Ransom v. City of Pierre

• Decision Date: 16 April 1900
• Docket Number: 1,305.
• Citation: 101 F. 665
• Parties: Ransom v. CITY OF PIERRE.
• Court: U.S. Court of Appeals — Eighth Circuit

101 F. 665

Ransom v. CITY OF PIERRE.

No. 1,305.

United States Court of Appeals, Eighth Circuit.

April 16, 1900

This case is before this court for decision upon the following facts and circumstances: The action is founded upon 500 coupons clipped from 100 bonds which were issued by the city of Pierre, S.D., on October 1, 1891, to refund its then outstanding indebtedness. One hundred of the coupons in suit matured October 1, 1896, April 1, 1897, and October 1, 1897 respectively. On September 28, 1896, James J. Ransom, the plaintiff in error, who was also the plaintiff below, began an action by mandamus in the circuit court for the Sixth judicial circuit of the state of South Dakota against Corwin D. Mead, as city treasurer of the city of Pierre, to compel him to apply the sum of $8,431.10, then in his hands as city treasurer, to the payment of those of the aforesaid coupons which matured October 1, 1895, and April 1, 1896, being those that were then overdue. This money in the treasurer's hands had been collected, as it seems, by taxation to pay said coupons. The treasurer, in his official capacity pleaded to the information for the writ that the coupons which he was asked to pay were void for the reason that the bonds from which they had been detached had been issued by the city of Pierre without authority of law, at a time when its indebtedness exceeded the amount of indebtedness that it was authorized to contract under the constitution of the state, and that said coupons and the bonds from which they were detached were for that reason utterly void. There was a trial upon the issues so tendered in the mandamus proceeding and a finding by the court that the coupons were illegal and void, as alleged, and a judgment that the mandamus proceedings be dismissed at the plaintiff's cost. From this judgment, rendered on June 29, 1897, Ransom, the plaintiff in error, perfected an appeal to the supreme court of South Dakota on September 24, 1897, giving a supersedeas bond. The suit at bar was commenced in the circuit court of the United States for the Southern division of the district of South Dakota on February 23, 1898, while the appeal in the before-mentioned suit was pending and undetermined. In its answer to the suit at bar the city of Pierre pleaded, among other defenses, the judgment theretofore rendered in favor of its city treasurer on June 27, 1887, by the circuit court for the Sixth judicial circuit of the state of South Dakota, as a bar to a recovery. This defense was sustained by the trial court, and a judgment was accordingly rendered dismissing the complaint. The plaintiff below thereupon removed the record to this court by a writ of error. When the trial in the case at bar took place, the mandamus proceeding above mentioned was still pending and undetermined in the supreme court of South Dakota, and it was so pending and undetermined when the case was argued in this court.

Robert W. Stewart (Henry R. Horner, on the brief), for plaintiff in error.

Ivan W. Goodner, for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge, after stating the case as above, .

This cause having been decided below in favor of the defendant city on the ground that the judgment of the circuit court for the Sixth judicial circuit of the state of South Dakota in the mandamus suit brought by James J. Ransom, the present plaintiff in error, against Corwin D. Mead, the city treasurer of the city of Pierre, conclusively established that the coupons in suit were issued without authority of law, and were, therefore, void, the principal question that was discussed on the argument was whether the judgment of the state court in the mandamus suit could be pleaded and received in evidence in the present action as a former adjudication. It is true that counsel for the city endeavored to support the judgment below on the additional ground that the coupons in suit must be regarded as void irrespective of the former adjudication, because at the time the bonds were issued the city had already exceeded the limit of valid indebtedness; but the trial court overruled the latter contention, and its action in that respect was strictly in accordance with two decisions of this court where the various points urged by the city in support of the latter defense were fully considered and decided adversely to its contention. Board of Education of City of Huron v. National Life Ins. Co., 36 C.C.A. 278, 94 F. 324; City of Huron v. Second Ward Sav. Bank, 57 U.S.App. 593, 30 C.C.A. 38, 86 F. 272. We discover no reasons for altering in any respect the views heretofore expressed by this court in the cases last cited, and accordingly agree with the learned trial judge that but for the rendition of the judgment in the mandamus proceeding the plaintiff would have been entitled to a verdict for the full amount of the coupons in suit. Since this case was argued, and while it has been under advisement, the supreme court of South Dakota has decided the mandamus case against the city treasurer of the city of Pierre, and we have been furnished with a certified copy of its decision, which was promulgated on March 2, 1900, but is not as yet officially reported. Insurance Co. v. Mead, 82 N.W. 78. An examination of that decision, which contains a careful review of all the questions involved in the controversy between the city and the bondholder, shows that the supreme court of the state has decided the following propositions: First, that the city of Pierre, under its charter, did have the power to issue bonds for the purpose of funding its outstanding indebtedness, which appears to have been one of the mooted points in the mandamus suit; second, that, although the territorial limits of the city of Pierre and the school district embracing the city were coextensive, yet the debts of the latter cannot be added to those of the former for the purpose of ascertaining if the city indebtedness exceeded the legal limit,-- the two corporations, the city and the school district, being separate legal entities; third, that the bonds issued being for the sum of $150,000, and 5 per cent. of the assessed value of city property being $161,144.40, the bonds did not show on their face that the debt occasioned thereby would exceed the legal limit of city indebtedness; fourth, that the issuance of bonds for the purpose of taking up and retiring an outstanding indebtedness does not in the state of South Dakota create a new or additional debt, within the meaning of the statutory or constitutional inhibitions of that state against creating an indebtedness in excess of 5 per cent. of the assessed valuation of municipal property, and that this is true whether such bonds be exchanged directly for outstanding obligations, or whether the bonds be sold, and the proceeds used to retire such obligations; and, lastly, that upon the facts disclosed by the record before the supreme court of the state the bonds in controversy were valid obligations of the city. The judgment of the circuit court of the state in the mandamus suit was accordingly reversed, and a new trial ordered.

On the argument of this cause it was urged on behalf of the plaintiff in error that the trial court erred in holding that the judgment in the mandamus proceeding was conclusive as respects the validity of the bonds in controversy-- First, because section 5343 of the Compiled Laws of Dakota of 1887 declares that 'an action is deemed to be pending from the time of its commencement until its final determination upon appeal, or until the time for appeal has passed, unless the judgment be sooner satisfied'; and, second, because the parties to the mandamus suit and the subject-matter of that suit were not the same as in the case at bar. The majority of the members of this court entertain the view, however, that neither of these propositions is tenable. Concerning the second of these contentions, it may be said that, while the mandamus suit was brought against the city treasurer, and not against the city by name, yet that officer was sued in his official capacity, and not as an individual. He did not defend the action for his personal benefit, but in right of the city, and, as custodian of its funds, to protect them against an illegal demand. The city permitted him to so defend, and the defense was doubtless made at the city's expense. In that proceeding the city of Pierre was in reality challenging the validity of the bonds now in controversy in the name of its treasurer, and for its own benefit and advantage. If that suit had resulted differently, the city would not have been heard to say that it was not bound by the judgment, because it was not sued in its corporate name, but in the name of one of its officers. The record also shows that the defenses interposed, litigated, and decided in that proceeding were identically the same as those which were interposed and litigated in the case at bar, except the issue tendered by the plea of a former adjudication. Under these circumstances the last-mentioned plea was well made, and was sustained by the record made in the mandamus suit, which was introduced in evidence. Holt Co. v. National Life Ins. Co., 25 C.C.A. 469, 80 F. 686; Scotland Co. v. Hill, 112 U.S. 183, 5 Sup.Ct. 93, 28 L.Ed. 692; In re Ayers, 123 U.S. 443, 8 Sup.Ct. 164, 31 L.Ed. 216; Harmon v. Auditor, 123 Ill. 122, 13 N.E. 161; 1 Herm. Estop. p. 166.

The first contention of the plaintiff in error, stated above presents a question of greater difficulty. In many cases the question has been mooted whether, when a writ of error has been sued out, or when an appeal has been taken which operates essentially as a writ of error, to review a judgment at nisi prius, and a supersedeas bond has been given to stay...