Town of Windfall City v. First National Bank

87 N.E. 984, 172 Ind. 679, 1909 Ind. LEXIS 82

• Court: Indiana Supreme Court
• Decided: April 1, 1909
• Docket: No. 21,226
• Status: Published

Opinions

Jordan, C. J.

Appellee commenced this suit in the lower court by filing a complaint in two paragraphs, making the town of Windfall City, of Tipton County, the school town of Windfall City and Wildcat school township defendants, together with Samuel Gaddis, Samuel Dingle and William IT. Minnick (the latter persons constituting a firm of contractors), they being made defendants to answer to their interest in the subject-matter of the suit. The purpose of the suit was to recover money alleged to be due and unpaid on street improvement bonds, and to enforce a lien for the payment thereof. The bond in suit arises out of certain street improvements made by the town of Windfall City under and in pursuance of certain sections of what is commonly known as the Barrett law (§§4288, 4289, 4290, 4297 Burns 1901, Acts 1889, p. 237, §§1-3, 9).

By the first paragraph of the complaint the plaintiff seeks to .recover an unpaid balance alleged to be due on account of the improvement of College street, a public street of the town of Windfall City. By the second paragraph the recovery is sought of an unpaid balance arising out of the improvement of South Independent street and other public streets of said town. Among other things, the first paragraph alleges that the plaintiff is a banking corporation, duly organized under the laws of the United States; that the town of Windfall City, Tipton county, Indiana, and the school town of Windfall City and Wildcat school township, of Tipton county, Indiana, are municipal corporations, duly organized and existing under the laws of the State of Indiana; that on December 6, 1898, there was, and for a long time prior thereto had been, and is yet, a public street in said town of Windfall City known as College street; that abutting on this street is out-lot No. 41, which lot is owned jointly by said school town and said Wildcat school township, and which lot was and is used by said school corporations for the maintenance of schools for the education of the children of said town and township; that said lot abuts on said College street for a distance of 359 feet; that on the date last mentioned the board of trustees of the town of Windfall City, by a unanimous vote, passed a necessity resolution under the aforesaid statute, declaring thereby the necessity of improving said College street, along and past said school lot and property, said improvement to be made by grading and paving the roadway with paving brick the entire length of the street, etc.

The pleading then sets forth in detail the various steps taken by the town, leading up to said improvement, all in accordance with and as required by the aforesaid statute, including the contract for the construction of said work entered into by and between said defendants Minnick, Gaddis and Dingle and the board of trustees of the town of Windfall City, the execution of a bond by said contractors, the making and completion of said improvement by them according to their contract, and the acceptance of the work by the board of trustees of said town, the total cost of the work, the assessments made by the board of trustees against the several abutting property owners according to their frontage upon said street, etc. By this assessment there was charged against said out-lot No. 41 the amount of $757.49 as its portion of the cost of said street improvement, etc. The execution of waivers, as authorized by the statute, by the several property owners, including the two school corporations herein, is shown by the averments of the pleading. After the execution of these waivers, it is alleged that the board of trustees of said town of Windfall City, relying upon the faith of said waivers and the agreements and promises therein, “duly passed and adopted an ordinance thereof authorizing and directing the issue of bonds for the sum of $2,306.76, for the purpose of raising money with which to pay for said improvement ; said bonds to bear five per cent interest, payable semiannually, to be issued in the name of the town of Windfall City.” It is averred that during the performance of said improvement by the aforesaid contractors, and in order to obtain means with which to perform said work, they pledged their contract and all rights thereunder to the People’s Bank of the town of Windfall City, in consideration that said bank would furnish to them in advance funds necessary to pay for the material and labor in the performance of such work. Under the contract between the town and the aforesaid contractors, it was provided that the town would cause to be issued street improvement bonds, as provided by said statute, and acts amendatory thereof, and said contractors' agreed therein that they would accept such bonds in the payment oE said improvements to be made. On December 6, 1899, said town did execute and deliver unto the aforesaid contractors a certain street improvement bond,' in payment of the contract for the improvement of said street, a copy of which bond was filed with the pleading and made a part thereof. By the terms of this bond the town of Windfall City agreed to pay to the bearer at the People’s Bank in the town of Windfall City, State of Indiana, $2,306.76 as follows: Ten per cent thereof on November 6, 1899, and ten per cent on the first Monday of November of each year until the whole amount of said bond was paid, the bond to bear interest at the rate of five per cent per annum on the unpaid portions, payable semiannually, on the first Mondays of May and November in each year. This bond was to be paid as provided upon the face thereof out of the assessments made upon the following described real estate in the town of Windfall City, Tipton county, Indiana, viz., College street for the entire length, etc., and Independent street, etc., these being the two streets improved. It was further stipulated in the bond, and on the interest coupons attached thereto, that the credit and good faith of the town is “hereby pledged.”

Upon the issue of this bond, and the delivery thereof to said contractors, the latter transferred and delivered it to the People’s Bank as further security. Thereafter this bank transferred and delivered the bond, with the unpaid coupons attached, to the plaintiff. It is alleged that plaintiff purchased and received the bond in good faith for the full value thereof, in the ordinary course of business, without notice of any defect, alleged defect or illegality thereon, etc.; that, by reason of the purchase of said bond, plaintiff became and is equitably substituted to all the rights of said contractors under the original contract for and on account of work and labor performed by them in the improvement of said streets as against each and all parties hereto, and became substituted to all the rights of said People’s Bank, and that said Minniek, Gaddis and Dingle, individually and under their partnership name, before the commencement of this action, transferred and assigned unto the plaintiff all of their rights of every kind and character, and all claims arising under and in pursuance of said contract for the work and labor performed and material furnished under and in pursuance of said contract; “the plaintiff is informed that the school corporations, defendants herein, claim and aver that said assessment against said school property is null and void, and without authority at law, and that said school corporations are not bound by their said waivers, and are in nowise liable for the payment of said bond, or any part thereof, and that said town now denies all liability for the payment of said bond, and refuses to pay the same or any part thereof.”

After averring other facts in respect to attorneys’ fees arising out of the prosecution of this action, the pleading closes as follows: ‘ ‘ The plaintiff therefore brings suit, and demands judgment in the sum of $1,000, the establishment and foreclosure of a lien against said school property for the amount of said assessment, with accrued interest thereon, and should the court determine that said assessment is illegal and void, and that the town of Windfall City had no power or authority to make the same against the property, then it demands judgment against said town for the sum aforesaid and for all other proper relief.” Copies of the contract, contractors’ bond, and of the improvement bond in the suit, are filed as exhibits with the pleading. In the bond it is stated that it was issued pursuant to an act of the General Assembly of the State of Indiana, approved March 8, 1889, and amendments subsequent thereto, and in pursuance of the provisions of an ordinance passed by the board of trustees of said town on January 3, 1899. There is no averment in either paragraph of the complaint to show that any assessment whatever was made against the town of Windfall City, or that said city had collected or received any money upon the improvement bond issued, or upon any of the assessments made against any of the property owners which it had not accounted for and paid over. In fact, nothing is averred to show that the town of Windfall City has in any manner realized upon any of the property assessed as benefited by the improvement.

The second paragraph of the complaint is substantially . the same in form and substance, except some variations by reason of its relating to the unpaid assessments .on South Independent street, but in all other respects it presents the same questions raised by the first paragraph. The appellant town of Windfall City filed its separate demurrer for want of facts to each paragraph of the complaint. The court overruled this demurrer, to which ruling the town excepted. After having unsuccessfully demurred, the town of Windfall City filed an answer in the nature of payment, accord and satisfaction. The plaintiff’s demurrer to this answer, for insufficiency of facts, was sustained, and said defendant refused further to plead, and thereupon the court rendered a separate judgment against it as follows: “It is adjudged and decreed by the court that the plaintiff recover of and from defendant, town of Windfall City, the sum of $1,144, together with the costs and charges, taxed at $-, to which said defendant at the time excepted, and prayed an appeal to the Supreme Court of Indiana, which, as the record recites, was granted, and its appeal bond fixed by the court in the sum of $2,000, and it is now agreed in open court by plaintiff and said defendant town of Windfall City that the clerk of this court may approve such bond when filed, and when so filed and approved by said clerk the same shall be treated as the approval of and as having this day been approved by the court, all of which is adjudged.”

Prom this judgment the town of Windfall City appeals, and has separately assigned errors upon the overruling of its demurrer to each paragraph of the complaint, and upon the sustaining of plaintiff’s demurrer to its separate answer, and prays that the judgment against it be in all things reversed. The court sustained the separate demurrer of the school town of Windfall City, and also the separate demurrer of Wildcat school township to each paragraph of the complaint for want of facts, to which ruling the plaintiff excepted, and, upon the latter’s electing to abide by the ruling of the court upon the demurrer, the court thereupon rendered a separate judgment in favor of each of said school corporations against the plaintiff, adjudging that the plaintiff take nothing by its action upon either paragraph of the complaint as against the defendant school town of Windfall City, and that said school town recover from the plaintiff its costs laid out and expended. The court also rendered a separate judgment in favor of Wildcat school township, that the plaintiff, as to it, take nothing by its action upon either paragraph of the complaint, and that said school township recover from the plaintiff its costs. Minnick, Gaddis and Dingle, the defendant contractors in the case, were defaulted and the court adjudged as against them that they had no interest in the subject of the action.

1. It will be observed that appellant town of Windfall City has- joined with it as eoappellants all of the defendants below. Counsel for appellee insist that this appeal cannot be considered as a terjn-time appeal, but in respect to this question we need not decide, for said appellant has also taken the necessary steps to make it a vacation appeal. The claim of appellee, that the appeal should be dismissed because the only appellant assigning errors is the town of Windfall City, is untenable. As heretofore shown, the court rendered a separate judgment in favor of each of the two school corporations and against plaintiff. Under the circumstances, neither of these corporations had any interest in the judgment which appellant town of "Windfall City seeks to reverse by this appeal. They are neither proper nor necessary parties to the appeal. Southern R. Co. v. Elliott (1908), 170 Ind. 273.

2. 3. 4. 5. These school corporations, not having any legitimate standing in this appeal, consequently have no right to assign errors. Certainly they have no grievance, on account of the decision of the trial court, for which they can be heard to complain, for each recovered a judgment against appellee bank. As preliminary to a question of appellee’s assignment of cross-errors, as hereafter shown, we deem it proper to make the following statement. Section nine of the Barrett law (§4297 Burns 1901, Acts 1889, p. 237), in dealing with improvement bonds or certificates issued on account of any of the public improvements made under the law, among other things provides that “the owner of any of such certificates or bonds may proceed in his own name to collect such assessment and foreclose the lien thereon in any court of competent jurisdiction,” etc., and that “any number of holders of such certificates or bonds for any single improvement may join as plaintiffs, and any number of owners of the property on which the same are a lien, may be joined as defendants in such suit. ’ ’ Under this provision of the statute appellee, as ■the holder of the improvement bond or certificate in suit, was authorized to join as defendants the two school corporations, they being joint owners of the school property out-lot No. 41, against which appellee sought to enforce the statutory lien, but the town of Windfall City in its corporate entity was not .in any sense the owner of any property affected by the assessment or liens arising out of the improvement in-question, and in no manner could it be regarded as a proper <or necessary party defendant. Under the circumstances it is evident that plaintiff was not authorized under the provisions of §4297, supra, to join the town of Windfall City as a eodefendant together with the two school corporations. Under §269 Burns 1908, §268 R. S. 1881, the town was neither a necessary nor a proper party defendant with the school corporations in this action, consequently its joinder as such was improper. It had no unity of interest in the subject-matter of the action with either the school town or school township as would warrant its joinder as a codefendant under §270 Burns 1908, §269 R. S. 1881. It is manifest, therefore, that the judgment rendered against the town in favor of appellee, from which this appeal is prosecuted, must be regarded as though it had been rendered in a separate action instituted by appellee to recover from the civil town. Under appellants ’ assignment of errors in this appeal the only matter with which appellee can be said to be concerned is the defeat of a reversal of the judgment which it recovered against the town of Windfall City. It does not seek to disturb, or in any manner to modify, its judgment against appellants, but demands that it be in all things affirmed. At the. close of the transcript, however, appellee has assigned what it terms cross-errors in this cause. Under this assignment it complains of the rulings of the lower court in sustaining the separate demurrer of the school town of Windfall City and in sustaining the separate demurrer of Wildcat school township to each paragraph of the complaint, and prays that the judgment against it in favor of each of these school corporations be in all things reversed. Under these cross-errors certain constitutional questions are discussed, but, because of the views which we entertain, these questions need not be considered. The purpose of this cross-assignment of errors is not to prevent the reversal of the judgment from which this appeal is prosecuted, by showing that whatever errors, if any, were committed against appellant by the lower court; such errors afford it no grounds for complaining of the ultimate decision from which it appealed. Neither does appellee, in respect to the judgment appealed from by appellant town of Windfall City, seek by its cross-assignment to secure any ruling by this court upon intermediate questions arising in the lower court for the guidance thereof in the event of a reversal of the judgment and the remanding of the cause back to the lower court for another trial. Thomas v. Simmons (1885), 103 Ind. 538.

It is apparent that appellee, by its cross-assignment of errors, has undertaken, as against the school town of Windfall City, and Wildcat school township, to make such cross-assignment perform the office of and serve as an independent appeal by it from the separate judgments rendered against it, as heretofore shown, in favor of each of said school corporations. As previously shown, each of the judgments rendered against appellee in favor of the school corporations was separate and distinct from and wholly independent of the judgment rendered against appellant town of Windfall City, and had no legitimate connection with the latter judgment. The judgments in favor of the school corporations were not necessarily brought before this court by virtue of the appeal of the town of Windfall City. In fact, they were not parts of the record necessary to exhibit the rulings upon which the appellants in this case have based their assignments of errors. Elliott, App. Proc., §421.

6. As the authorities affirm, the assignment of cross-errors in the case appealed is in the nature of a counterclaim in the trial court, and, under a well-settled rule, cross-errors can only be assigned or predicated upon questions presented in the lower court or rulings of the latter which arise out of or are connected with the judgment upon which the appellant bases his appeal. Elliott, App. Proc., §417; Ewbank’s Manual, §§20, 139, 206; Feder v. Field (1889), 117 Ind. 386; Walker v. Pritchard (1887), 121 Ill. 221; Robbins v. J. W. Butler Paper Co. (1886), 35 Ill. App. ; Harding v. Helmer (1899), 86 Ill. App. 190. The appellee in this case appears either to have overlooked or ignored this rule. It must follow that its assignment of cross-errors in this appeal,, for the reasons herein stated, is unauthorized and is, therefore, dismissed.

7. The only question remaining to be considered arises upon the assignment of errors by the appellant town of Windfall City, which alleges that the court erred in overruling its demurrer to each paragraph of the complaint. That neither of these paragraphs, under the facts therein averred, discloses any liability against said town is settled by repeated decisions of this court in cases arising out of public improvements under the statute here involved. Quill v. City of Indianapolis (1890), 124 Ind. 292, 7 L. R. A. 681; Robinson v. City of Valparaiso (1894), 136 Ind. 616; Dowell v. Talbot Pav. Co. (1894), 138 Ind. 674; Porter v. City of Tipton (1895), 141 Ind. 347; City of Huntington v. Force (1899), 152 Ind. 368.

Primarily, the town of Windfall City, under the statute in question, incurred no personal liability to the contractors to whom the work of making the improvement was let. - It was merely an instrumentality of the law in initiating and carrying out the improvement, and in collecting the money upon the assessments made against property subject thereto for the payment of the expenses. Under the statute, the improvement bonds or certificates issued by it were not its personal obligations. Quill v. City of Indianapolis, supra; Spidell v. Johnson (1891), 128 Ind. 235.

The court erred in overruling the separate demurrer of appellant to each paragraph of the complaint; for which error the judgment against the town of Windfall City is reversed, and cause remanded, with instructions to the lower court to sustain said demurrer,