thl!bonds or security takell for "money llaci 11pd received, II 'or t'o only'disaffirtn,ttle Jllt'galsecurity and sue upon the cotltilact,'rests with tU6hoider of the s'ecutity, and not with the corpuration ;galie it. ' : CjJ,ntract canb.e Elnfotcf'd subjeotto the equities between tbe original 'Ie.re ," Hacketts. t.orun.. V,. SWaCk 1lrf!-.me1." 37. N.,. J. La w, 191; .. :p.. .· un.Mayo1', t4t.h. Ed Law, 394. " Daniel, Neg. In,st.. (.2d EtI.) §. 420.; .·. C.?rp.. . . ....) §.§. 120-1.23;. Knapp y. 39 N., J. . ',f{'lbe' ground has been broadlytaken that, for debtsaud obligations lawfuIly crelUed, 'anyicorporatlon,public as well as private, has the implied authority, unless prohibited by statute, cliarter,'orby.law, to ,evidence the same by the execution of a bill, note, or bund, or other contract; that the power to contract a debt carries with it the power to give a suitable acknowll'dgment of it; and 'there is no rule of law; in the absencE" of a statute limIting the ll'ngth ofthe credit. Mttn'icipality v. McDonrJUyh, 2 Rob. (La,) 244, (1t)42;) BaT1'Y v. Merchants' EXchange Co., l.Sand, CIl. 2t)Oj OU1't'iS v. Leavitt, 15 N. Y. 9: Smith v. Law, 21 N.Y. 299; Bank v. Out'penter's Adm'Ts, 7 Ohio, 31; Ketcham v. Oityof Buffalo, 14N. Y. 356; Dougla8sv. Mayor, eta., 5 Nev. 147; City of Richmond v; McGir1', 78 Ind. 192; EvamvUle, etc'IB. 00. v. City of Evans'Dille, 15 Ind. 395; She.tJield Schuol Tp. v. And1'ess, 56 Ind. 162; Dill. Mun. Corp. (4th Ed.) 443;2 Koot, Comm. 224; Beach, Ry.Law; § 223; Gl'een'BBrlce, Ultra Vtres,p. 122; Chicago, B. & Q. R. 00. v. OUp of Aurora,99 Ill. 211. ,
ate 1
rig-Ilt ,t9
he corporation can . Oneida, Jj(tn,k v.OntfJ,'I''io 'Bcmk, 21 N. Y. 490; (lal$e llecidesthat,
t.
Henry A. Ounningham,fo'r defehdant·. l'nA\*tR,District Judge. The petitibn contains three couuts. The first count alleges that in February, 1871, the town of Memphis, Scotland county, Mo., subscribed for $30,000 of the capital stock of the Missouri, Iowa & Nebraska Railway Company, pursuant to power COllferredby arlact of assembly of Missouri, approved February 9;, 1857, to incorporate the Alexandria & Bloomfield Railroad Company; .that sucbsuhscription was. authorized by a majority vote of the people of the town of Memphis, at an election held for that purposejthatas an evidence of such subscription coupon bonds to the l'lmountor-$30,OOOwere issued and delivered by the town, which which matured on March 1, 1891. It were is further'.. averred that the 't<;iwn of Memphis received the stock in question, but subsequently. sold. it, and that for some years it paid the .on it&bondsj that it also appointed an agent to represent the town at meetinKs of the stockholders of the railway company. The petition then sets out One of the bonds in hmc verba, which appears to-be an,eg?t¥ib1e bond,in theqrdinary forrrt, such as are usually issued _by 'and avers that the plaintiff is the holder of 22 of such {giving 'their nUp1ID,ers,} and demauds judgment for the amount, due .on the subscription aeshown by the bonds, together with interest from ,March 1, 1891. The theory of the plaintiff's counsel seems to be thatthefil'st count of the petition is a suit on the bonds, treating
OODGE
fl. CITY ,OF:iMEMPHIS.:
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instruments; that: the bond evidences the contr8,ct df"snDscriptib'n;fftld'that the plaintiff iliJ'entitled to sneon .the same. ignoring,thei'T''iliegotiableql1al:ity preciisely as if they were an ordinary nonnegotiable contract, which the town was.imthorized to make and, had made. That the town of Memphis had no authority to issue negotiable bonds in payment for the stocksnbscriptioll is.conceded. Hill v. Memphis, 134 U. S. 198, 10 Sup. Ct. Rep. 562. To the first count of the petition the defendl,tnt interposes. several dHft::rent pleas, inqll.lding a plea of the statute oflimitations, and to thidatter plea 'plaintiff demurs. It may be cOIJ.ceded ,that if the pf properly founded on the bonds, caBing them either bonds or the contract of subscription, then the statute of limitations is not well pleaded, because such and .neither the 5, bonds did. not mature until March 1. ofthe,:statuteis applicable. ,But. on the other haUd, if a suit cannot be ffllliritained on the bondsacc9rding to plaintiff'scontentioo, then the first count of his declaration is bad, and the demurrer to the plea is not tenable foi:" that reason. 1 have looked throughallof the federal cases cited by plaintiff's attorney in support his contenti9n tbatwherenegotiable bondsareissned:bya municipal out authority of law,and are void asnegotiahle instruments. ,a suit may nevertheless be maintained on suchibonds, under some circumstances, as nonnegotiable instruments, and I have been unable to find a single paragraphjnany of the decisions that fairlysupportssucb a doctrine. The authorities show that, if paper is uttered by a municipal corporation without autl}ority of law, it is void, and a suit cannot be maintained thereon for any purpose. Mayor v. Ray, 19 Wall. 468; Hitchcock v. 96 U. S. 350; Litae Rock v. Merchants' Nat. Bank, 98 U. S. 308; Wall v. Monroe Co.· 103 U. S. 78; Hi71 v. Oityoj Memphis, 134 U. S.198, 10 Sup. Ct. Rep. 562; Merrill v. Monticello, 138 U; S.673, 11 Sup. Ct. Rep. 441. They show, no doubt, that when a municipal corporation sells bonds which are void, and receives the money, it may be compelled to restore if in an aetionfor money had and received. So when a municipal corporation is authorized to purchase property for any purpose, or to con. tract for the erection of public buildings or for any other public work. and it enters iutosuch authorized contract, but pays for the property acquired or work done in negotiable securities which it has no express or implied power to issue, it 'may be compelled to pay for that which i,t has received in a suit brought for that purpose. In no case, however, does it appear that a suit has been sustained on a void bond. treating it as nonnegotiable, and as something entirely different from what t4e parties intended it should be. As the court understands the cases, s,!lit must be brought on the implied promise which the law raises to pa.y the value of. that which the municipality has received, but has in. fact not paid for. because the securities issued in pretended payment were void. The demurrer to the plea must accordingly be overruled; because the first count is bad if it is regarded as stating a cause of actiOn on the bonds. If it is treated as a suit to recover the value of certain stock
of
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nJ)UAL REPORTER, vol. 51.
which the town lawfully8ubscribed and acquired, and has not paid for, tbet1'thepleaof the statu'temay be a good plea. At all events, it doea notcll.ftirmatively appeal' that the plea in that event is untelUlble. Thu;demurrer is overruled.
I
,
NORTH A'l'CUISQN BANK tI. GARRETSON d (OWcUu CounO/.AppeaZl, E-tahth.Ci.rcuUo Jun. No. T8.
ttl.
us. l89'.I.)
. One '1'., haVing purobased certain cattle offered his cbeck for 122,000 In plymen\. Tile eeUerrefuse<1 to it or part with the cattle until assured that the check would be pail!, and therefore telegraphed the drawee, asking if it would pay '1'''1 cbeck fer $92,000. Tbedraweeanswered: "'1'. la good. Send on your paper. It Held, th.t tbil constitl,ltedacontract to pay the check on presentation. 89 Fed. Rep. 168, and 47 Fed. Ren. 867, aflirmed. 1.i:UK_AGBBlliMlliNT TO AdoBPT-btMATEBUL VaumoN. A bank which has agreed to accept a cheok for a certait) sum cannot refuse payment l!ecause the oheck when presented concludes with the words "with exchange," DO place of exchange belnlt named, and the check being dated and payable in the lame toWDt for luch words,are mere surplusage, and of no effect. 47 Fed. Rep. 867. aflirmed.
L B&KJl
TBLlliGJ4.H.
In Errol' to the Circuit Court of the United States for the Western District of .Missouri. Affirmed. Willard P. HaU and Vinton Pike,.for plaintiff in error. L. O. KrauthojJ, for defendants in error. Before CALDWELL and SANBORN, Circuit Judges, and SHIRAS, Distric' Judge. SHIRAS, District Judge. The plaintiffs below, G. A. Garretson & Co., .. firm engaged in the banking business at Muscatine, Iowa, brought this action in the United States circuit court for the western district of Missouri, against the North Atchison Bank, a corporation located at Westboro, Mo., to recover the am()unt of a check drawn by one James Tate on the defendant bank for the sum of 822,000. The case was submitted to the trial court upon an agreed statement of facts, and judgment Was given in favor of the plaintiffs, the reasons therefor being very fully lind ably stated in an opinioli reported in 47 Fed. Rep. 867. The facts necessary to be stated are as follows: In September, 1888, the Muscatine Cattle Company sold to James Tate 1,000 head of cattle, at $22 per head, delivery of the cattle to be made at Pueblo, Colo. Tate offered to A. J. Streeter, the agent of the cattle company, in payment for the cattle, his check for $22,000 on the North Atchison Bank, and thereupon Streeter sent the following telegram to the bank: . .. PuEBLO, CoLO., Sept. 2. 1888. "Po North Atch:tson:Bank. Westboro, Mo.: Will you pay James Tate'. check on lOU, twenty-twotbousand dollars Answer; , .. A. J. STREETER.·