Flagg v. School District No. 70

65 N.W. 674, 5 N.D. 191, 1895 N.D. LEXIS 31

• Court: North Dakota Supreme Court
• Decided: October 28, 1895
• Status: Published

Opinions

Corliss, J.

When this case was before us on the former appeal (4 N. D. 30, 58 N. W. 499) we held that the bonds in question were not negotiable instruments, and that, therefore, the defendant could make, as against the plaintiff, the same defense of want of consideration that it could have made against the original payee had the bonds never been transferred. We also held that such want of consideration could be shown by proving that the bonds were not sold either for cash or for warrants 01-claims actually audited and surrendered. The defendant had no right to issue them for any other consideration. That no warrants or claims were ever audited and surrendered we held could not be shown as against the recitals in the certificate on the bonds to affect the power of the defendant to issue such bonds. The question of power we regarded as no longer open to inquiry. But we distinctly held that if, as a matter of fact, these bonds were not sold, either for cash or for warrants actually audited and canceled, they were without consideration and void. On the trial the defendant offered to prove that neither money nor audited and canceled warrants or claims furnished the consideration for the sale of these bonds; that in fact no warrants were audited before or at the time they were delivered, and that all the defendant had ever received, for them was a promise to deliver up certain warrants to the defendant, and that this promise had never been fulfilled. It is not pretended that cash was paid for these bonds. If no warrants were ever in fact audited, then no consideration growing out of the surrender of such warrants could possibly exist. But the offer of the defendant went still further, and included proof of the fact that no warrants of any kind were received by the defendant in exchange for these bonds, but only a naked unfulfilled promise to surrender such warrants. The error of the trial court was undoubtedly caused by a misunderstanding of our decision on the former appeal. What we intended to hold — and we think that the opinion in the case shows this— was that the fact that warrants had not been audited and surrendered could not be shown to establish a want of power to issue the bonds, but could be proved as bearing on the question whether in fact the bonds were issued in exchange for warrants which had been audited and canceled, for the purpose of establishing a want of consideration for their issue. The defendant should have been allowed to prove these facts, and for the error of the court in excluding the evidence the judgment is reversed, and a new trial is ordered.

All concur.