Edminson v. The City of Abilene

• Decision Date: 01 May 1898
• Docket Number: 299
• Citation: 54 P. 568,7 Kan.App. 305
• Parties: JOHN W. EDMINSON v. THE CITY OF ABILENE
• Court: Kansas Court of Appeals

54 P. 568

7 Kan.App. 305

JOHN W. EDMINSON v. THE CITY OF ABILENE

No. 299

Court of Appeals of Kansas, Northern Department, Central Division

May 1, 1898

Opinion Filed July 11, 1898.

Error from Dickinson district court; O. L. MOORE, judge. Affirmed.

Judgment affirmed.

Winfield Freeman, and Wood & Oakley, for plaintiff in error.

Scammon Mead & Stubenrauch, for defendant in error.

MAHAN P. J. MCELROY, J., concurring. WELLS, J., dissenting.

OPINION

MAHAN P. J.:

Plaintiff in error sued the city of Abilene to recover on several coupons detached from bonds purporting to have been issued by the authority of the city. The bonds from which these coupons are detached recite that they are issued in conformity to and in full compliance with the provisions of chapter 50, Laws of 1879, approved March 8, 1879, entitled "An act to enable counties, municipal corporations and boards of education of any city and school district to refund their indebtedness," and that they were issued to refund outstanding legal indebtedness of said city of Abilene duly surrendered and canceled. It is further certified and recited in the bonds that all acts, conditions and things required to be done precedent to and in the issuing of said bonds have been properly done, happened and performed in due form as required by law, and that the total indebtedness of the city, inclusive, is within the statutory limit.

The city answers (1) by denial of each and every allegation of the petition; (2) by denying that the plaintiff is an innocent purchaser for value of the coupons, alleging that the coupons were not purchased by the plaintiff for value, but were passed to him after maturity for the purpose of enabling him to maintain the action; further alleging that he took them with full knowledge of the matters and things thereafter set out in the answer; that the bonds were illegal, void, and of no effect, and do not and never did form any just or legal demand against the city; that they were not issued for the purpose of funding a valid and subsisting obligation against the city, but for the purpose of obtaining from the city $ 5000 unlawfully, and for a purpose not within the province of the city to pay; and that the mayor and clerk signed the bonds without authority of the city, in that no ordinance was passed by the city authorizing the execution and delivery of the bonds, as required by the statute in such cases. There are other matters alleged in the answer by way of defense which we do not consider necessary to allude to.

To this answer the plaintiff filed a general denial. Upon the issues thus made there was a trial to the court without a jury, and a judgment for the defendant.

It is not contended that the city received any consideration for these bonds; the city was not indebted lawfully upon the pretended obligations which they were issued to refund. It is conceded by the defendant that the plaintiff occupies the position of a bona fide holder, and that the bonds and coupons are negotiable instruments. That they are negotiable and are properly so made, was decided by the supreme court in the case of Rathbone v. Hopper, 57 Kan. 240, 45 P. 610.

The rule of this court regarding the assignment of errors in the brief is not complied with, but we take it that the error complained of is, that the trial court held that the city council could authorize the issuing of these bonds only by ordinance; that a resolution was not a compliance with the statute, and conferred no authority upon the mayor and clerk to execute and deliver the bonds; that, hence, the bonds were issued without authority of law; that this defense was available to the defendant against a holder for value without other notice thereof than that imparted by the records of the municipality itself; and that, in other words, a purchaser in the market was bound to take notice of the fact that these bonds were issued without authority of the municipality, exercised as required by the statute.

The petition alleges error in the trial court, (1) in the admission of evidence; (2) in holding that the refunding bonds could be legally issued only by ordinance, and not by resolution; (3) in holding that chapter 54 of the Laws of 1876 prescribes and controls the method of authorizing the issue of these refunding bonds in question; (4) in holding the bonds to be non-negotiable; (5) in holding that the coupons were not a valid obligation against the city, in the hands of the plaintiff; (6) in holding that the recitals in the bonds themselves were not obligatory and binding upon the defendant, or, in other words, did not estop the city from saying that its mayor and clerk had acted without authority; (7) in rendering judgment for the defendant; (8) in overruling the plaintiff's motion for a new trial.

The grounds of the motion for a new trial are: (1) Irregularity in the proceedings of the court; (2) abuse of discretion; (3) misconduct of the defendant and its attorneys; (4) accident and surprise; (5) error in the amount of the recovery, the amount being too large; (6) that the findings and judgment of the court are not sustained by sufficient evidence; (7) that the findings and judgment of the court are contrary to law; (8) newly discovered evidence; and, (9) errors of law occurring at the trial.

The points presented by the brief for the plaintiff in error, which are probably intended as assignments of error, but are not wholly supported by the record, are as follows:

1. Where a previous holder of municipal securities was a holder in good faith, for value, without notice, and before maturity, a subsequent holder succeeds to all his rights as a bona fide holder for value, no matter when or how the subsequent holder acquired the securities. We do not understand that there is any contention over this question in the case. It is unnecessary to notice it.

2. That the records of the proceedings of a municipal corporation import absolute verity, and in a collateral proceeding, after the rights of third parties have arisen, they cannot be impeached. We do not understand that this question is involved in this case or entered in any manner into the judgment of the court below.

3. That coupons of bonds of municipalities draw interest from the dates of their respective maturities. We do not understand that there is any question made on this point.

4. The issuance of negotiable refunding bonds by a municipality authorized by statute precludes inquiry as to the validity of the antecedent debt. This proposition was argued by counsel on both sides, and many authorities in support of the proposition are cited by counsel for plaintiff in error. We understand this point to have been determined by our supreme court in the case of Rathbone v. Hopper, supra. As we view that case, it was the judgment of the supreme court that this defense was not available against a bona fide holder of negotiable securities; and that bonds issued payable to bearer were negotiable, and properly made so under the statute under which these bonds were issued. However, we do not understand that the decision of the court below was based at all upon this proposition.

5. When authority to act is conferred by statute upon the legislative body of a municipality, and no limitation is imposed, whether the authority so granted shall be exercised by ordinance or by a resolution, such legislative body may...