Bd. of Ed v. Am. Nat'l Co.
| Citation | 135 Okla. 253,1928 OK 258,275 P. 285 |
| Decision Date | 17 April 1928 |
| Docket Number | Case Number: 17393 |
| Parties | BOARD OF ED, CITY OF SHAWNEE v. AMERICAN NATIONAL CO. |
| Court | Supreme Court of Oklahoma |
¶0 1. Schools and School Districts--Action by Purchaser on Bonds as Holder in Due Course--Conspiracy Between Purchaser and Intermediary Alleged as Defense--False Statements of Intermediary to School Board Admissible.
Where it is alleged a conspiracy exists, between a purchaser of bonds from a school district and an unauthorized intermediary who handles a purported sale of bonds, to secure illegally possession of the bonds, and where the purchaser and holder of bonds and coupons seeks recovery thereon relying upon good faith, and claiming to be a holder in due course as a purchaser from such intermediary, it is error to refuse evidence the purpose of which is to show false statements made by such intermediary to the school district board for the purpose of securing authorization for the sale of such bonds held as an investment of sinking fund.
2. Same--Invalidity of Sale of Bonds by Person Unauthorized by School Board.
Where authorization is made by the proper officers for the sale of bonds held by a school district as an investment of a sinking fund, and such authorization permits the school treasurer to sell such bonds, and it is not affirmatively established that the school treasurer acted to sell such bonds, but, on the other hand, it is established that an unauthorized person did act, to dispose of said bonds, such unauthorized act is without authority of law and void.
3. Bills and Notes--Holders in Due Course--Burden of Proof Where Acquired from One with Defective Title.
The purchaser of a negotiable instrument, in order to be a holder in due course, must come within the requirements of section 7722, C. O. S. 1921 (R. L. 1910, 4102), and under section 7729, C. O. S. 1921 (R. L. 1910, 4109), when it is shown that the title of the person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course, when the holder's title was acquired subsequent to the defective title.
4. Schools and School Districts--Unauthorized Sale of Bonds by Banker Who Took Them from Safety Deposit Box--Status that of Stolen Property.
When bonds belonging to a school district are left in its sinking fund investment box in a bank for safekeeping, and an unauthorized person, the banker, takes such bonds, the personal property of the school district, from such box and delivers the same to another without warrant or authority of law, receives a sum for the bonds, and without authority makes a deposit of funds in his bank for the benefit of the school district, the bonds are in legal effect stolen property.
5. Municipal Corporations--Notice of Limitations on Municipal Powers.
Whoever deals with a municipality does so with notice of the limitations on its or its agent's powers.
6. Bills and Notes--Unauthorized Delivery--Holder in Due Course--Burden of Proof.
Possession of a negotiable instrument by virtue of an unauthorized delivery does not make the instrument subject to defenses of the maker, providing the plaintiff is a holder in due course, without notice, and for value, but it compels the plaintiff to show that it is such holder, and possession alone is not sufficient to protect against the showing of an unauthorized and fraudulent delivery.
7. Schools and School Districts--Bonds--Power to Cancel in Board Alone.
Under section 10433, C. O. S. 1921, and section 6772, R. L. 1910 (), as applied to sinking fund and cancellation of bonds of municipalities and subdivisions thereof, a treasurer's authority is to invest. The board's authority is to buy and cancel outstanding bonds. The word "or," as used in the first two sections, is a coordinating particle that makes an alternative and vests power of cancellation in the proper officers, which is the board. The treasurer has no power of cancellation.
8. Same--Purchase of Bond Issue with Prior Sinking Fund not Operative as Cancellation of Bonds.
However, such "cancellation" is a ministerial duty when separated from "buy". The investment of a prior sinking fund in a subsequent bond issue does not operate as a cancellation, but an investment of a particular sinking fund in bonds for which the particular fund was created to retire is a cancellation ipso facto, as a matter of law, in that the bonds cease to be outstanding obligations of the municipality.
9. Same--Authorization Necessary for Treasurer of Board to Dispose of Bonds Bought by Sinking Fund Investment.
The treasurer of a municipality has no authority to barter, sell, or otherwise dispose of bonds held by a sinking fund investment and in his custody unless specifically authorized by the proper officers so to do.
10. Same--Sale of Bonds at Less than Par and Accrued Interest Forbidden by Statute.
Section 8573, C. O. S. 1921, restricts and forbids the sale of any securities held by investment of a sinking fund of a municipality at a sum less than par and accrued interest. The net resulting sum to the treasury for such sale must be at least par and accrued interest.
11. Contracts--Invalidity Where Forbidden by Law.
No action either at law or in equity can be maintained on a contract that is forbidden by law.
12. Payment--Deposit by Debtor in Bank to Account of Creditor not Payment Unless Creditor Consents.
A deposit by a debtor in a bank to the account of his creditor of a sum of money due the latter will not constitute payment to the creditor unless he consents to the deposit. When such a deposit is made without the creditor's consent, the bank is merely the agent of the debtor to pay the money to the creditor.
13. Same--Bonds--Unauthorized Deposit to Pay for Bonds Acquired from Unauthorized Source.|
Where a holder of bonds acquires possession of such property from an unauthorized source and deposits a sum in a bank ostensibly in payment for such property, such a deposit is not a consideration to the owner of such property in the absence of an agreement to such deposit.
14. Schools and School Districts--Validity of Contracts--Power to Act in Board, not in Individual Members.
The acts and declarations of individual members of a school board will not create a contract enforceable against the school district. The statute vests the power to act, to make or alter a valid contract, in a single board, not individuals.
15. Evidence--Presumption that Officers Do Their Duty.
The presumption will be indulged that officers do their duty. By virtue of such presumption it follows as a corollary that an officer never acted under and by virtue of a void resolution, in the absence of affirmative proof.
16. Same--Presumption not Indulged that Resolution of Official Board was Intended to Ratify Past Illegal Acts of Unauthorized Persons.
Where the text of a resolution authorized an act, in futuro, by a particular officer and in a specified manner, it cannot be said that such resolution (conceding its adoption, by approval of false minutes, wherein said resolution was set out) ratified the past illegal and unlawful act of an unauthorized person, in the absence of affirmative evidence that the board in so approving such resolution knew, contemplated, and considered the past illegal and unlawful acts. A resolution cannot be validated by any less formal action than should have been originally made.
17. Schools and School Districts--Action on Bonds--Judgment for Plaintiff Reversed.
Record examined, and found, by reason of undisputed facts therein contained, not to support the judgment rendered, but to warrant and support a judgment for the adverse party, and judgment is so ordered.
Error from District Court, Pottawatomie County; Charles C. Smith, Assigned Judge.
Action by American National Company on interest coupons on bonds against the Board of Education of Shawnee. Judgment for plaintiff, and defendant appeals. Reversed, and judgment ordered for defendant.
Arrington & Evans, Waldrep, & Jones, and F. H. Reilly, for plaintiff in error.
Park Wyatt and Wilbur J. Holleman, for defendant in error.
¶1 The defendant in error, American National Company, brought this action against the board of education to recover a sum certain purporting to be due as interest on coupons on certain bonds purporting to have been issued by the school district comprised of the city of Shawnee and territory annexed thereto for school purposes.
¶2 The action involves directly the interest coupons accrued on $ 100,000 worth of bonds. The plaintiff alleged that it was the owner and holder in due course of the coupons and that payment thereon had been refused. The defendant denied that plaintiff was the owner or holder in due course of the bonds or coupons and pleaded knowledge on the part of plaintiff, and pleaded a conspiracy between the plaintiff and the National Bank of Commerce to illegally and unlawfully secure said bonds; and pleaded further, a void transaction in failure to pay par for the bonds. The plaintiff replied, alleging it purchased the bonds from and paid to the National Bank of Commerce a reasonable market value for said bonds, and that it had no agreement, contract, or understanding with defendant school board concerning the bonds; otherwise denying.
¶3 The facts disclosed by the record are:
Ninety thousand dollars worth of the bonds in question were authorized by a vote of the people of the school district and dated May 21, 1917, and $ 10,000 worth of the bonds were authorized by the same municipal subdivision in 1920. The 1917 bonds were purchased in 1917, by the then treasurer of the school district, Mr. Keller, and indorsed by him in red ink on the face of the bonds, "Purchased with Sinking Fund, School District No. 93." The sinking fund used in this...
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