Rondot v. Rogers Tp.

99 F. 202, 39 C.C.A. 462, 1900 U.S. App. LEXIS 4130

• Court: Court of Appeals for the Sixth Circuit
• Decided: January 2, 1900
• Docket: No. 699
• Status: Published

Opinion

TAFT, Circuit Judge

(after stating the facts as above). The first question for our consideration in this case was made by demurrer to the declaration on the ground that the cause of action was barred by the statute of limitations. The cause of action in this cause is conceded to have accrued more than 6 and less than 10 years before the issuing of summons. By the law of Michigan (How. Ann. St. § 8718), actions of debt on contracts not under seal and of assumpsit must be brought within 6 years next after the cause of action accrues. By section 8719, all personal actions on any contract not limited by previous sections must be brought within-10 years. This applies to actions of covenant and to actions of debt on a sealed instrument. Stewart v. Sprague, 71 Mich. 50, 38 N. W. 673. By section 7778 it is provided that:

“In all cases arising upon contracts under seal or upon judgments when an action of covenant or debt may be maintained, an action of assumpsit may be brought and maintained, in the same manner, in all respects, as upon contracts without seal.”

It follows from the foregoing sections that in Michigan an action of assumpsit on a sealed instrument is barred in 6 years, while an action of covenant on the same cause of action is not barred for 10 years; the form, and not the cause, of action fixing the bar. Stewart v. Sprague, 71 Mich. 50, 38 N. W. 673.

The present action is in covenant. If it is properly brought in this form, then the bar of the statute is avoided. It is contended, however, that covenant will not lie on an unsealed instrument, and the bonds here sued upon were not sealed. The statute under which the instruments purport to have been issued provides for the issuing of bonds. A bond is a deed whereby the obligor obliges himself, his heirs, executors, and administrators, to pay a .certain sum of money to another at a day appointed. 1 Bl. Comm. 340. A deed is a writing sealed and delivered by the parties. 2 Bl. Comm. 295. The word “bond” imports a seal, and the word, when used in a sta tute authorizing the issue by a municipal corporation of written obligations negotiable in character, means specialties or writings under seal. Koshkonong v. Burton, 104 U. S. 668, 673, 26 L. Ed. 886. The officers issuing evidences of township indebtedness purporting to comply with the statute of 1867 must therefore be presumed to have intended to issue sealed instruments. They have not done so in this case. But section 7778 of Howell’s Annotated Statutes of Michigan, part of which has already been quoted, provides further iliat no bond, deed of conveyance, or other coniract in writing signed by any party, his agent or attorney, shall be deemed invalid for want of a seal or scroll affixed thereto by such party. In Jerome v. Ortman, 66 Mich. 668, 33 N. W. 759, it was held that an action of covenant in Michigan, as at common law, was an action upon a deed; that the purpose of the clause of section 7778, just quoted, was to permit parties intending to make a deed or specialty to have the writing signed by them, though without seal, treated in law as a deed or specialty; and therefore that covenant might be maintained thereon. See, also, McKinney v. Miller, 19 Mich. 142. We think the case at bar is within Jerome v. Ortman. The officers signing the instruments here in suit intended them to be bonds (i. e., deeds), for the statute so denominates the securities to be issued, and the instruments themselves bear the name “bond” on their face; and therefore they may be given effect as such, and will support an action of covenant. The circuit court was right in overruling the demurrer based on the statute of limitations.

The next questions arising in this case are those of evidence. The plaintiff’s counsel served notice upon the defendant to produce the township records covering the periods when the bonds in this case purport to have been authorized and issued. Two books are produced, one purporting to be the journal of the township board, and the other a record of the proceedings of the commissioner of highways. The journal of the township board is eyidently a defective record, and fails to show all of the proceedings of the township board, and the minutes of certain of the township meetings. The record of the highway commissioner is made up under the supervision of the township clerk. In this book the clerk, who became clerk in September, 1871, certifies that the records preceding his signature and sworn certificate were carefully copied from papers and books on file in the office of the township clerk. Part of these records are, on their face, minutes of the proceedings of the township board and of township meetings. It was a palpable mistake to include them, in the highway commissioner’s record, but, as the clerk kept both records, it is easy to understand how, in the loose methods of keeping the books, the error occurred. In the absence of the originals, we think these sworn copies, authenticated by the clerk in whose custody the originals should have been, and produced by the township whose records they purport to be, are at least prima facie evidence of the facts they record. 1 Dill. Mun. Corp. § 304, and cases cited. They show on their face their incompleteness, and this is, moreover, directly testified to by Fred Denny Larke, who was during the year 1871 at one time town clerk, and at another, supervisor. In this condition of the record, it is permissible to supply the missing parts by parol evidence. It was the duty of the township clerk to keep the record of the proceedings of the township board, and also of the township meetings (How. Ann. St. §§ 739, 740, 748); but the law does not anywhere make the recording of the proceedings a condition precedent to their validity. It is well settled that, under such a statute, creditors of a corporation, private, municipal, or quasi municipal, cannot be defeated because of the neglect of their debtor’s clerk properly to record the evidence of the orders and resolutions constituting the contract on the faith of which they have rendered service or advanced money to the corporation. Bank v. Dandridge, 12 Wheat. 64, 6 L. Ed. 552; Bridgford v. City of Tuscumbia (C. C.) 16 Fed. 910; School Dist. v. Clark, 90 Mich. 437, 51 N. W. 529; Taymouth Tp. v. Koehler, 35 Mich. 22; 1 Dill. Mun. Corp. § 300.

. It is objected to the validity of the bonds issued by authority of the township meeting of August 23, 1871, that the meeting was a nullity, and that the vote was not a vote of the majority of the electors preset in favor of the issuing of bonds. It is said that the supreme court of Michigan, in Loomis v. Rogers Tp., 53 Mich. 135, 18 N. W. 596, so decided. From a careful examination of that case, we do not think that the consideration of the validity of the meeting or its effect was necessary to the decision. The proceeding there was in mandamus to compel the township board of Rogers to levy a tax to pay the relator’s bonds, which, like those in suit, purported to have been authorized by the township meeting of August 23, 1871. The issues , were framed and submitted to the jury, but they did not cover the issues made by the pleadings. The township had answered, averring, . among other things, that it had not received any money for the bonds, and that the relator was, not a bona fide holder, of them,, and had not paid value for them. The relator did. not request the submission, of these issues to the jury, and the court held that the effect of his failure so to do was an admission of those averments of the answer. The court distinctly declined to pass on the validity of the bonds in the hands of a bona fide purchaser. The judge delivering the opinion did express the view that the meeting of August 23, 1871, was a nullity, because the vote was not solely for the issue of bonds, but was in favor of two contradictory propositions', to wit, the proposition to levy a tax, on the one hand, and to issue bonds, on the other, and that as 45 voted for the one, and 45 for the other, there was a tie vote, and neither proposition was carried. With deference to the learned judge, it seems to us that this construction of the action of the meeting cannot be supported. The notices for the meeting showed clearly that it was the intention of those calling the meeting that both a tax should be levied, and bonds should be issued for the same purpose, and this was undoubtedly the purpose of the electors who voted. The first section of the act gives the power to tax and power to issue bonds in the conjunctive, not in the alternative. There is nothing in the act anywhere which forbids a township to issue bonds in the same year in which a tax has been levied. The only limitation is the amount of tax in one year, or the total amount of bonds to be issued, and it is not claimed in this case that either limitation was exceeded. The second section provides what notice shall issue for township meetings, to authorize the exercise of powers conferred in the first section, and mentions the purpose to tax or to loan with the disjunctive, not to show that the powers were t0' be exercised alternatively, but by way of distributive reference to the two powers conferred in the first section. We find nothing in this to prevent the holding of two township meetings on sxiceessive days, — one to authorize a tax, and the other to authorize a loan; and, if so, there would seem to be no legal objection to the holding of a special meeting for both purposes. Even if the exact point were in judgment before the supreme court of Michigan, we should not be concluded by its decision in a case like this. The bonds were issued and bought by those through whom the complainant claims in 1872, and this decision was not rendered.until 1884. Tn such a question the courts of the United States exercise an independent judgment. Pleasant Tp. v. Ætna life Ins. Co., 138 U. S. 67, 11 Sup. Ct. 215, 34 L. Ed. 864; Folsom v. Ninety-Six Tp., 159 U. S. 611, 16 Sup. Ct. 174, 40 L. Ed. 278; Pana v. Bowler, 107 U. S. 541, 2 Sup. Ct. 704, 27 L. Ed. 424; Louisville Trust Co. v. City of Cincinnati, 47 U. S. App. 36, 22 C. C. A. 334, 76 Fed. 296. It certainly appears from these records that a majority of the voters in attendance at the township meetings called for the purpose approved the issue of the bonds sued upon.

Objection is made, however, that the meetings were not properly called, in several particulars. We do not think it necessary to consider the defects urged by counsel in respect either of the meeting of June 28, 1871, or that of August 23, 1871, for the reason that we think the township is estopped, as against a bona fide purchaser, by the recitals in the bonds, by its payments of interest coupons, and by its retention of the money paid in good faith for the bonds, to set up any defects in the steps preliminary to the issue of the bonds. The bonds recite that they were issued in conformity with the special act .of the legislature already referred to, and were authorized by the legal vote of the qualified voters of the township at a special meeting-held upon a certain date. The special act requires that the bonds, should be issued by the township board. The recital is in effect, therefore, that the bonds are issued by the board. There is direct evidence that the township board authorized the supervisor and treasurer, by resolution, to execute the bonds issued in accordance with the vote, and at the township meeting held August 28, 1871. This fact is further shown by the action of the board in paying the interest on the bonds for two years after their issue. There is no direct evidence of the passage of a resolution by the township board directing the execution of the bonds authorized by the meeting of June 28,1871, but the action of the board in paying coupons upon these bonds certainly tends to show that they were executed by authority of the board. The law did not specify the manner in which the bonds should be executed, but left that to the board, ydio were directed to issue them. The'board might act in issuing the bonds either by all of its members, or it might act in executing the bonds by one of its members, or by some township officer whose duties made it natural and proper for him to act in such a capacity. The supervisor who signed these bonds was the executive officer of the township. He was ex officio a member of the board, was the agent of the township upon whom all service of processes must be made, and, while not the president of the township board, was distinctively the general representative of the township in its dealings with others. The township treasurer was the financial officer of the township, whose duty it was to receive the proceeds of the bonds and to disburse them. If the ■fact was that the board directed the executive officers to sign the bonds on its behalf, and they did so, the binding effect of the bonds and their recitals on the township board is none the less because the agency of the supervisor and treasurer for the board is not as fully set forth as might be on the face of the bonds. In accepting the bond as the bond of the township board, whether signed by the officials under a fully-recited authority, or under one less elaborately set forth, the purchaser ran the risk of the actual existence of such authority. If.the board had not directed their execution, the bonds were void, however fully the signing officers witnessed the fact. If it had directed the execution of them, then, so far as the board was concerned, it had given validity to them. Hence it follows that, if the fact be that the board directed the execution of the bonds as they were executed, the recitals on the face of the bonds are to be given as full effect as if made in terms by the board itself. The board under the special act was given authority to issue the bonds. It was its duty to order the special township meeting in accordance with the written application of the 10 legal voters who were freeholders within such township. It was therefore within its implied authority to pass upon the validity of such application. Before issuing the bonds, it must decide that the proper vote had been taken at the township meeting, upon a notice properly issued. As it was the tribunal to decide these questions, it. necessarily had authority to recite its decision in.the face of the. bonds. These conclusions bring this cause within the numerous cases in which municipal corporations having statutory power to issue bonds have been held estopped to deny the validity oí bonds issued by them, by the recitals of the issuing officer or body in the face of the bonds that all the steps preliminary to the lawful issue of, the bonds have been complied with. The scope of the recitals here is quite as wide as in a number of cases decided by the supreme court and by this court. Town of Coloma v. Eaves, 92 U. S. 484, 23 L. Ed. 579; Ashley v. Board, 16 U. S. App. 656, 8 C. C. A. 455, 60 Fed. 55; Risley v. Village of Howell, 12 C. C. A. 219-222, 64 Fed. 453; City of Cadillac v. Woonsocket Inst. for Savings, 16 U. S. App. 545, 7 C. C. A. 574, 58 Fed. 935.

There are other circumstances in this case, in addition to the recitals, which would 'support an estoppel. There are the receipt of the money, its use for the public purpose, and the payment of interest coupons for two years. Such circumstances, under the decision of the supreme court in the case of Supervisors v. Schenck, 5 Wall. 772-781, 18 L. Ed. 556, were held to estop the county from setting up the irregularity of the proceedings by which an election under the law authorizing the issue of bonds was held. See, also, State v. Trustees of Goshen Tp., 14 Ohio St. 569; State v. Van Horne, 7 Ohio St. 327; State v. Trustees of Union Tp., 8 Ohio St. 394.

But it is pressed upon the court that the plaintiff does not occupy the position of bona fide purchaser, because he became their owner after their maturity. It is conceded that the People’s Savings Bank purchased these bonds before their maturity, and paid full value for them, without knowledge of any defect in the proceedings resulting in their issue, but the contention is that one who acquires negotiable paper after its maturity from one who bought it in good faith before its maturity may not enjoy the same immunity from equitable and other defenses as his transferror. This contention cannot be sustained. The assignee of a bona fide purchaser before maturity takes the same rights as his assignor had, no matter when the assignment was made. No cases have been cited which sustain the position assumed by counsel. Reliance is had upon general language applicable only to a purchase after maturity from an original party to the contract, or from one who is not a bona fide purchaser, and has no rights as such. The exact question was before the court in Cromwell v. Sac Co., 96 U. S. 58, 24 L. Ed. 681. See, also, Scotland Co. v. Hill, 132 U. S. 116, 117, 10 Sup. Ct. 26, 33 L. Ed. 261; Wood v. Starling, 48 Mich. 592, 12 N. W. 866. The plaintiff, by bis counsel, produced the bonds, and thus arose the presumption that he was their owner. Dawson Town & Gas Co. v. Woodhull, 14 C. C. A. 464, 67 Fed. 451; Brigham v. Gurney, 1 Mich. 351. No evidence was introduced to show the contrary. The evidence conclusively showed that a prior owner had been a bona fide pui*chaser for value. The plaintiff, in becoming the owner of the bonds, acquired the benefit of the title of the intermediate bona fide purchaser, and it is immaterial how the title came to him, — whether by gift or otherwise.

These views lead to a reversal of the judgment for the township. The ease should have been submitted to a jury on the issue whether tlie township board did authorize the execution of the bonds as they, were executed, and, if they found this to be the fact, with directions to return a verdict for the plaintiff; otherwise, to retufn a verdict for defendant. Judgment reversed, with costs, with instructions to order a new trial.