City of Plattsmouth v. Fitzgerald

Maxwell, Ch. J. In the year 1878 the defendant herein commenced an action against the plaintiif to recover upon certain warrants of said city surrendered for certain funding bonds which were afterward declared void. The plaintiff in error demurred to the petition upon the ground that the facts stated therein were not sufficient to constitute a cause of action. The demurrer was overruled, [404] and the plaintiff not desiring to plead further, judgment was entered against the city for the sum of $3650.00 and costs. The case is brought into this court by petition in error. The petition, after setting forth the incorporation of the city, states “that on or about the 17th day of February, 1877, plaintiff was the owner of the following described city warrants or orders of the city of Plattsmouth (giving a particular description of each); that said warrants or orders were duly and legally issued by said city for the full value in the ordinary course of transacting its municipal affairs, and for legitimate municipal purposes, and were issued to the several persons and individuals named in each of said warrants in payment for services and materials had and received by said city of Plattsmouth from said several persons and individuals in carrying on the legitimate and ordinary affairs of said city, and that said services rendered and materials furnished by said individuals, and each of them, were received and accepted by said city, and kept, retained, and used by said city for municipal purposes, and that plaintiff paid full value for the same; that on the 1st day of August, 1877, said warrants and orders in the aggregate amounted to the sum of $3054.13; that on said day this plaintiff, at the request of the city council and authorities of said city, surrendered to said city and exchanged said orders or warrants and all of them, and received in lieu thereof from said city six certain bonds of said city of Plattsmouth, known and designated as ‘ Ten per cent funding bonds of said city to fund the outstanding debts of said city, then and thereafter to become due;’ that said series of ten per cent funding bonds were authorized by ordinance duly passed by the common council of said city on the 14th day of June, 1873, in the amount of $25,000, and that each of said ten per cent [405] funding bonds so issued to this plaintiff called for the payment of the sum of $500, with interest from date at the rate of ten per cent per annum. A copy of the said bonds is attached to the petition, marked ‘ Exhibit A/ and made a part thereof.” The petition also alleges that in the year 1878 the supreme court declared said funding bonds to be null and void because in excess of the indebtedness which the city was authorized to incur; that thereafter, and before the commencement of the suit, the plaintiff demanded of said city a return of the warrants so surrendered for said bonds, but the authorities of the city refused to take any action in the premises or to make any provision for paying the same. It is also alleged that thirty-five of said orders, aggregating the sum of $1750, were issued in the year 1878 in payment of a Babcock fire engine, and were afterwards assigned to the plaintiff. The principal defense relied on by the city is, that the bonds having failed for want of validity no action can be maintained to recover the consideration therefor. And in the discussion of that question great stress is laid upon the case of Wheeler v. the City of Plattsmouth, 7 Neb., 270. In that case the court held in effect that bonds issued in excess of the amount limited by law are without authority, and void. And we adhere to that decision, but it has no application to the case at bar. In this ease the petition states that the warrants “ were duly and legally issued by said city for the full value in the ordinary course of transacting its municipal affairs and for legitimate municipal purposes.” This the demurrer admits. If, as is admitted in this ease, the warrants in question were duly and legally issued for legitimate municipal purposes, they are a just and proper charge against the city. The warrants were not issued in excess of the limit fixed [406] by law, otherwise they could not have been legally issued. The cases cited by the plaintiff’ in error therefore are not in point. ' Those decisions are placed upon the illegality of the contracts. But here the demurrer admits that the original contract was valid and hind-. ing on the city. Does, therefore, the exchange of valid obligations against the city for bonds authorized by its ordinances, but void because issued in excess of the limit fixed by law, deprive the holder of the claim of all action therein? If so, upon what principle? The city obtained its own evidences of debt, which were valid and binding upon it, in exchange for evidences of debt issued by itself which were void, although at the time they were issued they were believed to he valid. The debt is still unpaid, and being valid in its inception and a just charge against- the municipality, it is liable thereon. The judgment of the- district court is clearly right and is affirmed, the defendant to deposit with the clerk of this court, for the use of this plaintiff, the bonds in question within sixty days from this date. Judgment accordingly.