Board of Education v. Norfolk & Western Ry. Co.
| Decision Date | 10 February 1937 |
| Docket Number | No. 5949.,5949. |
| Citation | 88 F.2d 462 |
| Parties | BOARD OF EDUCATION OF CITY OF CHICAGO et al. v. NORFOLK & WESTERN RY. CO. |
| Court | U.S. Court of Appeals — Seventh Circuit |
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Richard S. Folsom, of Chicago, Ill., for appellants.
William A. Morrow and Walter M. Fowler, both of Chicago, Ill., Thomson, Wood & Hoffman, of New York City, and Gardner, Foote, Morrow & Merrick, of Chicago, Ill., for appellee.
Before EVANS, Circuit Judge, and LINDLEY and BRIGGLE, District Judges.
EVANS, Circuit Judge (after stating the facts as above).
The questions presented on this appeal are:
(1) In case the 1929 taxes are insufficient to pay all the warrants in full, do all holders share pro rata?
(2) If (1) be answered in the affirmative, should appellant, Board of Education, personally account to appellee for moneys improperly paid to other warrant holders in excess of their pro rata share?
(3) Was appellee guilty of laches so as to preclude recovery?
(4) Did the failure of appellee to protest against the Board of Education's method of paying these warrants create an estoppel against it?
(5) Should the injunction have been granted in addition to the decree for accounting?
(1) Each warrant issued by the Board of Education provided:
"This warrant is issued in anticipation of said taxes so levied for the year 1929 for educational purposes, to provide a fund to meet and defray the ordinary and necessary expenses of the public schools of the City of Chicago, and is payable, both principal and interest, solely from said taxes when collected, and not otherwise, which taxes are hereby assigned and pledged to the payment of this warrant and of all warrants issued against and in anticipation of such taxes, * * *."
It is true the warrants were numbered, but such numbering was for the convenience of the parties. The numbers did not fix the order of payment of the warrants or give preference of lien to the lower numbered warrants. The language of the warrant pledged the 1929 taxes to the payment "of this warrant and of all warrants." The situation was not unlike that of a mortgage which secures several notes. The notes might be numbered, but the mortgage secures them all equally. In the absence of language in the warrant indicating a different understanding we must hold that the money received in the way of taxes was for the payment of all warrants. Jewell v. City of Superior, 135 F. 19 (C. C.A.7); Norris v. Montezuma Valley Irrigation Dist., 248 F. 369 (C.C.A.8). See, also, Sibley v. Mobile, Fed.Cas.No.12,829; Rothschild v. Calumet Park, 350 Ill. 330, 183 N.E. 337; Thomas v. Patterson, 61 Colo. 547, 159 P. 34; Meyers v. Idaho Falls, 52 Idaho, 81, 11 P.(2d) 626; U. S. v. Macon County Court Justices and Treasurer, (C.C.) 75 F. 259.
It is too clear and obvious to need argument to support the legal conclusion that the passage of the Illinois statute (Smith-Hurd Ill.Stats. c. 122, § 155) could not and did not modify or restrict the contract rights of holders of warrants issued and sold before the enactment of said statute.
(2) We must answer this question also in the affirmative. The taxes received by the Board constituted a trust fund for the payment of all warrants. The Board held the funds as a trustee. It became liable personally when it distributed...
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