Kinney v. Eastern Trust & Banking Co.

• Decision Date: 02 June 1903
• Docket Number: 1,167.
• Citation: 123 F. 297
• Parties: KINNEY et al. v. EASTERN TRUST & BANKING CO.
• Court: U.S. Court of Appeals — Sixth Circuit

123 F. 297

KINNEY et al. v. EASTERN TRUST & BANKING CO.

No. 1,167.

United States Court of Appeals, Sixth Circuit.

June 2, 1903

Alfred J. Thomas and C. E. McBride, for plaintiff in error.

Squire Sanders & Dempsey, for defendant in error.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

RICHARDS Circuit Judge.

Some time in 1892, acting under a statute of doubtful constitutionality, the city of Wooster, Wayne county, Ohio issued bonds to the amount of $76,000 in aid of a railroad. Shortly afterwards, in September, 1892, the city issued refunding bonds, under section 2703, Rev. St. Ohio 1892, and took up the railroad bonds, obviously for the purpose of placing its obligations in a valid form. The refunding bonds contained the usual recitals, were put upon the market, and found their way into the hands of innocent purchasers for value. At its January term, 1897, the circuit court of Wayne county, Ohio, at the suit of a taxpayer, held these refunding bonds invalid, and enjoined the city of Wooster from levying a tax to pay them or the coupons. It appears that in this suit one Cochran, who claimed to own one coupon, of the amount of $30, was given leave to file an answer and cross-petition on behalf of the bondholders. Otherwise, they were not represented. The city failed to pay the interest on the bonds. So suit was brought on certain coupons by the defendant in error (plaintiff below), the Eastern Trust &amp Banking Company, a citizen and resident of Maine, and not a party to the action in the circuit court of Wayne county, and at the January term, 1900, of the court below, judgment was recovered against the city of Wooster for $2,662.54. The case was carried on error to this court, and affirmed in November 1900 (City of Wooster v. Eastern Trust & Banking Co., 105 F. 1001, 44 C.C.A. 682), upon the authority of Village of Kent v. Dana, 100 F. 56, 40 C.C.A. 281.

This judgment not being paid, and no other remedy being available, on March 30, 1901, application was made to the court below for a writ of mandamus against the city of Wooster, and the auditor and treasurer of Wayne county, to compel the levy and collection of a tax sufficient to pay it. On April 5, 1901, the city, through its city solicitor, answered the alternative writ, admitting the recovery of the judgment, its nonpayment, the fact there was no property with which to pay it, explaining that the judgment had not been affirmed by this court until November, 1900 and up to that time the decree of the circuit court of Wayne county, restraining the levy of a tax, was in full force and effect, and stating that the intended in May following, when the annual levies were made, to levy a tax to pay the judgment. Subsequently a supplemental answer was filed stating this had been done. It appears that under this levy an amount sufficient to pay the judgment has been collected and is now in the hands of the court below awaiting the termination of this proceeding.

In July, 1901, the plaintiffs in error, Kinney and Overholt, members of the city council and taxpayers of Wooster, acting for themselves and other taxpayers and for the city, applied for leave to become parties defendant, and to file an answer and cross-petition averring that the bonds were invalid, that the circuit court of Wayne county had held them so, and enjoined the levy of any tax to pay them, and submitted that this adjudication of the court which had first taken cognizance of the question whether the bonds were valid or invalid should be regarded as settling the matter in favor of the city and its taxpayers. Leave was refused, and it is to reverse this order that the case comes here.

Upon the hearing of the case of Village of Kent v. Dana, 100 F. 56, 40 C.C.A. 281, our attention was called to this decision of the circuit court of Wayne county, but we were unable to approve of its reasoning or recognize its conclusions as obligatory. This appears in the following extract from the opinion (100 F. 61, 40 C.C.A. 286):

'Our attention has been called to a decision of one of the circuit courts in Ohio (an intermediate appellate court of that state) in the case of Keehn v. City of Wooster, 13 Ohio Cir.Ct.R. 270, in which it was held that the requirement of section 2703 (Rev. St. Ohio 1892) that such bonds should show upon their face the purpose for which they are issued is not met by the recital that they were issued for the purpose of refunding a legal

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