National Bank of Commerce v. Town of Granada

54 F. 100 | 8th Cir. | 1893

CALDWELL, Circuit Judge,

(after stating the facts.) Unwonted haste and great irregularities characterized all the proceedings leading up to the issue of the bonds in suit. The town received no consideration for them; and if they had remained in the hands of 1 )oak, to whom they ivere originally issued, he could not have recovered upon them. Whether the plaintiff, as a purchaser for value, without notice of the frauds which would avoid the bonds in the hands of Doák, is in any better position, turns upon the question whether the officers of the town, who issued them, liad any lawful authority to do so. The act of the legislature is silent as to the mode of carrying into effect the powers conferred by it on the board of trustees.

We think the principal and vital question in this case is whether the powers thus conferred on the board of trustees may be exercised without an ordinance containing the usual and necessary provisions to guide, control, and bind the town and its officers, and the public, in the execution of the funding- scheme, and to protect all persons in their rights acquired thereunder. We entertain no doubt but that the appropriate mode for the town to proceed under the act in question is by ordinance of its board of trustees. The proceeding involves the appointment and holding of an election, and the conversion of a nonnegotiable floating debt into the form of negotiable bonds drawing a high rate of interest, payable semiannually, and which, must run 5, and may run 15, years. A measure requiring an expression of opinion from the voters of the town, at the ballot box, and involving such large values, and of so much interest to the taxpayers of the town and the holders of its securities, through so many years, ought not to be carried into effect except by the most *104solemn and deliberate mode of proceeding known to tbe law for giving expression to tbe corporate will. That mode is by ordinance. Tbis is tbe mode tbat is prescribed by tbe statute of Colorado, wbicb declares:

“Municipal corporations shall have power to make and publish, from time to lime, ordinances, not inconsistent with the laws of the state, for carrying .into effect or discharging the powers and duties conferred by this act, and such as shall seem necessary and proper to provide for the safety, preserve the health, and promote the prosperity, and improve the morals, order, comfort, and convenience, of such corporation, and the inhabitants thereof.” Section 4431, Mills’ Ann. St. Oolo.

Tbe statutes of tbe state wbicb authorize tbe issue of refunding bonds, (Id. § 4548,) tbe creation of new indebtedness, (Id. § 4403, 6tb subd.,) and tbe appropriation of aid to public libraries, (Id. 76th subd.,) require, in terms, tbat tbe same shall be done by ordinances. We think tbe board of trustees of tbis town bad a correct conception of tbe proper mode of proceeding when they passed tbe ordinance in question.

A statute of tbe state provides:

“All ordinances shall, as soon as may be after their passage, be recorded in a book kept for that purpose, and be authenticated by the signature of the presiding officer of the council or board of trustees and the clerk; and all by-laws of a general or permanent nature, and those imposing any fine, penalty, or forfeiture, shall be published in some newspaper published within the limits of the corporation, or, if there be none such, then in some newspaper of general circulation in the municipal corporation; and it shall be deemed a sufficient defense to any suit or prosecution for such fine, penalty, or forfeiture to show that no such publication was made: provided, however, that if there is no newspaper published within, or which has.no general circulation within, the limits of the corporation, then and in that case, upon a resolution being passed by such council or board of trustees to that effect, such by-laws and ordinances may be published by posting copies thereof in the public places to be designated by the board of trastees, within the limits of the corporation; and such by-laws and ordinances shall not take effect and be in force until the expiration of five days after they have been so published or posted. But the book of ordinances herein provided for shall be taken and considered in all courts of this state as prima facie evidence that such ordinances have been published as provided by law.” Section 1, Laws 1887, p. 445.

It is admitted that the ordinance in question was not "recorded in a book kept for that purpose,” and was not “authenticated by the signature of the presiding officer of the * * * board of trustees and the clerk,” and “was never published in any paper, or in any form or manner whatever.”

It is obvious to our minds that the ordinance in this case was of a “general or permanent nature,” and as such could “not take effect and be in force until the expiration of five days” after its publication. It provided for an election, and therefore concerned every legal voter of the town. It affected every taxpayer, whether a voter or not. It affected the creditors of the town, present and future. It im volved the making and execution of contracts, and various other matters relating to funding the floating indebtedness of the town. If such an ordinance is not of a “general or permanent nature,” it would be extremely difficult to suggest one that is.

The provision of the act that such ordinances shall not take effect *105oi- be in force until they are published in the mode provided by the act is mandatory. This ordinance, never having been published, never went into effect. Not being in force, it conferred no authority on the board of trustees, or any officer of the town, to do any act under it; and no one could acquire any right based oh it, or on any act of the officers of the town assuming to act under it. It had no more legal effect than if it had never been passed by the board of trustees. 1 Dill. Mun. Corp. §§ 331-834, and notes.

But the learned counsel for the plaintiff in error contends that the recital in the bonds that they “are issued under an ordinance” of the town relieves the plaintiff from the burden of showing that the ordinance was published, and estops the defendant from showing that it was not.

It has never yet been held that a false recital in a bond can make that a law which never was a law. When an ordinance has been duly enacted, and has taken effect, authorizing the officers of a town to issue its negotiable bonds upon certain precedent requirements or conditions, such as a petition of a given number of taxpayers, or a majority vote or other like conditions, and the officers issuing the bonds are the appointed tribunal to decide whether there has been a compliance with such precedent conditions, and the bonds issued recite that they are issued in pursuance of such ordinance, it is probably true that such recital, in favor of bona fide purchasers for value, would import a Ml compliance with the requirements of the ordinance, and preclude inquiry as to whether the precedent conditions were performed before the bonds were issued. But that doctrine has no application to this case. Here there was no ordinance in force under which the hoard of trustees, or any officer of the town, could perform any act. The authority to issue the bonds never attached, on any terms or conditions. The action of the mayor and clerk was not simply irregular, hut was without the sanction of any law. The point was never reached at which they could lawfully do any act under the supposed ordinance. It is a case of a total want of an tliority to do the act upon any conditions, and not a case where the authority to do the act existed, but the conditions precedent to the exercise of the authority were not observed.

The statute which provides that ordinances shall not take effect until they are published is a public statute, of which all persons are bound to take notice. The statute makes the recording of an ordinance in the ordinance hook prima facie evidence that it has been published according to law. But this ordinance was not recorded, nor authenticated as an ordinance by the signatures of the mayor and clerk, as required by law. Moreover, it is not shown that the mayor and clerk, or either of them, had any duty or function to perform in relation to publishing ordinances, or determining when they had been published according to law. The determination of this fact, when it becomes material, and is contested, and the ordinance has not been recorded, is, under the statute, a matter for judicial inquiry.

The statute itself provides that it shall be a sufficient defense to any suit or prosecution for a fine, penalty, or forfeiture to show *106that the ordinance imposing it was not published as required by the statute, and it is obvious that the same defense must prevail against any civil right grounded upon an ordinance which was never published, no matter by or against whom such right is asserted. The plaintiff was bound to know, independently of the recital in the bond, that there was such an ordinance in existence. This fact once established, it might well assume that the recital was sufficient evidence that the conditions prescribed by the ordinance for issuing the bonds had been complied with. It was as much the right and duty of the plaintiff to determine this question as it was of the clerk and mayor, and the determination of either, in any form, would not bind or conclude the town. It is only when officers are invested by law with the authority to determine or adjudicate upon the fact that their recital operates as an estoppel.

If the recital in this case had stated, in terms, that the ordinance had been duly published, it would not have estopped the town, because neither the mayor nor the clerk, nor both together, are invested with the authority to determine that question, and anything they might say or certify to on the subject, save as witnesses in court, would not be evidence anywhere, or bind any one. “If,” says the supreme court, “the officers authorized to issue the bonds upon a condition are not the appointed tribunal to decide the fact which constitutes the condition, their recital will not be accepted as a substitute for proof. In other words, where the validity of bonds depends upon an estoppel claimed to arise upon the recital ,of the instrument, the question being as to the existence of the power to issue them, it is necessary to establish that the officers executing the bonds had lawful authority to make the recitals, and to make them conclusive. The very ground of the estoppel ■is that the recitals are the official statements of those to whom ■the law refers the public for authentic and final information on the subject.” Dixon Co. v. Field, 111 U. S. 83, 94, 4 Sup. Ct. Rep. 315; Sutliff v. Lake County Com’rs, (Oct. term, 1892,) 13 Sup. Ct. Rep. 318.

The law does not refer the public to these officers, or to either of them, for information as to the publication of town ordinances; and their statements upon that subject have no more significance or binding force than those of any other citizen of the town.

The view taken of the question renders it unnecessary to consider other defenses to the bonds set up and relied on by the defendant in error. The judgment of the court below is affirmed.

midpage