213 F. 106 | W.D. Wash. | 1914
This is a suit in equity to enjoin the collection of a judgment at law. Plaintiff Interínela was treasurer of the city of Port Townsend from January, 1909, till January, 1914, and the plaintiff American Surety Company was surety on his official bond. The judgment the collection of which is sought to be enjoined was rendered in an action for damages for the failure of said Interínela as treasurer to pay a warrant of the city of Port Townsend drawn on the “General Indebtedness Fund” of said city when the same was presented for payment December 1, 1910. An appeal was taken to the Circuit Court of Appeals, which affirmed the judgment; and a petition for a writ of certiorari was dismissed by the Supreme Court. Paragraph 5 of the bill' alleges:
“That in said action * * * these plaintiffs as defendants therein set up certain legal defenses which they considered sufficient to defeat said action, but both the lower court and the Circuit Court of Appeals held said defenses insufficient and overruled the same.”
It is then alleged that the warrant in question was issued fraudulently by the city council in payment of a judgment of the superior court in an action brought by the holder of a warrant on a special improvement district fund; that before the rendition of this judgment the Supreme, Court of the State of Washington, in the case of German American Savings Bank v. Spokane, 17 Wash. 315, 49 Pac. 542, 38 L. R. A. 259, decided that under no circumstances should a city be held liable in the state of Washington on a street grade warrant of the kind and character of the one ‘sued on; that the judge who entered the same knew, and the city council was aware, that the city was not liable on such warrants; that an appeal was perfected, but before the record was sent to the Supreme Court the city council at a secret meeting agreed with the judgment creditor to pay the judgment by a warrant drawn on the general indebtedness fund of the city. It is also alleged that at the time of the issuance of the warrant the constitutional debt limit- of the city had been reached, and that the warrant was therefore void.
Defendant answers and files his motion to dismiss on the ground, among others, that the judgment referred to in the bill became res judicata as to the parties herein and the issue tendered; that the judg
It is also evident that, if the city council committed a breach of trust in issuing the warrant for an indebtedness for which the city was not legally liable, the fraud could be set up as well in a legal as in an equitable action. In Maine Northwestern Development Co. v. Northern Commercial Co., 213 Fed. 103, filed in this court March 25, 1914, where a motion was made to strike an affirmative defense of fraud, the court said:
“There is no such magic in the word ‘fraud’ as to rob a court of law of jurisdiction, irrespective of the nature of the fraud charged. Where the fraud is of such a nature as to render the contract against public policy or illegal courts of law have universally refused to enforce it.” 9 Cyc. 465; Woodstock Iron Co. v. Extension Co., 129 U. S. 643, 9 Sup. Ct. 402, 32 L. Ed. 819; West v. Camden, 135 U. S. 507, 10 Sup. Ct. 838, 34 L. Ed. 254.
9. An order may be entered dismissing the action.