De Voss v. City of Richmond

• Decision Date: 15 April 1868
• Parties: DEVOSS & als. v. CITY OF RICHMOND.
• Court: Virginia Supreme Court

59 Va. 338

DEVOSS & als. v. CITY OF RICHMOND.

Supreme Court of Appeals of Virginia.

April 15, 1868

1. In exercising the power to borrow money, a municipal corporation is not exercising sovereign powers, but is responsible for the acts of its agents as a private corporation.

2. An individual purchasing the bonds of a municipal corporation and having no actual notice of any special directions given to the officers of the company in relation to the particular bonds purchased, will only be bound by such directions if he has been wilfully ignorant of them; and not merely where there has been a want of caution.

3. The District Court of the Confederate States confiscated certain bonds of the City of Richmond, and by its decree directed the City Council to issue bonds in lieu of those so confiscated to its receiver. The Council, by resolution, directed its officers to issue the bonds as directed by the decree; but to insert on the face of the bond so issued, and on the books of the office, that it was so issued in lieu of a confiscated bond; and to do this upon every re-issue of the bond. The officer obeyed the directions on the first issue of the bond but failed to do it upon the re-issue of the bond; and it was purchased by a party having no knowledge that it was such a bond. The City is bound to pay the bond.

In December, 1866, the City of Richmond filed a bill against E W. DeVoss, R. H. Maury & Co. and Asa Otis, in which it was stated that there were then outstanding two bonds of the city, each for the same sum of twenty-three hundred dollars of the funded debt of the city, one of which was held by Otis and the other by DeVoss. The plaintiff was advised that the bond held by Otis was valid, and that the bond held by DeVoss was not a valid claim against the city. That Otis, who was a citizen of Massachusetts prior to the late war, held the bond of the city No. 7, for the sum of twenty-three hundred dollars, on which he had received interest up to July 1st, 1861. That from July 1st, 1861, to some time in the year 1865, the government of the Confederate States exercised over the greater portion of the State of Virginia, and certainly over the city of Richmond and its inhabitants, all the powers and functions of a legitimate sovereignty, exacting obedience to its laws and measures from all persons, municipal bodies and bodies corporate; and among these were certain laws sequestrating and confiscating to the use of the Confederate States all property, rights and credits within its limits which belonged to the citizens of the United States, as the estate of alien enemies; and the courts of the Confederate States were charged with the execution of these laws. That in a suit in the District Court of said Confederate States for the Eastern District of Virginia, between the Confederate States and the City of Richmond, the court by its decree confiscated the debt due upon the bond of Otis, along with many others alike situated, to the use of the Confederate States, as the property of an alien enemy, and commanded the said city by its decree to issue to Henry L. Brooke, as receiver of the said court, a new bond for the said debt of twenty-three hundred dollars, and directed the said Brooke, when the said bond should be received by him, to sell the same for the use of the Confederate States.

That the Council of the City adopted a resolution: " That in obedience to a decree of the District Court of the Confederate States of America for the Eastern District of Virginia, made April 3d, 1862, in a suit between the Confederate States of America and the City of Richmond, bonds of the city of Richmond be issued to Henry L. Brooke, receiver of said court, as directed by said decree, and that upon the books of the auditor, and also upon the face of the bonds, it shall be stated on account of what bonds said new bonds are issued. And whenever said bonds are transferred, they shall show that the bonds issued are on account of bonds mentioned in said decree. And the auditor is hereby directed to pay to the said H. L. Brooke, receiver as aforesaid, the interest now due upon the aforesaid bonds as directed in said decree." That in pursuance of said decree and resolution, the interest was paid to Brooke, and a bond No. 40, was issued to him by the auditor in place of the bond of Otis, on the face of which it was stated: " Be it known, that the City of Richmond is indebted to H. L. Brooke, receiver of the District Court of the Confederate States of America for the Eastern District of Virginia, in lieu of bond No. 7, standing in the name of Asa Otis, and sequestrated by the decree of said court on the 3d of April, 1862, in the case of The Confederate States v. The City of Richmond, and his assigns, in the sum of $2,300 redeemable 1st of July, 1891, and bearing interest at the rate of six per cent. per annum from the 1st of January, 1862, payable semiannually 1st of January and 1st of July; " which bond was dated 15th of April, 1862.

The bill further stated that Brooke passed the bond to R. H. Maury & Co., who, being the holders thereof, applied to the auditor for a new bond; and they having surrendered the bond, the auditor issued to them a new bond, in which they were the obligees, but omitted to make the said new bond show on its face that it was on account of a bond mentioned in said decree. That this omission was without the authority or sanction of the City, by its Council or otherwise; the aforesaid resolution being at that time, and ever since its adoption, in full force. The bill charges that Maury & Co. took the bond with notice that it was given in lieu of the bond of Otis; and that afterwards they passed it off to DeVoss, who in like manner obtained a new bond, payable to himself, in the place of the one he surrendered.

The prayer of the bill was for a surrender of the bond held by DeVoss, and for general relief.

The resolution of the Council is properly stated in the bill; but there is no copy of the bond issued to Brooke in the record, though the bill makes it an exhibit. This bond was, on the 29th of October, 1862, assigned by the attorney of Brooke to R. H. Maury & Co., and the bond issued to them, and that afterwards issued to DeVoss, is in the usual form of bonds issued by the City of Richmond; and is executed in the mode prescribed by the ordinance of the city.

DeVoss, in his answer, denied all knowledge of the confiscation of the bond of Otis, all knowledge of the resolution of the Council, or that the bond he held was issued on account of Otis' bond. And he said that it had been his purpose not to purchase confiscated property, and he invariably asked if the stock he proposed to buy was free from the taint of confiscation; and it was only upon such assurance that he would buy. He says that the bond issued to R. H. Maury & Co. was not delivered to him; but that Maury & Co. delivered to him the bond he holds payable to himself.

R. H. Maury & Co., by their answer, denied all notice that the bond they received was issued in place of the bond issued to Brooke. They say, that a suspicion that such was the fact would have prevented their purchase of it, it being their settled practice not to buy stocks or other securities, the title to which was derived through proceedings of sequestration in the Confederate courts. That they bought the bond of Lancaster & Co., brokers, who did not inform them of the name of the holder of the bond or exhibit it to them; and that upon their agreeing to buy, Lancaster & Co. procured a bond to be issued to the respondents, which was in the usual form.

The charter of the city gives authority to borrow money without any restrictions as to the amount, and the ordinance of the city, which is substantially taken from the Act of Assembly, prescribes the mode in which bonds or certificates of debt of the city shall be issued and executed. The practice in the transfer of bonds is generally for the owner to give a power of attorney to his agent who sells, to transfer the bond on the books of the auditor; and when a sale is made, this agent has the transfer made and the new bond issued payable to the purchaser, which the agent delivers to the purchaser.

DeVoss having been in Europe during the period of these transactions, his agent, who made the purchase for him, fully sustains his answer as to notice and his refusing to deal in securities derived under the sequestration acts.

The cause came on to be heard on the 19th of December, 1866, and it was agreed that the court might refer to the charter of the city, as well as its ordinances and entries upon the books of the auditor of the city. And thereupon the court held, that the bond held by DeVoss constituted no binding and valid obligation upon the City of Richmond; and that the complainant be forever quieted and acquitted from all claims or demands by reason of the same. From this decree, DeVoss applied to this court for an appeal, which was allowed.

Page & Maury and J. Alfred Jones, for the appellants.

Daniel, for the appellee.

JOYNES, J.

The only point decided by the Circuit Court was, that the bond held by DeVoss imposed no valid obligation on the city, and the propriety of that decision is the only question upon which our decision has been invoked.

The bill proceeds upon the assumption that the decree of the court of the Confederate States, by which the bond held by Otis is alleged to have been sequestered and confiscated, and in pursuance of which it was sold, did not protect the city against his claim, after the suppression of the Confederate Government. This assumption is controverted by the answer of DeVoss, which denies that rights growing up under the laws of that government and the decrees of its courts, while it was de facto the...