lent intent to cheat, hinder, or delay bis creditors, in the trial of the assignee's'right to the property under the assignment as against the lien of the attaching creditor, it is not material whether the assignee was aware of or participated in the debtor's fraud. In the charge of the court these rules were disregarded, and the judgment below is reversed, with costs, and with instructions to grant a new trial.
NATIONAL BANK OF COMMERCE v. TOWN OF GRANADA. (Circuit Court of Appeals, Eighth Circuit. January 27, 1893.) No. 138. 1.
Under Mills' Ann. St. . Colo. § 4431, the proper method of procedure In the issuing of town bonds to fund a fioating debt, as provided for in section iBbY an ordinance of the board of trustees, ordering an election. Laws ()Qlq. 1887, p. 445, § 1, provides that all town ordinances shall be recorded In a book kept for that purpose, and authentiooted by the presiding officer of the board and the clerk, and all by-laws of a general or permanent nature shall be published in some newspaper, and such by-laWS and shall not take effect· until the expiration of five days after they are but tije ,bOQk' of .otdinances provided for In the act shall be' pl:'iD1atacie evidence of publica..Uon. Held, that an ordinance calling an election to authorize the funding of the fioating debt of a town, which was PlJ:$Sed, but not recorde«l or published, never went into e1fect, and that bonds authorized by SUch an election were'void. 48 Fed. Rep. 278, af· firmed. ,., :. .
&MJIl__PunLtCATION OF OBDnUNCE.
A recital in such bonds that they are issued under the ordinance does not estop tlle town from showing that ordinance was never published, and is th.erefore void,since neither the mayor nor clerk, who signed the bonds, have any duty in relation to publishing ordinances, or determining when they had been pUblished according to law. 48 Fed. Rep. 278, and 44 Fed. Rep. ll.fIirmed. Dixon Co. v. Field, 4 Sup. Ct. Rep. 315, 111 U. S.
In Error to the Circuit Court of the United States for the District of Colorado. Action by the National Bank of Commerce of Kansas City, Mo., against the town of Granada, state of Colorado, to recover on cere tain town bonds. The circuit court gave judgment for plaintiff. 41 Fed. Rep. 87. A new trial was thereafter granted, (44 Fed. Rep. 262,) and judgment thereon given for defendant, (48 Fed. Rep. 278.) Plaintiff brings error. Afflrmed. Statement by CALDWELL, Circuit Judge:
This action is founded on interest coupons cut from. bonds purporting, on their face, to have been issued by "the city of GTaIlada. in the county of Bent, state of Colorado." The following is a copy of one of the bonds: "f500. State of Colorado. Number "Number City Funding Bond 9 9 of the City of Granada. ''The city of Granada, In ijle. county of Bent, state of Colorado, acknowledged itself indebted to t:!le b'ee.rer in the of five hundred dollars, payable fttteen years after the first day of December, 1887, redeemable after five
NATIONAL BANK 011' COMMERCE V. TOWN 011' GRANADA.
years at the pleasure of the city, with interest at the rate of eight per centum per annum, payable semiannually cn the ftrst day of June and the first day of December, in each year, at the treasury of the city, or at the NationaJ Park Bank, New York, on presentation and surrender of the proper coupons hereto attached. "This bond is issued under an ordinance of the city councD of the city of Granada, adopted on the 11th day of November, 1887, to provide for the issuing and paying of bonds of the city of Granada, for the purpose of funding and paying the existing debt of the city of Granada. "W. H. Cale, Mayor of Granada. "Ed. Walsh, City Clerk. "Registered: "Darwin P. Kinsley, [Seal.] "Auditor of the State of Colorado. ''Recorded: "E. S. Wiggins, "Treasurer of the City of Granada." The following is a copy of one of the coupons: "20. $20. 20. "The city of Granada, in the county of' Bent, in the state of Colorado, will pay the bearer on the flrst day of December, 1902, at the city treasury or at the National Park Bank, New York, twenty dollars, being six months' interest on bond No.9. W. H. Cale, Mayor. "Ed. Walsh, City Cll;rk." This cause was tried below on an agreed statement of facts. which, in the view the court takes of the case, it is not nee!ltul to set out in full. The town of Granada, styled, by mistake, "City of Granada," in the bonds, on the 4th day of November, 1887. entered into a contract with Thomas Doilk, whereby the latter, for the consideration of $36,000, to be presently paid in warrants on the town treasury, undertook to build a water reservoir of the capacity of 1,000 barrels,the water to be Obtained from the Arkansas river by means of a ditch, for the purpose of supplying the town with water for domestio and other purposes. This contract contained a stipulation that the town should immediately fund the warrants upon its treasury into b.onds bearing 8 per cent. interest, payable semiannually. On November 11, 1887, the board of trustees of the town passed the following ordinapce: "Be it ordained by the mayor and board of trustees of the incorporated town of Granada, Colorado: ' . . quallfted eleotorsof "Seotion 1. That there be subn;l1tted to the vote of the incorporated town of Granada, Coloraao, who shall have paid taxes upon property assessed to them in said incorporated town for the last preceding year, the question whether the board of trustees of said incorporated town shall issue bonds of such incorporated town under the provisions of the act of the legislature of the state of Colorado, being an act entitled 'An act to enable the several cities and towns of the state to fund the floating indebtedness in exchange, at par, for the warrants of said incorporated town of Granada, at par, issued prior to the date of the first publication Of a notice heretofore published in this behalf, in accordance with a petition heretofore presented to the said board of trustees, signed by fifty of the electors of said incorporated town of Granada during the preceding year. Such question to be submitted at a special election hereafter provided. ' "Sec. 2. 'I.'hat the foregoing proposition set out in section one of tll1s ordinance be submitted, as aforesaid, at a special election to be held in the incorporated town of Granada, Colo., at the usual place of holding elections. on the 12th day of December, 1887, between the hours of 1 o'clock P. M. and 4 o'clock P. M. of the same day. "Sec. 3. That upon the return of the canvass of the vote of said election according to law, if it shall be found that a majority of the electors of said incorporated town of Granada, Colo., who shall have paid taxes on property assessed to them in said town the preceding year, shall have voted in favor 1)£ said proposition, and the. result of said election be SO declared, then, and in that event, the mayor and clerk of said incorporated tOWn of Granada, Colo.,
are cl1rooted·to exchange bonds of 'sltid inoorporatOO toWlltOt 'CRe! amoUnt of 'thirty-siX' tliiousand' doRars, and no more,·, at .par, for,and<on,,aooount, of cerlaln warrants ill the' amount heret<>foreissued, to one '1llolIt8$:DQak,in payiment fOl"'tlheci>nstruotionand operation of waterworks within sald incorporated t<>wn of Granada, as per the ordinance heretofore'passedl!il'tha:t.bebalf,iand the said mayor and:clerk are hereby authorized and direote<li',upon the.pWi;Jersurrender and exchange of sald warrants, to exeoute'iahd cdel1ver sald 'bdnds. ' "Sec. 4. That notice of sald election be pUblished according to said Jaw." It,!s,lldmitted:,that .th1S"alleged or supposed ordinance was never recorded in the town :ordmance book/never signed by the mayor or attested by the clerk, and was never published in any paper, or in any form or manner whatever." . An election was held on the 12th day of December, 1887, and it was declared that the proposition to fund the :floating debt of the town was carried, and thereupon the mayor and clerk of the town, by order·of the board of trustees, executed and dellveredto Doak$36,OOO'in bonds in exchange for the $36,000 In town warrants previously Issued to him. The waterworks were never 'constructed, nor any part thereof. The plaintiff purchased the bonds from which! the coupons in the suit were cut, for vMue"bef01·e. maturity. The act of ilie legislature under whioh the board of trustees acted readsu: follows: "Itishil.l.lbe [thelduty of the city. Counell or board of trustees of any city or townll1lVing a :floating Indebtedness exceeding (10) ten thousand dollars, upon a petition of fifty electors of said city or town, who shall have vald upon property assessed to . tllem in said city or town in the precedtWrty days, in a newspaper published ing 'yMr, to publish for .1;ll.e penoll city or towri,' a,' notice requesting the holders of the warrants of sucp Clty or town to submit,.lp writing, to the city counell or board of trustees, thJrty .daYll from .. date. Of.,.th.e :flrst pUblication .of such notice, a . .. . the am6untof warrants of such city or town., with accrued inWhich,thlty will%change at par for the 1>Gnds of such city tetl;!st ortowu,. to be tss:Ued. under. the prov!s1O,llS of. this act, taking such bonds at plU'.. Xi shall be the dutyot such c1ty COWlcll or board of truStees, at the next general election.. atter the .expiration of thirty days from the date of. the11rst publ1¢ation of. the notice aforesaid, upon the petition of fifty of the eJ:ectorsof such city or town, who shall have paid taxes upon the property&SSessed to them sai!i city or town the preceding year, to submit to the vote of qUltll:fioo. electors of such city or town who shall have paid taxes upon the J,ll,'Ope,ro/..assessed,. to them in. $ald. city or town, the preceding year, the .the city councll or board of trustees shall issue bonds of such (lify or toWll, ,unaer the proviSions of this act, in exchange, at par, tor warrants. of $llch'city or town, at .par, issued prior to the date of the first Pllbllca#on of theaforesaidiiotice, or they may submit such question at a special election, ,Which they are hereby empowered to call for that purpose, at anYtime atter the e;;plratloil. of the thirty days from the date of the fu'st Pllbl1catiOIl ot1l1e notice aforementioned, on the petition of fifty qualified electors as aforesaid; and they shall publish, tnr the period of at least thirty da;Vs' immedf,ately Preceding such general or special election, in some neWspaper publlshetl in sucb city or town, a notice that such question will be electors, as aforesaid, at l!!uch election. The submitted treasurer of the County in w4ich such city or town is located shall make out and be,dellvered.to the judges of election of each election precinct, prior to said eXec:t16'n, a certified llstof the taxpayers ,of such city or town., who sJulll.have pa.td taxes upon property assessed to,them in the preceding upon the question of tundtng the city or town year, and no pe1'S0Il,shall indebtedness utlless his name shall appear upon such certifted list, nor unless he shall ,have Pal(\.l)ll city or town assessed agalnsthim in such city or town the year. If a majority of the votes lawfully cast upon the question of such of the city or town indebtedness shall be for funding 01' su'ch the .city councilor board of trustees may issue to any person or cOI1\Qrlltlons hol(iing any. city or town warrant or. warrants issued prior to the Of .the :flrilt, publicatipn, of tne afoooinentioned notice coupon
NATIONAL BANK OF CO.MMERCE f1. TOWN Oll' GRANADA.
bonds ot such cIty or In excbaDge therefor, at par. Nc)bonds sba1l be Issued of less denomination than $100, .and,,1t issued tor agnmteramount, then for some multiple of that sum, and the rate of Interest shall not exceed eight per cent. per annum, the Interest to be paid' seDllannuaDy at the office of the city or town treasurer, or In the city of New York, at the option ot the holders thereof, Such bonds to be payable at the ot the city or town after five years from the 4ate of their issuance, btltabsolutely due and payable fifteen years atter the date of Issue. The whole amount ot bonds issued under this act shall not exceed the sum of the City, or town innotice; debtedness at the date ot the first publication of the and the amount shall be determined by the city. council or board. of trustees, and a certificate made ot the same, and made part of the records of, the city or town, and any bonds issued in excess of said sum shall 'be null and voId; and all bonds issued under the provisions of this act shall be ,registered in. the office of the state auditor, to whom a fee of ten cents sbrall be paid tor recording each bond." Section 4541, Mills' Aim.. St. Colo. , ' The cause was first tried before Judge Fh111lps, who gavejttdgment for the plaintiff upon the grounds Ijtated in his opinion. 41 Fed. Rep. 87. A 'new tr1al was granted for reasons stated iI). his opinion, reported in .44 Fw. Rep. 262. The cause was la,st tried before Judge Parker, who for the defendant, (48 Fed. Rep. 218,) and'the plaintlfl! sued out this wrttot error.
Elijah Robinson, for plaintiff in error. James B. Belford and Alvin Marsh, for defendant in error. Before OALDWELL and SHlRAS, District Judge. SANBORN, Circuit Judges, and
OALDWELL, Circuit Judge, (after $tating the facts.) Unwonted haste and great iiTegularities characterized all the proceedings leading up to the issue of the bonds in suit. The town received no consideration for them; and if they had remained in the hands of Doak, to whom they were originally issued, he could not have recovered upon them. Whether the plaintiff, as a purchaser for value, without notice of the frauds which would avoid the bonds in the hands of Doak, is in any better position, turns upon the question whether the officers of the town, who issued them, had any lawful authority to do so. The act of the legislature is silent as to the mode of carrying into effect the powers conferred by it on the board of trustees. We think the principal and vital question in this case is whether the powers thus conferred on the board of trustees may be exer· cised witho'Ut an ordinance containing the usual and necessary provisions to guide, control, and bind the town and im officers, and the public, in the execution of the funding scheme, and to protect all persons in their righm acquiued thereunder. We entertain no doubt but that the appropriate mode for the town to proceed under the act in question is by ordinance of its board of trustees. The proceeding involves the appointment and holding of an election, and the conver· sion of a nonnegotiable floating debt into the fOi'lD. of negotiable bonds drawing a high rate of interest, payable semiannually, and which must run 5, and may run 15, years. A measure requiring an expression of opinion from the voters of the town, at the 'ballot box, and involving such large values, and of so much interest to the taxpayers of the town and the holders of its securities, through so many years, ought not to be carried into effect except by the most
anddelibera.tem;ode .ofproceeding.lmown. to the Jaw for .g.expreS.Sion to the corp.ora..te.w.ill. That mode is by ordinance. ' Tl+is . mode that is prescribed by the statute of Colorado, which .
c01)PoratiOllS.shall have power to make and publish, from time not blconslstent. with the laws of the state, for carrying .¢;ffect .of. d1sQ,harglng .t.he powers and duties conferred by this act, and 8U,ch 'as:_Seem and proper to provide for the safety, preserve th,eheattl'i, an<'f, promote the prosperity, and improve the morals, order, comtort, an,dconvenience, of such corporation, and the inhabitants thereof." Seo· tiOli. ,4431, Mills' Ann. St. 0010. , to
the I,!ltate which authorize the issue of refunding bonds, (ld. § 4548,) the creation of new indebtedness, (ld. § 4403, 6th· subd.,) and. the ,appropria,tion of, aid to public libraries, (ld. 76th subd.,) require, in terms, that the same shall be done by ordinances. . :We think board of trustees of tbis town had a correcll conceptio» ,of the proPer mode, of proceeding when they passed the ordinance in question. A statute of the state provides:
"All ordl:nahces shall, an soon as may be after their pa.ssage, be recorded in a book kept for that purpose, and bel8.uthenticated by the signature of the presiding ofiicer of the council or board of trustees and the clerk; and all by-laws ot a general or permanent nature, and those imposing any fine, penalty, or forfeiture, shall be published in some newspaper pUblished within the llmits of or, if there be none such, then m:some newspaper of general c1rcula1ionin the municlpal corporation; and it shall ,be deemed a sufiicient defeilSe to any suit or prosecution for such fine, penalty, or forfeiture to.show that no such publication was made: provided. however, that if there is no newspaper published Within, or which has no general circulation Within, the limits of the corporation,· then and in that case, upon a resolution being passed by such council or board ot trustees to. that eJrect, such by-Iaws and ordinanby ,posting copies thereof In the pUblic places to be desces may be ignated by the board ot trustees, within the limits of the corporation; and such by-laws and ordinances shall not take efrect and be in force until the expiration.ofdve:days after they so published or posted. But the book of provided for, shall be taken and considered In all courts ot th!.s stl!-te facie ev:idence that such have been published as provided by law."Sectlon 1, Laws 1887, p. 445.
It is that the ordinance in question was not "reoorded in a .book.· kept for that. purpose," and was not "authenticated by the signature of the presiding officer of the .. .. .. board of trustees and the clerk," and "was never published in any paper, or in any form. or manner whatever.''' It is. obvious to our minds that the ordinance in. this case was of a "general or permanent nature," and as such could "not take effect and be in force until the expiration of five days" after its pUblication. It provided for an eleotion, and therefore concerned every lega.l voter of the town. Raffected every taxpayer, whether a voter or not. It affected the creditors of the town, present and future. It involved: the making and execution of contracts, and various other mat, ters <relating to funding the floating indebtedness of the town. If such· an ordinance, is not of a "general or permanent nature," ill would be extremely difficult to suggest one that is. The .provision of the act that such ordinances shall not take effeot
NATIONAL BANK OF COMMERCE V. TOWN OF GRANADA.
or be in force until they are published in the mode provided by the act is mandatory. This ordinance, never having been published, never went into effect. Not being in force, it conferred no authority on the board of trustees, or any officer of the town, to do any act un· der it; and no one could acquire any right based on it, or on any act of the officers of the town assuming to act under it. It had no more legal effect than if it had never been passed by the board of trustees. 1 Dill. Mun. Corp. §§ 331·-334,and notes. But the learned counsel for the plaintiff in error contends that the recital in the bonds that they "are issued under an ordinance" of the town relieves the plaintiff from the burden of showing that the ordi· nance was published, and estops the defendant from showing that it was not. It has never yet been held that a false recital in a bond can make that a law which never was a law. When an ordinance has been duly enacted, and has taken effect, authorizing the officers of a town to issue its negotiable bonds upon certain precedent requirements or conditions, such as a petition of a given number of taxpayers,or a majority vote or other like conditions, and the officers issuing the bonds are the appointed tribunal to decide whether there has been a compliance with such precedent conditions, and the bonds issued reo cite that they are issued in pursuance of such ordinance, it is probably true that such recital, in favor of bona fide purchasers for value, would import a full compliance with the requirements of the ordi· nance, and preclude inquiry as to whether the precedent conditions were performed before the bonds were issued. But that doctrine has no application to this case. Here there was no ordinance in force under which the board of trustees, or any officer of the town, could authority to issue the bonds never attached, perform any act. on any terms or conditions. The action of the mayor and clerk was not simply irregular, but was without the sanction of any law. The point was never reached at which ,they could lawfully do any act under the supposed ordinance. It is a case of a total want of au· thority to do the act upon any conditions, and not a case where' the authority to do the act existed, but the conditions precedent to the exercise of the authority were not observed. The statute which provides that ordinances shall not take effect until they are published is a public statute, of which all persons are bound to take notice. The statute makes the recording of an ordinance in the ordinance book prima facie m'idence that it has been published according to law. But this ordinance was not recorded, nor, authenticated as an ordinance by' the .signatures of the mayor and clerk, as required by law. Moreover, it is not shown that the mayor and clerk, or either of them, had any duty or function to perform in relation to publishing ordinances, or determining when they had been published according to law. The determination of this fact, when it becomes material, and is contested, and the ordi· nance has not been recorded, is, under the statute, a matter for judicial inquiry. The statute itself provides that it shall lile a sufficient defense to any suit or prosecution for a fine, penalty, or forfeiture to show
FEDERAL REPORTER, vol.
the .sta.tute,r and it is obvious that the same defense must prevail against .anycivil right. grounded upon an ordinance which was never no matter by or against whom such right is 38serteili, The plaintiff was bound to know, independently of the recital .iII.! ·the bond, that there was such an ordinance in exist-. enCEl.';This fa.ct once established, it might well assume that the recital WaB sufficient evidence that the . conditions prescribed by the ordinance for issuing the bonds had been complied with. It WaB as much the right and duty of the plaintiff to determine this question as it was of. the clerk and mayor, and the determination of eitherjin any form, would not bind or conclude the town. It is only when officers are invested by law with the authority to determine. or adjudicate upon the fact that their recital operates 88 an estoppel. It the recital in this case had stated, in terms, that the ordinance had. heenduly published, it would not have estopped the town, because .neither the mayor. nor the clerk, nor both together, are invested with the authority to determine that question, and anything they' might say or certify to on the subject, save aB witnesses in court,; would not be: .evidence anywhere, or bind anyone. "If," says· the supreme court, "the officers authorized to issue the bonds upon a condition are not the appointed tribunal to decide the fact which COllStitUtes the condition, their recital will not be accepted asasubEltitute forproofo In other words, where the validity of bonds depends upon an estoppel claimed to arise upon the recital of the instrument, the question being as to the existence of the power. to· issue them, it·· is necessary to establish that the officers executing the ,bonds had lawful authority to make the recitals, and to make them conClusive. The very ground of the estoppel is that the· recitals are the official statements of those to whom 1;Jle law refers the public for authentic and final. information on the subject." Dixon 00. v. Field, 111 U. S. 83, 94, 4 Sup. Ot. Rep. 315; Sutliffv. Lake County Oom'rs, (Oct. term, 1892,) 18 Sup. Ct. Rep. 318. The law does not refer the public to these officers, or to either of them, for information as to the publication of town ordinances; a,nd their·sfutements\Ipon that lllubject have no more significance or binding force than those of any other citizen of the town. The view. taken of the question renders it unnecessary to consider Mherdefenses to the bonds set up and relied on by the defendant in eIT()r. The judgmentaf the court below is affirmed.
that the 'Ordinance imposing it was not published as required by
· UNiTED STATES tl. M'OOY··
lTh'lTED STATES".' MOODY et ali (District Court, S. D. , January 21, .1893.)
PLEADING-AMENDMENT-ADDING. INDIVJDUAL TO
, .At Law. On motion to amend complaint brought against Frank· lin J. ¥cCoy and B. E. Brooks, doing business under. the firm name and style of the Wilson Lumber Cqmpany, by adding the name of "Franklin J. McCoy, individually."·· Denied. . M. D. Wickersham. U. S. Dist. Atty., for the motion: G. L. & H. T. Smith, opposed.
TOULMIN, District Judge. The two defendants, Franklin J. McCoy and B. E. Brooks. are liable for the acts of the of which they were members, and the complaint is against them individually as well as againSt the partnership for the trespass complained of as having been committed by them doblg business under the firm name and style of the Wilson Lumber ,Company. Superadding the name' of Franklin J. McCoy and the word "individually" could not him any more liable therefor, if that is the purpose. The amendment proposed is the,refore use· mere surplusage, and should not. be less and unnecessary, would allowed for that reason. Beavers v. Hardie, 59 Ala. 573. But if the purpose of the amendment is to embrae.e in the same suit an individual demand against :E'ranklin J. McCoy, and a demand against the partnership of which he was a member, itis not permissible. The two separate demands cannot be joined in the same suit. Beavers v. Hardie, supra; 'Miller v. Bank, 34 Miss. 412; Lynch v. Thompson, 61 Miss. 360. . The statute of Alabama authorizes the amendment of the complaint by adding new parties defendant upon such terms and conditions as the justice of the case may require; but this statute is construed to mean that only such parties defendant may be added a8 were liable in the Kiven cause of action at the time of the commencement of the suit. Burns v. Campbell, 71 Ala. 289. The given cause of action. as shown by the complaint in this suit, is a trespass committed by Franklin J. McCoy and B. E. Brooks, doing business under the firm name and style of the Wilson Lumber Company, and is not a trespass committed by Franklin J. M()Coy individually. If the name of Franklin J. McCoy as one of the company had been omitted, it could be added by amendment. But it was not omitted. The amendment proposed .is therefore not allowable, and the motion for leave to makeI the same must be demed." . ·
Reported by Peter J. Hamilton, Esq" of the Mobile, Ala., bar.