Harmon v. Auditor of Pub. Accounts

• Decision Date: 26 September 1887
• Citation: 13 N.E. 161,123 Ill. 122
• Parties: HARMON and others v. AUDITOR OF PUBLIC ACCOUNTS and others.
• Court: Illinois Supreme Court

123 Ill. 122

13 N.E. 161

HARMON and others

v.AUDITOR OF PUBLIC ACCOUNTS and others.

Supreme Court of Illinois.

September 26, 1887.

Appeal from appellate court, Second district; WILLIAM BROWN, Judge.

Cook & Lawrence, W. & W. D. Barge, and J. A. Crain, for appellants.

M. D. Hathaway, for appellees.

MAGRUDER, J.

This is a bill filed on April 28, 1882, in the circuit court of Ogle county, by John Harmon, Samuel Domer, Daniel Fager, and Reuben S. Marshall, resident property owners and tax-payers in the town of Mount Morris and county of Ogle, against the auditor of the state, the treasurer and clerk of said county, the collector of said town, and the holders of the bonds hereinafter described, charging that 50 bonds of said town of $500 each, and 25 bonds of said town, of $1,000 each, dated May 3, 1875, payable May 1, 1885, drawing 10 per cent. interest, payable annually, and all issued and signed by John W. Hitt, the supervisor, and H. H. Clevidence, the town clerk, of said town, are void for want of power in said supervisor and clerk to issue the same, and praying that the same may be decreed to be null and void, and that the officers of the law may be perpetually enjoined from collecting any taxes to pay the same from the property of complainants and the other tax-payers of the town. Answers were filed denying the allegations of the bill, and set ting up the defenses hereinafter mentioned. The circuit court dismissed the bill for want of equity, and its decree has been affirmed by the appellate court, from which the case comes to us by appeal.

The same indebtedness involved in this suit has already been passed upon by this court in Railroad Co. v. Pinckney, 74 Ill. 277. In that case Daniel J. Pinckney, John W. Hitt, Jacob H. Humma, John E. McCoy, Milton E. Getzendauer, and John Sprecher, then resident property owners and taxpayers of the town of Mount Morris, filed their bill on November 11, 1871, in the circuit court of Ogle county, against the Chicago & Iowa Railroad Company, the town of Mount Morris, Charles Newcomer, the then supervisor, and Henry H. Clevidence, the then town clerk, of said town, ‘to enjoin the town and its officers from issuing bonds to the Chicago & Iowa Railroad Company in the sum of $75,000.’ After answers and replications filed, and hearing had, the circuit court decreed in accordance with the prayer of the bill, and, upon appeal, this court, at the September term, 1874, held that the town had power to issue the bonds, and reversed the decree of the circuit court, and dismissed the bill filed therein, as will be seen by reference to the opinion in 74 Ill. 277.

After the opinion of this court in the Pinckney Case had been filed, and while the proceedings on rehearing were still pending, negotiations were begun for a settlement of the claim of the railroad company against the town for the $75,000 of bonds. Communications in writing, dated November 14, 1874, signed by property owners and tax-payers in the town, were addressed to the complainants in the Pinckney Suit, advising a compromise with the company, and pledging the influence of the subscribers to induce the town to assume the expenses of the litigation. Two of these communications were signed, respectively, by Reuben S. Marshall and Samuel Domer, two of the appellants herein. At a special town meeting held on March 19, 1875, resolutions were passed accepting a previous proposition made by the president of the railroad company to the town supervisor to take bonds to the amount of $50,000 in lieu of the bonds amounting to $75,000; agreeing that the town would pay all the expenses of the Pinckney Suit, amounting to $1,600; and thanking the supervisor for his efforts in making the settlement. At the annual town meeting held on April 6, 1875, the proceedings of the special town meeting, and the resolutions there adopted, were ‘fully ratified and approved.’ By this compromise the town was saved from a possible indebtedness of $25,000. Its liability to issue bonds to the amount of $75,000, which the railroad company was entitled to receive by virtue of the decision made in its favor, was discharged by the issuance of bonds amounting only to $50,000. The latter bonds, so issued in compromise of the railroad company's claim, are the bonds hereinbefore referred to as being dated May 3, 1875,-50 of $500 each, and 25 of $1,000 each, and which this bill is filed to cancel. All of them are now in the hands of innocent holders, who have purchased them in good faith, relying upon the former decision of this court as to their validity. One of the appellees, the German Insurance Company of Freeport, owns $26,500 of them, purchased for value and before maturity.

The defendants set up the former proceedings in the Pinckney Suit as a bar to the relief sought by the present suit. Both the Chicago & Iowa Railroad Company and the town of Mount Morris were parties to the Pinckney Suit. In that suit it was decided that the town had the power to issue the bonds, and that the railroad company was entitled to have them issued in pursuance of the vote taken, and by reason of its compliance with the conditions exacted of it. The decision so made was final and binding as between the railroad company and the town, and, as between them, established the validity of the bonds. If the bonds had been issued, and suit had been brought on them by the company against the town, it will not be claimed that the latter could have defended on the ground that the election, in pursuance of which the bonds were issued, was invalid. It makes no difference that the railroad company and the town were both defendants in the Pinckney Suit. ‘In chancerysuits, where parties are often made defendants because they will not join as plaintiffs, who are yet necessary parties, it has long been settled that adverse interests, as between co-defendants, may be passed upon and decided, and, if the parties have had a hearing and an opportunity of asserting their rights, they are concluded by the decree as far as it affects rights presented to the court and passed upon by its decrees.’ Corcoran v. Canal Co., 94 U. S. 741; Louis v. Brown Tp., 109 U. S. 162, 3 Sup. Ct. Rep. 92; Scotland Co. v. Hill, 112 U. S. 183, 5 Sup. Ct. Rep. 93.

The obligation which rested upon the town to issue bonds to the amount of $75,000 to the railroad company was just as binding by reason of the decision in the Pinckney Case as though judgment had been rendered in a mandamus proceeding or in a suit on the bonds. If this be so, then the complainants, as citizens of the town, cannot, by a proceeding to prevent the collection of a tax to pay the bonds, dispute their validity upon any of the grounds which were or could have been litigated in the Pinckney Suit. The law upon this subject is thus stated in Freeman on Judgments, (3d Ed.) § 178: ‘A judgment against a county, or its legal representatives, in a matter of general interest to all its citizens, is binding upon the latter, though they are not parties to the suit. A judgment for a sum of money rendered against a county imposes an obligation against the citizens which they are compelled to discharge. Every tax-payer is a real, though not a nominal, party to such judgment. If, for the purpose of providing for its payment, the officers of the county levied and endeavored to collect the tax, none of the citizens can, by instituting proceedings to prevent the levy or enforcement of the tax, dispute the validity of the judgment, nor relitigate any of the questions which were or which could have been litigated in the original action against the county.’ The views of the text writer are sustained by the following authorities: Clark v. Wolf, 29 Iowa, 197; Tredway v. Railway Co., 39 Iowa, 663; State v. Rainey, 74 Mo. 229; Commissioners v. Hinchman, 31 Kan. 729, 3 Pac. Rep. 504.

It is claimed, however, that the Pinekney Suit is to be regarded as a controversy between the complainants therein on one side and the defendants therein on the other side, and not merely as a controversy between two of the defendants, the railroad company and the town. In this view it is urged that the decree in that suit cannot be pleaded as a former adjudication in the present suit, for the reason that the complainants there were not the same persons as the complainants here. The proceeding instituted by Pinckney and others was a chancery proceeding. The present proceeding is also upon the chancery side of the court. Where the action is at law and a judgment in an action at law is pleaded as a former recovery, the defense has a more restricted character than in a chancery suit.

The Pinckney bill was filed by certain property owners and tax-payers, as representatives of a class. Though not formally stating that it is filed on behalf of all other tax-payers in the town, yet it constantly refers to them and their interests in the question involved. It alleges that ‘your said orators and the other tax-payers of said town’ will suffer injury, that the issue of the bonds will be in violation of the rights ‘of your said orators and the other tax-payers of said town,’ and an attempt to deprive ‘your orators and the other tax-payers of said town’ of their property, etc., and to take the property of ‘your said orators and said other tax-payers of said town’ for a private use without compensation to ‘your said orators and said other tax-payers.’ Its prayer is, that the town be restrained from ‘collecting any taxes upon the taxable property of said town of Mount Morris to pay said bonds.’ Moreover, the Pinckney Suit was adopted by the town as its own litigation when the town paid the expenses of it, and compromised it through the town officers, and by resolutions of the town meetings.

The present suit was begun by Harmon and others, also tax-payers and property owners of the town, as representatives of the same class for whose benefit the Pinckney bill was filed. The...