Township of Grant v. Township of Reno, 107 Mich. 409

107 Mich. 409 | Mich. | 1895

Grant, J.

{after stating the facts). 1. The claim of the complainant is not barred, either by laches or the statute of limitations. These bonds were issued in January, 1869, before the decision was rendered in People v. Tp. Board of Salem, 20 Mich. 452, May 26, 1870. Under that decision these bonds were void, and their payment could not be enforced in the courts of this State, unless they showed upon their face the authority of the township to issue them, and were in the hands of a bona fide holder without notice. The bonds were payable 15 years from date. The township of Grant was, therefore, not liable until its liability was established by the judgment of a court of competent jurisdiction. Presumably, the officers and people of both these townships so understood the situation. There was, therefore, no necessity for proceeding or right to proceed to ascertain the amount of the bonds chargeable to each township until the liability of the township of Grant therefor was established by the judgment of such court. If the township of Grant had commenced suit against the township of Reno for its proportion of these bonds, according to the agreement of the two boards, it would have been a sufficient answer that the bonds were void under the decision in the Salem case, and there was no certainty that the former would or could be held liable for them. According to the allegations of the bill, its liability was established in October, 1891, and within three years after that this suit was commenced.

2. It is urged that this suit cannot be maintained because the judgment in the United States court is not conclusive, and the defendant has not had its day in court upon the question of the validity of these bonds. The obvious reply to this is that the only method provided by law whereby the defendant could have its day in court is the one here pursued. The bondholder could not sue the township of Reno, but only the township of Grant, his promisor. The effect of this judgment will, hereinafter be considered.

3. We think the steps taken by the complainant afford sufficient basis for the maintenance of the suit. The boards of the two townships had met and settled all their claims and rights of property, each against the other, and solemnly agreed upon the proper division of these bonds, and provided for an accounting. The agreement was binding upon the two townships, and either could enforce it in the courts upon the refusal of the other to carry it out.

4. The principal question in the case is whether the defendant can he held liable at all, for the reason that such bonds have been held void under the decisions of this court. The United States courts held that the decision in the Salem case was not binding upon them in cases where such bonds were issued and received in good faith prior to that decision. Township. of Pine Grove v. Talcott, 19 Wall. 666; Taylor v. Ypsilanti, 105 U. S. 60. Where, however, such bonds show upon their face lack of authority to issue them, or refer to ordinances or charters as the foundation thereof, the owners cannot be protected on the ground of their bona fides, but take at their risk, Risley v. Village of Howell, 57 Fed. 544; Bogart v. Township of Lamotte, 79 Mich. 294. Where such bonds show a prima facie authority upon their face, they are good in the hands of a bona fide purchaser without notice of the real object for which they were issued. Common Council of Cedar Springs v. Schlich, 81 Mich. 405. The case of Haugan v. Township of Grant does not appear to be reported, and we are, therefore, not informed of the basis of the judgment. For the purposes of this suit, however, we must assume, under the allegations of the bill, that it is a valid judgment, conclusive upon the township of Grant. Is it, if valid, conclusive upon the township of Reno? At the time the bonds were issued the two townships were one. The people acted upon the faith of the validity of an act of the legislature. The people of both townships were equally responsible for the issue of the bonds. The defendant is not in a position to throw stones at the complainant. Both occupy the same glass house, erected by their joint action. If the complainant can upon any legal grounds be held liable in a court of competent jurisdiction, there is certainly no justice or equity in permitting the defendant to escape its fair share of the burden. Especially is this so if the allegations of the bill are true that the defendant was notified of the pendency of that suit, and it was-defended with its knowledge and assent.

Defendant’s, counsel relies upon Township of Pierson v. Township of Reynolds, 49 Mich. 224, and Hale v. Township Board of Baldwin, 49 Mich. 270. Township of Pierson v. Township of Reynolds was decided, apparently, upon the ground that the transaction upon which the court rendered judgment as a binding agreement was subsequent in date to the organization of the defendant township,, and, even if valid, could not bind the latter township. The township of Pierson asked for the writ of mandamus' —a discretionary writ — to compel the two townships to-apportion the liability. In Hale v. Township Board of Baldwin the same writ was invoked for a like purpose. The court held that, upon the face of the petition, it appeared that the bonds were not negotiated and held by bona fide holders, and the court therefore refused the-discretionary writ of mandamus to compel an apportionment.

These cases are not similar in their facts, nor conclusive in the present case. The defendant may be able,, upon a hearing, to show some grounds for attacking that judgment, or to show why it is not bound by it. The-fact that the courts of this State would not have rendered judgment against the complainant is no reason; why they will not compel an apportionment of the judgment in another court of competent jurisdiction. In* the case of City of Port Huron v. McCall, 46 Mich. 565,. this court refused to hold void bonds which were issued) to pay judgments against the city in both the State and! Federal courts upon similar void bonds. If the judgment was valid, and was not obtained by collusion or fraud, we see no reason, in justice and in equity, why the defendant, equally responsible with complainant, should not be held to pay its share of the burden, and why that judgment is not conclusive upon it. We think the bill of complaint presents a prima facie case for hearing upon pleadings and proofs.

The decree will therefore he reversed, with costs of both courts, and the case remanded for further proceedings in accordance with this decision.

The other Justices concurred.