National State Bank v. The Ind. Dist. of Marshall

39 Iowa 490 | Iowa | 1874

Day, J.

The case presents for onr consideration two questions: First, the right of plaintiff to recover upon the order sued on; second, plaintiff.’s right to recover upon the facts alleged in the amendment to the petition.

1. schooiimsaSon’onn-1*' constitutionalla'v' 2.-: —: order: nego«ability. I. From the report of the referee it appears that at the time of issuing the order in question, the value of the taxable ' property of defendant was $50,278. Prior to that Bine defendant had issued warrants, which were outstanding, amounting to $¿,094.49. As an offset to this indebtedness, the only property which the district had was an old school house of the value of $100. -At the time that the order in question was issued, the district had an outstanding indebtedness, a little in excess of eight per centum of the value of its taxable property, and no funds in the treasury. The order in suit made this indebtedness about ten per centum of the value of its taxable property. Article II., section 3 of the Constitution, provides: “No county, or other political or municipal corporation, shall be allowed to become indebted in any manner, or for any purpose, to an amount in the aggregate exceeding five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax lists, previous to the incurring of such indebtedness.” That this provision of the constitution applies to a school district, we held in Winspear v. Dist. Tp. of Holman, 37 Iowa, 542. This order, being issued in excess of the constitutional limitation, was invalid in the hands of the original holder, whose duty it was to ascertain the authority of the officers with whom he dealt, to bind the district by issuing the order in question. Reichard v. Warren Bounty, 31 Iowa, 381, and cases cited. In this case we have nothing to do with the question of the validity of a negotiable instrument, executed by a municipal corporation in excess of this constitutional limitation, and in the hands of a bona fide holder. The order sued on, although payable to bearer and negotiable in form, does not possess the characteristics of negotiable paper. 1 ° *• 1 Clark v. the City of Des Moines, 19 Iowa, 199; Clark v. Polk County, Ib., 248; Shepherd v. District Township of Richland, 22 Iowa, 595. The order in the hands of the plaintiff is affected by all the defects which would have attached to it in the hands of the original holder.

Considered as an .order, there is another fatal objection to. the instrument sued on. Section 26, Chapter 172, Laws Ninth General Assembly, provides that the board of directors “ shall audit and allow all just claims against the district, ■* * * and no order shall be drawn on the district treasury until the claim for which it is drawn has been so audited and allowed.” Now it appears, from the report of the referee, that no claim against the district had been audited and allowed, in discharge of which this order was drawn. Upon the contrary, it was drawn in advance of the existence of any claims against the district, for the purpose of being put upon the market and negotiated to raise money to build a school house. And it was, in fact, sold for $800.00.

8_. __ curative act. The attorney for plaintiff concedes that there were such irregularities in the issuing of the paper sued on, as required the intervention of the legislature to cure. ■ But he contends that Chapter 49, of the General Laws of the Fourteenth General Assembly, render the order legal and binding. This statute was approved April 12th, 1872, and took effect after the commencement of this suit, and is as follows: “That chapter ninety-eight of the Acts of the Twelfth General Assembly, be amended by adding to the fifth section thereof, the following: ‘ Provided, That when, instead of bonds as in this act is provided, any independent school district has heretofore issued orders, on its treasurer, which have been sold, and the proceeds used in building school houses therein, or in paying indébtedness incurred in thus building, such orders shall be as legal and binding, as though they had been issued in bonds in accordance with this act.’” The order in question was issued May 20th, 1868. .The statute authorizing independent school districts to borrow money and issue bonds, which this curative statute amends, took effect by publication April 17th, 1868, more than a mouth before the order in question was issued. This statute proposes only to operate upon, and apply to, orders issued before Chapter 98, Laws of Twelfth General Assembly took effect. The order in question, issued subsequently to that time, is not within its provisions. Besides, that -this order was issued in violation of constitutional inhibition is a defect which this statute does' not attempt to cure, and which the legislature has no power to remedy.

The court did not err in holding that plaintiff could not recover upon the instrument sued on.

4.-:as-_ der. ’ II. In the amendment to the petition plain tiff alleges that John Williams, contracted to build a school house for defendant for about $5,300. That he erected the building according to contract, and assigned the sum of one thousand dollars of his claim therefor, to an unknown person, which unknown person assigned the claim to David Wooley, who sold and assigned the same to plaintiff.

No additional proof was introduced, and the case was determined upon the facts already reported by the referee. The’ claim then which Williams assigned, grew out of the order already referred to, and the assignment of the claim was the transfer of the order. We have already seen that this portion-of Williams’ claim was invalid, the transaction which gave rise to it having created a debt, after the constitutional limitation had been passed. Williams could not have enforced this debt, and his assignee occupies no better position. If Williams or plaintiff, has any right in equity to subject the building erected for the defendant to the satisfaction of the claim against the district, which we do not now determine, this adjudication is without prejudice to such right.

On defendant’s appeal the cause must be

Reversed.