Spitzer v. Board of Trustees for Regina Public School Dist. No. 4 of Saskatchewan

• Decision Date: 19 July 1920
• Docket Number: 3397.
• Citation: 267 F. 121
• Parties: SPITZER et al. v. BOARD OF TRUSTEES FOR REGINA PUBLIC SCHOOL DIST. NO. 4 OF SASKATCHEWAN. [1]
• Court: U.S. Court of Appeals — Sixth Circuit

267 F. 121

SPITZER et al. v. BOARD OF TRUSTEES FOR REGINA PUBLIC SCHOOL DIST. NO. 4 OF SASKATCHEWAN. ^[1]

No. 3397.

United States Court of Appeals, Sixth Circuit.

July 19, 1920

George D. Welles and Charles F. Chapman, both of Toledo, Ohio (Tracy, Chapman & Welles, of Toledo, Ohio, on the brief), for plaintiffs in error.

E. J Marshall, of Toledo, Ohio (Marshall & Fraser, of Toledo Ohio, on the brief), for defendants in error.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

KNAPPEN Circuit Judge.

This writ is to review a judgment in favor of the defendant in error, hereinafter called the plaintiff, against the plaintiffs in error, whom we shall call the defendants, for damages on account of defendant's refusal to receive and pay for damages of school debentures issued by plaintiff pursuant to alleged contract with defendants for their purchase. The case was tried to the court under written waiver of jury, and judgment rendered upon findings of fact. The legal conclusions based thereon are contained in a written opinion, reported in 255 F. 136. The substance of the case is this:

Plaintiff is a body corporate organized under the School Act of the province of Saskatchewan, Dominion of Canada, which act empowers any school district of plaintiff's class to issue, upon the security of the district, debentures running not more than 20 years and at a rate of interest not exceeding 8 per cent. per annum, for obtaining school sites and the erection and furnishing of school buildings thereon. The required preliminary steps include a declaration by the board of the advisability of such borrowing, expressed through a by-law under the corporate seal of the district and in form and effect as prescribed by the minister of education, and a notice of the board's intention to apply to the minister of education for authority to so borrow to be given to the taxpayers of the district, in a form prescribed by the minister, and to be posted in five or six conspicuous places in the district, to enable a demand--which in the instant case could be made by 20 taxpayers-- for a public vote upon the by-law; if no vote is demanded, the board is to transmit to the minister of education a certified copy of the by-law, as well as of the notice to the taxpayers, with proof of its posting, together with a declaration of the assessed value of the real property in the district as shown by the last revised assessment roll, 'upon receipt of which' (the act provides), 'and upon being satisfied that the several conditions required by this act have been substantially complied with, the minister may in writing authorize the board of trustees to borrow the sum or sums of money mentioned in the by-law, or a less sum, and issue public notice of authorization in the Saskatchewan Gazette ' The act permits the use of either of three forms of debentures, two of which provide for payment 'in lawful money of Canada'; the third, in such money or 'pounds sterling.' The act further provides that every debenture before its issue, shall be sent for registration to the minister of education, who, if satisfied that the requirements of the act have been substantially complied with, is required to register and countersign the debenture, keeping proper record of the same. It is also provided that such--

'countersigning by the minister shall be conclusive evidence that the district has been legally constituted and that all the formalities in respect to such loan and the issue of such debenture have been complied with, and the legality of the issue of such debenture shall be thereby conclusively established, and its validity shall not be questionable in any court in Saskatchewan, but the same shall, to the extent of the revenues of the district issuing the same, be a good and indefeasible security in the hands of any bona fide holder thereof.'

On February 14, 1913, plaintiff regularly passed, adopted and sealed what is known as 'by-law No. 16,' which, after reciting the necessity and desirability of borrowing $500,000 on the security of the district for the purpose of building, furnishing, and equipping a new school on each of two named locations, as well as purchasing sites, improving grounds, and making other improvements, including a heating and ventilating system in a third school; and that the sum so borrowed should be repayable to the bearer at the end of 20 years, with interest at the rate of not more than 8 per cent. per annum, enacted (a) that the necessary proceedings be taken under the school act to obtain the sanction of the minister of education to the loan, and (b) that, if the minister should empower the board to borrow the sum mentioned under the act, the debentures of the district (to be issued and executed by the chairman and treasurer of the board) be issued payable to bearer at the time and with not more than the interest above stated. Due notice of this by-law and its purpose was given the public. No poll was demanded, and the board duly transmitted to the minister of education certified copy of the by-law and notice, with proof of posting and declaration of assessed value of real property, whereupon the minister in writing authorized the board to borrow the sum stated, publication of which was duly made in the official gazette. Plaintiff thereupon advertised for tenders.

On April 12, 1913, defendants, who are dealers in bonds at Toledo, Ohio, submitted to plaintiff, in writing, an offer of $475,000 for $500,000 of 5 per cent. debentures of the district, maturing in 20 years, principal and interest payable in lawful money of the United States at the Bank of Montreal, in either New York or Toronto, Canada, at holder's option. The offer contained this further provision:

'We will print and deliver to you at Regina at our expense lithographed blank debentures ready for execution. Prior to our taking up and paying for said debentures, you are to furnish us complete transcripts of all proceedings leading up to and culminating in the issuance of said debentures evidencing their legality to the satisfaction of our attorney. Should our attorneys deem an additional by-law necessary, you are to pass the same.'

On April 16, 1913, at a duly called meeting of the board, defendant's tender was formally accepted by resolution, which, however, was not under seal. This was plaintiff's only acceptance through resolution or writing. At the request and instigation of defendants' agent, who also represented them in making the original tender, the board passed, apparently on the same 16th day of April, a new by-law, numbered 17, prepared by or under the suggestion of this agent, which by- law differed from No. 16 only in that the interest (not to exceed 8 per cent.) was expressly made payable semiannually, and both principal and interest made payable in lawful money of the United States, and at the places and with the option stated in defendant's tender. ^[1a] No public notice of this by-law No. 17 was given, but a copy of it was sent by plaintiff to the minister of education, who on April 17th, in writing, acknowledged its receipt and advised plaintiff of his approval. Later a transcript of all plaintiff's proceedings and of the acts of the minister of education already mentioned was sent to defendants at Toledo, who, in acknowledging receipt, said

'We will turn same over to our attorneys, and promptly advise you as to the result of their examination.'

Defendants asked plaintiff for no further or other legislation, nor for further or other transcripts of plaintiff's proceedings, nor did they request further or other proceedings by the minister. The records and transcripts so submitted by plaintiff to defendants were by the latter turned over for purposes of approval to their counsel, who thereafter prepared blank forms of debentures, which defendants on May 21, 1913, sent plaintiff for execution, with detailed instructions (apparently prepared by defendants' counsel) as to the formalities thereof. The debentures were accordingly executed by plaintiff and countersigned by the minister of education. The debentures so prepared and executed differed from the terms contained in defendants' written tender of April 12th only in that they were made payable in lawful money of Canada, instead of lawful money of the United States.

On July 5, 1913, defendants requested plaintiff to forward immediately $100,000 of the debentures to New York for delivery. On July 8th (three days later) defendants first suggested a possible criticism upon the debentures growing out of this situation: The school act of Saskatchewan provided for two kinds of school districts, viz 'public,' to which class plaintiff belongs, and 'separate,' which latter may be established by a minority of the taxpayers in the district, whether Protestant or Roman Catholic, and which, when established, are governed by the same laws as are public schools. Regina also had a 'separate' school district. The suggestion of July 8th above mentioned was by way of telegram from defendants to plaintiff, inquiring whether lands liable to assessment for indebtedness on debentures when issued remained liable therefore until the whole of the indebtedness has been paid, or whether it would be released from liability for such indebtedness if thereafter transferred from the present owners to Catholics. To this plaintiff made reply, so far as presently material, that the question raised had not been dealt with 'by our courts here'; that the lands were 'believed to remain liable,' but that the case was 'extremely hypothetical,' inasmuch as the assessments of the public school district had for the past 10 years been ten times that of the separate district. It appears from defendants' reply of July 22d that they had previously been...