Brown v. City of Atchison

• Decision Date: 10 March 1888
• Citation: 17 P. 465,39 Kan. 37
• Parties: J. P. BROWN, et al., v. THE CITY OF ATCHISON
• Court: Kansas Supreme Court

17 P. 465

39 Kan. 37

J. P. BROWN, et al., v. THE CITY OF ATCHISON

Supreme Court of Kansas

March 10, 1888

[Copyrighted Material Omitted]

Error from Atchison District Court.

THIS was an action brought in the district court of Atchison county on March 26, 1883, by the city of Atchison against William Hetherington and Webster W. Hetherington, partners as Wm. Hetherington & Co., to have certain bonds of the city of Atchison, twenty in number and each for $ 500, amounting in the aggregate to $ 10,000, canceled and declared null and void for illegality in their execution, and for want of consideration. On December 12, 1883, the defendants answered setting forth the circumstances under which the bonds were placed in their hands, that they had no interest in the bonds except as trustees, that J. P. Brown and Frank Bier, partners as Brown & Bier, were the real owners of the bonds, and that there could not be a complete determination of the questions involved in the controversy without Brown &amp Bier being made parties, and asking that they should be so made parties. Also, Brown & Bier appeared and asked to be made parties defendant, which was granted; and on January 8 1884, they filed their answer and cross-petition, setting forth in substance among other things, the following: On August 23, 1879, Brown & Bier owned bonds of the city of Atchison amounting to $ 49,943.95, which by way of compromise they permitted to be re-funded by the city of Atchison at the rate of sixty cents on the dollar. At the same time and as a part of the same transaction, they, with the city of Atchison, entered into a certain contract in pursuance of which the bonds in controversy were issued and placed in the hands of Wm. Hetherington & Co., as trustees, and it is alleged that the city of Atchison has violated such contract in various particulars, whereby it has become liable to Brown & Bier; and therefore they prayed that judgment may be rendered against the city of Atchison, first, that its petition against Wm. Hetherington & Co. be dismissed; second, that the city of Atchison be decreed to specifically perform the aforesaid contract, and to issue further bonds to Brown & Bier to the amount of $ 19,977.58, with 7 per cent. interest from July 1, 1879, or that judgment be rendered in favor of Brown & Bier and against the city of Atchison for that amount; third, or if such judgment cannot be rendered, then that judgment be rendered in favor of Brown & Bier and against the city of Atchison for the sum of $ 70,000, or that the city return to Brown & Bier the original bonds and coupons delivered by them to the city in the same condition in which they were when delivered; and for other relief. Full replies were filed by the plaintiff to the answers of the defendants. The case was afterward tried before the court without a jury. And the court made special findings and conclusions of fact and law, and on May 29, 1886, rendered judgment in favor of the plaintiff and against the defendants that the bonds in controversy be delivered up and canceled and held for naught, and that Brown & Bier be forever enjoined from setting up or claiming any right or interest therein or thereto. To reverse this judgment, Brown & Bier, as plaintiffs in error, bring the case to this court, making The City of Atchison the defendant in error.

The contract between the city of Atchison and Brown & Bier, as shown by the pleadings and the findings of the court, reads as follows:

"Whereas, the partnership firm of Brown & Bier now hold general funding bonds and judgments on coupons from the general funding bonds of the city of Atchison, Kansas, amounting in the aggregate to the sum of $ 49,943.95; and whereas, the city of Atchison is indebted to divers and sundry other parties who now hold the bonds of the said city of Atchison; and whereas, the said city of Atchison has offered to compromise the said bonds and judgments now held and owned by the said Brown & Bier upon a basis of fifty cents and 10 per cent. commission on the dollar of said amount of $ 49,943.95, by issuing to said Brown & Bier re-funding bonds of the said city of Atchison due in twenty years from July 1st, 1878, with interest at 7 per cent. per annum, payable semi-annually; and whereas, the said Brown & Bier have accepted the said proposition of the said city of Atchison to compromise the said amount of bonds and judgments by them held and owned at sixty cents on the dollar, as aforesaid, in re-funding bonds of the city of Atchison upon the following terms and conditions, to wit: First--The said city of Atchison is to deliver to said Brown & Bier re-funding bonds of the city of Atchison in an amount equal to 60 per cent. as aforesaid of the said sum of $ 49,943.95, the receipt of which said refunding bonds is hereby acknowledged. Second--If the said city of Atchison shall at any time within five years from this date compromise any of its bonded indebtedness now outstanding, by issuing re-funding bonds of said city in any amount in excess of sixty cents, as aforesaid, on the dollar on any bond compromised, or shall levy or cause to be levied a tax to pay any amount due, in excess of 60 per cent. thereof, then and in that event the said city of Atchison is to issue and deliver to Brown & Bier, re-funding bonds of the city of Atchison in an amount equal to what such per cent. in excess of 60 per cent. on any bonds so compromised would amount to on the sum of $ 49,943.95, and interest on such excess at 7 per cent. from July 1, 1879.

"Now, therefore, for the purpose of fulfilling the terms and conditions of this agreement obligatory upon the said city of Atchison, the said city of Atchison has caused to be issued and properly executed ten thousand dollars of the re-funding bonds of said city, a schedule of which is hereto attached as part hereof; and by agreement of the parties hereto, the said city of Atchison has deposited said ten thousand dollars of refunding bonds of said city so executed and issued as aforesaid, with Wm. Hetherington & Co., of the city of Atchison, in escrow, there to remain for and during the period of five years from date thereof, unless sooner delivered to said Brown & Bier under the terms of this agreement; that is to say, that if the said city of Atchison shall at any time before the expiration of five years from date hereof, compromise any of its outstanding bonded indebtedness at any sum in excess of sixty cents as aforesaid on the dollar, or shall at any time within such period levy or cause to be levied a tax to pay any bonds, coupons or judgments against the city on any of its outstanding bonds or coupons in excess of 60 per cent. as aforesaid of the amount due thereon, then and in that event the said Wm. Hetherington & Co. are authorized to deliver to the said Brown & Bier out of the said bonds so deposited with them under this agreement, such an amount thereof of the face value equal to what such per cent. in excess of 60 per cent. would amount to on the sum of $ 49,943.95, and interest on such excess at 7 per cent. from July 1st, 1879. And it is further agreed, that the condition upon which said Hetherington & Co. shall deliver said bonds to Brown & Bier under this contract, shall be the official records of said city of Atchison, if said city shall keep a record of each compromise of said bonds. Should the city of Atchison levy tax to pay interest on bonds, judgments and coupons, then the record of such levy shall be the evidence. Said Hetherington & Co. shall give written notice to the mayor of said city at least ten days before any bonds shall be delivered under this agreement.

"This contract shall not remain in force beyond the expiration of five years from date hereof, at which time all such bonds deposited with said Wm. Hetherington & Co., under this agreement, not used under the terms hereof, shall be surrendered to said city for cancellation. It is further mutually agreed between the parties hereto, that said Brown & Bier and the said city of Atchison shall act in good faith toward the other as to the subject-matter hereof, and the said Brown & Bier agree that they will not in any way interfere with the said city of Atchison in its attempt to compromise its outstanding indebtedness, and further agree that they will faithfully labor to bring about and effect a compromise of the indebtedness of said city, at a sum not to exceed sixty cents as aforesaid on the dollar, at the earliest practical period, and should they fail to do so, they forfeit all right under this contract, and said bonds shall be returned to said city of Atchison upon demand therefor; but the said Brown & Bier do not obligate themselves to effect any settlement of said indebtedness.

"In witness whereof, the said city of Atchison, by its mayor, hereto fully authorized by bond committee, has caused these presents to be executed, and caused the same to be attested by the corporal [corporate] seal of said city, and said Brown & Bier have hereunto affixed their signatures this 23d day of August, 1879.

[Seal.]

THE CITY OF ATCHISON, KANSAS,

Per JOHN C. TOMLINSON, Mayor.

BROWN & BIER."

Each of the bonds deposited with Wm. Hetherington & Co., except as to number, and each of the re-funding bonds, except as to number and amount, as is shown by the pleadings and the findings of the court, reads as follows:

No. 114.

UNITED STATES OF AMERICA.

$ 500.

STATE OF KANSAS.

[State Seal.]

COUNTY OF ATCHISON.

CITY OF ATCHISON.--RE-FUNDING BOND.

Know all men by these presents, that the city of Atchison, (a city of the second class,) in the county of Atchison and state of Kansas, for value received, hereby promises to pay to the bearer, on July 1st, 1898, at the office of the treasurer of said city, the sum of...