Intermela v. Perkins

• Decision Date: 05 May 1913
• Docket Number: 2,154.
• Citation: 205 F. 603
• Parties: INTERMELA et al. v. PERKINS.
• Court: U.S. Court of Appeals — Ninth Circuit

205 F. 603

INTERMELA et al. v. PERKINS.

No. 2,154.

United States Court of Appeals, Ninth Circuit.

May 5, 1913

[Copyrighted Material Omitted]

Intermela is the treasurer of the city of Port Townsend, Wash., and the American Surety Company is the surety upon his official bond. This action was instituted December 19, 1910, by Perkins, the holder of a city warrant drawn upon the indebtedness fund, to recover against the city treasurer, and upon his official bond, for a breach of duty as such officer in failure to pay the warrant when in funds. The warrant was issued to Alonzo Elliott February 18, 1898, and Perkins holds it by assignment from him. It was presented for payment February 19, 1898, and indorsed, 'Not paid for want of funds.'

It is shown that on the 1st day of December, 1910, and for a long time prior thereto, there was and had been money belonging to the indebtedness fund of the city sufficient to pay the warrant in full after deducting from the total amount of money in the treasurer's hands belonging to such fund a sufficient sum to pay all warrants, certificates, and other obligations and indebtedness of said city which are and were entitled to be paid out of such fund before the payment of said warrant.

The defendants, Intermela and the Surety Company, answer that said warrant was issued in satisfaction of a judgment made and rendered November 16, 1897, in the superior court of the state of Washington for Jefferson county, in a cause entitled Alonzo Elliott v. City of Port Townsend. A copy of the complaint in said cause is set out, showing that on or about August 31, 1888, the city council duly and regularly determined to make certain street improvements, and passed and adopted the necessary ordinances for the purpose; that thereafter appropriate steps were taken for making such improvements, bids were advertised for, and a contract duly let, and the improvements were regularly made and accepted by the city; that a warrant in the sum of $1,000, payable out of the Washington Street improvement fund, was issued February 11, 1889, to the contractor, W. C. Williams, as his stipulated consideration for making such improvements, which was afterwards assigned to the plaintiff, Alonzo Elliott, and bears an indorsement as of February 14, 1889, 'Not paid for want of funds'; that under its charter the city was charged in such cases with the duty of constituting special assessment districts and levying assessments upon the property within such districts sufficient to defray the costs of the improvement, and of collecting such assessments and applying the fund thus assembled to the payment of such costs; that the city did create such a special assessment district with a view to providing the requisite funds for paying such costs, but failed in its duty to regularly assess the property therein with the costs of such improvement, and for that reason was unable to enforce such assessments or to require the payment thereof, and thereby failed to procure the funds necessary to pay the cost of said improvement evidenced by the warrant issued as aforesaid, and that at the time of the incurring of said indebtedness for such improvement the indebtedness of the city was not equal to 1 1/2 per cent. of the value of the taxable property of the city.

Based upon this complaint, and for a further reason that the warrant was ordered issued at a special, not a regular meeting of the city council, defendants further answered that the judgment is void, and that the warrant issued in satisfaction thereof is likewise void.

For a second defense, the defendants answer that the action was not commenced within six years.

And for a third defense they answer that at the time the judgment was rendered as alleged in the first separate answer, and before the issuance of the warrant described in the complaint, there were outstanding about $130,000 street grade warrants on special funds of local improvement districts; that the city appealed from said judgment, but before the appeal was perfected entered into an agreement with the warrant-holders for street improvements, including Elliott, the plaintiff in said cause, whereby it issued warrants bearing 6 per cent interest on the indebtedness fund in satisfaction of the judgments entered upon the previous warrants, including the judgment in the Elliott case; that long before the city entered into such agreement the Supreme Court of the state of Washington had decided that under no circumstances can the city be held liable generally on a street grade warrant; that thereafter, to wit, about January 3, 1899, the city council repudiated and abandoned said agreement, and refused to recognize as valid any of such 'Indebtedness Fund' warrants, and has since continued to refuse to recognize the same as valid obligations of the city. It is further alleged that at the time such indebtedness fund warrants were issued the city was indebted beyond its constitutional limit of indebtedness for other purposes, and that at no time has the assent of three-fifths of the voters within the city voting at any election been had authorizing the incurring of said street grade indebtedness.

The issues having been completed by a reply, trial was had before the court (a jury being waived), which resulted in a judgment for plaintiff. From this judgment the defendants prosecute a writ of error.

U. D. Gnagey, of Port Townsend, Wash., and L. B. Stedman, of Seattle, Wash., for plaintiffs in error.

Charles E. Shepard, of Seattle, Wash., for defendant in error.

Before GILBERT and MORROW, Circuit Judges, and WOLVERTON, District judge.

WOLVERTON District Judge (after stating the facts as above).

It is first insisted by defendants' counsel that the court is without jurisdiction because the matter in dispute does not exceed $2,000 exclusive of interest and costs. To this it may be answered that this action is not upon the warrant, but against the city treasurer, and upon his official bond, for a breach of his official duty to the damage of the plaintiff. No action accrued against the treasurer until he was in funds to pay the warrant and it had been duly presented for payment; but, being in funds, the treasurer was bound to pay the warrant with accumulated interest. The liability of the treasurer arises by reason of his refusal to discharge an official duty towards the plaintiff, and sounds in damages, the measure of which is the amount of the warrant with accumulated interest to the time his liability became fixed. Had the city been sued, the case would have been different, because the obligation would then have been upon the warrant, and the principal without interest would have been the measure of jurisdiction.

Another question presented is whether, the warrant being drawn on the indebtedness fund, it has been shown prima facie that funds were in the hands of the treasurer at the time of the demand for payment applicable to the payment of such warrant. Section 636, Hill's Ann. Codes and Statutes, accords to the city council of cities of the class of Port Townsend power (subdivision 9) to levy and collect annually a property tax to be apportioned to a general fund, a street fund, and a sewer fund. Section 647 provides, among other things, that all moneys received from licenses, street poll tax, fines and penalties, and forfeitures shall be paid into the general fund. In 1897 the Legislature adopted an act (Laws 1897, c. 84) providing for the maintenance by such a municipality of a 'current expense fund,' and after the first day of February, 1898, of an 'Indebtedness Fund.' Moneys collected from licenses were required to be credited and applied by the treasurer to the 'Current Expense Fund,' and the municipality was required to levy and collect an annual tax for the payment of current expenses of not to exceed 10 mills on the dollar, and 'a tax for the payment of indebtedness (if any indebtedness exists) not exceeding six mills on the dollar,' the moneys collected to be accordingly credited by the treasurer to the respective funds.

'All moneys collected on and after the first day of February, 1898, from taxes of the year 1896, and previous years, and from penalty and interest thereon, shall be paid into the indebtedness fund.'

It has been decided in the state of Washington that the fund to be known under the act of 1897 as the 'Indebtedness Fund' supplanted the original general fund, and that all existing warrants should be paid therefrom. State ex rel. Polson v. Hardcastle, 68 Wash. 548, 553, 124 P. 110.

The question presented arises on a motion for a nonsuit interposed both at the conclusion of the plaintiff's testimony and at the conclusion of the entire testimony.

There are to be found in the testimony as certified by the bill of exceptions certain letters from the county treasurer of Jefferson county, Wash., to the city treasurer, transmitting certain tax moneys received from tax rolls and from sales of county delinquent property which had previously been acquired upon tax foreclosure sales. One list, transmitted to the city treasurer January 11, 1909, shows money received:

From sales of county real estate, lands and premises ...	$ 851 23
From 1904 tax rolls ...........................................	96
From 1905 tax rolls .........................................	1 44
From 1906 tax rolls .........................................	8 14
From 1907 tax rolls .....................................	1,922 86
	----------
Total	$ 2,784 63

Another list which is cast in the record shows remittances ranging from February 6, 1909, to May 10, 1910, aggregating $7,369.58. All the sales referred to are of county property that had been acquired by the...