National Bank of Commerce v. Town of Granada

• Decision Date: 27 January 1893
• Docket Number: 138.
• Citation: 54 F. 100
• Parties: NATIONAL BANK OF COMMERCE v. TOWN OF GRANADA.
• Court: U.S. Court of Appeals — Eighth Circuit

54 F. 100

NATIONAL BANK OF COMMERCE v. TOWN OF GRANADA.

No. 138.

United States Court of Appeals, Eighth Circuit.

January 27, 1893

Statement by CALDWELL, Circuit Judge:

This action is founded on interest coupons cut from bonds purporting, on their face, to have been issued by 'the city of Granada, in the county of Bent, state of Colorado.'

The following is a copy of one of the bonds:

"$500. State of Colorado. $500.

"Number City Funding Bond Number

9 of the 9

City of Granada.

'The city of Granada, in the county of Bent, state of Colorado acknowledged itself indebted to the bearer in the sum of five hundred dollars, payable fifteen years after the first day of December, 1887, redeemable after five years at the pleasure of the city, with interest at the rate of eight per centum per annum, payable semiannually on the first day of June and the first day of December, in each year, at the treasury of the city, or at the National Park Bank, New York, on presentation and surrender of the proper coupons hereto attached.

'This bond is issued under an ordinance of the city council of the city of Granada, adopted on the 11th day of November, 1887, to provide for the issuing and paying of bonds of the city of Granada, for the purpose of funding and paying the existing debt of the city of Granada.

'W. H. Cale, Mayor of Granada. 'Ed. Walsh, City Clerk.

'Registered:

Darwin P. Kinsley,

[Seal.]

'Auditor of the State of Colorado.

'Recorded:

'E. S. Wiggins.

'Treasurer of the City of Granada.'

The following is a copy of one of the coupons:

'20. . . . $20. . . . 20.

'The city of Granada, in the county of Bent, in the state of Colorado, will pay the bearer on the first day of December, 1902, at the city treasury or at the National Park Bank, New York, twenty dollars, being six months' interest on bond No. 9.

W. H. Cale, Mayor.

'Ed. Walsh, City Clerk.'

This cause was tried below on an agreed statement of facts, which, in the view the court takes of the case, it is not needful to set out in full.

The town of Granada, styled, by mistake, 'City of Granada,' in the bonds, on the 4th day of November, 1887, entered into a contract with Thomas Doak, whereby the latter, for the consideration of $36,000, to be presently paid in warrants on the town treasury, undertook to build a water reservoir of the capacity of 1,000 barrels, the water to be obtained from the Arkansas river by means of a ditch, for the purpose of supplying the town with water for domestic and other purposes. This contract contained a stipulation that the town should be immediately fund the warrants upon its treasury into bonds bearing 8 per cent. interest, payable semiannually. On November 11, 1887, the board of trustees of the town passed the following ordinance:

'Be it ordained by the mayor and board of trustees of the incorporated town of Granada, Colorado:

'Section 1. That there be submitted to the vote of the qualified electors of the incorporated town of Granada, Colorado, who shall have paid taxes upon property assessed to them in said incorporated town for the last preceding year, the question whether the board of trustees of said incorporated town shall issue bonds of such incorporated town under the provisions of the act of the legislature of the state of Colorado, being an act entitled 'An act to enable the several cities and towns of the state to find the floating indebtedness in exchange, at par, for the warrants of said incorporated town of Granada, at par, issued prior to the date of the first publication of a notice presented to the said board of trustees, signed by fifty of the electors of said incorporated town of Granada during the preceding year. Such question to be submitted at a special election hereafter provided.

'Sec. 2. That the foregoing proposition set out in section one of this ordinance be submitted, as aforesaid, at a special election to be held in the incorporated town of Granada, Colo., at the usual place of holding elections, on the 12th day of December, 1887, between the hours of 1 o'clock P.M. and 4 o'clock P.M. of the same day.

'Sec. 3. That upon the return of the canvass of the vote of said election according to law, if it shall be found that a majority of the electors of said incorporated town of Granada, Colo., who shall have paid taxes on property assessed to them in said town the preceding year, shall have voted in favor of said proposition, and the result of said election be so declared, then, and in that event, the mayor and clerk of said incorporated town of Granada, Colo.,

are hereby authorized and directed to exchange bonds of said incorporated town to the amount of thirty-six thousand dollars, and no more, at par, for and on account of certain warrants in the amount heretofore issued, to one Thomas Doak, in payment for the construction and operation of waterworks within said incorporated town of Granada, as per the ordinance heretofore passed in that behalf, and the said mayor and clerk are hereby authorized and directed, upon the proper surrender and exchange of said warrants, to execute and deliver said bonds.

'Sec. 4. That notice of said election be published according to said law.'

It is admitted that this 'alleged or supposed ordinance was never recorded in the town ordinance book, never signed by the mayor or attested by the clerk, and was never published in any paper, or in any form or manner whatever.'

An election was held on the 12th day of December, 1887, and it was declared that the proposition to fund the floating debt of the town was carried, and thereupon the mayor and clerk of the town, by order of the board of trustees, executed and delivered to Doak $36,000 in bonds in exchange for the $36,000 in town warrants previously issued to him.

The waterworks were never constructed, nor any part thereof. The plaintiff purchased the bonds from which the coupons in the suit were cut, for value, before maturity. The act of the legislature under which the board of trustees acted reads as follows:

'It shall be (the) duty of the city council or board of trustees of any city or town having a floating indebtedness exceeding (10) ten thousand dollars, upon a petition of fifty electors of said city or town, who shall have paid taxes upon property assessed to them in said city or town in the preceding year to publish for the period of thirty days, in a newspaper published within said city or town, a notice requesting the holder- of the warrants of such city or town to submit, in writing, to the city council or board of trustees, within thirty days from the date of the first publication of such notice, a statement of the amount of warrants of such city or town, with accrued interest thereon, which they will exchange at par for the bonds of such city or town, to be issued under the provisions of this act, taking such bonds at par. It shall be the duty of such city council or board of trustees, at the next general election occurring after the expiration of thirty days from the date of the first publication of the notice aforesaid, upon the petition of fifty of the electors of such city or town, who shall have paid taxes upon the property assessed to them in said city or town who shall have paid taxes upon the property assessed to them in said city or town, the preceding year, the question whether the city council or board of trustees shall issue bonds of such city or town, under the provisions of this act, in exchange, at par, for warrants of such city or town, at par, issued prior to the date of the first publication of the aforesaid notice, or they may submit such question at a special election, which, they are hereby empowered to call for that purpose, at any time after the expiration of the thirty days from the date of the first publication of the notice aforementioned, on the petition of fifty qualified electors as aforesaid; and they shall publish, for the period of at least thirty days immediately preceding such general or special election, in some newspaper published in such city or town, a notice that such question will be submitted to the duly-qualified electors, as aforesaid, at such election. The treasurer of the county in which such city or town is located shall make out and cause to be delivered to the judges of election of each election precinct, prior to said election, a certified list of the taxpayers of such city or town, who shall have paid taxes upon property assessed to them in the preceding year, and no person shall vote upon the question of funding in the city or town indebtedness unless his name shall appear upon such certified list, nor unless he shall have paid all city or town taxes assessed against him in such city or town the preceding year. If a majority of the votes lawfully cast upon the question of such funding of the city or town indebtedness shall be for funding of such indebtedness, the city council or board of trustees may issue to any person or corporations holding any city or town warrant or warrants issued prior to the date of the first publication of the aforementioned notice coupon bonds of such city or town in exchange therefor, at par. No bonds shall be issued of less denomination than...