Coler v. Cleburne

This is an action at law brought in the circuit court of the United States for the Northern district of Texas, by W. N. Coler, Jr., against the city of Cleburne, a municipal corporation of Texas, to recover on 234 coupons, of $35 each, amounting to $8,190, cut from a series o 51 bonds, of $1,000 each, purporting to have been executed and issued by that corporation. The case was tried by the court, on the written waiver of a jury, and, having heard the evidence, it adjudged that the plaintiff take nothing by his suit, and that the defendant go without day, and recover its costs. The plaintiff has brought a writ of error. There is no special finding of facts, but there is a bill of exceptions, which, after setting forth what was proved, states that the court, on the pleadings and proof, found the law for the defendant, and rendered final judgment for it and against the plaintiff for costs of suit. This is a sufficient special finding of facts to authorize us, under section 700 of the Revised Statutes, to determine whether the facts found are sufficient to support the judgment. The plaintiff, in his petition and four supplemental petitions, alleged that he was the bona fide owner, holder, and bearer, before maturity, of the coupons, for a valuable consideration paid; that the bonds were issued by the city for the purpose of erecting a system of water-works; and that the bonds and coupons were made and issued in pursuance of article 420 of the Revised Statutes of the state of Texas, and of an ordinance adopted by the city council of the defendant, September 13, 1883. The defendant, with other pleas, interposed one, called in the record a plea of non est factum, which says that the bonds and coupons in question are not the obligations of the defendant, and were never executed and delivered by it, because they never had any existence prior to July 3, 1884; that they were never signed by J. M. Odell, (who had, on the the first Tuesday in April, 1884, been duly elected to the office of mayor of said city for a term of two years, and was on the 3d of July, 1884, the legally qualified and acting mayor of the city,) or by his authority, or by any person authorized by law to act as mayor of the city; that said mayor at all times refused to sign the same; that, although said bonds and coupons purport, on their face to have been executed on January 1, 1884, and to be signed by the mayor of the city, they were in fact made on the 3d of July, 1884, and antedated, and signed by one W. N. Hodge, a private citizen, but formerly mayor of the city, whose term of office had expired in April, 1884; that any registration of the bonds in the office of the comptroller of public accounts of the state of Texas was illegal and without authority, because they were never forwarded to the comptroller by the mayor, Odell, or by any person authorized by him to do so, and he never forwarded to the comptroller his certificate showing the values of taxable property, real and personal, in said city for the year 1884, and never authorized any person so to do; and that said bonds and coupons were never delivered by said mayor, or by his authority, or by any person authorized to act as mayor of the city, to the Texas Water & Gas Company, or to any other person or persons. The plaintiff filed a demurrer to the above plea, as insufficient in law. The bill of exceptions states that this demurrer was considered by the court in its general finding.

The bonds and coupons, which were put in evidence, were in the following form:

'1,000. 1,000.

'UNITED STATES OF AMERICA.

'No. 51. $1,000.

'The city of Cleburne, in Johnson county, state of Texas,     hereby acknowledges that, for value received, it is indebted      and bound, and hereby promises to pay, unto the Texas Water      and Gas Company, or bearer, at the _____, in the city of New      York, at the expiration of twenty years from the date hereof,      the sum of one thousand dollars in lawful money of the United      States of America, and also that it is bound and will pay      interest on said sum of one thousand dollars, at the rate of      seven per centum per annum, on the first days of January and      July of each year thereafter, to and including the first day      of January, A. D. 1904, to the bearer, according to the rese      ctive coupons therefor hereto attached, for thirty-five      dollars each, signed by the mayor of the city of Cleburne and      attested by the secretary of the city of Cleburne, upon      presentation at the fiscal agency in New York. This bond is     authorized by article 420 of the Revised Statutes of the      state of Texas, and by an ordinance adopted by the board of      aldermen of the city of Cleburne, on the 13th day of Sept.,      1883, in conformity to said article 420.

This bond is one of a series of fifty-one of like tenor and     effect, issued for the erection of a complete system of      waterworks, and is secured by an ordinance of the city of      Cleburne under the general laws of the state, and setting      apart all the net revenues of said water-works to pay the      interest and sinking fund upon the same, and requiring the      council to annually levy and collect a tax of thirty-five      cents on the one hundred dollars' worth of property, if so      much shall be required, to pay the interest and two per cent. sinking fund. It is understood that the city of Cleburne     shall have the right to call in any or all the bonds of this      series, numbered from one to fifty-one, respectively, at any      time after ten years from the date of said bonds, upon first      giving public notice thereof in the city organ of the city of      Cleburne, for three months before the first days of January      or July in any year, and interest shall cease from the time      they are so called in, respectively. In witness whereof the     mayor of the city of Cleburne hereto signs his name, and the      city secretary of the city of Cleburne attests with the seal      of the said city of Cleburne, hereto affixed, this the first      day of January, A. D. 1884.

[L. S.]

'W. N. HODGE, Mayor.

'Attest: W. H. GRAVES, Secretary.

'1,000.'

The bond is indorsed as follows:

'51. $1,000 city of Cleburne water-works bond. Interest seven     per cent., payable July 1st and January 1st of each year. Twenty years' bond. Registered July 12th, 1884. WM. J. SWAIN,     Comptroller.

'$35.00. $35.00.

'On the first day of July, 1886, the city of Cleburne, state     of Texas, will pay to bearer, in the city of New York,      thirty-five dollars, being six months' interest on      water-works bond No. 51.

'W. N. HODGE, Mayor.

'W. H. GRAVES, Secretary.' The plaintiff proved that the Texas Water & Gas Company, a corporation, through its proper officers, made a written contract with the city, through its proper officers, on September 13, 1883, to erect for it a complete system of water-works, the material used and the manner of building being fully shown in specifications and plains, on or before June 1, 1884, in consideration for which the city agreed to pay the builder $51,000, in bonds of $1,000 each, payable to bearer 20 years after January 1, 1884, bearing interest at 7 per cent., represented by semi-annual coupons for $35 each attached thereto, the same to be engraved, signed by its mayor and secretary, and delivered to the Texas Water & Gas Company upon the completion of said system of water-works according to plans and specifications, and the acceptance thereof by the city after the same had been duly tested. It was further proved that said contract provided that, upon the works having been tested and the same reported and received by the city, the builder should be discharged from all further obligations on account of the works. It was further proved that the system of water-works was built within the time agreed upon, and accepted by the city; and that, on the 13th of September, 1883, the city council adopted an ordinance fully authorizing the contract above mentioned, a copy of which ordinance is given in the margin. It was also proved that, after the defendant accepted the water-works, and on July 3, 1884, the 51 bonds for $51,000 were delivered to the Texas Water & Gas Company, and registered by the comptroller of the state; that the defendant, before the delivery of said bonds, cut off and canceled the first coupon thero n, maturing July 1, 1884; that it took charge of the works and contracted a sale of them to another corporation, which corporation operated them for a time; that afterwards the defendant resumed the control of them, and still has possession of them and uses them for fire protection and other uses; that the Texas Water & Gas Company sold all of the bonds and coupons, and delivered them to third parties soon after they were received; that the defendant, by its city council, on July 3, 1884, adopted a resolution authorizing and requesting Ex-Mayor W. N. Hodge, whose name had been engraved on the coupons attached to the 51 bonds, to sign the bonds as and upon the date January 1, 1884, when he was actually the mayor of the city, and that said bonds be signed by W. H. Graves, who was the secretary of the defendant on January 1, 1884, as well as on July 3, 1884. The defendant proved that W. N. Hodge, who signed the bonds, ceased to be mayor in April, 1884; that Odell became then the mayor; that the bonds were signed July 3, 1884; and that the city council authorized Hodge, who was then a private citizen, to sign the bonds on that day. It was also proved that Mayor Odell did not furnish a statement of the valuation of property to the comptroller, nor forward to him the 51 bonds for registration, and refused to sign more than 40 of said bonds; and that the defendant was using and operating the water-works, and had been for over 20 months.

Articles 420 to 424 of the Revised Statutes of Texas, in force at the time of the issue of these bonds, (Rev. St. 1879, tit. 17, c. 4, p. 72,) were as follows: 'Art. 420.' The city council shall have power 'to appropriate so much of the revenues of the city, emanating from whatever source, for the purpose of retiring and discharging the accrued indebtedness of the city, and for the purpose of improving the public markets and streets, erecting and conducting city hospitals, city hall, water-works, and so forth, as they may from time to time deem expedient; and in furtherance of these objects they shall have power to borrow money upon the credit of the city, and issue coupon bonds of the city therefor, in such sum or sums as they may deem expedient, to bear interest not exceeding ten per cent. per annum, payable semiannually at such place as may be fixed by city ordinance: provided, that the aggregate amount of bonds issued by the city council shall at no time exceed six per cent. of the value of the property within said city, subject to ad valorem tax. Art. 421. All bonds shall specify for what purpose they were issued, and shall not be invalid if sold for less than their par value; and when any bonds are issued by the city a fund shall be provided to pay the interest and create a sinking fund to redeem the bonds, which fund shall not be diverted nor drawn upon for any other purpose, and the city treasurer shall honor no drafts on said fund, except to pay interest upon, or redeem the bonds for which it was provided. Art. 422. Said bonds shall be signed by the mayor and countersigned by the secretary, and payable at such places and at such times as may be fixed by ordinance of the city council, not less than ten nor more than fifty years. Art. 423. It shall be the duty of the mayor, whenever any bond or bonds are issued, to forward the same to the comptroller of public accounts of the state, whose duty it shall be to register said bond or bonds in a book kept for that purpose, and to indorse on each bond so registered his certificate of registration, and to give, at the request of the mayor, his certificate certifying to the amount of bonds so registered in his office up to date. Art. 424. That it shall be the duty of the mayor, at the time of forwarding any of said bonds for registration, to furnish the comptroller with a statement of the value of all taxable property, real and personal, in the city; also with a statement of the amount of tax levied for the payment of interest, and to create a sinking fund. It is herebym ade the duty of the comptroller to see that a tax is levied and collected by the city sufficient to pay the interest semi-annually on all bonds issued, and to create a sinking fund sufficient to pay the said bonds at maturity, and that said sinking fund is invested in good interest-bearing securities.'

It is assigned for error that the circuit court erred in overruling the plaintiff's demurrer to the plea of non est factum, because that plea failed to exclude the idea that the defendant or the law had authorized the person who actually signed the bonds and coupons to do so.

W. S. Herndon, for plaintiff in error.

James W. Brown, for defendant in error.

BLATCHFORD, J.