Frankford Real-Estate, Trust & Safe-Deposit Co. v. Jackson County ( 1900 )

WOODS, Circuit Judge,

after making the foregoing statement, delivered the opinion of the court.

The warrants in question are not payable on demand, were not issued in order to raise money "to meet and defray the ordinary and necessary expenses” of the county, and therefore do not come within the scope of either section of the act of 1879. It was so decided by the circuit court of Jackson county on an application for an injunction against the issue of these particular warrants. The transcript of that adjudication was offered in evidence, but, if otherwise competent as evidence upou any issue in the case, it was properly excluded, because not authenticated. It is not denied, however, that the injunction was applied for, and that in refusing it the circuit judge expressed the following opinion:

“The right to provide for the payment of contractors erecting a county jail by interest-hearing county orders payable at specified times in the future is recognized by our supreme court in Jackson Co. v. Rendleman, 100 111. 379. It Is contended, however, that the act of May 31, 1879, providing for the issuing of warrants on county treasurer, etc., has rendered nugatory that decision. In my opinion, the act mentioned has no reference to an interest-bearing county order, payable at a specified time in the future, and issued in pursuance of a contract like the one in question. The act is limited to demand orders and those issued to meet and defray ordinary expenses.”

That seems to us to be the right view of the question. The distinctions pointed out in the brief for the defendant in error between this and the Rendleman Case do not seem to be substantial. The one distinction which is claimed to he vital is that in that case “the order was issued to the contractor in payment for work for which the county had authority to contract, [while] in the case at bar the order was issued to a money lender for money which the county ⅞ * ⅞ had no authority to borrow.” The building of a county jail was a work for which the county had authority to contract, and to issue its warrants in payment, and we cannot think that the warrants issued for such a purpose are to be deemed valid if issued directly to a contractor in payment for work or material, but invalid if issued fox- money which was paid at once to the contractor or his assignee. At most, only the discount necessary to obtain money on the warrants was involved, and in respect to that the supervisors were under no restrictions, except of good faith. They may have been bound in good conscience to make good to contractors the discounts suffered on tlxe warrants first issued, and to keep the work going it may have been necessary or prudent to make the warrants at par as good as cash to the contractors, and to accomplish that it was doubtless found more economical to sell the warrants in round sums than to deal separately with each contractor. Indeed, there was no other practicable way of distributing the cost of the work for payment in equal or nearly equal annual sums, multiples of $500, over a number of years, as tvas contemplated from the beginning. The original warrants issued to the different contractors were in various sums, more often greater or less than equal to $500 or a multiple thereof, and in no proper sense can it be said that the warrants finally issued were executed for the purpose of funding a prior indebtedness. They were a part of the scheme from the beginning, and if, during the progress of the work, orders or warrants were given to contractors to be held until substituted by or paid with the proceeds of orders issued according to the original plan, the latter are not, on that account, to be condemned as invalid. The doctrine that a municipal body like a city, town, or county cannot issue a funding bond without special au-' thority is conceded, but we believe it has never been applied, and think it ought not to be applied, to such a case. The court erred in refusing to admit the warrants and coupons in evidence, and for that • reason the judgment is reversed, with direction to grant a new trial.