Interstate Trust Co. v. Steele

65 Colo. 99
CourtSupreme Court of Colorado
DecidedApril 15, 1918
DocketNo. 8876
StatusPublished
Cited by1 cases

This text of 65 Colo. 99 (Interstate Trust Co. v. Steele) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Interstate Trust Co. v. Steele, 65 Colo. 99 (Colo. 1918).

Opinion

Opinion by

Mr. Justice Teller.

Defendant in error Steele, suing as a tax-payer in behalf of himself and all others similarly situated, brought an action, against all the other persons and corporations appearing here as defendants in error, the plaintiff in error and Fred G. Lucas, to secure the cancellation of certain warrants and bonds issued.by defendant in error, The East Denver Municipal Irrigation District; to have the organization of said district declared void and of no effect, and to restrain the levying of taxes for the payment of interest upon said bonds and warrants.

The trial court found that the Irrigation District was a valid organization; that in August, 1910, the district entered into a contract in writing with The Antero Land and Irrigation Company, for the purpose of acquiring a completed irrigation system; that the electors of said district duly ratified said contract, and the issue thereunder of [101]*101bonds in the amount of $3,000,000.00; that all of said proceedings for the organization of the district and the issue of the bonds were confirmed in a proceeding in the District Court of Adams County; that said bonds were executed and delivered to the plaintiff in error, as trustee, under date of January 3rd, 1912; that on August 30, 1912, another contract was entered into between the said parties, which was duly ratified by the electors of said district; that both of said contracts were duly assigned by said Land and Irrigation Company to defendant Fred L. Lucas, and that thereafter the said district entered into a contract with him, which contract was never authorized nor ratified by the electors of said district.

Said Lucas was dismissed from the case by order of the District Court.

The court further found that the plaintiff in error, on the 4th day of February, 1914, as trustee, delivered to the board of directors of said district bonds of the par value of $325,000.00; that said district delivered bonds to the par value of $10,000.00 to the plaintiff in error, a like amount to defendant in error Lena R. Russell, and bonds to the par value of $20,000.00 to defendant in error Horace G. Clark; and that bonds in a large amount were delivered to said Lucas, none of which are concerned in this case. The court also found that the $10,000.00 in bonds delivered to the plaintiff in error, and bonds delivered to Lena R. Russell and to Horace G. Clark are valid obligations of said district, and that warrants Nos. 18, 29 and 205 were received by the plaintiff in error in the usual course of business for value, without notice of any defect in title, but void because procured to be issued to the said Land and Irrigation Company, the assignor of plaintiff in error, upon its promise to the directors of said district to redeem and pay the same. A number of other warrants, now held and owned by plaintiff in error, were adjudged void, because issued, as the court found, without authority.

[102]*102Plaintiff in error has assigned error upon so much of the judgment of the court as holds said warrants void; and defendant in error Steele has assigned cross-errors upon so much of said judgment as holds the bonds valid. Counsel for the Irrigation District join in the brief in support of the cross-errors.

Plaintiff in error contends, first, that the court erred in holding warrants Nos. 18, 29 and 205 void, since, it is urged, the plaintiff did not sustain the burden of overcoming the prima facie case made by the warrants, which were admitted to have been purchased' by the plaintiff in error for a valuable consideration, and to have been issued for services rendered to the district, and for expenses incurred in organizing it.

The court held the three warrants void because their issue. was procured by a promise by the Antero Land and Irrigation Company to redeem them. The court pointed out that it was discretionary with the board whether or not to allow the claims and issue the warrants, and “that the moving of such discretion in favor of such audit, allowance and issue by such inducement was and is against public policy.”

It is stipulated that these warrants, and some others, “were issued to the Antero Land and Irrigation Company for expense incurred by it in organizing said district and in the confirmation proceedings in connection therewith, including necessary engineering and surveying and attorney fees and court costs.”

The warrants, then, must be regarded as issued in settlement of valid claims against the district, no one asserting that the expenses mentioned were not payable by the district, or that the amounts allowed were excessive.

This presents the question whether or not the allowance of a valid claim, and the issue of a warrant therefor, though induced by a cause other than a recognition of the debt, render the warrant void.

[103]*103The finding of the court that to permit a public officer to allow claims on the ground that someone has promised to pay them is against public policy, may be admitted to be correct; but does public policy require that the innocent holder of a warrant thus issued^, for a valid debt, be punished by having such warrant held void?

Bearing in mind the fact that no fraud or collusion is charged, and that the right to make the alleged agreement is not questioned, we are to determine whether or not the doing of a proper act from a wrong motive will render it invalid. To state the proposition is to answer it.

Conceding, then, that the evidence justifies the finding that the two directors who testified that they allowed the claims because of the promise, (the third director testified that he had no knowledge of such promise, and that the claims were considered by the board,) it does not follow, under the circumstances of this case, that the allowance was wrong, or that the warrants are void. The facts as stipulated show that the warrants were issued in payment of obligations for which the district was liable, and they are, we think, valid in the hands of plaintiff in error.

It is urged that the warrants are void for the further reason that the claims on which they were issued were not verified.

The statute on which counsel rely to maintain that position provides that:

“No claims shall be paid by the district treasurer until the same shall have been allowed by the board, and only upon warrants signed by the president, and countersigned by the secretary, which warrants shall state the date authorized by the board and for what purpose. * * *

All claims against the district shall be verified the same as required in the case of claims filed against counties in this state, and the secretary of the district is hereby authorized and empowered to administer oaths to the parties verifying said claims, the same as the county clerk or notary public might do. * * * ’’Sec. 3463, R. S. 1908.

[104]*104Section 3450, R. S. 1908, gives to the district board full power to conduct the business of the district, to make all necessary contracts, employ agents and attorneys, and to perform all acts necessary to carry out the purpose of the irrigation statute.

In view of the general powers thus given to the board, we think the requirement that claims be verified should not be held mandatory, unless the intent that it be so clearly appears. The first cited section does not include verification among the things required to be done before payment may be made.

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Related

Doherty & Co. v. Steele
204 P. 77 (Supreme Court of Colorado, 1922)

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Bluebook (online)
65 Colo. 99, Counsel Stack Legal Research, https://law.counselstack.com/opinion/interstate-trust-co-v-steele-colo-1918.