Board of Com'rs of Lake County, Colo. v. Sutliff

• Decision Date: 09 October 1899
• Docket Number: 1,135.
• Citation: 97 F. 270
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: BOARD OF COM'RS OF LAKE COUNTY, COLO., v. SUTLIFF.

97 F. 270

BOARD OF COM'RS OF LAKE COUNTY, COLO., v. SUTLIFF.

No. 1,135.

United States Court of Appeals, Eighth Circuit.

October 9, 1899

[Copyrighted Material Omitted]

C. S Thomas (George R. Elder, W. H. Bryant, and H. H. Lee, on the brief), for plaintiff in error.

Edmund F. Richardson (Thomas M. Patterson and Horace N. Hawkins, on the brief), for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

This is an action brought by James R. Sutliff, the defendant in error, against the board of county commissioners of the county of Lake, in the state of Colorado, to recover the amount due upon coupons numbered 8, 9, 10, 11, 12, 13, 14 15, 16, 17, 18, 19, and 20, which were cut from ten road bonds that were issued by the plaintiff in error on July 1, 1881, after a favorable vote of the electors of the county, in accordance with the provisions of the act of the legislature of the state of Colorado approved March 24, 1877, entitled 'An act concerning counties, county officers, and county government and repealing laws on these subjects. ' Gen. Laws. Colo. 1877, p. 218. The defenses to the coupons were that the question of their validity was rendered res adjudicata by a judgment in favor of the county which was rendered in the court below and was affirmed by the supreme court in an action which was brought by John Sutliff, the father of the defendant in error, on September 26, 1889, upon coupons numbered 1, 2, 3, 4, 5, 6, 7, and 8, cut from the same road bonds (Sutliff v. Commissioners, 147 U.S. 230, 13 Sup.Ct. 318), and that the bonds and coupons were void because they were issued when the debt of the county exceeded the constitutional limitation upon it. The case was tried to a jury. John Sutliff originally purchased the bonds and coupons without notice of any defect in, or defense to, them, and paid for them more than their par value. After some of the coupons in suit had become due, and after the defense that they were issued in violation of the constitutional limitation had been made to some of them, he gave the bonds and the coupons now in question to the defendant in error, who is his son, as an advance of a part of his share of his estate. The bonds contained this recital:

'This bond is one of a series of five thousand dollars which the board of county commissioners of said county have issued for the purpose of constructing roads and bridges, by virtue of, and in compliance with, a vote of a majority of the qualified voters of said county, at an election duly held on the 7th day of October, A.D. 1879, and under and by virtue of, and in compliance with, an act of the general assembly of the state of Colorado, entitled 'An act concerning counties, county officers and county government and repealing laws on these subjects,' approved March 24th, A.D. 1877; and it is hereby certified that all the provisions of said act have been fully complied with by the proper officers in the issuing of this bond.'

At the close of the trial, the court below held that the question of the validity of coupons numbered 8 was res adjudicata, because they were sued upon by John Sutliff in his action in 1889, but that the other coupons upon which this action was founded constituted new causes of action; that, under the evidence in this case, the plaintiff in error was estopped by the recitals in the bonds from defeating these coupons on the ground that the bonds or the coupons were issued when the debt of the county was in excess of the constitutional limitation; and that the jury must return a verdict for the defendant in error upon all the coupons described in the complaint except those numbered 8. The jury was instructed accordingly, and a verdict was returned and a judgment rendered against the county.

It is assigned as error that the trial court held that the defendant in error was a bona fide purchaser of the bonds, who could rely upon the estoppel of the recitals therein. It is said that he paid nothing for them; that he received them as a gift; that some of the coupons were past due when he obtained them; and that he knew at that time that the county was defending an action upon other coupons upon the grounds relief upon in this action. Let all this be conceded. Still, the father of the defendant in error, John Sutliff, was a bona fide purchaser of these bonds and coupons, without notice of any defects in, or defenses to, them, and 'a bona fide holder of commercial paper is entitled to transfer to a third party all the rights with which he is vested, and the title so acquired by his indorsee cannot be affected by proof that the indorsee was acquainted with the defenses existing against the paper. ' E. H. Rollins & Sons v. Board of Com'rs of Gunnison Co., 49 U.S.App. 399, 413, 26 C.C.A. 91, 99, and 80 F. 692, 700. The indorsee who takes from a bona fide purchaser of negotiable paper stands in the shoes of his indorser, and may invoke every presumption and estoppel which buttressed the claim of the latter, notwithstanding the fact that he received the paper as a gift, after its maturity, and with notice of alleged defenses to its collection. Commissioners v. Bolles, 94 U.S. 104, 109; Commissioners v. Clark, 94 U.S. 278, 286; Board of Com'rs of Gunnison Co. v. E. H. Rollins & Sons, 173 U.S. 255, 275, 19 Sup.Ct. 390; Rathbone v. Commissioners, 49 U.S.App. 577, 588, 27 C.C.A. 477, 482, and 83 F. 125, 130; Hill v. Scotland Co. (C.C.) 34 F. 208; Daniels, Neg. Inst. (4th Ed.) Sec. 803. There was no error in the ruling of the court that the defendant in error could invoke the estoppel of the recitals in the bonds to the same extent as a bona fide purchaser, in support of the validity of his coupons.

The next contention of the counsel for the plaintiff in error is that the ruling of the circuit court upon the question of res adjudicata was erroneous. In the discussion of this position it will be conceded that James R. Sutliff, the defendant in error, is a privy of John Sutliff, the plaintiff in the former suit, and that the question here is the same that would have arisen if this action had been between the parties to the former judgment. There are two grounds on which an earlier judgment in an action between the same parties may constitute a conclusive estoppel respecting the issues in a subsequent suit. The first ground is that the later suit is founded upon the same causes of action upon which the former action was based. In a case where this is the fact, the former judgment is conclusive in the subsequent litigation, not only of every issue which was raised and determined, but also of every question which might have been presented by either party and might have been determined by the court in that suit. The second ground is that the subsequent action is founded on different causes of action, but that the issues which it presents were actually raised, litigated, and determined in the earlier suit. In a case in which the second action is upon different causes of action from those involved in the first, the former judgment, though between the same parties, operates as an estoppel only as to the points and questions actually litigated and determined, and it leaves the parties free to contest and try de novo every issue and controversy which might have been, but was not in fact, litigated and decided in the earlier action. Cromwell v. Sac Co., 94 U.S. 351, 352, Nesbit v. Riverside Independent Dist., 144 U.S. 610, 618, 12 Sup.Ct. 746; Commissioners v. Platt, 49 U.S.App. 216, 223, 25 C.C.A. 87, 91, and 79 F. 567, 571. It will be noticed that pleading and proof that the earlier suit was upon the same causes of action as the later is sufficient to establish the estoppel upon the first ground, but that where the second suit is upon different causes of action it is indispensable to the estoppel that it should appear that the questions in issue or points of controversy in the second action were actually raised, litigated, and determined in the first. The record in the case at bar stands in this way: The plaintiff in error pleaded in its answer that John Sutliff brought his action against the county on September 26, 1889; that in his complaint he pleaded that he was the owner of the 10 bonds from which the coupons involved in both actions were cut, and prayed for judgment for $3,000 on account of the coupons claimed to be due upon the commencement of that action; that on July 24, 1891, in that action, 'being upon the recurring liability of the same cause of action as that set forth in the complaint herein,' judgment was rendered in favor of the plaintiff in error, and this judgment was affirmed by the supreme court. These averments were denied by the reply of the defendant in error. At the trial so much of the record in the former action as was necessary to show that, among other things, that suit was brought to recover the amounts due on coupons numbered 8, was offered and received in evidence, for the purpose of showing that the coupons so numbered, constituted certain of the causes of action in the former suit. But the record of that suit was not made a part of the bill of exceptions, and is not presented for our consideration. The counsel for the plaintiff in error preferred seven requests for instructions to the jury. One of these was that coupons numbered 8 constituted a part of the subject-matter of the former action, and that consequently no recovery could be had upon them in this action. The court so charged the jury. But no request to instruct them that any of the questions presented by the causes of action upon the other coupons pleaded in this suit were conclusively determined by the judgment in the former action was preferred to the court below, and no error was assigned because that court did...