Smith v. Sac County - 78 U.S. 139 (1870)
U.S. Supreme Court
Smith v. Sac County, 78 U.S. 11 Wall. 139 139 (1870)
Smith v. Sac County
78 U.S. (11 Wall.) 139
1. In a suit on a negotiable security, when the defendant has shown strong circumstances of fraud in the origin of the instrument, this casts upon the holder the necessity of showing that he gave value for it before maturity.
2. In a case submitted to the court without a jury which finds the facts constituting such fraud, and does not find that the plaintiff gave value for the paper, the judgment was rightfully given for the defendant.
Samuel Smith sued the County of Sac, Iowa, on certain interest coupons attached to bonds purporting to have been issued by the county for the erection of a courthouse.
According to the form of pleading in the Iowa courts, by petition and answer, which is adopted in the circuit court for that district, the plaintiff set out in a petition the adoption by vote of the people of the county, at a special election held July 7, 1860, of a proposition submitted to them by the county judge, providing for the erection of a courthouse, to cost $10,000, and the issuing of the bonds to that amount &c.; that the proposition and the result of the vote thereon were duly recorded as required by law; that the bonds with coupons were issued accordingly; and after describing, by number and otherwise, twenty-five of the coupons, averred that the plaintiff was the owner and holder of them, that he received them in good faith before maturity and paid value therefor, and that the same are valid and legal claims against the county. Copies of the proposition submitted, the record of the vote thereon, and the bonds and coupons were made part of the petition. The bonds were payable to bearer, signed by the county judge, and with the county seal affixed, and recited on their face that they were
"issued by the said county, in accordance with a vote of the legal voters thereof, at a special election holden on Saturday, the 7th day of July, A.D. 1860, pursuant to a proclamation made by the county judge of said county, according to the statutes of the state of Iowa in such case made and provided, for the purpose of erecting a courthouse in Sac City, the county seat of said county, as per said proclamation."
The concluding clause reads thus:
"In witness whereof, I, Eugene Criss, County Judge of said County of Sac, have hereunto affixed my name, and caused the seal of Sac County to be attached at Sac City this first day of October, A.D. 1860. "
The coupons were payable to the holder and signed by the county judge. The answer opened thus:
"The defendant for answer denies that any such election as is set out in the petition was called or held; denies that the electors of said county (a majority of them) are in favor of building a courthouse and issuing bonds in payment therefor; denies that any such bonds or coupons were issued, or any such contract let for building a courthouse; denies that the county judge had any authority to call such election, or make such contract, or issue such bonds or coupons; defendant further denies each and every allegation in plaintiff's petition."
Various statements, intended to defeat the claim, were then made.
It was stated by counsel at the bar, that the Revised Code of Iowa [Footnote 1] enacts that an answer shall contain
"a general denial of each allegation of the petition, or else of any knowledge or information thereof, sufficient to form a belief, OR a specific denial of each allegation of the petition controverted by the defendant, or of any knowledge or information thereof sufficient to form a belief. And also enacts [Footnote 2] that every material allegation of the petition, not controverted by the answer, must for the purposes of the action be admitted to be true."
The case was submitted to the court, under the act of Congress authorizing the trial of issues of fact in the circuit courts, by the court, without a jury, and which [Footnote 3] provides that "the finding of the court upon the facts, which finding may be either general or special, shall have the same effect as the verdict of a jury," and further that
"When the finding is special, the review may also extend to the determination of the sufficiency of the facts found to support the judgment."
The court, on the evidence, found as the facts:
"1st. That an order and proclamation was made by Eugene
Criss, County Judge of Sac County, for submitting to the vote of the people of the county, 'whether or not a courthouse should be erected in the same, to cost $10,000, in bonds &c., and whether or not a tax should be levied,' &c., as the same was alleged in the plaintiff's petition."
"2d. That an election was held on the 7th July, 1860, in pursuance of the said order and proclamation; and that the proposition was adopted by a majority of the votes cast at said election."
"3d. That the proposition and order for the submission of the same, together with a statement of the result of the election, was afterwards, by and under the direction of the said county judge, entered and recorded at large in the office of the said county judge in the 'Minute Book' of the county judge and county court."
"That by the said record entry the said order for the submission of the said proposition to the vote of the people purported to have been made at a session of the county court on the 4th day of June, A.D. 1860; but that the said record was not in fact made and entered in the 'Minute Book' at that time, nor until after the execution and delivery of the bonds, as hereinafter found, and that the said order was entered in said 'Minute Book' in June, 1861, after the said county judge had ceased to have any power or jurisdiction over the financial business of the county."
"4th. That the said county judge of said county, having entered into a contract in behalf of said county with one W. N. Meservy for the erection by the said Meservy of a courthouse in and for said county, did execute, October 1st, 1860, in behalf of the county, by affixing thereto his signature as such county judge and the lawful seal of said county, and deliver to Meservy, in pursuance of the terms of the contract, ten bonds, purporting to be the bonds of the county, dated &c., and coupons annexed, for the annual installments of interest to grow due thereon as aforesaid, being for one hundred dollars each, and payable to bearer at said bank, or receivable for taxes at the county treasury of said county, at the option of the holder. Said bonds and coupons were all expressed in the same words and figures as set forth in the plaintiff's petition."
"5th. That the said county judge in fact signed, sealed, and delivered said bonds and coupons as aforesaid at Fort Dodge,
in the County of Webster and State of Iowa, and not within the County of Sac, and that the contractor, Meservy, gave one of said bonds for $1,000 as a gratuity to the county judge as soon as the same were delivered by said county judge to said Meservy, and no courthouse was in fact ever built by said contractor or any other person in pursuance of said contract."
"6th. That the plaintiff Smith was, at the time of commencing this action and still is the holder and owner of twenty-five of the coupons, being those declared on; that he became such holder by transfer thereof to him before maturity, and after the entry of said proceedings in the 'Minute Book,' as hereinbefore found; that the said coupons were, at the commencement of this action, and still were, wholly unpaid."
"And, as matter of law 'arising upon, and resulting from the facts hereinbefore found,' the court was of opinion and adjudged that the said bonds and coupons were wholly void as against the said County of Sac, and that the defendant was entitled to judgment."
To this opinion and judgment the plaintiff excepted.
On the case's coming here, the point was raised whether a finding that the plaintiff had had value for his bonds was not indispensable to sustain the judgment. There was not, as will have been observed, any finding of that fact, nor did the record present evidence to show it.