Hayes v. City of Nashville

• Decision Date: 10 May 1897
• Docket Number: 464.
• Citation: 80 F. 641
• Parties: HAYES et al. v. CITY OF NASHVILLE.
• Court: U.S. Court of Appeals — Sixth Circuit

80 F. 641

HAYES et al. v. CITY OF NASHVILLE.

No. 464.

United States Court of Appeals, Sixth Circuit.

May 10, 1897

The action below was by W. J. Hayes & Sons, a firm of brokers of Cleveland, Ohio, to recover from the corporation, the mayor and city council of the city of Nashville, Tenn., $3,750, a part of the sum deposited under a contract made between the parties for the sale and purchase of $400,000 of negotiable bonds. The defendants filed a plea averring they were entitled to retain the amount sued for because of damages in that sum sustained by them through the failure of the plaintiffs to take the bonds as agreed. The contract was as follows:

Agreement made this 13th day of April, 1893, by and between the mayor and city council of Nashville, a corporation organized under the laws of the state of Tennessee, hereinafter to be known as the city of Nashville, and W. J. Hayes & Sons, of the city of Cleveland, in the state of Ohio, witnesseth: Whereas, the said city of Nashville did on the 11th day of April, 1893 offer to sell to the said W. J. Hayes & Sons the $400,000 of city of Nashville 4 1/2 per cent. trunk-sewer bonds, issued under the act of the general assembly of the state of Tennessee, approved February 2, 1892, and an ordinance of said city passed in pursuance thereof on the 13th day of March, 1893, at the par value of said bonds, less 2 per cent thereof, to be allowed and paid by said city of Nashville to said W. J. Hayes & Sons as commission; and whereas, said W J. Hayes & Sons did on the 11th day of April, 1893, accept said offer, and agree thereto: Now, therefore, the said city of Nashville does hereby agree to and does sell to the said W. J. Hayes & Sons the said four hundred thousand dollars of trunk-sewer bonds for the sum of four hundred thousand dollars, less the 2 per cent. commission aforesaid to be paid and allowed said L. J. Hayes & Sons by said city. Said bonds are to be dated April 1, 1893, of denomination of $1,000, with semiannual interest coupons attached, interest at the rate of 4 1/2 per cent. per annum, payable semiannually at the Chemical National Bank of New York City, or at the office of city treasurer, Nashville, Tennessee, at the option of the holders of the same. Said bonds are to mature in thirty years from the date thereof, with principal payable at the office of the treasurer of the said city of Nashville, Tenn. Said bonds are to be numbered from 1 to 400, inclusive, and are to be legally issued, and the said city of Nashville shall furnish the said W. J. Hayes & Sons a transcript of said proceedings relating to said issue, showing the legality thereof. The said bonds are to be delivered to the said W. J. Hayes & Sons at the Chemical National Bank of New York City as follows, at expense of city: $75,000 on or before the 1st day of May, 1893, $75,000 in thirty days thereafter, and $50,000 every thirty days thereafter, successively, until the entire issue is taken up. In consideration whereof, the said W. J. Hayes & Sons hereby agree to purchase, to take up and pay for said bonds when delivered, not only the par value thereof, less the two per cent. commission aforesaid, but in addition thereto all interest, which shall have accrued on the par value of each installment of said bonds; interest to be calculated from April 1, 1893, up to date of such installments, as above provided: provided, however, that the said W. J. Hayes & Sons shall have the option of taking up and paying for the entire issue at any time after legality of bonds is established. If the said W. J. Hayes & Sons fail to take and pay for any installment of bonds as above provided when delivered, then, at the option of the said city of Nashville, this contract may be declared null and void in all its provisions. As an evidence of good faith upon the part of the said W. J. Hayes & Sons, and as a guaranty upon their part that they will faithfully carry out the provisions of their contract, they have delivered to the recorder of the city of Nashville a draft for the sum of five thousand dollars, receipt of which draft is hereby acknowledged by the said city of Nashville. A pro rata of said deposit, with 6 per cent. interest thereon, will be refunded to the said W. J. Hayes & Sons as each installment of bonds is taken up and paid for. The conditions of this contract are subject to the opinion of Judge John F. Dillon, of New York, as to the legality of bonds; the legal services for same to be paid by W. J. Hayes & Sons. In witness whereof, the mayor and city council of Nashville has caused this agreement to be signed by the finance committee of the city council, by the mayor of said city, and by the recorder, and has caused its official seal to be affixed thereto; and the said W. J. Hayes & Sons have caused the same to be signed by T. W. Heatley, their duly-authorized agent.

[Signed] Geo. B. Guild, Mayor.

A. S. Williams,

[Seal.] J. B. Murray,

G. P. Lipscomb,

Finance Committee.

James T. Bell, Recorder.

W. J. Hayes & Sons, per Thos. W. Heatley.

The bonds were declared to be legal by Judge Dillon of New York, in accordance with the contract, and the city issued them. It delivered $100,000 of them to the plaintiffs, and received payment thereon; and, in accordance with the contract, it delivered up to the plaintiffs $1,250 of the $5,000 guaranty deposit. Though requested frequently by the city to take and pay for the remaining $300,000 of the bonds the plaintiffs failed to do so. There was a good deal of correspondence between the parties, and the city authorities made a number of efforts to secure the completion of the contract by the plaintiffs. Finally a meeting of council was called for the purpose of considering the situation the minutes of which were as follows: Minutes of the Meeting of the City Council of Nashville of February 10, 1894:

Minutes.

City Hall, Nashville, Feb. 10, 1894.

The Hon. the city council met this evening at 4 o'clock in extra session, pursuant to a call from his honor the mayor. Present-- Messrs. Barthell, Dalton, Goodloe, Goodman, Harwell, Moore, Murray (P. A.) Murrey (J. B.), Stewart, Sykes, Williams, and Prest. Higginbotham. The message of his honor the mayor, convening the council, was as follows:

'Gentlemen of the Council: You are called to meet in extra session this evening at 4 o'clock to consider the matter of declaring forfeited the trunk-sewer bonds contracted for by W. J. Hayes & Sons, Cleveland, Ohio, and to take such steps as the emergency of the cases may demand, and the interest of the city requires.

'Feby. 10th, 1894.

'Respectfully,

Which message was received and filed.

Mr. Sykes offered the following:

'Be it resolved by the mayor and city council of Nashville that whereas, the mayor, recorder, and finance committee, the commissioners appointed by ordinance approved March 13, 1893, to negotiate and sell the trunk-sewer bonds, have this day sent the following communication to the city council, to wit:

"To the Mayor and City Council: We herewith submit the resolutions of the commissioners appointed to negotiate the trunk-sewer bonds, which resolutions was passed at a recent meeting held January 23, 1894, and is as follows: 'Whereas, W. J. Hayes & Sons, of the city of Cleveland, Ohio, have failed to comply with the provisions of their contract made with the city of Nashville April 13, 1893, with reference to the sale of the trunk-sewer bonds (that is to say, said W. J. Hayes & Sons having failed to take the installments of said bonds at dates provided for under the terms of said contract); and whereas, by the terms of the said contract the said city of Nashville has authority, at its option, to declare said contract null and void upon failure of the said W. J. Hayes & Sons to comply therewith: Therefore be it resolved by the commissioners appointed by ordinance approved March 13, 1893, namely, the mayor, recorder, and the finance committee, that said contract is hereby declared null and void and of no further effect. Be it further resolved that said commissioners report their action to the city council for ratification and approval.'

""[Signed] Geo. B. Guild, Mayor.

""James T. Bell, Recorder.

""Chas. Sykes.

""A. S. Williams.

""M. J. Dalton.

""W. H. Higginbotham.

""Frank Goodman."

'Therefore be it resolved by the mayor and city council of Nashville that said action of the commissioners be ratified and approved. Be it further resolved that said contract be declared null and void, in accordance with the suggestions and recommendations of said commissioners. Be it further resolved that W. J. Hayes & Sons be notified of the action of the mayor and city council with reference to the said contract, and that they be further notified that the mayor and city council of Nashville, in accordance with the provisions of said contract, claim the guaranty deposited by them (the said W. J. Hayes & Sons) for the faithful performance thereof, not yet refunded to them, amounting to the sum of $3,750.00. Be it further resolved that the treasurer and comptroller be directed to draw from the Fourth National Bank the said sum of $3,750.00, and deposit the same with the legal depositories of the city, the First National Bank.'

Which resolutions were on motion adopted, and then council adjourned.

(Signed)

Notice of these resolutions was conveyed to the plaintiffs in the following letters:

Letter of Recorder James T. Bell, of February 12, 1894:

Office of City Recorder.

Jas. T. Bell, Recorder and Judge of City Court.

Nashville, Tenn., February 12, 1894.

W. J Hayes & Sons-- Dear Sirs: I am directed to inclose a copy of resolutions adopted by the Hon. city council of Nashville February 10, 1894. I regret that things have assumed the...