Peck v. City of Hempstead

• Decision Date: 25 November 1901
• Citation: 65 S.W. 653
• Parties: PECK v. CITY OF HEMPSTEAD.<SMALL><SUP>1</SUP></SMALL>
• Court: Texas Court of Appeals

65 S.W. 653

PECK v. CITY OF HEMPSTEAD.¹

Court of Civil Appeals of Texas.

November 25, 1901.

Appeal from district court, Waller county; Wells Thompson, Judge.

Action by H. B. Peck against the city of Hempstead. From a judgment for defendant, plaintiff appeals. Affirmed.

A. C. Tompkins, for appellant. J. D. Harvey, for appellee.

GARRETT, C. J.

This action was brought by the appellant, H. B. Peck, against the city of Hempstead, Tex., as a defunct municipal corporation, to recover upon 99 coupons cut from certain bonds alleged to have been issued by said city. The bonds from which the coupons were detached were six bonds numbered 17, 18, 19, 20, 21, and 22, respectively, for the sum of $500 each, dated January 3, 1887, and payable 25 years after date, with 8 per cent. interest per annum, interest payable semiannually on the 1st days of January and July each year. On bonds 17, 18, and 19 there were 16 installments of interest due on each, and on 20, 21, and 22 there were due on each 17 installments, each evidenced by a coupon for $20; making the aggregate amount due and for which this suit is brought, $1,980. The bonds were all of the same tenor and effect as No. 17, which is as follows: "United States of America. Number 17. Dollars 500. State of Texas, County of Waller. The city of Hempstead, in the state of Texas, twenty-five years after date, will pay to the bearer hereof at Hempstead, Texas, the sum of five hundred dollars, lawful money of the United States, with interest thereon from date at the rate of eight per cent. per annum, payable semiannually at the office of the city treasurer of the city of Hempstead on the first day of January and July each year, upon presentation of the proper coupon hereto attached, signed by the mayor and countersigned by the secretary of said city. This bond is one of a series of six bonds of like tenor and amount, numbered from 17 to 22, inclusive, issued by virtue of an ordinance of said city enacted on the 10th day of December, A. D. 1886, and printed on the reverse side hereof, for the purpose of completing the public school building in and for said city. In witness whereof the city council of the said city of Hempstead have caused these presents to be signed by the mayor and countersigned by the secretary of said city of Hempstead, this, the third day of January, A. D. 1887. C. D. Robinson, Mayor. James D. Montgomery, Secretary. [Seal.]" Coupons attached to become due January 1st and July 1st each year until maturity, all alike except as to number and due date, one of which is as follows: "The city of Hempstead will pay to bearer $20.00 at the office of the city treasurer of the city of Hempstead on the 1st day of January, 1892, being six months' interest due on bond No. 17. C. D. Robinson, Mayor. Jas. D. Montgomery, Secretary."

On the back of each of said bonds 17, 18, 19, 20, 21, and 22 is printed, to wit:

"An ordinance to provide for the issuing bonds to complete the public school building, and also for the levy of a tax for the payment of the principal and interest of said bonds. Whereas, the city of Hempstead has assumed control of the public free schools therein, in accordance with the constitution and laws of the state of Texas, and it is necessary to complete the public school building, now in course of erection; and whereas, by virtue of articles 419 to 424, inclusive, of the Revised Statutes of the state of Texas the said city is empowered to issue bonds for the purpose of building a public school building, in such amounts as may be necessary, under certain restrictions therein named; and whereas, the property within said city subject to an ad valorem tax amounts to the sum of five hundred and fifty-seven thousand four hundred and eighty-four dollars, as appears from the tax rolls of said city for the year 1885: Therefore, be it ordained by the city council of the city of Hempstead, in the state of Texas, that:

"Section 1. There shall be issued by the city of Hempstead for the purpose of the completion of the public school building now in course of erection in and for said city, coupon bonds of said city to the amount of three thousand dollars ($3,000) in denominations of five hundred ($500) dollars each, bearing interest at the rate of eight (8) per cent. per annum, the said interest being payable semi-annually on the first days of January and July of each and every year, at the office of the city treasurer of the said city of Hempstead, in the state of Texas, twenty-five years from date.

"Sec. 2. Said bonds shall be signed by the mayor and countersigned by the secretary of said city and shall be registered in the office of the comptroller of the state of Texas, and shall bear date the third day of January, A. D. 1887.

"Sec. 3. For the purpose of meeting the interest on said bonds and providing an annual sinking fund sufficient to discharge the principal at maturity, an ad valorem tax of ten cents on the one hundred dollars on all property in said city subject to taxation on the first day of January, A. D. 1887, is hereby levied, and the assessor and collector shall proceed to assess and collect the same as other taxes, and each year thereafter there shall be levied and collected by the council such a tax as shall be sufficient to pay the interest semi-annually on said bonds, and provide a sinking fund for the payment of said bonds at maturity.

"Sec. 4. That this ordinance take effect and be in force from and after its passage.

"Approved December 10, 1886.

"C. D. Robinson, Mayor.

"Attest: Jas. D. Montgomery, Secretary."

Said bonds bearing indorsement as follows: "No. 17. The City of Hempstead, Public School Bond. $500. Payable January 3rd, 1912, at Hempstead, Texas. Interest eight per cent. Payable semi-annually on the first days of January and July at the office of the city treasurer of the city of Hempstead, Texas. Registered January 4, 1887. Wm. J. Swain, Comptroller."

The ordinance printed upon the bonds and above set out was not at any time passed nor authorized by the city council of the city of Hempstead, nor does same appear of record in the minutes of said city council, and the city council never at any time authorized nor provided for the issuance of $3,000 in bonds for the purpose of the completion of the public school building.

The city of Hempstead was duly incorporated as such under the general law of the state of Texas, and had such corporate existence on the several dates herein mentioned until March, 1899, when the corporation was legally abolished, and the commissioners' court of Waller county, now composed of John M. Pinckney, county judge, and A. Guillemet, W. A. Sorsby, J. B. Brown, and J. G. Kellner, commissioners, assumed control of the affairs of the city as provided by law. On March 2, 1886, the city council passed an ordinance authorizing the issue and the sale of bonds for $8,000 of $500 each, payable 25 years after date, with 8 per cent. interest, payable semiannually, for which coupons were attached. These bonds were issued and sold, and were numbered from 1 to 16, inclusive. They were issued for the erection of a public school building, and at the time of their issuance the city council levied a tax of 25 cents on the $100 assessed valuation of property subject to taxation to pay the interest and create a sinking fund for their redemption, which was the full extent of the power of the city to tax for that purpose. On December 10, 1886, it having appeared that additional funds were necessary to complete and inclose the building, the city council passed an ordinance for the purpose, as recited therein, of funding the floating indebtedness of the city, but intended in fact to raise the sum necessary for completing the public school building as above stated, as well as to fund the floating indebtedness. This ordinance provided for the issuance and sale of six bonds, each for the sum of $500, of the same tenor and effect with those involved in this suit; but when they were presented to the comptroller he refused to register them because their issuance was unauthorized, and they were in fact never issued; whereupon James D. Montgomery, the city secretary, filed with the comptroller of the state of Texas what purported to be the copy of an ordinance authorizing the issuance of the bonds for the purpose of the completion of the public school building as the same appears printed on the back of the bond as above set out; and the mayor of the city and the said Montgomery as secretary signed and issued the bonds without the knowledge of the members of the city council that they had not been issued in accordance with the ordinance as actually passed on December 10, 1886. The city council did not cause or authorize the issuance of said bonds, nor did it authorize the mayor or secretary to sign the same. On January 1, 1886, the assessment rolls of the city showed the total valuation of all property rendered for city taxation to be $511,216; on January 1, 1887, $481,298; on January 1, 1888, $433,537; and on January 1, 1889, $395,308. The bonds were registered with the comptroller, and in March, 1887 were sold at par to Noel & Co., of St. Louis, Mo., and the proceeds were paid into the treasury of the city of Hempstead. Afterwards, and before any installment of interest thereon fell due, the appellant became the purchaser of said bonds without knowledge of any irregularity or illegality in the issuance thereof, and is an innocent holder thereof, without actual notice of the fact that no ordinance was ever actually passed authorizing their issuance. Interest upon the bonds was paid regularly by the city until July 1, 1891, when default was made on Nos. 20, 21, and 22. Since that date no interest whatever has been paid, and the coupons declared on in the petition all remain unpaid. We do not find it anywhere stated in the statement of facts or the conclusions of the trial judge that the city of Hempstead ever assumed control...