,i"lliohhe was an officer/f()r the of obtainingsomespecitic relief him' ona personal liltbility" or in order to obtain a diScovery frotu him in regard 'to matterspecllliarly within his lmo'Vledge," he is -s.. reill party to the, Ido not see how it can be otherwise. One who is made a defenditbt to a suit for the purpose discovery fr0t11 him as lricldental to the relief Bought against another defendant,is just as lllucha necessary, and therefore a real, party as though made a defendant to a bill for discovery alone. In either case it is obthat unless inadea party no discovery can be obtained from him, 'and'when sued for that 'purpose it would seem to be plain enough that he cannot be held to be a nominal party. It results, tHat the second ground of dE-murrer is well taken, and must be sustained, with leave to complainant to amend within the usual time, if he shall be so advised.
AYLESWORTH "'.
COUNTY.,
{OLreuit Court, E. D. Michigan. November 80, 1889.>
,
1.
COtT.l'l'I'Bs-.AOTION QN DBAJ.N WARR.&.NTs-J'UBISDIOTION.
An action lies in the federal court upon drain orders drawn by · county drain commissioner upon a county treasurer, though the orders themselVeS create no debt; against the county', and the sole duty of the county officers i$ to assess and collect the cost of constructing the drain from the owners of property benefited by it. In such case the judgment is special, and is enforceable only by mandamU8 to compel the collection of the tax. Such orders are so far negotiable that suit may be brought upon them by the holder, though the court woul4have no jur,isdiction of an action brought by the assignor of such holder. ' :' , ,, ' ,
II. SAME-AcTION BY
8. 4.
8.A.MlI-EVIDENOE..
Such orders are p'lima.facl:e valid, and plaintiff is not bound to prove the regularity of the proceedings for the assessment and collection of the taX.
A, decision of the supreme court of .the state denying relief to a prior holder of such orders is IIot reB adjttawata. (8yZlabWJ by the CQwrt.) .
JUDGMENT-RES ADJUJ)I<lATA.
At Law. This was an action upon certain orders originally issued to one John Scriven for work done and materials furnished in the construction of two drains in the defendant county, such drains being located in the townships of Newark, New Haven, and Arcada, and no other. These orders were issued in pursuance of Act 43, Laws 1869, as amended by Act No. 169, Laws 1871. To the special count in the declaration were also attached the common counts, together with copies of these orders, which were signed by the drain commissioner and countersigned by the chairman arid clerk of the board of supervisors. An indorsement upon such orders shows that they were presented for payment to the county treaeurerabout the time they were issued, and that on the 31st Of March, '1883, all but one of them were again presented, and a payment made thereon. '
AYJ,E8WORTII
tl.
GRATIOT COUN'.l'Y.
The following is a sample copy of the orders, with their indorsements. "No. 257. ITHAOA, MICHIGAN, Nov. 7th. 1872. "County Treasurer, Gratiot County: Pay to John Scriven or bearer three hundred and seventy-six dollars out of the drain tax assessed in the township of Arcada for cpnstruction orNewark and Arcada ditch in said township. Act number 169. Laws 1871. ' D. W. ATTENBURG, "Drain Commissioner of Gratiot County. H. T. BARNABY. , ",Chairman Board of Supervisors. "N. CHUROH, Clerk." Indorsed "Presented for payment this 16th day of Nov.· 1872, "W. S. TURK. Treasurer Gratiot County, Michigan. "Paid March 31st, 1883, on the within order. $148.46. HAVERLO, County Treasurer· ·"Received March 31st, 1883, of said county treasurer the above $148.46 as the agent of Eliza W. Brownell. of Niagara county. New York. , " W . E. WINTON." [Signed]
"S.n.
ing defElDsEls: First, the statute of limitations; second, that the orders were payable out of a special fund, which was not supplied with funds with which to pay them on account of the action of the party through, whom plaintiff claimed title; third, re8 adjudicata. These drains were constructed by John Scriven under contract-First, with the drain commissioner of Gratiot, county; second, under contract with E. W. Kellogg, special commissioner by Act445, Laws 1871, which certain state in Gratiot county might be used in the payment for drains located in said township. These lands were benefited, ·by the construction of the drains, and were assessed for the same·. , Before the assessment was reported to the commissioner of the land-office, Scriven made his selection Of lands in payment of his con· tract with Kellogg. The commissioner of the land-office would not issue Scriven brought patents to ,Scriven until these ,taxes were paid. In a suit in chancery in the circuit court for Gratiot county to set aside these taxes, ro,J.d compel the commissioner to issue patents, and had a decree in his f!1vor as prayed. decree was not appealed from, and patents were issued. By this means the special fund from which these orders were to be paid was diminished by about $2,000. Had thoile taxes been collected by the land commissioner, and turned over to the county treasurer, the orders would a;ll have been paid. In 1881, one Eliza W. Brownell, who claimed to have received these orders from-Scriven, petitioned the supreme court of Michigan foumanagainst the board of supervisors compelling them to pay these orders. Her petition was denied. .49 Mich. 414,13 N. W. Rep. 798. Maraton Jerome, for plaintiff. F. H ·.Canfield and C. J. Willett, for defendant. BROWN, J.
The defendant pleaded thegeneralissue, and gave notice of the follow-
of -'
.,
'
..'
.
,.',
While this is nominally an action to recover the amount, from the coWlty, the real objlilct is to procure the issue of, .:,
FEDERAL REJ'ORn:R',
vol. 43.
aWl'itof mandamua for the collection of this tax from the property benefitedby the drain. Several defenses are interposed, which I will proceed to 'consider in their cirder. L That the orders created no obligation against the county. If by this it is intended merely to urge that the orders created no debt against the county which, as atnunicipal it is bound to pay, the position taken is correct. It is wellsettled that, where .public improvements are by law to be made at the expense of the adjoining property, no charge against the corporation is created, and its only duty is to take the necessary and legal steps to collect the assessment, and to pay it to the parties justly entitled thereto. Thus it was held int11e case of La.ke v.Trul8tees, 4 Denio, 520, in an action upbnan order given by the president of a village upon the treasurer to' pay the contractor' a cert/iin sum out of particular funds, that the' corporation wastha agent or instrument of the land-holder having an interest in the matter, to ascertain how much each one ought to pay and another to receive, and collect the money from those who were benefited, and Bee that it was, properly applied to the particular object, and that this was the extent of its duty. It was held that the plaintiff could not recover generally against the corporation as for a debt, and it was intimated that the plaintiff had a edy by mandamus, or by an action on the case again'st the trustees for neglect of duty. This is also the intimation of the supreme court in the case of Ogden v. County of Daviess,102 U. S. 634. And I believe that the auth()rities are uniform to the effect that no action will lie against the countyupon these obligations as for a debt chargeable 'against it. Good;. rich v.Detroit, 12 Mich. 279; Bank v. Laming, 25 Mich. 207 The proper remedy in this class of Cases in the state courts is }:iy writ of mandamus to comllelthe assessment and collection of the tax: by the officers charged with that duty, and payment of the same to the party entitled thereto.· . a'petition for a writ of maridamus in the federal court will not be entertained as an original proceeding, it was at bnetime supposed that no action of any kind would lie a municipality. In the case of Boro v.Phillips Co., 4 Dill. 216, it was held that the failure onefusal of the county to its duty in such cases did not make it liable to a general judgment for the obligations of the· particular district,and could not be made the foundation of an action against the county for a. money judgment. This· may be entirely true, and yet it does low that there is no remedy in the federal court Where the plaintiff is entitled tosue therein 'by reason of his citizenship·. The general rule is believed to' be without exception that, where the 'plaintiff is otherwise entitled to relief in this court, he will not be debarred therefrom by reason of the fact that his remedy in the state court, upon the same cause of action, would be of a character which we are not entitled to administer here. Hence it was held by Judge DILwN,in the case of Jordan v. OassCo:, 3 Dill. 185, that the holder of county bondS issued a county court on behalf ofa tciwlJ.ship voting aid to a railway might sue the county in the federal court, and recover judgment thereon, althotlgli
As
AYWWORTH V. GRATIOT COUNTY.
ciuch judgment could not be enforced against the county or i11l property, or the tax-payers of the county at large, but only by mandamus to the county court to compel the levy and collection of the special tax, according to the statute; This· is believed to be the earliest case upon the subject, and the opinion is a very interesting and instructive one. This case was approved in County of Cnss v. Johnson, 95 U. S. 360, and was applied in the case of Davenport v. County of Dodge, 105 U. S. 237, to bonds issued to county commissioners on behalf of a precinct which had no corporate existence, and could not contract or be contracted with. The court considered the bonds in this case as special bonds, which the county commissioners were to issue for the precinct. and that they were in legal effect the special bonds of the county, payable out of a special fund, to be raised in a special way. Similar ruling was made in the case of Blair v. Cuming Co., 111 U. S. 363, 4 Sup. Ct. Rep. 449. This case differs from the others in the fact tlrat the bonds contained no promise by the county to pay. but a promise by a precinct, which had no separate corporate existence. Notwithstanding this, the county was held liable to the performance of the obligation. As the authority of the drain commissioner to draw these orders is unquestioned, it is evident that there must be a remedy in favor of the payee or holder against some one for payment. It is an axiom of the law that for every wrong there is a remedy. It is evident, however, there can be no remedy against the commissioner, as he has no corporate powers, and as he is required by law to draw these orders upon the county treasurer in behalf of the contractor, but has no power to enforce the collection of the tax, or to provide in any other way for their payment. It is equally clear that the county treasurer is not bound to pay them unless he has the funds, and that no action will lie against him Unless he, refuses to disburse moneys actually in his hands for that purpose. An examination of the statute, we think, demonstrates that there is an obligation on the supervisors representing the county that they can only discharge by an assessment and collection of the tax. By section 1 of the drain law of 1869, as amended in 1871, the board of supervisors of each county is authorized to appoint one county drain commissioner, who is required by section 3 to execute the duties of his office and the resolutions and orders of the board of supervisors. He is bound to keep a.fuH record of his official acts in a book to be furnished by the county, to.drawall proper orders on each drain fund, to report to the board ofsupervisors his action in relation to each drain, and file the same with the clerk. Orders, drawn by him must be countersigned by the chairman and clerk of the board. By se.ction 4, on application to him by 1001' more owners of land in each township, he is required to make examination by surveys, and to determine the route of any they may require, and may have the assistance (section 6) ora court of record for the appointment of special commissioners to examine the property, and the necessity for th.e construction of such drain. By section 11, he shall make . a full report of all his doings, and present the saIne to the board their next annual meeting·. This bOard shall charge v.48F.no.5-23 ;
3S'..
<UDEIUL' BBPOltTEB ,vol.. 48..
s11m against earihtownship, and direct the supervisor of eaehtpwnship to levy the same upon the several parcels of lll-nd benefited bYi,thedra.iil. By section 12 the county treasurer is charged with the duty .ofreturning all lands upoDwhich a tax shall be levied and not paid to·the auditor general, and the llame shall be advertised and sold, and, .if, bid off to the state, . the state treasurer shall pay over to the county. treasurer the amount ()f the taxes. By section 15, whenever such tax· i shall be set. aside .by any court of competent jurisdiction, it shall be lawful for the supervisor to reassess such tax on the same land where such drain has been made, and, in case of any mistake or apportionment of ta:lCes, the board of supervisors. upon· the dation of the dllain ,'01' upon a review before them had by appeal from the action of the drain commissioner, may reassess upon the 'various: lands or portions of lands such amount of' drainage taxes as' may be .neoessary to correct such mistake or misapportionment. By' section 17, no money shall be paid by any county treasurer except on So warrant drawn by the oountersigned by the ohairman and clerk of the board of supervisors, and then only from the particular fund provided for each ditch. If there be no funds in his hands, the county treasurer must indorse the date of the presentation of the orders with his signature thereto, and his orders shall draw interest from and after such presentation' and indorsement. Section 19. By section 2'4 the board of, supervisors has full:powerand authority to control the tion ofthe,oommissioner, and may order reassessment of the drain tax, or.any portion thereof, to cOlTecterrors, and may make any other order . in relation to such ditches or drains as may be necessary. By section 33 the most ample powers are .conferred upon courts to make such orders assball be just and equitahlei' and may order suoh tax to remain on the roll for collection, or order the same to be levied, or may enjoin the same,' or. may. order the whole, or such part thereof as may be just and eq'uitable, to be refunded. 'L It'is evident that undertbis aotmost ample powers are conferred on . the board of supervisors with regard to the assessment and collection of these taxes, and,in case of any dereliction of duties on their part there ought to be a remedy the corporation, of which they are the authorized expression and agent. As before observed, the proper remedy' in .the state CJourt is by writ of mandamus. As this court is .incompetent, in. thA first. :instauce, to afford this' relief, we think an .action may be brought against the county, and the collection of the judgment enforced by the same process of mandamus that would be resorted to if the proceedings had.been instituted in the state court. iMy only doubt in this connection is whether the declaration should' not,count upon the failure oftheboard of supervisors to take the proper proceedings for the levy and collection of this tax. The state courts 'have repeatedly held that no action as for,a debt will lie against the pality upon these warrants, (Goodrich v. Detroit, 12 Mich. 279; Ba'nTcv. LanBing,25 Mich. 207; Whalen v.City of La Or088e, 16 Wis. 271; F'in'M!J V,Oit'll oj Oshk08h, 18 Wis. 209; Fletchilr v. City oj Oshkosh, Id; 232; Mar- '
tl. GRATIOT COUNTY·
:855
.grznv.; eiiy;ojDubuque, 28 Iowa, 575;) but may not an obligation foQ pay these or4er8, arise from a fa.ilure to collect them from the land? 2. The second defense i}f this case is that these orders are not negotia,ble, and that plaintiff is not authorized to bring suit upon the $arrie in this court. By the .8ct of 1887 this court cannot take cognizance of al.?-Y suit, except upon foreign bills ofexchange to recover the contents of any promissory note or other chose in action in favor of any assignee or. of any subsequent if such instrument be payable to bearer, and be made by any corporation unless such suit might have been prosecuted in .such court, to recover said contents, if no assignment or transfer had been made. There is no doubt that under the case of Mayor v. Ray, 19 Wall. 468, instruments of this description may be transferred from hand to hand, but that they are not commercial paper, in the sense of creating an absolute obligation to pay for them, free from legal and eqQ.itable defenses, and that the holder takes them subject to such defenfles. Weunderstand, however, that they are negotiable infltruments ill the sense that suit may be brought upon them by the holder, though they have no validity unless issued for the. purpose authorized by law, and that l while primafacie valid, they may be shown to have been irregularly or fraudulently issued. of Columbia v. Cornell, 130 U. S.655, 9 Sup. Ct. Rep. 694; Wall v. County of .Monroe, 103 U. S.74; Claiborne Countyv. Brooks, 111 U. S. 408, 4 Sup. Ct. Rep. 489; Kelley v. Mayor, etc., 4 Hill, 263. They were also held to be negotiable instruments in Bull v. Sima, 23 N. Y. 570, and in Brill v. Tuttle, 81 N. Y. 454. It was said that they operated as an assignment of so much of the fund as the amount of the order. The act of 1887 does not seem to be limited to negotiable paper, but to extend to any chose in action if the instrument be paya):>le to bearer, and be made by a corporation or in behalf of a corporation; but, even assuming that it is limited to negotiable paper, we think that these instruments so far participate of that character that suit may be brought upon them by any holder. 3. The third defense is that the plaintiff is bound to prove the proceedings for the assessment and collection of the tax to have been regular. UndoubtedlYI the regularity of such proceedings may be examined on certiora1'i to the drain commissioner, (Kroop v. Forman, 31 Mich. 144; Whitiford v. Probate Judge, 53 Mich. 130, 18 N. W. Rep. 593;) or upon a bill filed to restrain the Qollection of the tax, (Frost v. Leatherman, 55 Mich. 33, 20 N. W. Rbp. 705.) But in actions upon orders drawn upon the county treasurer to pay for services rendered, it is said by the supreme court, in Wall v. County of Monroe, 103 U. S. 77; the orders prima facie the. 'validity of the claims allowed, and authorized their payment. It is further. said that the warrants, being in form negotiable, are transferable by delivery so far as to authorize the holder to dernaqd payment of theJ;l1j and to maintain in his own name an action upon' them; but they are not negotiable in the sense of the law..; merchant,so that, .when held bya bona jidepurchaser, evidence of or defenseflava,Uable against .the original payee, would
356
DDERAL REPORTER,
-be excluded. The transferee takes" them subject to all legal and equitable defenses which existed to them in the hands of such payee. 4. It is said, however, that the case of Brownell v. Supervisors, 49 Mich. 414, 13 N. W. Rep. 798, is conclusive against the right of recovery in this case. That was an applicatloufor a writ of.mandamus for the payment of these very orders. The court held that the relator, Eliza W. Brownell\ had not shown herself to be the holder and legal owner of these orders, and that she was not entitled to the writ unless her right to such orders was either admitted or proved. It was further intimated in that case that Scriven, the original holder of these orders, could not have recovery upon them, because he, having purchased certain state lands, against which a portion of these taxes had been assessed, had filed a billiil chancery in the circuit court for Gratiot county against the commissioner of the state land-office, ahd procured a decree declaring the assessment on such lands to be illegal and void. In pUfEluance of this decree, these lands were patented by the state to Scriven without the payment ofsaid taxes, or any part thelteof; It was said that, under these circumstances, neither Scriven nor any perSOn claiming under him could, with avery good grace, ask that a discretionary writ should be issued as prayed .for in that case. We do .not understand, however, what there is in this opinion to create an estoppel. Weare not informed of the grounds on which the court set aside these taxes, nor do we understand why the board of supervisors had not ample power, under the act, to re-assess these taxes upon the same or other lands benefited by the drain. Weknbw of no reason why a paving contractor, for instance, owning.aJot upon a certain street which he has paved; may not institute a bill to have the taxes assessed upon such lot declared to be illegal; in which case we understand the ,.tax would either be reassessed or assessed upon the other lots upon the same street. To say that he is thereby debarred from recovering the amount of his paving contract is practically to say that he must pay a tax himself which the court has declared to be illegal or improperly assessed.:.' While we should desire to give full forcetorthe.opinioriof the "sUpreme ,court in this case, the point really decided was that the relator had not made title· to these orders. There Was no such construction given to the drain law as would be binding upollthis court, nor are there any reasons given in this opinion why a holder of these orders might riot niaintain suit upon them. It was said to be dou bUul whether, under this" legislation, it was contemplated that parties could purchase state lands against which taxes had been entered up,and have the same set asidejbut that is precisely what Scriven appears to 'have done in this case., . We do not understand the court to decide that an action could not be maintaiaed against the county upon. these orders, but only in its discretion it would refuse a writ of mandamus. We are not fully persuaded that the reason stated in the latter part of this opinion for denying the writ isa sound one, but in any event we hold that it is not applicable to this case. We do not find it necessarY' to discuss at length the question as to when the statute of limitations 1:>egins to run upon these orders, because,
PECK V. FIRST NAT. BANX.
, 3.57
as to all but one of them, it is admitted that a payment was made in 1885, which, upon any construction, would take them out of the statute. Upon the remaining orderit is quite evident that the statute is a complete defense. I shall therefore finstruct the jury to render a verdict for the plaintiff in this case for the sum of $4,847.12, and interest from November 7th. NOTE. A motion for a new trial, argued before t.he circuit and district . judges, was denied. .
PECK
et al. v.
FIRST NAT. BANK.
Ccnrcuit Court, S. D. New York. May 22, 1890.) BANKS AND BANKING-COLLEOTIONS.
Plaintiffs sent to a certain bank a bUl of exchange indorsed to said bank for collection. At the time the bank received the bill of exchange it was insolvent, to the knowledge of the mana¢ng officer, and on that day, or following morning, it failed. Prior to the failure it indorsed the bill of exchange to defendant bank, which collected it, and kept the proceeds, crediting the insolvent bank, which was indebted to it, with the amount thereof. HeW, that the first bank acquired no title because of its fraud in not disclosing its insolvency, and defendant had no better title, as plaintiffs' indorsement showed that the bank was merely plaintiffs' agent to collect the proceeds.
At Law. Action by John P. Peck and others, copartners, doing business ae "Farmer!'!' Bank of Coshocton," against the First National Bank of New York to recover the proceeds of a bill of exchange, which was sent to the Fidelity National Bank of Cincinnati, with the following indorsement thereon: "Pay to the order of Ammi Baldwin, cashier, for collection. account of Farmers' Bank of Coshocton, Ohio. SAMUEL IRVINE, Cashier." Said Samuel Irvine was cashier for plaintiffs. The Fidelity Bank dorsed the bill of exchange to the defendant bank, and, after the failure .of the Fidelity Bank, the defendant bank collected it,and kept the pro:ceeds, crediting the Fidelity National Bank, which was indebted to defendant, with the amount thereof. Henry O. Andrews, for plaintiffs. Peabody, Baker Jc Peabody, for defendant. WALLACE, J. At. the time when the Fidelity Bank received the draft belonging to the plaintiffs for collection, the bank was, according to the agreed statement of facts, "hopelessly and irretrievably insolvent,as was known to E. L. Harper, the vice-president of the Fidelity Bank, who was then the managing officer of the business of the bank." The bank failed the same day, or the next morning, and never resumed business. Under these circumstances, it was a fraud upon the plaintiffs, on the part of the bank, to acquire their property upon the faith of its apparent prosperity, without disclosing the real situation. The FIdelity Bank;