Board of Com'rs of City and County of Denver v. Home Sav. Bank

• Decision Date: 24 August 1912
• Docket Number: 3,526.
• Citation: 200 F. 28
• Parties: BOARD OF COM'RS OF CITY AND COUNTY OF DENVER v. HOME SAVINGS BANK. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

200 F. 28

BOARD OF COM'RS OF CITY AND COUNTY OF DENVER v. HOME SAVINGS BANK. ^[1]

No. 3,526.

United States Court of Appeals, Eighth Circuit.

August 24, 1912

W. H Ferguson (Milton Smith and Charles R. Brock, on the brief) for plaintiff in error.

Charles W. Waterman, for defendant in error.

Before ADAMS and SMITH, Circuit Judges, and REED, District Judge.

REED District Judge.

The Home Savings Bank, a Michigan banking corporation, which will be called the plaintiff, sued the city and county of Denver a municipal corporation of Colorado, which will be called the defendant, to recover the amount of a certificate of indebtedness issued by its board of commissioners February 20, 1908, to the order of the Federal Ballot Machine Company an alleged corporation of California, which will be called the Machine Company, for $11,250, payable in one year, with interest from date at the rate of 5 per cent., payable semiannually. There was a verdict and judgment for the plaintiff, and the defendant brings error.

The complaint alleges that on February 20, 1908, the defendant made and delivered to the Machine Company its negotiable bond or certificate of indebtedness, payable to the order of the Machine Company at the office of the treasurer of the defendant in one year for $11,250, with interest from date, payable semiannually as per coupons attached, which said instrument it is alleged the Machine Company sold, indorsed, and delivered to the plaintiff for value before maturity. The certificate of indebtedness and second coupon are set out in the complaint and are as follows:

$11,250.00

Certificate of Indebtedness.

No. 1.

'City and County of Denver, State of Colorado.

'The Federal Ballot Machine Company having presented its claim, for furnishing ballot machines, against the city and county of Denver, in the sum of eleven thousand two hundred and fifty dollars and the same having been allowed at a regular meeting of the board of county commissioners of the city and county of Denver, state of Colorado, on the seventeenth day of February, 1908, and the board of county commissioners, being authorized thereto by the laws of the state of Colorado, Act of 1905, hereby issues its certificate of indebtedness for the said sum, and will in one (1) year pay to the order of the Federal Ballot Machine Company the sum of eleven thousand two hundred and fifty dollars, with interest on this sum, from the date hereof, at the rate of five per cent. per annum; the said interest payable semiannually, as per two (2) coupons, hereto attached. Interest and principal payable at the office of the county treasurer of the city and county of Denver, Colorado. This certificate is one of a series of ten issued in like sum, payable annually.

'Signed by the board of county commissioners of the city and county of Denver, of the state of Colorado, by its chairman, and attested by the county clerk and recorder with the seal of the county, authorized thereto by resolution of the 20th day of February, 1908.

'Denver, Colorado, February 20th, 1908.'

The instrument is indorsed as follows:

'Pay to the order of The Home Savings Bank, Detroit, Mich. Federal Ballot Mach. Co., A. Andrew, Vice Prest.'

Coupon No. 2 attached to the instrument is as follows:

'On the 20th day of February, 1909, the board of county commissioners of the city and county of Denver, state of Colorado, will pay to the order of the Federal Ballot Machine Company, at the office of the county treasurer of the city and county of Denver, Colorado, two hundred eighty-one and one quarter dollars, being six months interest to that date on certificate of indebtedness No. 1 for $11,250.00.

'Board of County Commissioners of the City and County of Denver, Colorado,

By S.D. C. Hays, Chairman.

'Attest: Albion K. Vickery,

'County Clerk and Recorder of the City and County of Denver, Colorado.'

Indorsed:

'Federal Ballot Mach., A. Andrew, Vice Prest.'

It is alleged that on the 23d day of February, 1909, both instruments were presented to the treasurer of the defendant and payment demanded, which was refused, that plaintiff thereupon caused them to be protested for nonpayment, and paid $7.50 protest fees therefor. Judgment is asked against the defendant for the amount of said instruments with interest, and for the protest fees.

To this complaint the defendant filed a motion to strike therefrom the word 'negotiable,' where it appears therein, also the allegation that the instruments were protested, and plaintiff paid $7.50 as fees therefor, upon the ground that the word 'negotiable' is but an expression of an erroneous legal conclusion as to the character of the certificate of indebtedness, that it affirmatively appears that the instruments sued upon are not negotiable, that neither could be legally protested, and the allegations of the complaint as to the payment of protest fees are wholly irrelevant and immaterial. This motion was denied, but no exception was taken to the ruling, and the defendant was given 20 days thereafter in which to answer. Within such 20 days the defendant answered, and later, on January 5, 1910, filed an amended answer alleging three defenses to the complaint as follows:

First defense: That it has not sufficient knowledge or information upon which to base a belief as to whether or not the Machine Company negotiated, transferred, indorsed, or delivered to the plaintiff for value or otherwise, the instruments sued upon, or as to whether the plaintiff is the owner of said instruments.

Second defense: That the consideration for the execution of both the certificate of indebtedness and interest coupon mentioned in the complaint has wholly failed, in that said certificate of indebtedness was executed in part payment for 150 voting machines known as the 'Dean Ballot Machines,' under an agreement made and entered into between the Federal Ballot Machine Company and this defendant on the 27th day of May, 1907, whereby the Machine Company agreed and guaranteed that each of said machines should conform in every particular to the Constitution and statutes of the state of Colorado with respect to the holding of elections by means of said machines, and that they would perfectly and accurately perform the work of voting machines as required by said laws; that said machines do not conform to the Constitution and statutes of Colorado, and do not accurately perform the work required by said Constitution and laws; that in the use of said machines the secrecy of the ballot cannot be preserved; that the mechanism of the machines is so intricate and complicated that it is impossible for an elector by the use of said machines to vote a straight ticket, a mixed ticket, or an irregular ticket or any of them, and it is impossible for an elector by the use of said machines secretly to vote a split or irregular ticket; that their construction is such that an elector cannot cast a vote for presidential electors without first divulging the names of the persons for whom he desires to vote, and it is impossible for an elector to vote for any particular elector; and that said machines are without any value whatever.

Upon information and belief it is alleged that the Machine Company is and was at the institution of the action the beneficial owner of the certificate of indebtedness and interest coupon set forth in the complaint; that neither thereof was before maturity, or at any time, in good faith and in due course of business negotiated, sold or transferred by the Machine Company or by any one to the plaintiff; that any transfer or delivery thereof, if any was ever at any time made, was for the sole purpose of enabling the plaintiff in its own name to prosecute this action for the purpose of thereby defeating the defense which the Machine Company knew existed against itself, and of which the plaintiff had notice prior to any alleged negotiation, transfer, or delivery thereof to it.

The third defense is the same as the second, except that it omits the second part or paragraph of the second defense beginning with the words, 'Upon information and belief' that the Machine Company is and was the owner of the instrument sued upon, etc.

The plaintiff demurred to each of these defenses upon the ground that none of them states any facts sufficient to constitute a defense to either the certificate of indebtedness or coupon set forth in the complaint. The demurrer was overruled as to the first and second defenses, and sustained as to the third, January 27, 1910. No exception was taken by the defendant to the ruling. The plaintiff thereupon replied to the first and second defenses denying all of the allegations thereof; and upon the trial, which began August 2, 1910, offered and introduced testimony that it purchased the instruments sued upon in good faith, before maturity and for value, without notice of any defense thereto. The defendant offered no evidence, but at the close of the plaintiff's evidence moved for 'a nonsuit upon questions of law raised by defendant in the motion to strike parts of the complaint,' which motion was denied. The defendant then moved for a directed verdict in its favor, but stated no ground therefor, which motion was also denied, and to these rulings the defendant at the time excepted.

The plaintiff then moved for a directed verdict in its favor for the amount due upon the certificate of indebtedness and coupon sued upon, which motion was sustained and judgment rendered for the plaintiff against the defendant for the amount of said instruments and costs, to which ruling and judgment the defendant excepted. A motion for new trial was afterwards made and denied, and the defendant excepted.

The defendant assigns as error that the Circuit Court erred (1) in...