Village of Heyburn v. Security Savings & Trust Co.

• Decision Date: 09 July 1935
• Docket Number: 6161
• Citation: 55 Idaho 732,49 P.2d 258
• Court: Idaho Supreme Court
• Parties: VILLAGE OF HEYBURN, IDAHO, a Municipal Corporation, Respondent, v. SECURITY SAVINGS & TRUST COMPANY, a Corporation, Appellant

49 P.2d 258

55 Idaho 732

VILLAGE OF HEYBURN, IDAHO, a Municipal Corporation, Respondent, v. SECURITY SAVINGS & TRUST COMPANY, a Corporation, Appellant

No. 6161

Supreme Court of Idaho

July 9, 1935

JUDGMENT-CONCLUSIONS OF ALL QUESTIONS INVOLVED-LAW OF THE CASE-RES JUDICATA-CHANGE OF FORM OF ACTION OR PLEA-MUNICIPAL CORPORATIONS-VOID BONDS-RIGHTS OF PURCHASER.

1. Judgment of proper court puts an end to all further litigation on account of same matter, and becomes the law of the case, which cannot be changed or altered, even by consent of parties, and is not only binding on them, but on courts and juries, ever afterwards, as long as it shall remain in force and unreversed.

2. In action between same parties on same claim or demand, former adjudication concludes parties and privies, not only as to every matter offered and received to sustain or defeat claim but also as to every matter which might and should have been litigated in first suit.

3. Judgment declaring municipal bonds void in law action by holder to recover amount due on interest coupons held res judicata in equity suit by village against holder to cancel bonds and unpaid coupons, where issues tendered in law action rendered admissible all possible evidence bearing on validity of bonds, and no different fact was in issue in law action from what was in issue in equity suit.

4. Finality of judgment declaring municipal bonds void and its effect as res judicata in subsequent case was not lessened by adoption of different form of action in subsequent case or plea for equitable relief.

5. Municipal bonds which were issued in violation of constitutional prohibitions were void and could never become valid or collectible in hands of purchaser.

6. In action to cancel bonds and interest coupons which had been adjudged to have been issued in violation of constitutional and statutory debt limitations, holder held not entitled to have equity direct accounting and fix general debt liability against village, since bonds were void and not voidable, and equity cannot and will not afford relief against violations of constitutional prohibitions (I. C. A., sec. 49-2401; Const., art. 8, sec. 3).

APPEAL from the District Court of the Eleventh Judicial District for Minidoka County. Hon. Wm. A. Babcock, Judge.

Action to have municipal bonds declared void and for cancelation thereof. Judgment for plaintiff. Defendant appeals. Affirmed.

Judgment affirmed with costs to respondent. Petition for rehearing denied.

Hugh A. Baker, for Appellant.

To constitute res judicata it is necessary that the issue common to the two actions be actually litigated and determined. If there be uncertainty as to issue upon which matter involved in former suit was determined, entire question is open. (34 C. J. 1072; Matson v. Poncin, 152 Iowa 569, 132 N.W. 970, 38 L. R. A., N. S., 1020; Mason v. Ruby, 35 Idaho 157, 204 P. 1071; Marshall v. Underwood, 38 Idaho 464, 221 P. 1105; 34 C. J. 915.)

Municipalities are bound by recitals in bonds when in hands of holders in due course and estopped to assert facts contrary to recitals. (Jasper County v. Ballou, 103 U.S. 745, 26 L.Ed. 422; Sherman County v. Simonds, 109 U.S. 735, 3 S.Ct. 502, 27 L.Ed. 1093; Warren County v. Marcy, 97 U.S. 96, 24 L.Ed. 977.)

Res Judicata.

The difference between the effect of a judgment as a bar and as an estoppel is made clear by sections 438 and 450 of the title "Judgments" in 15 R. C. L.

The rule is stated in 34 C. J., at pages 745 and 874. It was applied by this court in the cases of Lawrence v. Corbeille, 32 Idaho 114, 178 P. 834, and Rogers v. Rogers, 42 Idaho 158, 243 P. 655, cited by respondent.

S. T. Lowe, for Respondent.

The judgment in the original action constitutes res judicata of the issues in the instant case and an estoppel against the defendant to now contend that the bonds or coupons are valid obligations of the village, for a judgment of a court of competent jurisdiction is conclusive of the parties and their privies as to any question actually or directly in issue, which was passed upon or determined by the court. (South Boise Water Co. v. McDonald, 50 Idaho 409, 296 P. 591; Rogers v. Rogers, 42 Idaho 158, 243 P. 655; Marshall v. Underwood, 38 Idaho 464, 221 P. 1105.)

In order to constitute an estoppel by judgment it is not necessary that the cause of action be the same in both cases. It is only essential that the question at issue in the second action shall have been presented and determined in the former suit, between the same parties. (City of New Orleans v. Citizens Bank of Louisiana, 167 U.S. 372, 17 S.Ct. 905, 42 L.Ed. 202; Southern P. R. Co. v. United States, 168 U.S. 1, 18 S.Ct. 18, 42 L.Ed. 355; Forsyth v. Hammond, 166 U.S. 506, 17 S.Ct. 665, 41 L.Ed. 1095.)

A judgment in an action on coupons, in which action the validity of the bonds from which the coupons were detached is in issue, is conclusive as an estoppel in an action involving the validity of the bonds or other coupons. (Bissell v. Spring Valley Townsite, 124 U.S. 225, 8 S.Ct. 495, 31 L.Ed. 411; Elgin v. Marshall, 106 U.S. 578, 1 S.Ct. 484, 27 L.Ed. 249; Block v. Board of County Commissioners, 99 U.S. 686, 25 L.Ed. 491.)

The alleged affirmative defense constituted no defense in this action, for the indebtedness sought to be incurred by said bonds was incurred in direct violation of the constitutional and statutory provisions.

Where bonds are issued by a city, which are void because they represent a debt in excess of the constitutional or statutory limit on the power of the city to contract the indebtedness, no implied contract or equity can be raised against the city on the ground that it received the money and used it for public benefit. (Litchfield v. Ballou, 114 U.S. 190, 5 S.Ct. 820, 29 L.Ed. 132; Morton v. Nevada, 41 F. 582; Travelers' Ins. Co. v. Johnson City, 99 F. 663, 40 C. C. A. 58; 49 L. R. A. 123.)

Chapman & Chapman, Amicus Curiae, filed brief on petition for rehearing.

AILSHIE, J. Morgan and Holden, JJ., concur. BUDGE, J., Givens, C. J., Dissenting.

OPINION

AILSHIE, J.

The Village of Heyburn, respondent, commenced this action against Security Savings & Trust Company, appellant, the owner and holder for collection of nine funding bonds of $ 500 each, aggregating $ 4,500, which had been issued by respondent June 1, 1922. By such action the village sought to have the bonds canceled and adjudged and decreed void.

On June 1, 1922, the village officers adopted an ordinance (No. 31) providing for the issuance of these bonds "for the purpose of funding a like amount of the outstanding warrant indebtedness of said village." In pursuance of this ordinance the bonds were subsequently issued and sold to five individual purchasers through the agency of a Portland brokerage firm. Some interest coupons were thereafter paid and finally the village refused to pay any further coupons, asserting the invalidity of the bond issue. The purchasers assigned the bonds, together with unpaid coupons, to the appellant herein and it instituted an action on June 26, 1928, against the village to recover the amounts then due on unpaid coupons. In that action the jury returned a general verdict for the village. Thereafter and prior to the entry of judgment, but after the entry of the verdict, the village instituted the present action, praying for a cancelation of the bonds, pleading the facts which it claimed rendered the bonds void and also the previous action against the village and the verdict rendered therein. After the entry of the judgment on the verdict and prior to the trial of the present case the village filed a supplemental complaint, setting up the judgment which had been entered in the former case and alleging that:

"The said judgment has never been vacated, modified or appealed from and is now in full force and effect. That the same constituted an adjudication that the said bonds are illegal and unlawful and unenforceable . . . . and that the said defendant (appellant herein) is thereby, estopped from asserting or claiming any defense to the right of the plaintiff to have the said bonds, together with the coupons thereon canceled."

The village also alleged that the bonds incurred an indebtedness exceeding the income and revenue of the village for the year in which they were issued; that they were issued without the assent of two-thirds of the qualified electors voting at an election held for that purpose; that the indebtedness represented by the bonds, with the other outstanding bonds of the village, exceeded in the aggregate ten per cent of the assessed full cash valuation of all the property within the village and that the bonds were issued for the payment of illegal warrants and not for the purpose of paying any valid outstanding indebtedness of the village, and that the bonds were not in the hands of or owned by an innocent purchaser, and that the appellant was not a holder in due course.

The appellant herein answered the complaint and added a further answer "by way of affirmative defense" to plaintiff's cause of action and thereupon set out the warrant and other indebtedness of the village as the same existed at the time of the issuance of these bonds and the claim of the village that the bond issue was unlawful and void because it exceeded the income and revenue of the village for the year in which the bonds were issued; and that they were issued without the assent of two-thirds of the qualified electors voting therefor and that they, together with other outstanding indebtedness, exceeded in the aggregate ten per cent of the full cash value of the real estate within the village; and further that they were issued for payment of illegal warrants, etc.

This present case was thereupon tried to the court and...