Weith v. The City of Wilmington

• Decision Date: 31 January 1873
• Citation: 68 N.C. 24
• Parties: J. M. WEITH and GEORGE ARENTS v. THE CITY OF WILMINGTON.
• Court: North Carolina Supreme Court

68 N.C. 24

J. M. WEITH and GEORGE ARENTS

v.THE CITY OF WILMINGTON.

Supreme Court of North Carolina.

January Term, 1873.

The records of a public corporation are admissible in evidence generally. Their acts are of a public character, and the public are bound by them.

The corporate powers of cities and towns are emanations from the State, granted for purposes of convenience, and they are not allowed in the exercise of those powers to contravene the policy of the State, or exceed the powers conferred, and much less those which are either expressly or impliedly prohibited.

Therefore, where the city of W in 1862, borrowed money from A and gave him a bond, which money was used indirectly in aid of the rebellion, and A, before the bond became due, transferred it to B without notice as to its consideration, and the city in 1867, by virtue of an act of Assembly, took up the bond, and issued to B in its place other bonds with coupons attached, who afterwards sells the coupon bonds in open market, for a fair price, and without any notice as to the illegality of the original consideration, to C. In a suit by C against the city, to recover the coupons on the bonds purchased from B: It was held, That C could not recover, for the reason, that all bonds of a like nature had been declared void by the ordinance of the Convention of 1865, and the payment of the same was thereby, and by sec. 13, art. 7 of the Constitution, prohibited, and as being against public policy.

Bonds issued by municipal corporations, under their corporate seal, payable to bearer, are negotiable, and are protected in the hands of the rightful owner, by the usages of commerce, which are a part of the common law.

( Henderson v. Shannon, 1 Dev. Law, 147; Calvert v. Williams, 64 N. C. Rep. 168; Marsh v. Brooks, 11 Ired. 407, cited and approved.)

CIVIL

ACTION, tried at June Term, 1872, of the Superior Court of NEW HANOVER county, before Russell, J.

The plaintiffs commenced their action before a Justice of the Peace, demanding the payment of certain coupons attached to bonds issued by defendant, under “An Act to enable the City of Wilmington to provide for the debt of said city contracted prior to the year 1866,” ratified the 27th day of February, 1867. Judgment was rendered by the Justice in favor of the plaintiffs, and the defendant appealed to the Superior Court.

On the trial in the Court below it was in evidence that the plaintiffs purchase the bonds, to which the coupons sued on were attached, in open market in the city of New York, giving therefor full value, (the market price,) and that the purchase was made before the bonds or coupons became due; and that the plaintiffs had no notice of anything affecting the validity of the bonds or coupons, and were bona fide holders of the same, for value, without notice.

The defendant offered in evidence the record of the proceedings of the Mayor and Board of Aldermen of the city of Wilmington, for the years 1862 and 1867, for the purpose of showing, that the bonds before alluded to, was delivered to James Dawson, in payment of a bond made to John Dawson, the 19th May, 1862, for $10,000; and that this bond of $10,000 was given to John Dawson for money advanced by him, to be used, and which was used by the city in aid of the rebellion. To the reception of this evidence the plaintiffs objected. It was permitted by his Honor, and the plaintiffs excepted.

It was also in evidence for the defendant that the bond of $10,000, of 19th May, 1862, to John Dawson had been transferred to James Dawson, and that it was in payment of this bond, that the ten bonds for $1,000 each, were issued to James Dawson, and that the coupons sued on were detached from some of the same.

There was also evidence on the part of the plaintiffs, that James Dawson purchased the bond, ($10,000), from John Dawson, in June 1862, before its maturity, and paid the full amount of the same, principal and interest, in Confederate money; that he purchased without any notice of the purpose for which the money had been loaned by John Dawson to the city, or to what use the money had been applied by the city, or without notice of anything affecting the validity of the bond. There was further evidence tending to show, that the claim of James Dawson had been referred to a committee of the Board of Aldermen to ascertain the consideration of the original $10,000 bond, and to determine whether it was a just and legal claim against the city. That the committee reported the claim to be due and owing by the city, and the Board after examination approved it, and exchanged the bonds (coupon) therefor.

Several instructions were asked by the counsel for both parties, all of which appear in the opinion of the Court.

His Honor charged the jury, “That if they should find that the bond of $10,000 given to John Dawson, of 19th May, 1862, was for the loan of money in aid of the rebellion, and should further find, that this bond had been transferred to James Dawson, and that if it was in payment of this bond held by James Dawson, that the city bonds sued on, were issued and disposed of by the Board of Aldermen, that then the said bonds were void and the plaintiffs could not recover.”

His Honor also charged, that “the plaintiffs could not recover, even if the jury should further find, that James Dawson purchased the John Dawson bond before it became due, for full value and without notice, and that afterwards, in pursuance of the act of the Assembly referred to, the Board of Aldermen had audited and approved the James Dawson claim, and had issued the bonds sued on in payment thereof; and though the jury should further find, that the said bonds so issued as aforesaid, had come into the hands of the plaintiffs as innocent holders, that they purchased the same in open market, for full value and without notice. For, the bonds being void in their inception, would be void into whosoever hands they might come.” To this charge of his Honor the plaintiffs excepted.

The jury returned their verdict for the defendant. Rule for a new trial; rule discharged. Judgment against plaintiffs for costs, and appeal by them.

Strange, with whom was Wright & Steadman, for appellant , cited among others, the following authorities: Calvert v. Williams, 64 N. C. Rep. 168; Kingsbury v. Suit, 66 N. C. Rep. 601; Poindexter v. Davis, et al., 67 N. C. Rep. 112; Henderson v. Shannon, 1 Dev. 147; Cronly v. Hall, 67 N. C. Rep. 9.

London, contra .

READE, J.

1. The defendant offered in evidence the records of the proceedings of the city council, and the first question is, as to their admissibility.

Such writings are denominated in the books, “official registers,” and are divided into two classes, viz: official registers of corporations of a private nature, and official registers of corporations of a public nature.

The records of private corporations are admissible, as between the members thereof, but not as against strangers. This is the general rule, subject to some exceptions, which it is not necessary to consider. The records of public corporations are evidence generally. Their acts are of a public character, and the public is bound by them. 2 Phil. Ev.; Greenleaf, Ev. 484.

Among the records so admissible, are expressly enumerated, “the books of record of the transactions of towns, city councils and other municipal bodies.” The corporation of a city, and municipal corporations generally, differ from private corporations. They more nearly resemble the Legislature, acting under a constitution prescribing its powers. Their acts are of a public character, and the confidence given to them is founded on the circumstance, that they have been made by authorized and accredited agents, appointed for the purpose, and on the publicity of their subject matter.

We are of opinion that the records were properly admitted in evidence.

2. The second question is, whether the bonds sued on are void by reason of the illegality of the consideration.

The facts are, that John Dawson advanced money for the city of Wilmington to obstruct the river in aid of the rebellion, and that the city gave him a bond to secure the money so advanced, and that John Dawson transferred the bond to James Dawson for value, and without notice of the illegal consideration; and then the city of Wilmington gave to James Dawson the bonds sued on, in substitution for the John Dawson bond; and then the plaintiffs bought the bonds in the market for value, and without notice of any illegality.

We will first consider the case, as if it were between individuals,--as if the city of Wilmington, the defendant and maker of the bonds, were an individual. We would then have this case: A executed to B a negotiable instrument, the consideration of which is illegal, so that it is voidable by A as against B; and B transfers the instrument to C for value and without notice. Can C recover of A upon the instrument? It is settled that he can. The only exception is, where the illegality is by statute, which provides that the instrument shall be void, not only as against the maker, but into whosever hands it may fall. And this is the only difference between considerations malum in se, and malum prohibitum. The maker is liable, under the law merchant, for the safety and benefit of trade and commerce. Henderson v. Shannon, 1 Dev. Law, 147; Mercer Co. v. Hacket, 1 Wallace, 83. And see other cases cited by plaintiff's counsel.

But if this were not so, if the assignee for value and without notice, of the negotiable paper, could not recover upon the original paper against the maker, the maker being an individual, still there is another view of the case to be considered. This action is not upon the original paper, but the original paper was surrendered to the defendant by James Dawson, the assignee of the obligee, and the present bond taken in its stead. That presents this case: A wins money of B at cards, and takes a bond. A assigns the bond to C for value and without...