Coffin v. City of Indianapolis

• Decision Date: 06 January 1894
• Docket Number: 8,888.
• Parties: COFFIN et al. v. CITY OF INDIANAPOLIS et al.
• Court: United States Circuit Court, District of Indiana

59 F. 221

COFFIN et al. v. CITY OF INDIANAPOLIS et al.

No. 8,888.

United States Circuit Court, D. Indiana.

January 6, 1894

Miller Winter & Elam, for complainants.

John E Scott and Elliott & Elliott, for defendants.

BAKER District Judge.

The questions for consideration are presented by the demurrer interposed by the city of Indianapolis to the bill of complaint. The complainants, after showing the requisite diverse citizenship of the parties, allege, in substance That they are bankers and brokers, doing business in the city of New York, and as such are dealers in municipal bonds and other securities. That, by the charter of the city of Indianapolis, provision is made for the borrowing of money the making of loans, and the selling of bonds, as follows:

'Sec. 30. The common council shall have power to borrow money to an amount not exceeding two (2) per cent. of the taxable property of such city, as the same may appear on the tax duplicate of such city for the year in which such loan shall be effected; provided, that the entire money borrowed shall not at any time exceed two (2) per cent. of the taxable property of such city. Such loans may be made only for the purpose of procuring money to be used in the legitimate exercise of the corporate powers of such city, and for the payment of legitimate corporate debts. Sec. 31. Such ordinance for loans may authorize the issuance of bonds or other city obligations, negotiable or not, bearing interest at a rate not exceeding six (6) per cent., and running not to exceed thirty years. Such ordinances shall provide for the time and manner of advertising the sale of such bonds or other securities, and of the receipt of bids for the same, together with the mode and terms of sale. All duties with regard to the preparation, advertisement, negotiation, and sale of such bonds and other securities shall be performed by the head of the department of finance. Said officer, after causing such bonds to be properly executed, shall deliver the same to the city treasurer, taking his receipt therefor, and, upon the conclusion of the contract for the sale of such bonds or other securities, shall certify to the treasurer the amount which the purchaser is to pay for the same, together with the name of the purchaser. And thereupon it shall be the duty of the treasurer to receive from the purchaser the amount so certified, by the head of the department of finance, and to deliver the bonds or other securities to the purchaser, taking his receipt therefor. The treasurer and the head of the department of finance shall thereupon each make a report of his proceedings to the mayor. Sec. 32. Temporary loans may be authorized by ordinance of the common council in anticipation of the revenue of the city for the current and following year, and payable within that period, but the aggregate amount of such temporary loan in any fiscal year shall not exceed the amount of the city levy for the same year. No temporary or other loan upon the revenue of any current or succeeding year shall be made until all temporary loans upon the revenue of any preceding year shall have been fully paid. Sec. 33. The common council shall have power to authorize the issue and sale of refunding bonds, in order to raise money to take up any outstanding bonds of such city, or to exchange with the holders of such outstanding bonds. The same shall be governed by the provisions of the second preceding section, so far as the same are applicable. Sec. 34. No order or warrant shall be drawn against the funds of such city, in the hands of the treasurer, or other officer, unless an appropriation has been made by ordinance of money for such purpose which is not exhausted, or unless the same shall be for a salary fixed by statute, or ordinance, or for the payment of any judgment which such city is compelled to pay. Sec. 35. All bonds or other city securities offered for sale, pursuant to the provisions of this act, may bear annual interest not exceeding six (6) per cent., may run not longer than thirty years, and may contain an option allowing such city to redeem the same at earlier specified dates, in whole or in part, if so directed in the ordinance authorizing such issue.'

That on the 24th day of May, 1893, said city was indebted in the principal sum of $600,000, evidenced by 600 bonds of $1,000 each, to become due and payable July 1, 1893. That on or about April 1, 1893, said city was indebted in a certain other sum of $21,000, evidenced by 21 other bonds, of $1,000 each, known as the 'Sellers Farm Issue' of bonds, which $21,000 of bonds were by said city, on April 1, 1893, duly paid, discharged, and canceled, so that after that date the same were no longer an indebtedness of the city. That on the 23d day of May, 1893, an ordinance known as 'General Ordinance 30, 1893,' was enacted by the common council of said city, and approved by the mayor. The ordinance authorized the head of the finance department to refund certain of the indebtedness of the city, amounting to $600,000, represented by certain outstanding bonds, known as 'Series A' and 'Series B,' which would become due July 1, 1893; 'and to issue and sell bonds of said city to replace in the treasury the sum of $21,000, used in paying the bonds of said city, known as the 'Sellers Farm Issue,' which became due April 1, 1893. The head of the finance department was authorized, for the purpose of refunding said indebtedness, and replacing in the city treasury said sum of $21,000, to prepare and sell 621 bonds of the city, of $1,000 each, which should bear the date of July 1, 1893, and should be designated 'Indianapolis Refunding Bonds of 1893.' The head of the finance department was required to advertise for bids for the sale of said bonds. It was ordered that the city comptroller should award such bonds, or, if he should see fit, a part thereof, to the highest and best bidder therefor, and that he should have the right to reject any and all bids or proposals, or any part thereof, and should have the right to accept a part of any bid, he being the sole judge of the sufficiency or insufficiency of any bid. It was further ordered that the person to whom the bonds, or any part thereof, should be awarded, should, within 10 days thereafter, deposit with the city comptroller a certified check on some reliable bank, payable to the order of the treasurer of said city, for a sum equal to 5 per cent. of the face of the bonds so awarded; and that said check should, upon the completion of the sale of the bonds for which it was deposited, be returned to the successful bidder; and, in case the successful bidder should fail to complete the purchase of the bonds so awarded, he should forfeit the check so deposited to the city. That on May 24, 1893, the city, in pursuance of said ordinance, caused public notice to be given that sealed bids would be received by said city until Friday, May 26, 1893, at 9 o'clock A. M., for the whole or any part of said $621,000 of bonds of said city; said notice being as follows: '$621,000.

'Refunding Bonds of the City of Indianapolis.

'Department of Finance, Office of the City Comptroller.

'Indianapolis, Ind., May 24, 1893.

'Sealed bids will be received by the city of Indianapolis, Indiana, until Friday, May 26, 1893, at 9 o'clock A. M., for the whole or any part of $621,000 refunding bonds of said city, to be dated July 1, 1893. Said bonds will be of the denomination of $1,000 each, with coupons attached; will draw interest at the rate of 4 1/2 per cent. per annum, payable semiannually, on the 1st day of January and July; the principal payable in thirty (30) years, without option, and both principal and interest payable at the office of Winslow, Lanier & Co., New York. These bonds are issued for the purpose of taking up $600,000 of city bonds due July 1, 1893, and to put back into the city treasury $21,000, paid out to redeem bonds due April 1, 1893. Bids for the purchase of said bonds should be indorsed 'Proposals for Refunding Bonds,' and directed to the city comptroller, Indianapolis, Indiana. The proposals will be opened May 26, 1893, at 9 o'clock A. M., and the bonds awarded to the highest and best bidder, the city reserving the right to reject any and all bids. Successful bidders will be required within ten days from the date of the award to deposit with the city comptroller a certified check on some reputable bank, payable to the city treasurer, for 5 per cent. of the face value of the bonds awarded, as an earnest of good faith, which check would be returned to the maker should the bonds be taken up at the proper time; otherwise, it will forfeit to the city. The bonds will be delivered at the office of Winslow, Lanier & Co., New York, July 1, 1893, and must be paid for on that day.

William Wesley Woolen, Comptroller.'

That complainants presented to said city a bid for said bonds, as follows:

'We will purchase $621,000 city of Indianapolis 4 1/2 per cent. thirty-year refunding bonds, or as many as you can legally issue, and pay par for the same.

Coffin & Stanton.'

That the complainants were the highest and best bidders, and thereupon said $621,000 of bonds were awarded to them by said comptroller. That on May 26, 1893, the complainants, assuming that it would be shown that all of said bonds were refunding bonds and were legal, deposited with the Merchants' National Bank of Indianapolis, Ind., the sum of $31,050 being 5 per cent. upon said sum of $621,000, the total amount of said bonds then and there so assumed to be awarded to complainants, and received therefor a certificate of deposit, bearing date May 26, 1893, payable to the order of the city treasurer of said city, and delivered the same to the comptroller of said city, who was the head of the department of...