Aurora City v. West

• Decision Date: 01 December 1868
• Citation: 7 Wall. 82,74 U.S. 82,19 L.Ed. 42
• Parties: AURORA CITY v. WEST
• Court: U.S. Supreme Court

74 U.S. 82

19 L.Ed. 42

7 Wall. 82

AURORA CITY v. WEST.

December Term, 1868

ERROR to the Circuit Court for Indiana; the case being this:

The charter of the city of Aurora authorized its council, whenever a majority of its qualified voters required it, to take stock in any chartered company for making 'roads' to that city, and to make and sell their bonds to pay for it. With this power the city, in 1852, issued $50,000 of bonds to the Ohio and Mississippi Railroad Company; a company whose charter authorized it to survey, locate, and construct a railroad 'on the most direct and practicable route' between Lawrenceburg on the Ohio and Vincennes on the Wabash. The bonds recited that they were issued in payment of a subscription to stock in the Ohio and Mississippi Railroad Company, made by the city by order of the common council, in pursuance of its charter.

The bonds all passed from the company to West & Torrence, and the interest, due January 1st, 1856, not being paid, these persons brought suit on them at May Term, 1856, in the Dearborn County Court of Indiana, for payment. The declaration alleged that the city, under the authority of its charter, subscribed for $50,000 of the stock of the company; that the company was chartered to construct, and was then constructing, a railroad to the said city; that a majority of the qualified voters had assented to the subscription; that the city issued and sold the bonds to raise the funds to pay for the stock, and that the plaintiffs purchased them.

The city pleaded: 1. That the location of the railroad was not established through the city till after the subscription. 2. That the company was not chartered to construct, and was not, at the date of the subscription, constructing a railroad to the city.

To the first plea the plaintiffs demurred, and the demurrer was sustained; and to the second they replied, that the company located their railroad through the city before the bonds were delivered.

The defendants demurred to the replication, but the court overruled the demurrer.

The concluding statement of the record was that 'the said city, not desiring to controvert the facts stated in said reply, but admitting the same,' judgment was rendered for the plaintiffs.

Other sets of coupons subsequently falling due, West & Torrence, at May Term, 1861, brought suit on them in the same Dearborn Court, on pleadings much the same as the other, and obtained judgment against the city. This judgment was reversed for error, in the Supreme Court of Indiana, and the cause remanded.

Subsequent sets of coupons being unpaid, West & Torrence brought suit on them in the Circuit Court of the United States for Indiana.

The declaration in this third suit recited, 'for that whereas' the city, by virtue of power given in its charter, had lawfully, and in due form, 'and for a valuable consideration,' executed and issued the bonds, and that the plaintiffs, 'for a valuable consideration had become the legal holders, and owners, and bearers' of them, and the city had refused to pay, a right of action had accrued. The city demurred, assigning for cause, that the declaration did not allege that the bonds were issued in pursuance of such a vote of the inhabitants of the city as the charter required.

The court overruled the demurrer and gave judgment against the city.

A yet still additional series of coupons falling due, West & Torrence brought the suit which was now here by error. The declaration contained a special count (much as in the preceding cases), and the common counts. Separate demurrers were filed to the respective counts, but were overruled and withdrawn. The general issue, called in the record the first plea, was also pleaded and subsequently withdrawn; the second count being then left without answer.

Seven special pleas, numbered from two to eight, inclusive, were pleaded to the special count.

The 2d alleged that the bonds were issued without any good or valuable consideration.

The 3d, that they were void, because the company was not chartered to construct a railroad to the city.

The 4th, because a majority of the qualified voters of the city had not signified their assent, &c.

The 5th, because the railroad company was not chartered to make a road to the city.

The 6th, because the subscription was made and the bonds issued before the road was located to the city, and before the railroad company had resolved to make such location.

The 7th, because the stock, before its issue to the defendants, became wholly worthless through the mismanagement of the directors.

The 8th, because the proper officers of the city never sold and delivered the bonds as required by law, and the company obtained them without such sale and without authority.

Notice to the plaintiffs was alleged of all these facts.

Of replications not withdrawn, the first, which was to the second plea, set up the judgment, May Term, 1856, of the Court for Dearborn County.

The 2d was to all the pleas except the 1st, and set up the judgment in the Circuit Court of the United States.

The 5th was to the 3d, 4th, 5th, 6th, 7th, and 8th pleas; and also set up the judgment in the Court of Dearborn County, as described in the first replication.

The 6th was to the 4th plea, and set up the same judgment.

The 8th was also to the 4th plea, and set up that the defendants were estopped by the recital in the bonds from denying that a majority of the qualified voters of the city had assented to the subscription.

The 10th was to the 3d, 5th, and 6th pleas, and set up certain proceedings of the city council, therein recited, as an answer to the said several pleas.

The city demurred specially to each of the replications; but the court overruled the demurrer, and the defendants filed a rejoinder to the 2d replication, the rejoinder being the judgment recovered in the Court of Dearborn County, at May Term, 1861, and that the Supreme Court of the State, on appeal, had reversed it for error, and remanded the cause.

The rejoinder, by agreement, was to be regarded as pleaded to all the replications adjudged good except the 10th.

The rejoinder being held bad on demurrer the parties waived a jury, and submitted the cause to the court for the assessment of damages, and the court, having heard the evidence, gave judgment for the plaintiffs. Upon which the defendants took a bill of exceptions.

Mr. Lincoln, for the City, plaintiff in error:

1. The plaintiffs seek to set up the judgments, in the Dearborn County Court, as an estoppel; but the Supreme Court of Indiana, having sustained the defences in this suit, between these parties, the plaintiffs below cannot so use that case. We have an estoppel against an estoppel. This opens the whole matter, and sets it at large.

Independently of this, the replications are so manifestly irregular that, as being the first fault in the pleading, we are entitled to judgment.

2. But without pressing these technical matters, the second plea distinctly avers that the bonds were issued without any consideration, and that this fact was known to the plaintiffs when they received them. Now certainly, neither in the Dearborn County Court case, nor in that in the Federal court in Indiana, was the bona fides of the bonds put in issue, contested, and determined. Both cases went off upon demurrer. The whole history is matter of record; and an examination of the records, and a comparison of them with the record in this suit, will show that this is as we here assert. The demurrer did not cover all the facts involved in this suit. A recital is not an averment or allegation. Now the plea of res judicata is a plea of estoppel, and requires the highest degree of certainty. It cannot be aided by inference. It holds good only in those cases where the identical point in dispute, in the case wherein it is pleaded, was put in issue, contested, and determined upon in the former suit.

It may be stated as a matter of fact, that the want of bona fides in the issue was not known to the city until lately. It neither was nor could have been put in issue.

3. The coupons having been themselves for interest ought not to bear interest; the compounding of interest as against a debtor not being favored.

Mr. Stanbery, who filed a brief for Mr. Mitchell, contra:

1. There is nothing to show that the judgment below was not rendered on the second count. To it there was no plea; and a demurrer had been withdrawn. Certainly judgment might have been rendered by nil dicit.

2. The Supreme Court of Indiana 'remanded' the cause for further proceedings. The case, as an estoppel against an estoppel, thus comes to nothing.

3. The want of bona fides, now rested on, was, if existing in fact, a matter connected with the very origin of these things. It might, and, if meant to be relied on at all, ought to have been pleaded in the earlier suits. A party having divers defences to the same instruments has no right to present but one at a time, take his chance on trial with that one, and, if he fail on that trial, bring up his reserves, singulatim in this way. If that were allowable, a party might keep his case open forever. The rule may be different in regard to a defence occurring since the last trial, or as to one of which the defendant could not possibly have then had knowledge. Nothing of that sort appears, or can be now asserted here. The case is on pleadings.

But we think that the bona fides of the issue of the bonds was involved in the former suits. The declaration in one of them recites expressly 'the valuable consideration' in the case. Indeed, it was essential under any circumstances to prove that the city did execute and deliver the bonds for a valuable consideration. The plaintiffs could not have got along otherwise. This is sufficient, and the fact of consideration must be therefore taken to be established by the judgments.

4. The interest on the coupons was rightly given; interest being, properly enough given, on a debt due,...