Louis v. Trustees of Brown Township/Opinion of the Court

This is an action on bonds and interest coupons thereto attached, signed by the trustees of Brown township, payable to the Springfield, Mt. Vernon & Pittsburgh Railroad Company, or its assigns, on the first day of October, 1871, and dated April 20, 1853. The plaintiff says she is the owner and holder of the bonds and coupons, and in explanation of her title alleges that 'after execution and delivery of said note to said railway company as aforesaid, and in the year 1854, the said railroad company did indorse and deliver said note and the coupons thereto attached to Brown, Collins & Brown, and that said Browns, Collins & Brown afterwards indorsed and delivered said note and coupons to Richard B. Hopple, and Richard B. Hopple afterwards indorsed and delivered said note and coupons to the plaintiff, who now holds and owns the same.' The defendants for answer, among other matters, filed two pleas of a former adjudication, in which the bonds were declared to be void, and rely upon these in bar of the action.

The first of these pleas, called defense No. 3, sets out a suit by one Hiram Hipple, plaintiff, against the trustees of Brown township, Robert B. Hopple, and others, in which he alleges himself to be the owner of real estate incumbered by a mortgage to secure the payment of the bonds on which the present suit is brought, and that said defendants, among whom was the Richard B. Hopple from whom plaintiff in this suit purchased the bonds aforesaid, asserted a claim to his land on account of said mortgage. The plea further alleges that the holders of the bonds, among whom was Richard B. Hopple, filed their answer and cross-bill alleging the bonds and mortgage to be valid, and pray that the bonds and mortgage might be declared to be valid, and for a decree of foreclosure of the mortgage, and that in said cross-bill said Richard B. Hopple set up as the foundation of his prayer for relief, his ownership of the identical bonds now set forth in this action. In the suit on the mortgage, which was finally appealed to the supreme court of the state, Hopple and the other bondholders failed, and were adjudged to pay costs on the ground of the want of authority in the trustees of Brown township to issue the bonds. To this suit the trustees of Brown township and Richard B. Hopple and other bondholders were parties. The second plea sets forth an application by Richard B. Hopple, in his right as owner of these bonds, for a writ of mandamus from the supreme court of Ohio to compel the trustees of Brown township to levy a tax to pay the interest on said coupons. To the alternative writ the trustees answered, denying the validity of the bonds, and the court decided that the supposed bonds and coupons were issued without any legal authority, and without any authority to take stock in the railroad company to which they were delivered, and gave judgment for costs against said Hopple. The plea also avers that said bonds were not transferred to Annie Louis, plaintiff, until long after said bonds and coupons were due. To these pleas demurrers were filed, and the demurrers overruled, and plaintiff not desiring to reply or plead further, judgment was rendered for defendant. The error assigned by plaintiff is the overruling of these demurrers.

We think the court was right, upon the plainest principles of jurisprudence. The case is unembarrassed by the doctrine of bona fide purchaser of negotiable securities, because the bonds were overdue in the hands of Richard B. Hopple when the suit of Hipple against him and others to have them declared void was commenced; the bonds falling due October 1, 1871, and the suit commenced October 18th of that year, and the cross-bill, in which Hopple sought to enforce the bonds, was commenced April 2, 1872. The bonds were therefore past due, during the whole period of that litigation in which they were adjudged to be void in his hands.

As regards the action of mandamus, while the bonds were not overdue at the time of the judgment against Mr. Hopple, the plea expressly avers that they were overdue when plaintiff Louis became their owner, and as she alleges in her declaration that she bought them of Hopple, it follows that they remained in his hands from the date of the judgment on mandamus against him until they became past due. This follows, also, from the fact that he asserted ownership of them after they were due in the cross-bill to Hipple's suit. The plaintiff, therefore, holding under Hopple by a purchase made after the bonds were due, and after the judgment in which they were decided to be void in his hands, is bound by that judgment, unless something can be shown which takes the case out of the general rule. In the mandamus case the plaintiff was the owner of the bonds, and the present plaintiff is bound by the privity of a subsequent holder of them. The defendants in that case are the defendants in this, so that the action is now between parties on whom that judgment is binding.

The only objection made to this is that while the statute of Ohio makes a judgment on mandamus a bar to another civil action where the writ is granted, it does not so declare where it is refused. The words of the statute are not presented to us, nor any decision of the courts of that state cited to sustain the proposition. It is easy to see why the statute should declare that where a party has had a recovery of what he claims by a writ of mandamus, the other party should not also be harassed by another action for the same demand. But it would not follow that where a mandamus was refused on grounds which were conclusive against the right of plaintiff to recover in any action whatever, that the judgment would not be a protection when such other action was brought. Such was the case before us. The ground of the court's judgment in denying the mandamus was not left to inference, however strong that inference might be from the pleadings, as in the case of Block v. Com'rs, 99 U.S. 686, but the court declared, in the case we are now considering, in positive terms, that 'the said supposed bonds or undertaking and coupons, in the writ mentioned, were issued by the defendants without any legal power or authority, * *  * and without any legal power or authority to make said supposed subscription to the capital stock of the railroad company, and that said supposed subscriptions, and said supposed bonds and coupons, are for said reason absolutely void,' and that defendants are not estopped to set up the invalidity of said instruments. Here is not only a denial of the writ of mandamus, but an adjudication that in the hands of Hopple the bonds now in suit were absolutely void.

This court has repeately held, since Postmaster General Kendall's Case, 12 Pet. 614, that the proceeding in mandamus is, when appropriate, an action at law to recover money, and is subject to the principles which govern said actions; and in the case of Block v. Com'rs, 99 U.S. 686, the denial of the writ is held to be conclusive in a subsequent action as to the invalidity of the bonds, though the fact that the decision in mandamus was based on that ground is inferred from the pleadings, and not from the express language of the judgment, as in the present case.

We are of opinion that the judgment of the supreme court of Ohio established the fact that the bonds and coupons were void in the hands of Hopple, and the judgment is conclusive of that fact against his vendee and privy in this action. The same result must follow in the case of Hipple v. Board of Trustees and Richard B. Hopple and others. It is argued, in avoidance of this conclusion, that the board of trustees and Hopple being both defendants to Hipple's bill, no adversary contention on the question of the validity of the bonds could have taken place between them. But this view of the case ignores entirely the facts that Hopple, in filing his cross-bill seeking to establish the bonds as valid, became plaintiff, and made the trustees defendants, and in this manner raised the issue of their validity between himself and the trustees directly, and it was in express terms decided against him. His assignee of those bonds, in the present action against the same trustees, is clearly bound by that decision. But if there had been no cross-bill, the fact that both Hopple and the trustees were placed as defendants in the suit of Hopple, does not impair the conclusive character of the decree in that case as between those parties. The present case is precisely analogous to that of Corcoran v. Chesapeake & Ohio Canal Co. 94 U.S. 741, and we cannot better express our views of this case than by a quotation from the opinion in that:

'It is said that Corcoran and his co-trustees, the canal     company and the state of Maryland, were all defendants to      that suit, and that as between them no issue was raised by      the pleadings on this question, and no adversary proceedings      were had. The answer is that in chancery suits, where parties     are often made defendants because they will not join as      plaintiffs, who are yet necessary parties, it has long been      settled that adverse interests as between co-defendants may      be passed upon and decided, and if the parties have had a      hearing and an opportunity of asserting their rights, they      are concluded by the decree as far as it affects rights      presented to the court and passed upon by its decree. It is     to be observed, also, that the very object of that suit was      to determine the order of the distribution of the net      revenues of the canal company, and that the Corcoran trustees were made defendants for no other      purpose than that they might be bound by that decree; and,      lastly, as the decree did undoubtedly dispose of that      question, its conclusiveness cannot now be assailed      collaterally, on a question of pleading, when it is clear      that the issue was fairly made and was argued by Corcoran's      counsel, as is shown by the third head of their brief, made a      part of this record by stipulation.'

'It seems to us very clear that the question we are now     called on to decide has been already decided by a court of      competent jurisdiction, which had before it the parties to      the present suit; that it was decided on an issue properly      raised, to which issue both complainant and defendant here      were parties, and in which the appellant here was actually      heard by his own counsel; and that it therefore falls within      the salutary rule of law which makes such a decision final      and conclusive between the parties, and that none of the      exceptions to that rule exist in this case.'

We are of opinion that both demurrers were properly overruled, and affirm the judgment of the circuit court.

Mr. Justice MATTHEWS did not sit in this case.