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OF ST. PAUI,
TY. No. 449.
mST. NO. 26. BARNES COUN-
(CIrcUit Court of Appeals, Eighth OircUit. October 15, 11l94.) FEDERAL COURTS-FOLLOWING STATE DECISIONS-CONSTRUCTION OF TERRITORIAL STATUTE BY STATEOOURT.
A of the supreme court of a state construing a statute of the territorytrom which the state·wlls··formed (Laws Dak. 1879, c. 14), on the question of the amount of indebtedness which a school board might the ere(Jtion andfu.rnisp.ing of a schoolhouse, even if not absolutely binding upon the federal courts within the state, should be followed by them, unless imperative reasons exist for dlSl'egardlng It.
In the Circuit Court' of the United States for the District of North Dakota. Action by the Capital Bank' of'St. Paul, Minn., against school district No. 26, BariiE!'s county, .N. D. Judgment for defendant, brings ... Affirmed. and WiIljani1I. Jones: (paniel V.Samuels and W. Irving Culver, on the ,brief),.forplain,tUl;41 error,.. .... ' in. error. , .Ge<?rlire oK.. Andl;'ul:l, 10r BeforeOALDWELL, SANBORNjandTHAYER,Oircuit Judges. J",
THA.YER, Circuit J.udge. Thilil iil suit which . was brought by tM.plaihtiff in' error, the Oapital. Bank of St. Paul,Minn., against the: defendantin error, 8chooldi$tvietNo. 26, N. D., amount due on nine!s.chool warrants., were aIlegedito>havebeen delivered by said school district in the month of Decembar, 1881, for the building. ,of a school house. 'The school district in substance, and by way of defemre W the action, ·that .the warrants were fraudulently issued and put emulation by certain persons who pretended to be officers of said school district,but not such in point of fact; secoud,tnatthe warran'tsin suit were barred by the statute of limitations of the staterof North Dakota; and, third, that the warrants were void when jssued,becanse each of them amounted to more tban lper cent of the "tiixaQlevaIue of ;all the property in said school ilistrictfor the year 1881; also, because ,the inhabitants of said' district· had never authOrized the school· board to build a school· h<luse at any meeting of the· .inhabitants called for that purpose, .and ·because .· the ,inhabitants of the district hlld J;lever selected a site for 8,. school honse. The case was tried to Ii jury, and at the conclusion of the plaintiff's evidence the court directed a verdict for the defendant, which was accordingly returned. The facts disclosed by the record, on which the circuit court appears to have predicated its action. in directing a verdict for the defendant, are substantially as follows: On the 29th day of November, 1881, the superintendent of schools for the coun.ty of Barnes, in the then territory of Dakota, formed a new school district, consisting of township 139 N., of range 59 W., and township 139
CAPITAL BANK l'. SCHOOL DI8T. NO.
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939
N., of range 60 W., to be known as "School District NumbeI1 Twenty-Six, County." At the same time he directed five notices to be posted, calling a first district meeting of the inhabitants of the district to beheld on the 17th day of December, 1881. The record does not show what was done thereafter by the inhabitants of the district in the way of further organizing the district, and electing officers thereof; but it does show that on the 21st of December, 1881, eight of the warrants now sued upon were executed and delivered. They were each in the following form: Territory of Dakota. , "Sanborn, Dec: 21st, -1881. "Treasurer of School District No. 26 of Bal'nes County; "Pay to J. W. Shannon, or bearer, five hundred dollars, out of any moneys In the district treasury. belonging to the contingent fund not otherwise appropriated, for building school house. "C. P. Werth, District Clerk. Jacob Werth, Director." "$500.00. "No. - - , .
One other warrant in the sum of $500, which was also sued upon, appears to have been drawn as early as December 3, 1881, before the district was formed. Evidence was offered at the trial tending to show that the aforesaid warrants, amounting altogether to $4,013.70, were delivered to J. W. Spannon, the payee therein named, for building and furnishing a school house for said district, which he had agreed to erect and furnish, under a contract made with the school board of the district, for the sum of $4,000 in school warrants. There was evidence further· tending to show that after the delivery of the aforesaid warrants, and some timeduririg the early part of the year 1882,. Shannon, the caused a school house to be erected and furnished, which was worth at the time in cash about $1,600. It waf;! aJS() shown that the warrants had been duly sold and assigned to the Capital Bank of St. Paul, Minn., before the commencement of the action. In the course of the trial it was admitted that the assessed valuation of all the real and personal property situated in said school district No. 26, for the year 1881, was, $25,035, and that the highest valuation placed upon said property for the purpose of taxation during the period of five years thereafter was $30,540. The foregoing are substantially all of the material facts proven at the trial in the circuit court, on which the plaintiff's right to recover on the warrants then depended, and now depends. From what has said it will be seen that the warrants in question were issued when the present state of North Dakota formed a part of the territory of Dakota. The validity of the warrants must therefore be tested by an act of the territorial legislature entitled "An-actto establish a school">public school law for Dakota territory," which was approved on February 22, 1879, and was in force on the 21st of December, 1881, and for some years thereafter. Laws Dale 1879, c. 14, §§ 16, 25, 29, 39, 56, 57. The supreme court of North Dakota -has recently construed the various provisions' of this aet relating to the selection of school-house sites, the of school houses, and the issuance of warrants therefor, in a suitwhieh was
940
FEDERAL REPORTER,
vol. 63.
this plaintiff. Oapital Bank of St. Paul v. School Dist. No;;53,1 N. D. 479, 48 N. W. 363. That suit, like the one in hand, was,founded Cln school warrants that had been issued by the district, under the territorial law aforesaid, to pay for the erection and furnishing l of a school house. The question arose in that case, as in the case at bar, to what exttmt the school board of a rural school district might contract an indebtedness for the erection and furnishing.' ot a school house by .issuing school warrants for that purposejandit was held, in an elaborate opinion, that the amount of stich indebtedness could not exceed the amount of the funds in the hands'of the school board, or subject to collection, for the purpose of building a school house, and the amount that could be realized from the maximum tax which could be levied by the inhabitants of the district, for the current year, for the 'purpose building a school house. Section of the territorial law above cited provide" that: "The lIlhabltants qualified to vote at a school district meeting, lawfully assembled, .shall have power: · * * (5) To vote a fax annually not exeeeding one per cent. on the taxable property In the district, as the meeting shall deem ,su1l:lclent, to purchase or lease Ii site, and to build, hire or purchase a school house, and 1:Q kl:lep the same In .repair." "The district board shall J;lurcbase or lease such site for a school house as shall have been designated by the voters at a district meeting in the corporateniune thereof, and shall bulld,hire or purchase such school house as the voters in a. district meeting shall have agreed upon, out of the funds pI;QVided for that purpose; · .."
Section 56 of the same aet provides that:
Oommenting on these sections of the act, the supreme court of North Dakota said: "The manifest purpose of this legislation.ls to prevent the district, unless bonds are issued under chapter 24 of tlie Laws of 1881, from either mortgaging. the future resources, or incl'easingbeyond one percent. of the assessed valuation the present. burden of ·the inhabitants of the district. The Inhabitants, in meeting lawtully assembled, select a site,dlrect the building of the school house, and levy a one per cent. tax to pay for. the same, It Is out of the funds provided . tor that purpose that the board is to build and pay tor the house. The funds provided for that purpose are those on ha,nd. or subject to collection .for that purpose, and, in addition,' the amount wb,ich can be raised by the levy of a tax not exceeding one per cent of till:! assessed valuation 9f the district; and the tax must be levied before it"c'an be said that the funds are proVided. The inhabitants cannot in any one year levy this maximum tax for any number of years in advance. No c8J1 be deemed as provided for that purpose which the .district has nQt Wen Qn hand for that purpose, or subject to collection, or which it has not leVied a tax to raise."
In, that case the contract for the erection of the school building, alld the warrants issued incompliance therewith, were held void, because the contract price for the erection of the school house was lal"gelyin excess of the funds on hand and subject to collection, and tbaaUlounttbat could,be·raised by ,the ,maximum tax for1,he· current year.. In the case at ..conti'act.price for the erection of the s.::hool .building'amounted .toab()ut lOM-sixth ·of. the gross value ·of aiLof the property in the district; real and personal, as valued for
CAPITAL BANK t1. SCHOOL DIST. NO.
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taxation for the year 1881; and the maximum tax which the district could levy for that year, for the purpose of erecting a school house, was scarcely adequate to pay one-half of the annual interest on the warrants that were issued to the contractor. It follows that the warrants were utterly void, for want of power in the school board to execute the building contract and to draw the warrants, if we follow the construction of the statute under which they were issued, that has been adopted by the supreme court of the state !of North Dakota, and that had previously been adopted by the suprem.e court of the territory of Dakota in the case of Farmers' & Nat. Bank v. School Dist. No. 53, 42 N. W. 767. It is urged, however, that this court is not bound by the decision of t):l.e state supreme court construing the act aforesaid, because it was a territorial statute, and not a law enacted by the legislature of tpe state of North Dakota subsequent to its admission into the Union. We shall not stop to inquire at the present time whether the decision of the state court construing a law of the territory out !of which the state had been carved should be given the same force effect as a decision of that court construing an act of the legislature of the state.. We conceive that the present case does not us to express an opinion on that novel proposition. It is sufficient to say at this time that it is highly important to the due administration of justice that courts exercising a concurrent jurisdiction over the same people and territory should, so far as possible, adopt the same construction of local laws. The many evil results that would surely follow if we should disregard the deliberate judgment of the supreme court of North Dakota construing the school laws of the territory of Dakota, under which the great majority of the school districts of that state have doubtless been organized, and under which they have acted for a period of years, are so apparent that we need not stop to describe them, or attempt to enumerate them. It is obvious, we think, that, without reference to the question whether the decision of the state court is absolutely binding upon us, we ought to follow it, unless imperative reasons exist for disregarding it, and no such reasons are disclosed by the present record. The warrants upon which the suit at bar is founded are not negotiable instruments in the sense of the law Board Com'rs of Hamilton Co. v. Sherwood (decided at the present term) 64 Fed. 103. They were not purchased by the present plaintiff because of any local decisions which had previously upheld their v·alidity, and given them a currency in the market, on the faith of which the purchaser relied when he made the purchase. Neither is the case one in which the federal circuit court was called upon to construe a statute of the state or territory before its meaning had been authoritatively declared by the courts of the state, for the record before us shows that the present action was commenced in the circuit court of the United States for thQ d,istrict of North Dakota nearly two years after the statute in question had received a definite construction by thesnpreme court the state in a suit brought by this plaintiff, the Capital Bank of St. Paul,' r:Minn., against another school district, in the courts of that
· it is Dlanifestthat object had in vielV in bringing the px:e/Soot actionQP4. admitted, :l;l.t! the bar""";'w.as to obtain a review of court of the state, and, if of djfferep.t of ,a Moreover, tb.e 1$79, which was supreme court of tbe in itself. a reasonable The decisiop. ,()f,tb:e supreme couri ()f,North Dakota, act, restauPQD of policy which are! if not,C;0llvil,lcing; a:qd anyco,urt might w.ell overrqled. ::th{!decision In question, .and the decoum:of the. territory as well, even if it felt itself,a.1HfqlllibeI.'ty· W do so.. '. .. . Tb;e, ;wib,ich we have it unnecessary to (lecide:wbethel', as is by the defendant, the plainti:l:t'ItJl$.Uaeofaction t:l"wstatute of limitations of the 'stat".of' North. Dakota,aud,.no will be expressed upon thatpQ:int., .· ! ,We think that tJil,e, ,circuit <:l9urt acted' plioperly in followiug: this of the $\\JWeme CQuJ1dQf the, I ijtate in the case bereWfone -e,i,ted,' and, so holdiillg, the juj}gJnent of :the circuit couI.'t is hereby mnttned. ,, f(A\CQ, ." I; 'i
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.In Error tel the U.nited states for the Eastern t>lstrictof Wisconsm. ' .' ....' ". , .' " ,Fl'3;Uk' Lippet.'t.against the Ora.ne Company I'M 'llersonal 'Defendant bi,'inO's,el.f&l'.', ' . "/:,.,,, ['" '.' '. '. . an beloW. .flfoj:>U8'ht lffiR :agalnst was, . ,1Illl-i!" ;. , ",',': ,
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pllifu'ltit\' in error
C01.p:'t! anit removoothoo.ce Into his,' guardian ad litem, damages tor personal det.endant in 12.
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