Village of Kent v. Dana

• Decision Date: 12 February 1900
• Docket Number: 737.
• Parties: VILLAGE OF KENT v. DANA.
• Court: U.S. Court of Appeals — Sixth Circuit

100 F. 56

VILLAGE OF KENT v. DANA.

No. 737.

United States Court of Appeals, Sixth Circuit.

February 12, 1900

This action was brought by Edward Dana, who was the plaintiff in the court below, and who is the defendant in error here, to recover upon 75 interest coupons of $30 each, maturing, part of them, September 1, 1896, part March 1, 1897, and the remainder September 1, 1897. These coupons were originally attached to certain refunding bonds, being part of an issue of such bonds issued by the village of Kent, the defendant below, which is a municipal corporation in Portage county Ohio. The bonds bear date March 1, 1892, and were numbered from 1 to 80, respectively, being for the sum of $1,000 each. The bonds are not yet due. The following is the form of one of the bonds and a coupon, as set forth in the petition, the several bonds and coupons differing only in the dates when they were respectively payable and in the number:

'United States of America.

'No . . . .

$1,000.

'State of Ohio.

Portage County.

'Village of Kent.

'Refunding Bond.

'Know all men by these presents, that the village of Kent, in Portage county, state of Ohio, is indebted to and promises to pay the bearer the sum of one thousand dollars in lawful money of the United States of America, at the National Bank of North America, in the city of New York, on the first day of March, A.D. 19--, with interest thereon at the rate of six per cent. per annum, payable semiannually on the first day of March and September of each year, upon the presentation and delivery of the proper coupon hereunto annexed, signed by the village clerk, at the said National Bank of North America, in the city of New York. And the said village is hereby held and firmly bound, and its faith and credit and all the real and personal property of said village are hereby pledged, for the prompt payment of this bond and interest at maturity. This bond is one of a series of bonds of like date and tenor, issued for the purpose of procuring the necessary means to refund and extend the time of payment of certain outstanding general fund bonds heretofore legally issued by said village, which, from its limits of taxation, the said village is unable to pay at maturity. This bond is issued and executed under and by authority of and in accordance with an ordinance duly passed by the village council, February 15, A.D. 1892. And it is hereby certified and recited that all acts, conditions, and things required to be done precedent to and in the issuing of said bonds have been properly done, happened, and performed in regular and due form as required by law. And it is also certified that all statutory and constitutional provisions have been fully complied with in the creating of this indebtedness. In testimony whereof, we, the undersigned officers of the village of Kent, Ohio, being duly authorized to execute this obligation in its behalf, have hereunto set our official signatures, and caused the seal of said village to be hereunto affixed, this first day of March, A.D. 1892.

'(Corporate Seal.)

C. B Newton, Mayor, 'Frank Arighi, Clerk.'

'30.

No. 9.

'On the first day of September, 1896, the village of Kent, Portage county, state of Ohio, will pay the bearer thirty dollars, at the National Bank of North America, in the city of New York, being six months' interest due on refunding bond No. 1.

Frank Arighi, Village Clerk.'

The ordinance under which these bonds were issued was the following: 'An ordinance to provide for issuing of bonds of the village of Kent, Ohio, for

the purpose of extending the time of payment of certain indebtedness, which from

its limits of taxation, said village is unable to pay at maturity. 'Be it

ordained by the council of the village of Kent, Ohio:

'Section 1. That for the purpose of extending the time of payment of so much of its existing indebtedness now due, and to become due, as said village is unable from its limits of taxation to pay at maturity, there be issued the bonds of said village in the sum of eighty thousand dollars ($80,000) as hereinafter provided.

'Sec. 2. That said bonds shall be of the denomination of one thousand dollars ($1,000) each, and shall be numbered from one to eighty, both inclusive, and shall bear date the first day of March, A.D. 1892, and shall become due and payable as follows to wit: Ten thousand dollars March 1, 1915, ten thousand dollars March 1, 1916, ten thousand dollars March 1, 1917, ten thousand dollars March 1, 1918, ten thousand dollars March 1, 1919, ten thousand dollars March 1, 1920, ten thousand dollars March 1, 1921, ten thousand dollars March 1, 1922. Said bonds shall bear interest at the rate of six per cent. per annum, payable semiannually, on the first day of March and September of each year, and the several installments of interest shall be evidenced by the coupons attached to said bonds, and both interest and principal shall be payable, as they severally become due, at the National Bank of North America, in the city of New York. Said bonds shall express upon their face the purpose for which they are issued, and that they are issued under and in pursuance of this ordinance, and shall be signed by the mayor and countersigned by the clerk of said village, under the corporate seal of said village.

'Sec. 3. That the mayor and clerk of said village are hereby authorized and directed as soon as practicable, to prepare and execute said bonds and the proceeds thereof, when they shall have been disposed of according to law, shall be used and applied under the direction of the council for the sole purpose of paying off and extending the time of payment of said maturing and matured indebtedness of said village.

'Sec. 4. This ordinance shall take effect in ten days after its publication according to law. Done at the council chambers this 15th day of February, A.D. 1892. Passed February 15th, 1892.

C. B. Newton, Mayor.

'Frank Arighi, Clerk.' This ordinance was duly published in a weekly newspaper on the 20th day of February, 1892.

The defendant, the village of Kent, alleged by way of defense: 'That on or about the 1st day of March, 1892, one C. B. Newton, who was then mayor of said village of Kent, and Frank Arighi, who was then the clerk of said village of Kent, pretended to execute on behalf of said village of Kent what purported to be eighty bonds for the sum of $1,000 each, together lith interest coupons attached thereto, which bonds and interest coupons were, respectively, for the sums mentioned in the petition, and purported to mature, respectively, the amounts and at the times stated in the petition. But it says that the said C. B. Newton, as such mayor, and said Frank Arighi, as such clerk, had no power or authority at the time to execute or issue such or any bonds, or coupons, or any of them on behalf of this defendant. And it says that said pretended bonds and coupons were not issued for the purpose of procuring necessary means to refund and extend the time of payment of certain then outstanding general fund bonds theretofore legally issued by said village, which, from its limit of taxation, the said village was unable to pay at maturity; and it says that there was at the time no outstanding general fund bonds or any other bonds of said village outstanding or maturing, and that the said village was not indebted at the time in any sum whatever upon any of its bonds theretofore issued, nor were any such bonds of the defendant in any sum whatever then outstanding, nor had the defendant at said time or theretofore issued any of its bonds; and it says that any issue of bonds by the defendant at said time would be to that extent an increase of the indebtedness in that amount of the defendant. It says that the said pretended bonds did not, upon their face, express the purpose for which they were purported to be issued, nor any purpose for which they purported to be issued; and, admitting that the defendant is a municipal corporation, and a village of the first class, as averred in the petition, it denies every averment and fact stated in the petition not herein specifically admitted; and it asks to be hence dismissed, and to recover its costs.'

These averments of the answer were denied by the plaintiff below in his reply, and upon the issue so made the case came on for trial. It was agreed between counsel for the parties that the form of the bond as set up in the petition and the form of the coupon, and the execution of the bonds and coupons in that form, might be treated as having been proved or admitted. Further evidence was introduced, tending to show that subsequently to the execution of the bonds and their coupons they were purchased by the Rutland Savings Bank, a banking institution doing business at Rutland, in the state of Vermont, from Spitzer & Co., who were dealers in municipal securities, at Boston, in the state of Massachusetts; that the bank at the time of such purchase paid their full nominal value, with a small premium. The coupons were paid for a time, but default was made on those maturing after March 1 1896. It was also proven that the coupons in suit were transferred by the bank to Dana at a time prior to the commencement of the suit; that they were delivered to him; and that the transaction was, in form, at least, a purchase, Dana having given his check for the price thereof; but it further appeared that this check had never been collected. It was further shown by testimony of the officials of the bank that this transfer was made for the purpose of enabling Dana to bring suit for the recovery of the amount due upon the coupons, and for the reason that the bank might be discredited by the bringing of suits on investments made by it. In endeavoring to establish its defense, the...