terest subject to approval as to legality, you to furnish the bonds: We will accept and pay for said bonds, when duly registered and ready for delivery, par and accrued interest and $75 premium. "Central National Bank, "By S. W. Pierce, President." The following day, May 17th, the city commissioners met and accepted the offer of the bank. Four days later, May 21st, the bank wrote: check for $1,000, the city brought this action to recover the balance, $630.55. The bank filed a general demurrer to the plaintiff's petition. This was overruled. The bank then filed an answer, in which it pleaded that as a national bank chartered under federal statutes it did not have authority to purchase the bonds; and (third) that the bonds were illegally issued because they exceeded the limit of indebtedness authorized "We desire to state that we wish the bonds by state statutes; that the bank's contract of which we purchased last week to be issued in purchase was "subject to approval as to denominations of $500 each, instead of $1,000, and will pay the additional costs for registering legality"; and (fourth) thatand printing same. We wish you would kind-"defendant, upon plaintiff's offer to deliver to it ly furnish full transcript of all proceedings re- the aforesaid bonds, and in order that it might lating to this issue of bonds as soon as pos- exercise an intelligent and prudent judgment sible." and election under the aforesaid terms of its said bid as to the acceptance of the said bonds, submitted the subject of their legality to lawyers of high repute, skill, and experience in the examination and the determination of the validity of such bonds, and were by such attorneys advised that said bonds were invalid and void for the reasons set forth in the third defense herein; also alleged the good faith on and advice relative to the validity of said bonds, the part of the attorneys in their examination and that it acted honestly and in good faith upon the aforesaid judgment and advice of said attorneys, and so doing,- and so believing and relying thereon, elected to and did disapprove said bonds as to their legality and thereupon refused to accept them; that thereupon it promptly and in good faith notified plaintiff," etc. In due time the bonds were executed, offered to and declined by the School Fund Commission, a statutory prerequisite (Gen. Stat. 1909, § 8950), and on approval by the Attorney General were registered by the auditor of state. With these matters disposed of, the city tendered the bonds to the defendant bank on July 29, 1913, whereupon they were declined by the bank. The same day the bank addressed two letters to the city officials as follows: A demurrer was sustained to the third defense; and on motion of plaintiff the fourth defense was stricken out, on the ground that it was essentially the same as that of the third defense, to which a demurrer had been sustained. The district court made findings of fact and conclusions of law; the latter being as follows: "Gentlemen: Referring to the issue of city bonds for the paving of North Washington street, amounting to $50,560, which we purchased from you 'subject to legality,' we beg to inform you that the transcript of the proceedOther allegations covered good faith and ings relating to the issuing of these bonds fur- mistake on the part of the bank as to its cornished us by your city clerk was duly submit-porate powers, and concluded with a prayer ted to McCune, Harding, Brown & Murphy, At for the restitution of the $1,000 which had torneys, 831 Scarret Building, Kansas City, Mo., for examination and opinion as to the le- accompanied its original bid. gality of said bonds. The firm referred to decline to approve the legality of the bonds, and the proceedings were then forwarded to Hon. Chas. Wood, of Chicago, for examination, and without any information as to the opinion of said firm, and without prejudice. After waiting two weeks for this opinion we are informed that it is the same as Judge McCune's, which is that these bonds are in excess of the debt limit authorized by our statutes and therefore illegal. Under these circumstances you cannot expect us to accept and pay for the bonds, and we would ask you to return to us the certified check submitted with our bid, and oblige." "Gentlemen: Whereas, Judge Henry L. McCune, of the firm of McCune, Harding, Brown & Murphy, Attorneys, Kansas City, Mo., and Judge Chas. B. Wood, of Chicago, have careissue of the bonds for the paving of North fully examined the proceedings relating to the Washington street in this city to the amount of $50,560; and whereas, both of these gentlemen express their opinion that in issuing these bonds this city exceeds the limit of its authority to issue these bonds, and therefore said bonds are not legal: In view of the foregoing facts, we must decline to accept and pay for said bonds until such time as you have established in a court of competent jurisdiction that said bonds are legal beyond any doubt." "Conclusions of Law. "No. 1. Under the seventh subdivision of sec tion 5136 of the United States Revised Statutes, banks are not empowered or authorized to purdefining the powers of national banks, such chase or deal in municipal bonds as an investthe contract, so far as is executory or unexecutment, and when a national bank makes a contract to purchase such bonds for such purpose, ed, cannot be enforced. "No. 2. A national bank has no power or authority to act as agent or broker for another in buying and selling municipal bonds. "No. 3. The bonds in question in this case city of Junction City, Kansas, and said city did are legal, valid, and binding obligations of the not exceed the limits of its authority in the is suance of the same. "No. 4. The plaintiff city is not bound to return the certified check that accompanied the is not entitled to a judgment against the city for bid in question in this case, and the defendant the amount of said check in this action. "No. 5. That this action should be dismissed Thereupon the plaintiff city sought a market elsewhere for its bonds, and, as the bond market was down, it had to sell them at a discount, and incurred certain expenses in so doing. This discount, expenses, etc., amounted to $1,630.55, and, after appropriating the proceeds of the bank's certified ties appeal. at the costs of the plaintiff." From this judgment of dismissal both par The bank assigns error: (1) That the court held in effect that the words "subject to approval as to legality" meant a judicial determination of the question. (2) That the bonds were illegal. in holding that the bank was not entitled to restitution. It was bound by its contract. The purpose of a certified check to accompany a bid is well known. It was a pledge of good faith, and to guarantee a recoupment or partial recoupment for any contingent loss (3) That the bank should have been given to the vendor if the contract was broken by restitution of its $1,000. [1] 1. Examining these alleged errors, the city's offer read: "All bids to be subject to the legality of the issue." The bank's bid recited: "Subject to approval as to legality." But it is only fair to say that the general tenor of the bank's letter was a bid for the bonds on the terms and conditions of the city's offer. We cannot view this letter of the bank as a counter proposition. The qualifying condition must be held to mean the same in both the offer and the bid. If the issue was valid, the bank was to be bound; if not, the bank was to be relieved. It would have been no difficulty for the bank to have made the approval of its attorneys, or of any reputable attorney, a condition of its bid. It did not do so; and the fair import of its bid does not warrant the interpretation which it afterwards sought to place on it when the bond market had slumped. Counsel for the defendant call our attention to the case of Great Falls v. Theis (C. C.) 79 Fed. 943, and some others to the same effect, which hold that the purchaser of bonds may be excused from his bargain where his attorneys had advised that the bonds were illegal, even though the issue was afterwards judicially upheld. But we doubt the wisdom of that doctrine, and in any event we decline to apply it here. If the lawyer's doubt was founded upon a serious question touching the legality of this issue, we would have a different case. There was no excuse for that doubt in the case at bar, so far as now presented to us. Here it was certainly proper to consider the validity of the bonds as a judicial question. the vendee. We cannot agree with counsel for appellant, nor with the learned trial court in its conclusion, that the contract was ultra vires. Let it be conceded that the bank had no power to act as broker, or purchase the bonds as agent for another vendee. The city had no notice of the bank's agency. It assumed that it was dealing with the bank as 10 Cyc. 1148. a bona fide purchaser. What is there to the contention that a national bank may not purchase municipal bonds? The district court found that under Revised Statutes of the United States, § 5136, subd. 7 (U. S. Comp. St. § 9661), no That subdivision such power is conferred. reads: National banks have power: "Seventh. To exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits, by buying and selling exchange, coin and bullion; by loaning money ing and circulating notes according to the proon personal security; and by obtaining, issuvisions of this title." Is not the purchase of municipal bonds an incidental power of banking? Are municipal bonds not an evidence of indebtedness which may be discounted? Shall we close our eyes to the fact that national banks, with the sanction or at least without the disapproval of the federal government, are state depositaries of this commonwealth, and that they do procure municipal bonds and deposit them with the state treasurer to secure state deposits? Shall we ignore the financial and banking statistics of this state and the country at large, which continually show the vast sums invested by national banks in municipal bonds? We are bound to take judicial notice of matters of such great public concern. We could not give countenance even to an intimation that such investments are questionable. Nor does this power to acquire municipal bonds depend wholly upon the general language of the statute referred to. In section 3 of the Act of Congress of May 30, 1908, c. 229, 35 Stat. 548 (U. S. Comp. St. § 9731), 1909 Supplement of Federal Statutes Annotated at page 358, we find specific sanction given to such investments. It reads in part: [2] 2. The alleged defect in the bonds was that they were issued in excess of the limitations fixed by chapter 109, Laws of 1911. That statute provides that the bonded debt of a city of the second class, such as Junction City, shall not exceed 11⁄2 per cent. of the assessed valuation of all taxable property within the city; but it is also provided that bonds for paving improvements and "That any national banking association which certain other specified purposes shall not be has circulating notes outstanding, secured by the deposit of United States bonds to an amount included in such limitation. The bonds in of not less than forty per centum of its capquestion were for paving, and therefore ital stock, and which has a surplus of not less specifically excluded from the limit of in- than twenty per centum, may make application debtedness which chapter 109 sought to re-ity to issue additional circulating notes to be to the Comptroller of the Currency for authorsecured by the deposit of bonds other than bonds strict. of the United States, with the approval of the mously agrees, there should be a new trial; Secretary of the Treasury, shall accept as secu- and I would confine it largely to questions rity for the additional circulating notes provided for in this section, bonds or other interest-pertaining to the bank's good faith in its conbearing obligations of any state of the United sultation of attorneys as to the legality of States, or any legally authorized bonds issued the issue, and whether the legal infirmities by any city, town, county, or other legally constituted municipality or district in the United pointed out by the bank's attorneys were States which has been in existence for a period fair questions of legal debate or mere evasive of ten years. quibbles. [5] 5. Holding these views, we think that the city should have judgment for the balance of its expenses which arose from the bank's breach of contract, and this case is remanded, with instructions to enter judgment for the city as prayed for in its petition. It is so ordered. JOHNSTON, G. J., and BURCH, MASON, PORTER, and WEST, JJ., concur. I therefore dissent. MARSHALL, J., concurs in this dissent. (47 Utah, 252) SHAY v. UNION PAC. R. CO. (Supreme Court of Utah. July 12, 1915. Re- 1. PLEADING 236-AMENDMENT-DISCRETION OF COURT. In a shipper's action to recover damages for the destruction of a carload of emigrant movsparks from a helping locomotive, not having a ables, including several horses, alleging that sufficient spark arrester, fell upon and through the defective car and destroyed the contents by fire, the allowance of a trial amendment, alleging that after the discovery of the fire the defendant and its servants did not use ordinary care in protecting the car, and negligently opened a door and permitted a wind to fan the smoldering fire into an uncontrollable flame, when it might, by ordinary skill, have been put out and have saved the property from destruction, was within the trial court's sound discretion. [Ed. Note.-For other cases, see Pleading, Cent. Dig. §§ 601, 605; Dec. Dig. 236.] 2. CARRIERS 132-Loss oF GOODS-NEGLI GENCE-BURDEN OF PROOF. 132.j DAWSON, J. (dissenting). I think that the words "subject to the legality of the issue," as mentioned in the city's offer, and the words "subject to approval as to legality," as set forth in the bank's bid, should be interpreted according to the custom of the trade. That custom is so well known as to need no evidence to show it, although it was abundantly shown by the defendant bank. The qualification "subject to legality," or "subject to approval as to legality," does not mean a judicial determination. It means that the contract was conditioned upon the approval of the purchaser's lawyer or bond expert touching the proceedings leading up to and involved in the bond issue, and it Such action was an action for negligence, means that the examination of the proceed- in which the burden of proof was on the plainings by the bank's lawyer or expert should | tiff. be made in good faith, and that to excuse [Ed. Note.-For other cases, see Carriers, the purchaser from its bargain such examina- Cent. Dig. §§ 578-582, 605; Dec. Dig. tion should show some rational or tangible doubt as to the legality of the issue and not some mere quibble. In this capitol building where this court sits is the largest bond market in Kansas, that of the school fund commission; and that body by statute and practice invariably purchases bonds with that same qualification, and never otherwise. Bond purchasers, no more than real estate purchasers, should be held to their bargains, if there is any serious chance of legal infirmities in the matters which are the subject of the contract. It will not tend to ex-1001.] pedite either public or private business to 4. CARRIERS 218-CARRIAGE OF GOODS lay it down dogmatically that the successful bidder for municipal bonds is bound absolutely, notwithstanding the honest misgivings of his lawyers as to the legality of the issue, when it is afterwards judicially determined that the bond issue is valid. The defendant bank was denied the privilege of making this defense. The city should have recoupment to the amount of $33 for the reprinting of the bonds at the behest of the bank. For the errors of the trial court, on which this court unani 3. APPEAL AND ERROR 1001-REVIEW FINDINGS OF JURY-WEIGHT OF EVIDENCE. Where the evidence in a shipper's action for the loss of goods by fire negligently started by sparks from the engine contained some substantial evidence in support of every element of ligence was for the jury, and the Supreme Court negligence alleged in the complaint, such negwas concluded by their finding and precluded from weighing the evidence or passing upon the effect that should be given to any particular statement or kind of evidence produced at the trial. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 3922, 3928-3934; Dec. Dig. RECEIPT-LIMITATION OF LIABILITY. Interstate Commerce Act Feb. 4, 1887, c. 104, Stipulations in a bill of lading given under § 20, 24 Stat. 386, as amended by Act June 29, 1906, c. 3591, § 7, 34 Stat. 593 (U. S. Comp. St. 1913, § 8592), requiring an interstate carrier, receiving property for transportation, to issue a receipt or bill of lading, and making it liable to the holder for any loss or injury to the property, limiting the value of horses shipped to $100 each, and the value of goods to $10 a hundredweight, were binding on the shipper.1 [Ed. Note.-For other cases, see Carriers, Cent. Dig. $$ 674-696, 927, 928, 933-949; Dec. Dig. 218.] For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 5. CARRIERS 218-RECEIPT FOR GOODS-1 what are called "emigrant movables," inLIMITATION OF LIABILITY-SHIPPER'S IN- cluding four horses, while in transit on the SPECTION OF CAR-NEGLIGENCE. Under such provision, a stipulation in a bill of lading of emigrant movables, including horses, that the shipper should inspect the cars in which the stock was to be transported and satisfy himself that they were safe and in proper condition, and report to the carrier's agent or employé any visible defect therein and demand necessary repairs before using it, and that the fact of his allowing his stock in the car should be an acceptance of its suitability, and that he thereby assumed all the risk, loss, or damage from any other cause than the willful negligence of the carrier, referred only to such defects as might in some way affect the safety or suitability of the car for transportation purposes, and not to defects which could only become dangerous or operative by reason of some subsequent negligence of the carrier; so that the shipper's unreported notice of a defect in the door of the car and his agent's unreported notice of a defect in the roof, through which sparks from a helper engine, placed too near the car, fell, causing a fire which destroyed its contents, did not charge the shipper with contributory negligence in the selection and use of the car. [Ed. Note.-For other cases, see Carriers, Cent. Dig. §§ 674-696, 927, 928, 933–949; Dec. Dig. 218.] railroad of said company from Eaton station, Colo., to Idaho Falls, Idaho. The whole history of the shipment is, with much particularity, set forth in the complaint. It is, however, only deemed necessary to refer to the acts of negligence complained of, which are alleged as follows: * * * "That at the said grade in Wyoming the defendant, by its agents and employés connected a second or helping engine in said train for the purpose of assisting in drawing said train up and over what is there known as the 'Sherman Hill'; that said defendant carelessly and negligine closely in front of said car in which plaingently coupled the said second or helping entiff's goods were loaded; that the said car in which plaintiff's goods were located was a defective car, having holes in the roof and in the sides thereof, and that said defendant carelessly and negligently used said defective car in transporting and carrying plaintiff's aforesaid Property; that the said second or helping engine was defective and not properly equipped with sufficient spark arresters, and did at that time emit many sparks, which fell in and upon the said car in which plaintiff's goods were being carried, and did then and there, being on or about the 11th day of February, 1913, in Albany county, state of Wyoming, on the said 'Sherman Hill,' set fire to the contents of the said car; that after the discovery of said fire the defendant, its servants and employés, did not use ordinary care in protecting said car of goods, and carelessly and negligently, after the discovery by them of a smoldering fire in said car, opened the windward door and permitted a strong wind, then blowing, to blow through said open door, into and upon said smoldering fire, thereby fanning it into an uncontrollable fire, and that said fire at the time it was so discovered by them could have, by EXPLOSIVES SHIPPER'S VIOLATION OF LAW. put out, and thereby saved plaintiff's said propordinary skill, been controlled, quenched, and A shipper of a carload of emigrant mov-erty from destruction, and that said fire conables, including horses, whose agent riding in sumed and destroyed the entire contents of said the car to look after the horses, etc., carried a car, to the damage to this plaintiff of the total revolver and a shotgun, and placed some carsum as above stated in itemized amounts agtridges in the oven of one of the stoves, to- gregating the total sum of $3,643; that said gether with some loaded shells for the shotgun, fire was caused by defendant in carelessly and did not thereby violate the law prohibiting the negligently operating the train by placing said shipment of explosives and other dangerous ar- defective engine so near said car and in using ticles, so as to defeat the shipper's recovery for said defective car, thereby throwing fire in and a destruction of the goods by fire started by upon said car." sparks from defendant's locomotive. 6. CARRIERS 136-INJURY BY SPARKS FROM ENGINE-QUESTION FOR JURY-NEGLIGENCE. In a shipper's action for damages for the destruction of a carload of emigrant movables, including horses, by fire set by sparks from a helper engine placed nearer the car than the carrier's rule permitted, and where there was evidence for defendant that the engine was equipped with a proper spark arrester, the question of its negligence was nevertheless for the jury.2 [Ed. Note.-For other cases, see Carriers, Cent. Dig. §§ 478, 596-598; Dec. Dig. 136.1 7. CARRIERS 121 CARRIAGE OF GOODS [Ed. Note.-For other cases, see Carriers, Cent. Dig. §§ 531-536; Dec. Dig. 121.] Appeal from District Court, Weber County; N. J. Harris, Judge. Action by A. M. Shay against the Union Pacific Railroad Company. Judgment for plaintiff, and defendant appeals. Affirmed. The defendant answered the complaint, admitting that it received the chattels described therein for transportation from Eaton, Colo., to Idaho Falls, Idaho, admitted that P. L. Williams and Geo. H. Smith, both said chattels were destroyed by fire in the of Salt Lake City, H. B. Thompson, of Po- state of Wyoming while in transit, and adcatello, Idaho, and C. R. Hollingsworth, of mitted that said chattels weighed not to Ogden, for appellant. D. E. Rathbun, of exceed "13,300 pounds." It denied all other Idaho Falls, Idaho, and David Jensen, of allegations of the complaint, and pleaded the Ogden, for respondent. FRICK, J. This was an action to recover damages from the Union Pacific Railroad company for the destruction of a carload of 2 Christensen v. Railroad Co., 35 Utah, 137, 99 Pac. 676, 20 L. R. A. (N. S.) 255, 18 Ann. Cas. 1159; Richards v. Railroad Co., 41 Utah, 99, 123 Pac. 933. provisions of the act of Congress relating to interstate commerce. It also pleaded the contract of shipment as contained in the bill of lading wherein the value of the horses shipped was limited to $100 each, that the shipper agreed to inspect the car in which said chattels were shipped and report all defects, and that defendant, under the pro visions of said contract, was liable only for willful or actual negligence, and also pleaded contributory negligence on the part of the respondent. Upon a trial to a jury they found the issues in favor of the plaintiff, awarding him damages in the sum of $1,906, on which sum they allowed legal interest from the date of the destruction of the chattels to the time of trial, amounting to the sum of $165.18. The court entered judgment for the principal and interest, amounting to the sum of $2,071.18, from which the defendant appeals. A large number of errors are assigned and insisted upon, but we shall notice only such as we deem material, or which, in our judgment, affect the substantial rights of the parties. should be given to any particular statements or kind of evidence produced at the trial. All those matters were for the jury to pass on, and we are concluded by their finding. The evidence being sufficient to take the case to the jury, the motion to direct a verdict upon the two first grounds was properly denied. We shall hereafter refer to some particular portions of the evidence in connection with the propositions discussed. [4] It is vigorously contended that under the repeated rulings of the Supreme Court of the United States, and especially as those rulings are reflected in the cases of Adams Express. Co. v. Croninger, 226 U. S. 491, 33 Sup. Ct. 148, 57 L. Ed. 314, 44 L. R. A. (N. S.) 257, Kansas City Southern Ry. Co. v. Carl, 227 U. S. 639, 33 Sup. Ct. 391, 57 L. Ed. 683, M., K. & T. Ry. v. Harriman, 227 U. S. 657, 33 Sup. Ct. 397, 57 L. Ed. 690, Boston & Maine R. v. Hooker, 233 U. S. 97, 34 Sup. Ct. 526, 58 L. Ed. 868, L. R. A. 1915B, 450, and in the very recent case of O. S. L. R. Co. v. Homer, 235 U. S. 693, 35 Sup. Ct. 207, 59 L. Ed. 429, in which that court reversed the case of Homer v. Railroad, 42 Utah, 15, 128 Pac. 522, the court erred in not granting the motion for the reason we have quoted. This contention is bas [1] The first assignment we shall notice is that the court erred in permitting the respondent to amend his complaint in the particulars we have indicated by the italics. The allowance of the amendment, although irregular as to time, was nevertheless within the sound discretion of the trial court. A careful inspection of the whole proceedings relating to the amendment and evidence adduced in support thereof leads us to the conclusion that the appellant was not prejudiced upon the stipulations contained in the ed thereby. Neither have counsel pointed out any particular reason why appellant was prejudiced thereby. Of course, appellant might have been prejudiced by permitting the jury to find it guilty of the negligence therein alleged, when, as a matter of fact, it was not so guilty, but that is a matter which we shall consider hereafter. This assignment, therefore, cannot prevail. It is next urged that the court erred in refusing to grant appellant's motion for a directed verdict, for the reasons: (1) That the respondent had failed to prove that the loss and damages complained of were caused through the negligence of the appellant; (2) that respondent had failed to prove any negligence on its part; and (3) for the further reason that respondent "was guilty of contributory negligence with reference to the selection and use by his written assent of the car and failure to report to the agent of the carrier that there were not other or visible defects in the car." [2] In this connection it is insisted that the action is one for negligence, and hence the burden of proof was upon the respondent. That, no doubt, is the law, and the case was submitted to the jury upon that theory. * [3] We cannot, within reasonable limits, set forth the evidence produced upon the trial relating to the negligence, and it must therefore suffice to say that, in our judgment, there is at least some substantial evidence in support of every element of negligence alleged in the complaint. In view of that, we are precluded from weighing the evidence or from passing upon the effect that 153 P.-3 bill of lading which is the receipt or bill of lading provided for in the amendment made in section 20 of the original Interstate Commerce Act and which amendment is specially referred to in the case of Adams Express Co. v. Croninger, supra. It is there, in substance, held that the shipper is bound by the provisions or stipulations contained in the bill of lading. The provisions or stipulations in the bill of lading issued to respondent in the case at bar, and which are relied on by appellant, are the following: "It is expressly agreed that the value of live stock to be transported under this contract does not exceed the following mentioned sums, to wit: Horses, $100.00 per head. * * "The shipper agrees to inspect the cars in which said stock is to be transported * * and satisfy himself that they are sufficient and safe and in proper order and condition, and shall report to the agent or employés of said carrier any visible defects therein, and demand necessary repairs before proceeding to occupy said cars, and the fact of his loading said stock into said cars shall be an acknowledgment and acceptance by him of the sufficien cy and suitability in every respect of said cars; and he hereby assumes all risk of loss or damage from any other cause or thing not resulting from the willful negligence of the carriers, their officers, agents, or employés. * * "No carrier shall be liable for any loss or damage to said stock by 串 * fire * or any other cause not directly the result of gross negligence on the part of said carriers, their agents and servants." There was a further provision in the bill of lading, namely, that the chattels in the car with the four horses, as counsel for appellant puts it, "were shipped under a declared valuation of $10 per hundredweight." |