Hinkley v. City of Arkansas City

• Decision Date: 02 September 1895
• Docket Number: 619.
• Parties: HINKLEY et al. v. CITY OF ARKANSAS CITY.
• Court: U.S. Court of Appeals — Eighth Circuit

69 F. 768

HINKLEY et al. v. CITY OF ARKANSAS CITY.

No. 619.

United States Court of Appeals, Eighth Circuit.

September 2, 1895

This was a suit by the plaintiffs in error, Rufus H. Hinkley George H. Richardson, and Henry St. John Smith, partners in business under the name of Swan & Barrett, against the defendant in error, the city of Arkansas City, a city of the second class of the state of Kansas, to recover the amount due on 170 coupons which were detached from certain refunding bonds that were issued, as the plaintiffs averred, by said city. The complaint, which was in the usual form, alleged among other things, that before said bonds or coupons became due and payable they had been purchased for value by the plaintiffs, and that each of said bonds from which said coupons were detached contained the following recital 'This bond is one of the series of fifty-four bonds of like amount, tenor, and effect, executed and issued by the said city to compromise and refund its matured and maturing indebtedness heretofore legally created by said city, and in accordance with an act of the legislature of the state of Kansas entitled 'An act to enable counties, municipal corporations, the board of education of any city and school districts to refund their indebtedness,' approved March 8, 1879, and it is hereby certified that the total amount of this issue of bonds does not exceed the actual amount of the outstanding indebtedness of said city, and that all the requirements of the provisions of the foregoing act have been strictly complied with in issuing this bond. ' The material portions of the refunding act referred to in the foregoing recital are as follows:

'Be it enacted by the legislature of the state of Kansas: Section 1, That every county, every city of the first, second or third class, the board of education of any city, every township, and every school district, is hereby authorized and empowered to compromise and refund its matured and maturing indebtedness of every kind and description whatsoever, upon such terms as can be agreed upon, and to issue new bonds with semi-annual interest coupons attached, in payment for any sums so compromised; which bonds shall be issued at not less than par, shall not be for a longer period than thirty years shall not exceed in amount the actual amount of outstanding indebtedness and shall not draw a greater interest than six per cent. per annum.

'Sec. 2. Bonds issued under this act by any county shall be signed by the chairman of the board of county commissioners and attested by the county clerk under the seal of the county. Bonds issued by any city shall be signed by the mayor and attested by the city clerk under the seal of the city. * * * ' Laws Kan. 1879, pp. 80, 81, c. 50.

The defendant city pleaded, in substance, that the bonds and coupons in question were issued without authority of law, and that the same were void for the following reasons, to wit: That on or about July 1, 1887, an election was ordered in said city of Arkansas City, Kan., for the purpose of voting aid to and subscribing to the capital stock of the Grouse Creek Railway Company in the sum of $54,000, said aid to consist of an issue of bonds to the amount of $24,000 and an issue of warrants to the amount of $30,000; that at the time said election was ordered aid had already been extended to said Grouse Creek Railway Company by other municipalities, and townships of the county of Cowley, in which the defendant city was located, to the amount of $50,000; that under the laws of Kansas then in force the county of Cowley and the townships and municipalities therein had no power to vote aid to said Grouse Creek Railway Company in excess of $50,000, and that the defendant city was, therefore, without power to extend further aid to said railway company in the sum of $54,000, as contemplated by said election; that notwithstanding these facts, the mayor of said defendant city, one J. L. Huey, who was also the president of said Grouse Creek Railway Company, assumed to execute aid bonds in the sum of $24,000 and aid warrants in the sum of $30,000 in the name of said city and in favor of said railroad company, and subsequently endeavored to negotiate them, but that in point of fact they were never issued or put in circulation, and never became binding obligations of said city; that thereafter an agreement was made by and between said J. L. Huey, mayor, as aforesaid, and W. N. Coler & Company, a firm of brokers, who were alleged in the answer to be the agents and brokers of the abovenamed plaintiffs, whereby said W. N. Coler & Company agreed in behalf of their principals to purchase refunding bonds to the amount of $54,000, provided the same were issued in lieu of said aid bonds in the sum of $24,000, and in lieu of said aid warrants in the sum of $30,000 theretofore executed by said mayor; that, in pursuance of said agreement, said J. L. Huey did procure the issuance of pretended refunding bonds in the sum of $54,000, being the bonds in controversy, and did thereupon deliver the same to W. N. Coler & Company, who were at the time the plaintiffs' agents. The answer further averred the fact to be 'that no ordinance of the city council of the defendant city was at any time passed, authorizing the refunding or attempt to refund said pretended bonds and railroad aid warrants; and that in truth and in fact said pretended bonds and railroad aid warrants so attempted to be refunded were not the binding or valid obligations of defendant city,-- all of which plaintiffs in this action at the time well knew. ' It was also averred by the defendant city 'that no ordinance of any kind was ever passed at any time by the mayor and council of defendant city authorizing the issue of said pretended aid bonds and aid warrants, and that the same were so pretended to be issued as aforesaid without any notice to the voters of the defendant city, and without any authority of law so to do; and that the same are wholly void, and of no force and effect whatever. ' A reply was filed to the aforesaid plea or answer, denying all the allegations thereof, and the case went to trial before the court, a written stipulation having been filed, waiving a jury. The circuit Court entered a judgment in favor of the defendant city. 61 F. 478. To reverse that judgment the record was removed to this court by a writ of error.

W. H. Rossington and Charles Blood Smith, for plaintiffs in error.

John A. Eaton and J. C. Pollock (J. Mack Love, on the brief), for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge, after...