Diefenderfer v. State ex rel. First National Bank of Chicago

Potter, Ciiiee Justice. 'i'lais was a suit in mandamus brought in the District Court in the name of the State on the relation of the First National Bank of Chicago to compel the issuance and deliver}'- to the relator of the refunding water bonds of the town of Sheridan to the amount of seventy-five thousand dollars, of the denomination of five hundred dollars each, bearing interest at five per cent per annum, and payable in thirty years after their date, but redeemable at the option of the town in 'ten years, in accordance with an ordinance of said town enacted June 15, 1903, providing- for the issuance of such bonds for the purpose of redeeming and refunding the same amount of outstanding water bonds issued in 1893, which outstanding bonds became redeemable according to their terms on August x, 1903. The relator claimed a right to the relief sought by virtue of an alleged contract between it and the corporate authorities of the town made June 18, 1904, as the result of a proposal of the relator, at the solicitation of the town authorities, to purchase the bonds at par, and an acceptance of such proposal. The Town of Sheridan, Alfred Diefenderfer as Mayor, J. F. Hoop as Clerk, G. T. Stahl as Treasurer, and the individual members of the Board of Trustees or Council of the town, were joined as defendants, and an alternative writ was issued returnable September 3, 1904, the suit having been commenced August 9, 1904. The answer contained a general denial of the allegations of the petition respecting the contract relied on by the relator and the duties of the respective town officers to issue and deliver said bonds, or cause the same to be issued and delivered, to the relator, and also set up certain separate and specific defenses which may he summarized as follows: (1) The absence of any provision by ordinance or statute prescribing the manner of giving notice for the redemption of the outstanding bonds, and the failure of the Town Treasurer to ascertain and advise the corporate hoard as to the bonds, — 396 — their amount, etc., ready for retirement. Under this defense the claim seems to have been that until such provision and ascertainment had been made the Council or Board of Trustees, as the corporate board, is indifferently designated in the statute, was not in a position to issue the bonds or accept a bid therefor. (2) The submission of a more favorable bid by another party (Shepard & Co.) on August x, 1904, after the alleged acceptance of relator’s bid. (3) After the alleged acceptance of relator’s bid, the passage of a, supplemental ordinance, viz: oix August 1, 1904, requiring an advertisement for bids to be submitted and opened on. September 5, 1904. (4) The submission of a bid by another party (Shepard & Co.) on September 5, 1904, agreeing tO'pa}r a slightly larger sum for the bonds than that called for by relator’s bid, and the alleged acceptance thereof by the Town Council. In this connection, however, it appeared that such acceptance -was conditional only, having been express^ made conditional upon the decision of the court in this suit being in favor of the town, and if unfavorable, then such acceptance, it was declared, should be null and void. Upon a trial of the cause the District Court found for the plaintiff, and found specifically among other things that in 1893 the town had duly issued its water bonds to the amount of seventy-five thousand dollars, bearing interest at six per cent, which were outstanding and unpaid and redeemable; that an ordinance had been. duly and regularly enacted June 15, 1903, for refunding said indebtedness by issuing bonds in the same amount to bear interest at five per cent per annum, to run in denominations of five hundred dollars each, and to be payable in thirty years, but to be redeemable in ten years at the option of the town; that the corporate authorities had duly offered the said refunding bonds for sale according to the terms of said ordinance to the highest bidder for cash; that on July 18, 1904, the relator had bid par for the bonds and was the highest bidder up to that time, there having been several bids thereto — 397 — fore received; and that on said date the bid of relator was duly and fully accepted by the corporate authorities of the town. Thereupon a peremptory writ of mandamus was awarded the plaintiff, requiring the defendants, the town and its officers aforesaid to make and cause to be signed, executed, sealed, registered and delivered to the relator such refunding bonds, the same to be dated not later than January 1, 1905, upon payment by the relator into the town treasury of the sum of seventy-five thousand dollars, and each officer was thereby required to perform his particular duty in respect to the issuance of the bonds as provided by ordinance. The judgment was rendered November 15, 1904, and on December 29, 1904, this proceeding in error to review such judgment was instituted in this court by Alfred Dief-enderfer as Mayor of the town, J. F. Hoop as Clerk, and D. Kahn as Councilman and member of the Board of Trustees. The Town of Sheridan, by its corporate name, the other members of the Board of Trustees, and the Treasurer were joined as defendants in error with the plaintiff below. The principal defendant in error, the State on relation of the bank, filed a motion-to dismiss the petition in error upon the following grounds: (1) That there is no longer any controversy pending in the cause; (2) that since the judgment the authorities of the town have directed the issuance of the bonds to the relator, and have fully complied with the judgment; (3) that neither of the plaintiffs in error have any appealable interest in the cause. The hearing was had upon that motion. The motion to dismiss is based generally upon facts occurring since the rendition of 'judgment, shown by an affidavit of the Town Treasurer attached to the motion, containing duly certified copies of certain resolutions adopted by the corporate board on November 21, and December 19, 1904, showing thereby that the Council or Board of Trustees on November 21, 1904, not desiring to appeal, but — 398 — being willing to abide the judgment, adopted a resolution recognizing the contract with relator for the sale of the bonds in question, and directing their issuance, execution, sale and delivery to relator, in accordance with such contract and the judgment aforesaid, and requiring them to be dated January 1, 1905. That resolution also prescribed a form for the bonds and coupons to be attached, provided specifically for a notice to be given by the treasurer for the redemption of the outstanding bonds, and that interest should cease thereon on January 1, 1905, arid required the Mayor to sign the new bonds and a certificate thereon to be endorsed attesting the legality of their issue, the clerk and treasurer to countersign the bonds, and the clerk to affix the corporate seal thereto. It is shown by the affidavit that notices were at once published by the treasurer calling upon the holders of the outstanding bonds to surrender them for payment and cancellation on January 1, 1905, at the Chemical National Bank, New York City; that by direction of the said treasurer, the relator on or before that date deposited the purchase price of the bonds, $75,000, at said Chemical National Bank to the credit of the town of Sheridan, and the treasurer on said date deposited in said bank a sufficient sum of. money to pay all the interest on the outstanding bonds then due and unpaid; and that many of the outstanding bonds have been paid out of such deposits by said bank upon the direction of the treasurer. It is also shown that on December 19, 1904, the resolution of November 21 was again passed over, and, notwithstanding the veto of the Mayor, each of the five members of the board voting- for the resolution on both dates, except D. Kahn, who voted in the.negative. It is stated in the affidavit that the relator prepared and sent the bonds to the town of Sheridan in December, 1904, to be signed and executed, but that the Mayor and Clerk have refused to perform their duty in the premises, and that their terms of office will expire on or before March 24, 1905. The statute authorizes the Mayor and Council of an incorporated city or town to issue its negotiable coupon bonds, — 399 — upon providing by ordinance therefor, for the purpose of redeeming, funding or refunding any indebtedness, bonded or otherwise, when the same can be done at a lower rate of interest, or to the profit and benefit of such city or town. (R. S. 1899, Secs. 1719-1724.) The town of Sheridan is incorporated under a special charter, enacted when Wyoming was a territory and had power to so incorporate cities and towns. (Sess. Laws 1884, Ch. 85; R. S. 1899, Secs.' 1426-1487.) The bonds that were to be refunded by the issue in question had been issued in 1893 to provide funds for constructing, purchasing and regulating a system of water works for the town. Debts contracted for supplying a city or town with water are excepted from the constitutional limitation upon public indebtedness. (Const., Art. XVI, Sec. 5-) The answer in the case below admitted that the bonds of 1893 had been duly issued, and also admitted the passage of the ordinance of June 15, 1903, for the redemption of such bonds by issuing refunding bonds, as the same was set out in full in the petition. It will be unnecessary to recite in detail the provisions of that ordinance, except that they may become material in some particulars in discussing one of the propositions in the case. It is sufficient now to say that it authorized and directed the issuance of the refunding bonds to the amount of seventy-five thousand dollars, without fixing their date of issue, provided that the rate of interest should be five (5) per cent, payable semiannually, on January 1 and July 1 of each year, and that they should be issued in denominations of five hundred ^dollars each. The duties of the officers were prescribed in respect to the issuing of the bonds, and in some respects as to the calling in of the old bonds, but the precise method of giving notice thereof was not provided by that ordinance. The ordinance recited the purpose of the issuance of the refunding bonds, and the desire of the corporate authorities to refund the water bonded indebtedness at a lower rate of interest. — 400 — It appeared on the trial that' the corporate officers had solicited bids without advertisement for the refunding bonds, as they were permitted' to do, since there was no requirement by statute that bids should be advertised for; and when relator’s bid was submitted, and its alleged acceptance occurred, the town had not provided by ordinance for advertising for bids. It was shown that relator’s bid was the best that had been received at that time. It was a bid to pay par for the bonds, the town to pay $250 to cover all expenses. At a meeting of the Mayor and Council the bid was acceped on July 18, 1904, and the relator notified thereof. The chief contention of the respondents on the trial below, as might be indicated by the answer, was that no binding or valid contract had been made with relator, and that the town was, therefore, authorized to provide for receiving, and to receive and accept another and later bid, which was more favorable to the town from a financial standpoint. That was the chief issue in the case, the others supplementing- it. The question arises, therefore, upon the motion to dismiss whether, in view of the action of the Town Council subsequent to the judgment, the issues have been withdrawn from further controversy, so that the appeal presents nothing but purely abstract questions. That is the contention of defendant in error. Counsel for plaintiffs in error, on the other hand, while apparently conceding that if no further controversy existed a dismissal might properly result, contend that the effect of the corporate action aforesaid has not been a settlement of the controversy or a full compliance with the judgment. The grounds of such contention will appear as we proceed. Clearly there would be no further controversy to authorize a review of the judgment, had the issuance of the bonds not only been directed by the Council, but had they been signed, issued and delivered to the relator. (Leet v. Board (Cal.), 47 Pac., 595.) The right to mandamus to compel the issuance and delivery of valid municipal bonds to one — 401 — entitled thereto is upheld in a number of cases. (Jones v. Guttenburg (N. J.), 51 Atl., 274; Halsey v. Nowrey, Mayor (N. J.), 59 Atl., 449; Smalley v. Yates, 36 Kan., 519; People v. Brennan, 39 Barb., 522; People v. McGuire, 65 N. Y. Supp., 463; High’s Ex. Leg. Rem., Sec. 333.) In Jones v. Guttenburg, supra, the court say: “The claimants’ right to these bonds is clear, and they are without any other adequate specific remedy. No specific remedy is provided by statute for the recovery of these bonds or damages for failing to issue them, nor does any exist in any common law action. The claimants could not bring an action of replevin, trover or detinue; and if an- action as for a breach of contract could be maintained, it is difficult to see what would be the measure of damages, and if damages were recovered, the relators might be compelled to proceed by mandamus to compel the town to levy a tax to pay the judgment.” We do not understand, however, that the right to the remedy of mandamus is disputed in case the relator is entitled to the bonds. Assuming the legal right in the town at the time of the adoption of the November resolution to sell and issue the bonds to the relator upon its bid therefor, nothing would seem to have been left for the Mayor and Clerk to do but the performance of the mere ministerial duties of signing; sealing and delivering the bonds; every other matter having been settled and determined by the ordinance of June, 1903, and the resolution aforesaid. It is to be observed that none of the defenses interposed by the answer were personal to the town officers. They were each made a defendant, and each defended, in a representative capacity. The defenses set up were intended to show, and their only effect, if any, was that the town was under no obligation to the relator in the premises. None of the issues in the case went to the right of either of the plaintiffs in error to refuse a performance of the contract with the relator if a valid contract existed. In other words the officers offered no defense or justification for their refusal to act inde — 402 — pendent of a defense or justification deemed available to the town itself as a corporate body. The action was against the town, and against the other defendants as officers thereof, on the theorj'- that t'he latter were required to perform their respective official duties in executing the obligation imposed upon the corporation as a result of its contract. We think it follows, therefore, that if the corporate board had authority in November to recognize the contract, -which was declared by the judgment to be valid and binding upon the town, and to reaffirm its acceptance of the relator’s bid, or to accept it as an original act, and in conformity thereto to- sell the bonds to the relator, every issue determined by the judgment was by such action of the board withdrawn from further controversy. If -there was anything in the proposition that the acceptance of relator’s bid in July was premature because specific provision had not been made as to the method of notifying the holders of the outstanding bonds, which may be doubted, that objection is cured by the resolution in November for the sale of the bonds to relator which made such- provision. Clearly, the mere fact that a better bid had been submitted by another party on August ist was of no avail to authorize the town to ignore their previous acceptance of relator’s proposal. That other bid, like the one submitted by the relator, had not been submitted in response to an advertisement for bids. If the board had entered into a complete acceptance of the bid -of relator, on July 18, such action could not be invalidated as against the relator by afterwards providing by ordinance that bids should be advertised for, and thereby soliciting other bids. The action of the board in September in receiving the bid of Shepard & Co. was taken pending the suit and the alternative writ, and there was not. an absolute .acceptance of such bid at any time; and the town doubtless had the right to reject any bids submitted in response to its advertisement, unless it had in some way waived that right. Under the terms of the acceptance of the Shepard bid, it — 403 — became null and void if the decision in the pending suit should result unfavorably to the town. The decision of the District Court was not appealed from by the town of Sheridan, the principal defendant, and the party in whose interest every defense was interposed. Did the corporate board of the town have the right to accept the judgment as a finality and proceed to comply with it so as to prevent its review on the petition of either of the three officers, the plaintiffs in error here? That we think is a practical statement of the question before us upon the motion to dismiss. If that right existed, it was exercised by the resolutions aforesaid. In our opinion the hoard had such right in the absence of any illegality in the bond .issue or in the contract of sale. But it is contended that, as the statute confers upon the "Mayor and Council” the power to issue the bonds of the municipality for the purposes mentioned, the Mayor has independent authority in the premises, and that bonds cannot be issued except with his consent. We cannot so construe the statute. It was evidently intended to bestow the power upon the governing body of the city or town, which consists of a Mayor and Council, having regard, however, to the usual prerogatives of the Mayor and Council. In Section 1724 it is provided that the issuance of the bonds shall be provided for by ordinance, which unquestionably means an ordinance enacted in the manner allowed by law. The Mayor is not given a vote upon questions coming before the board except a casting vote in case of a tie. He may veto an ordinance, but it may be passed over his veto by a two-thirds vote of the-members of the board. If, therefore, there was no illegality in the contract for the sale of the bonds to relator, a sufficient number of the board could by appropriate procedure provide for such sale, notwithstanding the disapproval of the Mayor. They did so by adopting the resolution of November over his veto, assuming that he was authorized to express his disapproval thereof by a veto. The clerk is given no voice in passing ordinances or resolutions, and he is clearly bound by a valid act of the board, — 404 — though he may disapprove it. The plaintiff in error, Kahn, had a right to vote upon the resolution, and did so, casting the only negative vote. He is likewise bound by the valid act of the majority. He has no further duty in the matter, not being required to sign or take any part in executing or delivering the bonds. It appears to us, therefore, that if the bonds themselves would not be illegal, or were not to be issued for an illegal purpose, and if the sale to relator upon its bid is not illegal, there is no controversy now pending between the interested parties in the case. It would be useless to decide questions determined by the judgment that have ceased to be a matter of controversy. (People ex rel. v. Com. Council, 82 N. Y., 575; Campbell v. Hall (Wash.), 69 Pac., 12.) It may be conceded that, should the board by its aforesaid resolutions be attempting to illegally issue the bonds of the town, or to illegally' sell the same to the relator, the Mayor and Clerk might be permitted to demand a review of the judgment, on the ground that they ought not to be compelled to perform an illegal act. There is some contention of illegality in the transaction. There is, indeed, no assertion that the town was unauthorized to issue the refunding bonds in question. On the contrary, it was proposed to issue them to another party. It is, however, insisted that the relator failed to show that the requisite steps had been taken to make the bond issue of 1893 regular and legal. That was not an issue in the case. The petition alleged those bonds to have been duly issued, and to constitute a valid and existing indebtedness of the town. The answer expressly admitted their due issuance for the purposes stated in the petition; and upon the trial there does not seem to have been any suggestion to the contrary. Those bonds were referred to in the ordinances and resolutions of 1903 as constituting a valid bonded indebtedness of the town. It is again insisted that the sale to relator is illegal on the ground that it will be for less than par and accrued interest, — 405 — in violation of the statute. Counsel discusses that contention altogether upon the bid of the relator. We think it is more properly to be considered upon the present motion with reference to the resolution of November which finally provided for the sale, together with the bid. But was. the bid a proposal to pay less than par and accrued interest at time of disposal? It offered to pay “par," the town to pay $250 to cover all expenses. At the time the bid was submitted the bonds had not been issued, nor their date fixed. No interest had accrued. Under the November resolution the bonds were to be dated January 1, 1905, and the outstanding bonds were to be redeemed on the same date. The relator deposited the agreed purchase price, $75,000, the principal of the bonds, as directed by the town treasurer, on or before the date of the bonds. Hence, under the resolution, and upon the facts, there was no accrued interest. But the word “par” would seem to include accrued interest, nothing to the contrary appearing. (21 Ency. E. (2d Ed.), 1029; Simonton on Munic. Bonds, 145; Illinois v. Delafield, 8 Paige, 537; Ft. Edward v. Fish, 156 N. Y., 363.) It is argued that the condition for the payment by the town of two hundred and fifty dollars to cover all expense brought the purchase price below par. The expense referred to was no doubt the estimated cost of preparing the bonds ready for execution. It was apparently so treated on the trial, so far as the record discloses. No intimation is to be found anywhere in the case that any other matter of expense was contemplated. We are aware of no rule of law, nor do we understand the statute to declare or imply that the bond purchaser is to bear the expense incident to the preparation of the bonds, unless he agrees to do so. The bonds are to he issued by the town, and in the absence of a contrary arrangement it would clearly he its duty to cause them to be prepared, issued and delivered, and to defray the necessary attendant expense thereof. There is not to be found the slightest intimation in the action of the corporate board, or in the record of an at — 406 — tempted violation or evasion of the statutory requirement as to the terms and conditions of sale. The judgment having been acquiesced in by the corporate authorities of the town, who have proceeded as far as possible to comply with it, and are only prevented from completely doing so by the refusal of the Mayor and Clerk to perform mere ministerial valid duties, no good reason is perceived for permitting a review of the judgment at the suit of those officers. The subsequent action of the corporate authorities operated, in our judgment, to withdraw from further contest every controverted issue upon the trial determined by the judgment. Nothing had previously been done which prevented the corporate board from proceeding-in November to fully accept relator’s bid, and provide for the sale of the bonds to the relator upon that bid, such bid having been solicited and submitted when a right to do so existed, and in accordance with an existing ordinance. The only issue, if any, therefore, that can now exist between the parties is whether the Mayor and Clerk ma) rightfully refuse a performance of the duties imposed upon them by the resolution adopted by the corporate board since the rendition of judgment. That was not an issue determined by the judgment. The fact that the plaintiffs in error were permitted by the court below to give and did give a supersedeas bond does not have the effect apparently insisted upon to authorize a review of the judgment for the determination of controversies fully settled by the act of the parties since the judgment. The giving of'the bond might prevent the judicial enforcement of the judgment, pending the appeal, by attachment for contempt or otherwise, but did not prevent the parties from voluntarily executing or complying with the judgment. Neither would the possible fact that the terms of office of the plaintiffs in error, Mayor and Clerk, have expired since the taking of the appeal furnish a sufficient reason for a reversal of the judgment. — 407 — The constitution provides that ‘‘no bond or evidence of .debt of any county, or bond of any township or other political subdivision, shall be -valid unless the same shall have endorsed thereon a certificate signed by the County Auditor or other officer authorized by law to sign such certificate, stating that the bond or evidence of debt is issued pursuant to law and is within the debt limit/’ (Const., Art. XVI, Sec. 8.) The ordinance of June, 1903, and the resolution of November, 1904, required such certificate to be signed by the Mayor, it is suggested that the Legislature had failed to enact a law designating what officer should sign such certificate upon bonds of a city or town until the recent session of the Legislature, when an act was passed, approved February 21, 1905, requiring the certificate of legality upon such bonds to be signed by the clerk. It is argued that, in view of the recent statute, it is no longer the duty of the Mayor to sign the certificate as required by the ordinance, resolution and judgment. When the ordinance and resolution were adopted the Town Council was no • doubt authorized to designate the officer to sign the certificate, and we know of no reason why the Council might not have required the Mayor to sign in addition to the signature of any other officer required by statute. The bonds are to be dated January 1, 1903, the purchase price was then paid, aird had they been executed on that date the new statute would not have applied. It may perhaps now apply, should there be a new Mayor and Clerk in office, but the provision of the ordinance would not, in our opinion, be necessarily void; its effect may be to require the Mayor, as well as the Clerk, to certify to the legality of the bonds. For the reasons stated, we think the motion to dismiss should be granted. The petition in error will be dismissed. Bijard, J., concurs. Van Orsdeu, J., did not sit.