Town of Aurora v. Gates

• Decision Date: 26 September 1913
• Docket Number: 3,957.,3,956
• Citation: 208 F. 101
• Parties: TOWN OF AURORA v. GATES. SAME v. WILDER.
• Court: U.S. Court of Appeals — Eighth Circuit

208 F. 101

TOWN OF AURORA v. GATES.

SAME v. WILDER.

Nos. 3,956, 3,957.

United States Court of Appeals, Eighth Circuit.

September 26, 1913

[Copyrighted Material Omitted]

William A. Bryans, of Denver, Colo., for plaintiff in error.

Hugh McLean, of Denver, Colo., for defendants in error.

Before SANBORN and CARLAND, Circuit Judges, and WILLARD, District judge.

SANBORN Circuit Judge.

The town of Aurora complains of judgments against it upon some of its bonds and coupons which it issued and sold in 1891 for waterworks on the ground that the ordinance under which they were issued was never published. The court below held that it was estopped from defeating the bonds on this ground by the recital and certificate therein as against the plaintiffs below, who were innocent purchasers for value. The recital was that each bond was issued 'in pursuance of an ordinance in relation to waterworks bonds and also under and by virtue of and in full compliance with an act of the General Assembly of the state of Colorado entitled 'An act in relation to municipal corporations,' approved April 4, 1877, and an act amendatory thereof, approved March 2, 1887. ' The certificate was:

'It is certified that this issue of bonds is for the purpose of purchasing waterworks for fire and domestic purposes, and further, that all the provisions of said ordinance and said act have been complied with, and that all acts, conditions and things requisite to be done, precedent to and in the issuing of said bonds have been done, happened and performed in regular and due form as required by law.'

The acts of the Legislature recited in the bonds granted to the officers of the town plenary power to issue and sell the bonds and coupons for waterworks. They did so and levied taxes to pay and paid the coupons on these bonds for many years. Before they were issued the board of trustees of the town passed an ordinance to the effect that the town issue the bonds for the waterworks and that 'the mayor and other officers of the town * * * are hereby directed and instructed to issue said bonds in the name of the town and to carry out the terms and provisions of this ordinance. ' The statutes of Colorado provided that the mayor should preside at all meetings of the board of trustees and that the clerk should make a true and accurate record of all the proceedings, rules, and ordinances made and passed by the board of trustees (Mills' Ann. Statutes of Colorado, Sec 4511); that all ordinances should be published in a manner specified in the statutes; that they should not take effect or be in force until the expiration of five days after their publication; that as soon as might be after their passage they should be 'recorded in a book kept for that purpose and be authenticated by the signature of the presiding officer of the council or board of trustees and the clerk'; and that 'the book of ordinances herein provided for shall be taken and considered in all courts of this state as prima facie evidence that such ordinances have been published as provided by law' (section 4443, Mills' Ann. Stat.). The ordinance under which the bonds were issued was recorded in the book of ordinances and authenticated by the signatures of the presiding officer of the board of trustees and the clerk, and the bonds were signed by the mayor, who was the presiding officer of the board of trustees, and the treasurer, and they were attested by the signature of the clerk and by the official seal of the town.

The argument against the estoppel by the recital and certificate from proving that the ordinance was not published is twofold. The first runs in this way: In the absence of an ordinance neither the town nor its officers had any power to issue the bonds or to make the recital and certificate therein. The ordinance never was published; therefore it never went into effect; and the bonds, the recitals, and certificates were issued without authority and are void. In support of this contention counsel cites Post v. Pulaski County, 49 F. 628, 1 C.C.A. 405; National Bank of Commerce v. Town of Granada, 54 F. 100, 104, 105, 4 C.C.A. 212, 216, 217; Hinkley v. City of Arkansas City, 69 F. 768, 773, 16 C.C.A. 395, 400; Town of Aurora v. Hayden, 23 Colo.App. 1, 126 P. 1109; Peck v. City of Hempstead, 27 Tex.Civ.App. 80, 65 S.W. 653; and other less pertinent opinions. But the validity of this contention is no longer open to debate in the national courts. It ignores the vital distinction between that total want of power which no act or recital of the municipality or quasi municipality may remedy and the total failure to exercise or the inadequate exercise of a lawful authority. It ignores the essential difference between a total lack of power under the laws under all circumstances and a lack of power which results merely from the absence of the exercise or the inadequate exercise of the power. The former, it is true, cannot be affected by the estoppel of recitals or certificates, but the latter may be.

A municipality or a quasi municipality may not, by the recitals or certificates in its bonds, estop itself from denying that it is without power to issue them when the laws are such that there can be no state of facts or of circumstances under which it would have authority to emit them. But, if the laws are such that there might under any state of facts or of circumstances be lawful power in the municipality or quasi municipality to issue its bonds, it may, by recitals therein, estop itself from denying that those facts or circumstances exist and that it has lawful power to send them forth, unless the Constitution or act under which the bonds are issued prescribes some public record as the test, and no such test was prescribed in this case, of the existence of some of those facts or circumstances. Chaffee County v. Potter, 142 U.S. 355, 364, 12 Sup.Ct. 216, 35 L.Ed. 1040; City of Evansville v. Dennett, 161 U.S. 434, 441, 443, 446, 16 Sup.Ct.

613, 40 L.Ed. 760; Stanly County v. Coler, 190 U.S. 437, 23 Sup.Ct. 811, 47 L.Ed. 1126; Waite v. Santa Cruz, 184 U.S. 302, 320, 22 Sup.Ct. 327, 46 L.Ed. 552; Quinlan v. Green County, 205 U.S. 410, 419, 27 Sup.Ct. 505, 51 L.Ed. 860; Presidio County v. Noel-young Bond Co., 212 U.S. 58, 65, 67, 69, 70, 29 Sup.Ct. 237, 53 L.Ed. 402; Board of Com'rs v. Sutliff, 97 F. 270, 277, 38 C.C.A. 167, 173; National Life Ins. Co. v. Board of Education, 62 F. 778, 789, 792, 10 C.C.A. 637, 648, 651; City of Huron v. Second Ward Savings Bank, 86 F. 272, 279, 30 C.C.A. 38, 45, 49 L.R.A. 534; Wesson v. Saline County, 73 F. 917, 919, 20 C.C.A. 227; City of South St. Paul v. Lampbrecht Bros. Co., 88 F. 449, 453, 31 C.C.A. 585, 589; Board of Com'rs of Haskell County v. National Life Ins. Co., 90 F. 228, 231, 32 C.C.A. 591, 594; Hughes County v. Livingston, 104 F. 306, 311, 43 C.C.A. 541, 546; Independent School District v. Rew, 111 F. 1, 7, 49 C.C.A. 198, 204, 55 L.R.A. 364; Fairfield v. Rural Independent School District, 116 F. 838, 840, 841, 54 C.C.A. 342, 344, 345. If the town had published the ordinance under which the bonds were sent forth, it would have had ample authority to issue them and to make the recital and certificate they contain. There might therefore have been a state of facts under which it would have had authority to issue the bonds and to make the recital and certificate they contain and it was within the power of the town to bring that state of facts into existence. The town, therefore, had the power, by a recital or a certificate in the bonds to the effect that this state of facts existed, to estop itself from denying its existence for the purpose of defeating the bonds and the coupons which innocent purchasers had bought in reliance upon that recital or certificate.

It is true that before the decision of the Supreme Court in City of Evansville v. Dennett, 161 U.S. 434, 441 443, 446, 16 Sup.Ct. 613, 40 L.Ed. 760, this court fell into the error in National Bank of Commerce v. Town of Granada, 54 F. 100, 104, 105, 4 C.C.A. 212, and in Hinkley v. City of Arkansas City, 69 F. 768, 773, 16 C.C.A. 395, of holding that a recital or certificate that all preliminary steps had been taken or all precedent conditions had been fulfilled under which the bonds were issued, would not estop a quasi municipality from defeating its bonds by proof that no ordinance required by the statute had been passed or published; and in Town of Fletcher v. Hickman, 165 F. 403, 91 C.C.A. 353, this court said, citing the Granada Case, that counsel in the Hickman Case assumed that the publication of the ordinance was a prerequisite to the validity of the bonds and held that the ordinance was duly published. But as this court and the Supreme Court had repeatedly declared, that has never been the law since the decision in 1895 of Evansville v. Dennett, 161 U.S. 434, 16 Sup.Ct. 613, 40 L.Ed. 760, by the Supreme Court of the United States. In that case the city charter empowered the city to issue the bonds on condition that a petition of two-thirds of the resident freeholders of the city was presented to the city council praying it to subscribe for the stock for which the bonds were issued, and no such petition was ever made. A void amendment to the city charter by its terms authorized the city to issue the bonds on condition that a majority of the qualified electors of the city, who were also taxpayers, voted in favor of the subscription for the stock for which the bonds might be issued. The bonds were issued under the void amendment, and some of them contained a recital that they were issued by virtue of the city charter and by virtue of the void amendment which was specified by the date of its passage, and by virtue of a resolution of the city council ordering an election which resulted in a legal majority...