Smythe v. Inhabitants of New Providence TP.

263 F. 481 | 3rd Cir. | 1920

WOOLLEY, Circuit Judge.

The facts which form the background of the matters here assigned as error are briefly these:

This suit was brought upon five bonds issued by the Township of New Providence pursuant to an Act of the Legislature of the State of New Jersey entitled “An Act to authorize certain towns in the Counties of Somerset, Morris, Essex and Union to issue bonds, and take stock in the Passaic and Peapack Railway Company,” approved April 9, 1868 (P. L. of N. J. 1868, page 915). This act is quoted in part and discussed in Bernards Township v. Stebbins, 109 U. S. 341, 3 Sup. Ct. 252, 27 L. Ed. 956; Bernards Township v. Morrison, 133 U. S. 523, 10 Sup. Ct. 333, 33 L. Ed. 766; Montclair v. Ramsdell, 107 U. S. 147, 2 Sup. Ct. 391, 27 L. Ed. 431.

In declaring on the bonds, the plaintiff pleaded the statute, and, in conformity with its requirements, averred the consent of taxpayers of the Township to the issue of bonds, evidenced by affidavits of the Township commissioners, and affidavit of the Township assessor that the assenting taxpayers constituted a majority of the landed property holders; that the bonds were executed by two of the commissioners, but without seals; that they were afterwards registered in the olli.ce of the County Clerk and certified by him; that they were issued for public purposes; and were bought by the plaintiff in the public market for a valuable consideration. The defendant, pleaded the general issue, statute of limitations, and certain special pleas challenging the validity of the bond issue on grounds which will appear more particularly in the consideration of the matters assigned as error.

Two of the five bonds were excluded from the evidence. The case was submitted to the juiy on the remaining three bonds upon testimony for the plaintiff alone, the defendant having declined to introduce any testimony. The jury rendered a verdict for flic plaintiff for the principal of the three bonds and interest; whereupon both parties sued out the writs of error now under consideration.

As the bonds sued on purport to be obligations of the Township issued solely by authority of the cited statute, their validity depends, of course, upon their issuance in conformity with its provisions. The many errors assigned are directed chiefly to the court’s rulings oil evidence tendered in proof of the validity of the bond issue. As these assignments are numerous, and do not always present, when viewed alone, the real questions they raise, we shall discuss them by their subject matter, with reference to which they are quite capable of classification.

[ 1 ] Assuming for the present that the plaintiff was a bona fide holder of the bonds, he was required, to entitle him prima facie to judgment, to prove the due appointment of the commissioners and the execution by them of the bonds. Montclair v. Ramsdell, 107 U. S. 147, 158, 2 Sup. Ct. 391, 27 L. Ed. 431; Bernards Township v. Morrison, 133 U. S. 523, 527, 10 Sup. Ct. 333, 33 L. Ed. 766.

The First Question, therefore, is:

Was there competent proof of the due appointment of the commissioners ?

[2] The. plaintiff’s evidence of the appointment of the commissioners consisted of the application by the requisite number of freeholders for the order appointing the commissioners, produced from the office of the County Clerk; the appointment of the commissioners; oaths of the commissioners; and the written consent of the taxpayers of the Township to their appointment; and the affidavit of the assessor that the taxpayers so consenting constituted a majority of the taxpayers in the Township. The Township contends that these papers were improperly admitted in evidence because the signatures of the subscribing witnesses were not proved. They were admitted on the theory that they were ancient documents, and also on proof of the signature of the County Clerk to some or all of these papers by receiving in this trial the testimony of witnesses, since deceased, given at a former trial.

The bonds were more than fifty years old. Instruments of the character of these form an exception to the general rule requiring documents to be authenticated by the testimony of subscribing witnesses, and are provable as ancient documents. In suits on bonds of such antiquity, the subscribing witnesses are presumed to be dead and the rule is strong that such instruments prove themselves. There is, however, an important qualification to the rule, which declares that, in order that ancient documents may prove themselves, they must on their face be free from suspicion, they must come from the proper custody, and be accompanied by some corroborating evidence. 10 R. C. L. 1097, 1098. This suspicion does not mean suspicion of their validity; it means suspicion as to their authenticity. The authenticity of the bonds being the solé question before the court on their tender as evidence, we are of opinion that the rule was fully met and that the bonds were properly admitted.

[3] It is contended further that the commissioners were required by the statute to execute a bond to the Township for the faithful discharge of their duties, that the execution of such a bond is a prerequisite to the valid appointment of the commissioners -and to the validity of their subsequent acts, and that there was no evidence that the commissioners ever executed such a bond. We do not think evidence of the execution of a bond of this character is material to the plaintiff’s right to recover on the bonds of the’Township subsequently issued by the commissioners. A bond executed by them to insure the faithful performance of their duties was a matter between them and the Township. We are concerned here not with their bond hut with their acts, the pertinent one being the issuance of the bonds in suit, which show, by endorsement, that the conditions essential to their validity have been complied with. Having proved the due appointment of the commissioners and the execution by them, in fact, of the bonds, it is not necessary that the holder of the bonds

“¿should, in the first instance, prove either that he paid value, or that the conditions preliminary to the exercise by the commissioners of the authority conferred by the statute were, in fact, performed before the bonds were issued. The One was presumed from the possession of the bonds; and the other was established by tbe statute authorizing an issue of oonds, and by proof of the due appointment of the commissioners, and their execution of the bonds, with recitals of compliance with the statute.” Montclair v. Ramsdell, 107 U. S. 147, 2 Sup. Ct. 391, 27 L. Ed. 431; Bernards Township v. Morrison, 133 U. S. 523, 527, 10 Sup. Ct. 333, 33 L. Ed. 766; Bernards Township v. Stebbins, 109 U. S. 341, 3 Sup. Ct. 252, 27 L. Ed. 956; New Providence v. Halsey, 117 U. S. 336, 6 Sup. Ct. 764. 29 L. Ed. 904; Cotton v. New Providence, 47 N. J. Law, 401, 2 Atl. 253; Mutual Life Co. v. Elizabeth, 42 N. J. Law, 235.

Second Question.

Was there competent proof of the execution in fact of the bonds so as to sustain their admission in evidence?

This question involves several others, the first of which is:

(1) Were the signatures to the bonds and their registration proved? The registration of the bonds cannot be seriously questioned. As to the signatures of the commissioners, the bonds purported to be signed by two of the three commissioners in 1868. Both were dead at the time of trial. Their signatures were proven by the testimony of two witnesses given at a former trial and admitted by stenographer’s notes at this trial, although, perhaps, it may be contended that this testimony related only to the signature of one commissioner.

[4] Aside from this testimony, the age of the bonds (having been executed about fifty years ago), the evidence of the preliminaries to their issue, their certification and registration, make them admissible in evidence as ancient documents. There is also evidence by one witness that the bonds had been registered by him and that he had certified the fact of their registration by endorsement on the bonds and recognized the signatures thereto.

[5] In addition to this evidence, the signatures of the two commissioners appeared in their oaths of office admitted in evidence. These exhibits, together with the bonds signed by the commissioners, were submitted to the jury and were before them for comparison. Such comparison is authorized by the Act of Congress, approved February 26, 1913, 37 St. at Large, 683, c. 79, U. S. Comp. St. 1916, § 1471, p. 2367, commented on in Maxey v. United States, 207 Fed. 327, 330, 125 C. C. A. 77, which extends the rule of the common law in regard to the comparison of handwritings, Withaup v. United States, 127 Fed. 530, 62 C. C. A. 328, and provides:

“In any proceeding before a court or judicial officer of tbe United States where the genuineness of the handwriting of any person may be involved, any admitted or proved handwriting of such person shall be competent evidence as a basis for comparison by witnesses, or by the jury, court, or officer conducting such proceeding, to prove or disprove such genuineness.”

We regard the evidence offered as prima facie proof of the due execution of the bonds by the commissioners purporting to sign them.

[6] (2) If the commissioners’ signatures were proved, was it by competent evidence, the evidence offered and admitted being testimony given in the trial of another case by witnesses who were dead at the time of this trial?

While we think the execution of the bonds might have been proven by the boiids themselves as ancient documents, the signatures of the commissioners were further proven by admitting testimony given at a former trial brought to recover on the same bonds against the same defendant. This the defendant challenges undér Section 861 of the Revised Statutes (Comp. St. §■ 1468). This section reads:

“The mode of proof in trial of actions at common law shall be by oral testimony and examination of witnesses in open court, except as hereinafter provided.”

The exceptions to the section refer to the taking of depositions of living witnesses, a matter with which we are not concerned in this case. We do hot find the cases cited on the talcing of depositions under the exceptions to the cited section applicable to the precise question in this case. We, therefore, lay them aside.

There are two lines of cases in which this statute has been construed with reference to admitting in evidence in a later trial testimony given in a former trial. One rule prevails in the Eighth Circuit and is stated in Salt Take City v. Smith, 104 Fed. 457, 43 C. C. A. 637, and in Chicago, M. & St. P. Ry. Co. v. Newsome, 174 Fed. 394, 98 C. C. A. 1. It is, briefly, as follows:

“These various sections of the Acts of Congress provide a complete system for the practice of the courts of the United States in the procurement and admission of the testimony of witnesses. In Section 861 they establish a general rule, and in the subsequent sections to which reference has been made they specify every exception to it; Every case must, therefore, fall under the rule or under one of the exceptions. A glance at the sections which specify the exceptions discloses the fact that the testimony of a witness at a former trial is not among the exceptions, and this case therefore necessarily falls under the express declaration of Congress that the mode of proof in actions at common law shall be by oral testimony, and examination of witnesses in open court.”

The of the absent witness was excluded.

; The other rule prevails in the Sixth Circuit and is stated with elaborate consideration in Toledo Traction, Co. v. Cameron, 137 Fed. 48, 69 C. C- A. 28. In that case the testimony of a witness given at a former triai was preserved by stenographic notes and admitted in evidence at the later trial. The Circuit Court of Appeals for the Sixth Circuit, in construing Section 861, Revised Statutes, held that, in enacting that section, Congress had no thought of altering the rules of evidence which maintained at common law or of excluding their application by making certain exceptions with reference to the taking of depositions. Quite contrary to the ruling of the Circuit Court of Appeals for the Eighth Circuit, the Circuit Court of Appeals for the Sixth Circuit construed Section 861 as not-restricting the testimony literally to proof by oral testimony and examination of the witnesses in open court, but regarded that expression as a positive enactment of the rule of the common law, where evidence in one trial was admissible in another trial between the same parties, involving the same issues under certain circumstances.

As these interpretations of Section 861 involving opposite rules were made in cases where the absent witnesses in question were alive and where their testimony could have been obtained by resort to depositions, under other sections of the statute, we do not feel called upon to distinguish the two cases or to follow either rule, for the instant case and its applicable rule are distinguishable from those cited by the fact that here the witnesses who testified in the former trial are not merely absent; they are dead; and their testimony, if procurable at all, is to be had only from the mouths of witnesses who heard it at the former trial.

From the cases collated in Toledo Traction Co. v. Cameron, supra, as well as from all authorities which have been shown us and which we have found by our own research, it appears that testimony, given in a former civil action or at a former trial of the same action by a witness who has since died, is admissible in a later action if between substantially the same parties and substantially the same issue is involved, on the theory that such testimony is, both at common law and by long usage in the courts of this country, regarded as one of the exceptions to the general rule against hearsay testimony. The requirement of Section 861 of proof “by oral testimony and examination of the witnesses in open court” is satisfied by the presence at the later trial of a witness who heard (or stenographically reduced) the testimony of the witness since deceased; and if the witness since deceased gave his testimony at a former trial, under oath, and under cross examination or opportunity of cross examination by the party against whom it was offered at the later trial, the objection to the hearsay rule is overcome, and his testimony, if adequately preserved, is clearly admissible. Toledo Traction Co. v. Cameron, 137 Fed. 48, 69 C. C. A. 28; Mattox v. United States, 156 U. S. 237, 241, 242, 15 Sup. Ct. 337, 39 L. Ed. 409; 10 R. C. L. 966; 2 Jones on Evidence, §§ 336, 337.

Applying this rule to the offer in this case, we find no error committed by the trial court in admitting the testimony of deceased witnesses.

(3) Can the admission in evidence of the bonds be sustained on the ground that they were ancient documents?

We are of opinion that the bonds proved themselves as ancient documents.

[7] (4) Were the bonds, having been signed by only two of the three commissioners, valid?

It is a fair construction of the statute that the bonds though signed by but two of the three commissioners are valid. Any doubt upon this question, however, is set at rest by the case of Cotton v. New Providence, 47 N. J. Law, 401, 2 Atl. 253, where this provision of the statute was construed.

[8] (5) Were the bonds invalid because the commissioners did not affix their seals?

This question was argued on demurrer before Thomas G. Haight, then district judge. The statute provides that the bonds should be issued by the commissioners under their “hands and seals, respectively.” Under authority of Draper v. Springport, 104 U. S. 501, 26 L. Ed. 812, Judge Haight held that the substantial thing to be done by the commissioners on behalf of the Township was to pledge the security of the Township in aid of the Railroad Company by issuing its bonds. “The technical form of the obligations was a matter of form rather than of substance. The issue of bonds under seal, as contradistinguished from bonds and obligations without a seal, was merely a directory requirement. • The Town, indeed, had no seal; and the individual seals of the commissioners would have had no legal efficacy, for the bonds were not their obligations, but the obligations of the .Town; and their seals could have added nothing to the solemnity of the instruments.” We are in full accord with this ruling. Morrison v. Bernards Township, 36 N. J. Law, 219; Bernards Township v. Morrison — Bernards Township v. Stebbins, 109 U. S. 341, 349, 350, 3 Sup. Ct. 252, 27 L. Ed. 956.

Third Question.

Was suit on the bonds barred by the Statute of Limitations?

This involves two questions. The first is:

(I) Was the action founded on the bonds or on the statute?

[9, 10] The rule is settled that where a liability is created, not by the act of the parties but by positive provision of a statute, a Statute of Limitations, framed, as the New Jersey Act, after the Statute of 21 James I, is not applicable. Angeli on Limitations, § 80. This rule is not questioned, but the Township denies its applicability to this case. The distinction between liability on the statute and liability on bonds issued under authority of a statute- is clearly shown in Robertson v. Blaine County, 90 Fed. 63, 32 C. C. A. 512, 47 L. R. A. 459, and in Bullard v. Bell, Fed. Cas. No. 2,121; Cowenhover v. Freeholders, 44 N. J. Law, 232;. Outwater v. Passaic, 51 N. J. Law, 345, 18 Atl. 164. These are actions on liabilities fixed by statutes where the parties did nothing to create them. In Morrison v. Township of Bernards, 36 N. J. Law, 219, it was'held, that a suit may be'maintained on bonds issued pursuant to the statute under consideration, thus recognizing that, it was the act of the parties which created the liability, not the statute, and that an action,to enforce that liability is on the bonds, not on the statute. This view is, inferentially at least, supported by Bernards Township v. Morrison, 133 U. S. 523, 527, 10 Sup. Ct. 333, 33 L. Ed. 766.

[11] (2) Did the six year or the sixteen year Statute of Limitations (Comp; St. 1910 N. J. p. 3162) apply?

Section 1 of,the act limits actions to six years on contracts “without specialty”; Section 6, to sixteen years on actions, among others, “upon any single or penal bill for the payment of money only.” It is to be noted that the. last mentioned section (the sixteen year limitation) does not in so many words refer to instruments under seal, yet the courts of New Jersey have given to the terms so used their recognized legal significance and have construed that clause to cover actions “upon sealed instruments for the payment of money only.” Flasser v. Haines, 52 N. J. Law, 10, 21, 18 Atl. 1095. Therefore, bonds under seal are within thé sixth section.

What are the instruments sued on in .this cáse? Admittedly they are bonds. The statute which authorized their issuance so described them. The statute, however, went further and gave them the dignity of bonds under seal lay directing that they bear the seals of the Township commissioners. When issued, the bonds themselves recited their execution under the seals of these officials. As the failure of the commissioners to affix their seals to the bonds as directed by the statute did not destroy their validity (Draper v. Springport, supra), the omission of the commissioners’ seals did not, we think, change the character of the instruments from that which the statute authorized and defined. Being in legal effect “sealed instruments for the payment of money only” (Draper v. Springport, supra; Elassar v. Haines, supra), the bonds in suit come under Section 6 of the New Jersey Statute of Limitations and are subject to the sixteen year limitation, not to the six year limitation.

Bonds No. 66 and 87, having matured more than sixteen years before suit was brought, and the Statute of Limitations of New Jersey having run. against them, were properly barred by the trial court. Bonds No. 92, 93 and 94, having matured at a date less than sixteen years before this suit was begun, were properly admitted.

Fourth Question.

Was the plaintiff a bona fide holder of the bonds and did the court err in charging the jury on this issue?

[12-14] The plaintiff proved that he paid for the bonds. He did not prove the amount he paid. This was not necessary. On the subject of fides, the plaintiff starts with the presumption that he acquired the bonds in good faith, even though he acquired them after maturity. Montclair v. Ramsdell, 107 U. S. 147, 158, 2 Sup. Ct. 391, 27 L. Ed. 431; Bernards Township v. Morrison, 133 U. S. 523, 527, 10 Sup. Ct. 333, 33 L. Ed. 766. Being a presumption, it was rebuttable. - It was not rebutted by any evidence offered by the Township. The plaintiff in buying the bonds succeeded to whatever rights his predecessor in title had in them. Montclair v. Ramsdell, supra; Byles on Bills, 119, 124. There is'nothing shown that he purchased them with knowledge of any infirmity. The fides of the plaintiff’s holding was a matter of defence of which the defendant did not choose to avail itself.

If this case had been brought here on the defendant’s writ alone, or on the plaintiff’s writ also, but with no more assignments of error than those we have reviewed, we would have entered a decree affirming the judgment below. But, while we find the judgment free from error on the defendant’s showing, we are confronted by the plaintiff’s writ under which he also attacks the judgment. His attack against the judgment is made, not solely on the ground of the court’s alleged error in applying the Statute of Limitations to two of the bonds (which we have resolved against him), but also on an alleged error of the court in charging the jury, that, in framing their verdict, if for the plaintiff, they should compute interest on the principal of three remaining bonds at a rate less than that which the bonds called for. This raises another question, which we term the

Fifth Question.

Was the plaintiff entitled to interest on the principal of the bonds at their prescribed rate of seven per centum per annum from the dates of maturity to the date of verdict?

[15] The trial court instructed the jury that if they found for the plaintiff they “should allow him interest at the rate of seven per cent, from the date of the execution of the bonds until their maturity, * *' * but [they should] allow interest on the bonds from the date of their maturity until the present date at the rate1 of six per cent, only, six per cent, being the legal rate of interest in this state.”

We think this was error. Our opinion is based, first, on a fact and then on the law as applied to that fact, about neither of which can there .be much dispute. The bonds‘provided for the payment of their principal at a named bank, “also interest thereon at the rate of seven per cent, per annum, payable semi-annually on the first days of July and January in each year, until the said principal sum shall be paid, on the presentation of the annexed interest coupons at the said bank.” This obligation, while it indicates the expectation of the obligor to pay principal at maturity, contains an express promise to pay interest at seven per cent, “until the said principal sum shall be paid.” The principal sum was not paid either at maturity or later. This is the fact.

Cases in the Supreme Court of the United States, and, similarly, a case in the Court of Errors and Appeals of New Jersey, declare the law, as to interest, to be, that in the absence of provision in a bond indicating the continuance of the prescribed interest rate after maturity, the legal rate prevails; but where a bond calls for a given rate, which is higher than the legal rate, yet is not usurious, and provides for the payment of that rate until the principal of the bond is paid, the contract rate prevails after maturity quite as well as before maturity. Jones Co. v. Guttenberg, 66 N. J. Law, 659, 667, 51 Atl. 274; New Orleans v. Warner, 175 U. S. 120, 147, 20 Sup. Ct. 44, 44 L. Ed. 96; Holden v. Trust Co., 100 U. S. 72, 25 L. Ed. 567; 2 Daniel on Negotiable Instruments, 6th Ed. Section 1458A.

[16] These authorities (which apparently were not submitted to the trial judge): rule the question. But in this ruling, the rate of interest on the principal of the bonds should not be confused with the rate of interest on defaulted coupons. The interest rate on coupons after' maturity is the legal rate because the coupons carry no contract rate of interest after maturity.

We are constrained to hold that in instructing the jury, if they found for the plaintiff; to compute interest on the bonds after maturity at the legal rate, the trial court erred, and that, because of this error, the judgment below must be

Reversed.