Travelers' Ins. Co. v. City of Denver

• Decision Date: 15 June 1888
• Citation: 18 P. 556,11 Colo. 434
• Parties: TRAVELERS' INS. CO. v. CITY OF DENVER.
• Court: Colorado Supreme Court

18 P. 556

11 Colo. 434

TRAVELERS' INS. CO. v. CITY OF DENVER.

Supreme Court of Colorado

June 15, 1888

Commissioners' decision. Error to superior court of Denver.

This action was brought by the plaintiff, the Travelers' Insurance Company, against the defendant, the city of Denver to recover the sum of $25,497.80, and interest, alleged to be due it upon certain city warrants, which warrants were set out in the complaint, and constituted 10 separate causes of action, the averments in each cause of action being the same except as to the date and amount of the warrant therein set out, and the date of the presentment thereof indorsed thereon. The first cause of action is set out as follows:

'The the plaintiff is a corporation duly organized and incorporated under the laws of the state of Connecticut. That the defendant is a municipal corporation created, organized and chartered and incorporated under and by virtue of the laws of the said state of Colorado, and more particularly under a public act of the general assembly of the said state approved April 6, A. D. 1877. That heretofore, and on the 3d day of July, 1882, at Denver, in the county of Arapahoe and state of Colorado, aforesaid, the said defendant made, executed, and delivered unto one Joseph Williams, then and now being of the said city of Denver, its certain instrument of writing obligatory, commonly known as and called a 'City Warrant,' in manner and form, words and figures, as follows, to-wit:

"$1,308.21.

CITY CLERK'S OFFICE,

No. 102.

"DENVER, COLO., 7-3, 1882.

" Treasurer of the City of Denver: Pay to the order of Joseph Williams the sum of thirteen hundred eight and 21-100 dollars out of the 20th St. sewer fund, on account of the 20th St. sewer cont.

"By order of the city council made 7-1, 1882.

"Attest: JAS. T. SMITH, City Clerk.

ROBERT MORRIS, Mayor.'

'The words: 'Presented for payment July 3, 1882. No funds. This warrant bears interest from this date at ten per cent. per annum. WM. M. BLISS, City Treasurer.'--were written across the face of said warrants, and said warrants were indorsed on the back as follows: 'JOSEPH WILLIAMS.' That on the 3d day of July, 1882, the said warrant was duly presented to said defendant for payment, and payment thereof demanded, and defendant then and there refused to pay the same, and caused the indorsement written on said warrant to be made. That thereupon and thereby the said defendant promised to pay to the said Joseph Williams' order, for value received, the sum of thirteen hundred and eight and 21-100 dollars, ($1,308.21,) with interest thereon at the rate of ten per cent. per annum from the said 3d day of July, 1882. That thereafter, and prior to the commencement of this action, the said Joseph Williams, for value received, sold, released, transferred, and assigned the said city warrant unto the said plaintiff. That no part of the same has been paid, and that the said defendant has failed, neglected, and refused, and still does fail, neglect, and refuse, to pay the said sum of thirteen hundred and eight and 21-100 dollars, or any part thereof; and there is now due and owing to said plaintiff from said defendant, on said warrant, the said sum of thirteen hundred and eight and 21-100 dollars, together with interest thereon from and since the said 3d day of July, 1882, at the rate of ten per cent. per annum.' The defendant demurred to each and every count of the complaint on the ground that the complaint did not state facts sufficient to constitute a cause of action against the defendant. The demurrer was sustained, and, the plaintiff failing to amend its complaint, judgment was entered in favor of defendant for its costs.

STALLCUP C., dissenting.

J. P. Brookway and John H. Croxton, for plaintiff in error.

James H. Brown, City Atty., for defendant in error.

RISING, C., ( after stating the facts as above.)

Counsel for defendant in error, in their argument, urge three grounds in support of the ruling of the court below: (1) That the complaint contains no allegations showing any consideration for the warrants sued on; (2) that there is no allegation in the complaint showing that there ever was or is any money in the treasury of defendant to the credit of the fund on which the warrants are drawn, sufficient to pay the same, or either of them; (3) that an action against defendant, on such city warrants, cannot be maintained; that plaintiff's remedy is by mandamus against the city treasurer.

The contention of defendant in error is that the warrants sued on are not negotiable instruments. We think these warrants are made negotiable by the provisions of sections 3-5, c. 9, Gen. St. It is provided by section 3 that instruments of writing whereby one person acknowledges any sum to be due to any other person shall be taken to be due and payable to whom the said instrument in writing is made; by section 4 such instrument in writing is made assignable by indorsement of the payee thereon, in the same manner as bills of exchange; and by section 5 the assignee of such instrument in writing may maintain an action thereon in his own name, which he could also do under the provisions of the Code. These provisions of our statute were adopted in this state from the statutes of Illinois, in which state they have been construed to make a county order a negotiable instrument, in Garvin v. Wiswell, 83 Ill. 215; and county warrants have been held to be negotiable, in this state, in People v. Hall, 8 Colo. 485, 496, 9 P. 34. For instances in which instruments in writing have, under these provisions, been held to be negotiable instruments, see Lee v. Balcom, 9 Colo. 216, 11 P. 74; Stewart v. Smith, 28 Ill. 397; Archer v. Claflin, 31 Ill. 306-315; Petillon v. Lorden, 86 Ill. 361.

The second ground urged by defendant in error in support of the ruling of the court in sustaining the demurrer to the complaint goes to the main question in the case. Counsel for defendant in error contend that the warrants set out in the complaint are, by the express terms thereof, drawn on a special fund, and that, being so drawn, the complaint does not state a cause of action, in that it is not alleged therein that there is money in said special fund with which to pay the warrants sued on; while counsel for plaintiff in error contend that the warrants are drawn on the general revenue of the city, and are payable out of the same, and that, being so drawn, it was not necessary for the plaintiff to allege, in its complaint, that there was money in the general fund of the city with which to pay the warrants. It seems to be well settled that, in an action upon warrants drawn on a special fund, it is necessary for the plaintiff to allege that there is money in that fund to pay the same. Reeve v. City of Oshkosh, 33 Wis 477; Campbell v. Polk Co., 49 Mo. 214; Board v. Mason, 9 Ind. 97; 1 Dill. Mun. Corp. § 505; 1 Daniel, Neg. Inst. § 433. The warrants contain a direction to the treasurer of the city to pay 'out of the 20th St. sewer fund,' to the order of Joseph Williams, the sums in said warrants named. It is claimed by plaintiff in error that this direction to pay 'out of the 20th St. sewer fund' must be considered as descriptive of the purpose for which the warrants were drawn. We do not think the claim well founded. The purpose for which the warrants were drawn is stated therein to be 'on account of the 20th St. sewer cont.,' and this statement is so clearly expressed that no doubt can arise in relation to the purpose for which the warrants were drawn. It is also clear that, upon the face of the warrants, the direction is to make payment out of a particular fund. To overcome this apparent special-fund feature of the warrants, counsel for plaintiff in error contend that the city is primarily liable for the indebtedness evidenced by such warrants, and that, the city being liable for the payment of such indebtedness, whether there is or is not such special fund, the warrants must be held to be drawn on the general revenue, notwithstanding the direction made. To properly understand the force and effect of the clause in the warrants relating to the fund out of which payment is to be made, we must look to the provisions of the charter authorizing the city to draw warrants. It is provided, in section 62 of the charter, that...