Application of H. B. Kelly and others for writ of mandamus to George B. Cole, auditor of the state of Kansas. Writ denied.

This is a proceeding for mandamus to compel the respondent, as auditor of the state, to register 200 refunding bonds of the denomination of $500 each, executed by the county of Chase in pursuance of an agreement with relators to compromise and refund $80,000 of railroad bonds issued by that county November 1, 1892, in aid of the Chicago, Kansas & Western Railroad Company. The right of relators to demand the registration of these bonds is based upon section 3, c. 163, Laws 1891, as amendatory of section 4, c. 50, Laws 1879, which, in so far as relates to this controversy, reads as follows: "The proper officers shall, at the time of issuing refunding bonds, make out and transmit to the auditor of state a certified statement of all proceedings had by the proper board or city council, as shown of record, and that the said bonds have been issued for value in all respects in conformity to this act for certain indebtedness surrendered, distinctly describing the bonds issued and the indebtedness surrendered, and that they have been duly registered by the attesting clerk and the county clerk, as required herein, which statement shall be in such form and include such other information as the auditor of state may require, and be signed by all the officers whose signatures are attached to such bonds, and attested by the proper clerk, with the corporate seal of the county, city, township, school district or board of education, if any, and be duly acknowledged before the county clerk; and the auditor shall, upon being satisfied that such bonds have been issued according to the provisions of this act, and that the signatures thereto of the officers signing the same are genuine, register the same in his office in a book kept for that purpose, and shall, under his seal of office, certify upon such bonds the fact that they have been registered in his office according to law." The facts are agreed upon, and are substantially as follows: On the 16th day of November, 1886, the electors of Chase county conferred upon its board of commissioners authority to subscribe for $80,000 of the capital stock of the Chicago, Kansas & Western Railroad Company, and to issue in exchange therefor 80 bonds of the county in the denomination of $1,000 each, due and payable 30 years from the date thereof, bearing interest at the rate of 6 per cent. per annum, payable semiannually, to aid in the construction of a line of railway through said county. On November 19, 1886, in pursuance of the authority so conferred by the electors, a subscription to the capital stock of said railway company was made, and thereafter the company constructed its line of railway through said county in compliance with the terms and conditions agreed upon. The county, however, refused to com65 P.-43

ply with the terms of its agreement until compelled by order of this court, made on the 12th day of October, 1892, requiring it to so do. In pursuance of the order of this court so made, and on the 1st day of November, 1892, the county issued and delivered, payable to bearer, its 80 bonds in the denomination of $1,000 each, due and payable on the 1st day of November, 1922, bearing interest at the rate of 6 per cent. per annum, payable semiannually, as evidenced by 60 interest coupons thereto attached. All the interest earned upon said bonds to May 1, 1901, has been promptly paid by the county. These aid bonds the board of county commissioners of the county now seek to refund. In furtherance of this object, the county, through its board of commissioners, on the 27th day of April, 1901, entered into a contract, constituting relators the financial agents of the county, for the purpose of consummating the refunding of said aid bonds. This contract provides, in substance: That the county will execute and place in the office of the treasurer of state its 200 refunding bonds in the denomination of $500 each, dated May 1, 1901, bearing interest at the rate of 4 per cent. per annum, payable semiannually, each of said bonds absolutely due and payable on the 1st day of May, 1926, with the option in the county to pay off and redeem from one to ten of such bonds in the numerical order of their issue at any interest payment, beginning May 1, 1906; said bonds, so executed, to be delivered to the order of relators upon the surrender for cancellation of said railroad aid bonds. That for each block of $4,000 of said aid bonds surrendered for cancellation relators are entitled to receive $5,000 of the refunding bonds so executed until the exchange of the whole issue is made; relators, however, expressly agreeing to surrender only so many of said aid bonds under this contract as they may be able to control. In compliance with this contract the county board executed the refunding bond in controversy, containing therein, as the basis of statutory power to issue the same, the following recital: "This bond is one of two hundred bonds of $500.00 each, numbered from one to two hundred, inclusive, amounting in the aggregate to $100,000, issued for the purpose of refunding legal outstanding bonded indebtedness of said Chase county, and which does not exceed in amount the actual amount of outstanding indebtedness of said Chase county, and in pursuance of chapter 50, Laws of 1879, as amended by chapter 163, Laws of 1891, entitled 'An act to amend chapter 50 of the Laws of 1879, entitled "An act to amend chapter 50 of the Laws of 1879, entitled 'An act to enable counties, municipal corporations, the boards of education of any city and school districts, to refund their indebtedness,' as amended by chapter 113, Laws of 1893, entitled 'An act to amend sec tion two (2) of chapter one hundred and sixty-three (163) of the Laws of 1891, entitled

"An act to refund indebtedness,' as amended by an act of the legislature of 1901 entitled 'An act to amend section one (1), chapter one hundred and sixty-three (163) of the Session Laws of 1891, entitled "An act to refund indebtedness." The bonds so executed, together with a certified copy of the proceedings of the county board, were presented to the defendant, and demand made that the same be registered in his office in compliance with the provision of statutory law above quoted. This demand was, by the respondent, refused; hence this proceeding to compel a compliance therewith.

Overmyer, Mulvane & Gault and Waggener, Horton & Orr, for plaintiffs. A. A. Godard, Atty. Gen., and J. S. West, Asst. Atty. Gen., for defendant.

POLLOCK, J. (after stating the facts). This controversy arises over the construction of section 1, c. 288. Laws 1901, recited in the bonds. This section reads: "That section 1 of chapter 163 of the Laws of 1891 be and is hereby amended so as to read as follows: Section 1. Every county, every city of the first, second or third class, the board of education of any city, every township and every school district is hereby authorized and empowered to compromise and retund its bonded indebtedness, including coupons and judgments thereon, upon such terms as can be agreed upon, and to issue new bonds with semi-annual interest coupons attached in payment for any sums so compromised, which bonds shall be sold at not less than par, shall not be for a longer period than thirty years, shall not exceed in amount the actual amount of outstanding indebtedness, inclusive of attached coupons, and shall not draw a greater interest than six per cent. per annum. No indebtedness of any kind shall be funded or refunded under the provisions of this act except bonded indebtedness actually existing at the time of the passage of this act or hereafter legally created; and nothing herein contained shall be construed to validate or invalidate any existing bonded indebtedness." It is strenuously 'insisted by the learned counsel for relators that this act confers power upon the municipalities therein named to refund their outstanding bonded indebtedness by the issuance of new bonds in conformity with the provisions of this act, and in compliance with the provisions of the other acts of which this act is amendatory, aggregating, in face value, the entire amount of bonded debt of the municipality, inclusive of interest coupons thereto attached, whether earned or unearned; and that in the present case, as Chase county is refunding $80,000 face value, of the aid bonds, which have thereto attached unmatured interest coupons aggregating $103,200, or a total debt of $183.200, by the issuance of $100,000 face value of the refunding bonds, the aid bonds are ac

tually being refunded at their present worth, and the transaction is clearly within the power conferred upon the county by the act quoted. On the other hand, it is contended by counsel for respondent that the act in question, construed in connection with the several acts recited in the bonds, confers power to compromise and refund actual outstanding bonded indebtedness, including matured interest coupons and judgments thereon only, and that the unearned or unmatured interest coupons attached to the aid bonds are not actual outstanding bonded indebtedness within the terms of the act, and may not, therefore, be refunded under the power conferred; and as it is admitted that $20,000 of the bonds sought to be registered represent unearned interest coupons, and not indebtedness of the county, that the issue in such amount exceeds the power conferred on the county, and that the desire of the county or its agents to so magnify and multiply the bonded debt of the county must be denied. An examination of the title and provisions of the original act of 1879, and a comparison of this act with the several acts amendatory thereof, subsequently passed prior to the act in question, leaves it entirely free from doubt that only actual outstanding bonded indebtedness may be refunded under the power here conferred, and that the policy of the lawmaking power, as expressed in the amendment of 1891, has been heretofore to greatly restrict and safeguard the large measure of power conferred by the original act. For example, under the original act "matured and maturing indebtedness of every kind and description whatsoever might be refunded," whereas the amendment of 1891 limited the scope of the power to refund to "bonded indebtedness, including matured coupons and judgment thereon." Again, the original act made no requirement as to registration of the refunding bonds in the office of the auditor of state. This safeguard, to prevent abuse of the power, the act of 1891 incorporated in the law. By the original act no restriction was placed upon the amount of bonds which a municipality might issue. By the act of 1891 the limit of counties and townships to issue bonds, except in refunding outstanding bonded indebtedness, was restricted to 5 per cent. of the assessed valuation of the municipality as shown by the last determination of the board of equalization, and cities (except cities of the first class) and school districts to 6 per cent. of the amount so determined. Viewed

in the light of this former restrictive legislation upon this subject, we are justified in holding that the power conferred by the apparently conflicting provisions of the act under consideration is limited to and controlled by the prohibition in the act that "no indebtedness of any kind shall be funded or refunded under the provisions of this act except bonded indebtedness actually existing at the time of the passage of this act, or

hereafter legally created." As interest earned upon a principal bond, represented by past-due coupons, from its very nature inheres in and forms a part of the bond itself, by force of necessity such interest becomes a part of the "actually existing bonded indebtedness." But as to the unearned interest represented by coupons attached to the aid bonds sought to be refunded in this case, the holder of the principal bond has the present right neither to demand nor receive the same. It is only by his forbearance of the use of the principal sum, evidenced by the face of the bond he holds, for a given length of time in future, that the amount expressed in such coupons becomes the demandable property of the holder, or the "actual bonded indebtedness" of the county. This is not only the natural and reasonable definition of the term "bonded indebtedness," but it is the rule adopted by all courts in estimating the amount of indebtedness that may be lawfully incurred under constitutional and statutory limitations upon the power of municipal corporations to incur indebtedness. The face value of the obligations and the accrued interest thereon are alone considered as the debt. Interest to become due thereon in the future is not reckoned indebtedness. Carroll Co. v. Smith, 111 U. S. 556, 4 Sup. Ct. 539, 28 L. Ed. 517; Lake Co. v. Graham, 130 U. S. 674, 9 Sup. Ct. 654, 32 L. Ed. 1065; Chaffe Co. v. Potter, 142 U. S. 355, 12 Sup. Ct. 216, 35 L. Ed. 1040; Sutliff v. Com'rs, 147 U. S. 230, 13 Sup. Ct. 318, 37 L. Ed. 145; German Ins. Co. v. City of Manning (C. C.) 95 Fed. 597. This is also the view taken by the officers of the county, as they certify to the respondent that "the bonded indebtedness of said county at this date is $80,000," not $183,200. The construction we have placed upon the act under consideration seems not only in harmony with the policy and intent of the legislature, as ascertained from prior amendments to the original act, but in direct accord with the positive inhibition contained in the act itself. It is also important to consider the fact that, while the original act and amendments thereto recited in the bonds as affording lawful power for their existence have many times been resorted to for the purpose of changing the form of the municipal indebtedness of the bodies corporate therein named, it has not heretofore been contemplated that any authority or power resided therein to absolutely create additional bonded indebtedness of such municipalities, but rather that the power to create bonded indebtedness, as contradistinguished from the power to change the form of indebtedness, rests in the people, and a vote of the electors is necessary to call such power into operation. Should the construction contended for by counsel for relators be adopted, the very bonds now sought to be registered may, at the expiration of two years from their date, notwithstanding the option of payment therein contained, be re

funded by the issuance of other bonds, aggregating in face value the entire amount of principal and unearned coupons thereto attached. Such power, so liable to abuse, of such vital importance to the taxpayers of the municipality, if intended, must be conferred in such clear, positive, and unmistakable terms as to leave no room for construction by the courts. It follows that the writ must be denied. It is so ordered. All the justices concurring.

(63 Kan. 422)

TOOTLE et al. v. ELLIS et al. (Supreme Court of Kansas. July 6, 1901.) JUDGMENT-ENFORCEMENT INJUNCTION

VALIDITY.

1. The collection of a judgment rendered upon the service of a summons regular in all respects, except that it had no amount indorsed thereon for which judgment would be taken in case the defendant failed to answer,-said summons being in an action for the recovery of money only, and the defendants not appearing therein, should not be enjoined where it was not shown in the injunction proceedings that the defendants had a valid defense, in whole or in part, to the original cause of action.

2. The failure to indorse upon the summons, regular in other respects, the amount for which judgment will be taken in case the defendant fails to appear, in an action for the recovery of money only, does not render the judgment rendered in such action void, so that its collection may be enjoined.

(Syllabus by the Court.)

Error from district court, Osage county; William Thomson, Judge.

Action by John G. Ellis and others against Tootle, Hanna & Co. and others. Judgment for plaintiffs, and defendants bring error. Reversed.

Chas. S. Briggs, Pleasant & Pleasant, and Edwin A. Austin, for plaintiffs in error. Harvey & Harvey, for defendants in error.

CUNNINGHAM, J. Tootle, Hanna & Co. sued Ellis & Co. in the district court of Osage county, Kan.; their cause of action being on four promissory notes executed by the defendants. A summons was issued, regular in all ways, except that "the amount for which, with interest, judgment would be taken if the defendant failed to answer," was not indorsed thereon. The præcipe for summons filed by the plaintiffs did not request that it should be. Judgment was rendered for $1,200 by default on November 18, 1885. This judgment was kept alive, and on October 13, 1897, execution was issued thereon, and duly levied upon the nonexempt lands of the defendants in said action. They then brought this action; it being one against the sheriff and the judgment creditors to declare said judgment to be null and void, and to enjoin the selling of the land levied on, and the collection of the judgment. In this injunction action the pleadings, summons, and judgment in the first action were fully set out. The petition also

contained an allegation that the plaintiffs had a valid defense to the original action brought by Tootle, Hanna & Co. A demurrer to this petition was overruled, and the defendants' answer contained a general denial. On the trial no evidence was offered by the plaintiffs in support of their allegation that they did not owe the notes sued on in the original action, in whole or in part, or that they had any defense whatever to them. The court awarded the plaintiffs judgment, and declared the former judgment void, and enjoined the collection of it in any manner.

(1)

These facts present two questions: Admitting the judgment to be void by reason of the omission to indorse on the summons the amount for which, with interest, judgment would be taken if the defendants failed to answer, may defendants in error have the collection of such judgment enjoined, without showing that they have a defense in whole or in part to the original action? (2) Did the failure to make such indorsement render the judgment void? We answer both of these questions in the negative. The execution of a judgment may not be enjoined simply because no sufficient summons was served, unless it is shown that the defendant had a defense in whole or in part to the judgment rendered. Some cases hold that in cases where no process at all has been served on the defendant the collection of the judgment may be enjoined without showing a defense to the original action, but a large preponderance of the authorities hold that, notwithstanding an alleged want of service of process, a court of equity will not interfere to set aside a judgment until it appears that the result will be other or different on a subsequent trial from that already reached, or, in other words, that there was a defense to the action, either entire or partial (Freem. Judgm. § 489, and cases cited); the general principle being, as laid down in High, Inj. § 114, that it must be shown to be against good conscience to execute the judgment sought to be enjoined. In this case a summons was served,-a summons under the hand of the clerk and the seal of the court. It informed the defendants that they had been sued, and that they must answer the petition by a given time. This gave the court jurisdiction of them. The judgment rendered therefor was not void. They might have taken advantage of the omission of the indorsement, had they chosen so to do by some movement in the case. This they did not do. They paid no attention to the information contained in the summons that they had been sued. They gave no heed to the warning of the court that they must answer. True, the statute adds that, if the defendants fail to answer, judgment shall not be rendered against them for a larger amount than that indorsed on the summons and costs. But this is not a part of the summons. It is but an indorsement on the summons. The summons gets the party into

court. Its service gives jurisdiction of the party to the court. The party, being thus in court, must defend his rights and protect his interests, as is permitted by the rules of procedure. Most of the rights given to litigants by statute, and most of the safeguards thrown around them, may be thrown away, if they shall choose so to do, or neglect to avail themselves of those provisions. This court, in Simpson v. Rice, 43 Kan. 22, 22 Pac. 1019, strongly intimated that the view here taken was the correct one. We now follow that intimation, and hold that the judgment in the case of Tootle, Hanna & Co. against Ellis & Co. was not void; and hence, if for no other reason, the levy and sale of real estate under an execution to enforce it could not be enjoined. Dusenberry v. Bennett, 7 Kan. App. 123, 53 Pac. 82. The judgment of the district court will be reversed, with instructions to proceed further in harmony with this opinion. All the justices concurring.

(63 Kan. 343)

FIRST NAT. BANK OF HUTCHINSON ▼ KANSAS GRAIN CO. OF MIS

SOURI et al.

(Supreme Court of Kansas. July 6, 1901) MORTGAGE FORECLOSURE-REDEMPTIONRENTALS-RIGHT TO SURPLUS.

Under the provisions of section 24, c. 109, Laws 1893, an insolvent mortgagor, if the holder of the legal title, is entitled to receive, and may assign, the income arising out of rentals of the mortgaged premises remaining in the hands of a receiver appointed to control and rent the mortgaged property during the statutory period of redemption, as against the claim of the prior mortgagee upon the deficiency judgment, who, before the assignment of the income by the mortgagor, and after the issuance and return nulla bona of an execution upon the deficiency judgment, has made application to the court for allowance and distribution of the fund in the hands of the receiver to apply upon such deficiency judgment. (Syllabus by the Court.)

Error from district court, Reno county; M. P. Simpson, Judge.

Action by the First National Bank of Hutchinson, Kan., against the Kansas Grain Company of Missouri and others. Judgment for plaintiff. From an order for distribution of proceeds on foreclosure, plaintiff brings error. Affirmed.

W. M. Whitelaw and F. S. Whitelaw, for plaintiff in error. H. Whiteside, for defendants in error.

POLLOCK, J. The Kansas Grain Company, a Missouri corporation, was on June 2, 1893, indebted to plaintiff in error upon promissory notes aggregating, face value, $20,000. To secure payment of these notes, the grain company on said date made plaintiff in error its first mortgage on certain grain-elevator properties in Reno and other counties of this state. The grain company being insolvent, and default in payment of

the notes having occurred, foreclosure suit was brought; and on October 19, 1894, a decree of foreclosure of the mortgage so given, and judgment in favor of plaintiff in error in the sum of $22,556.66, was entered, and one S. T. Hutton was appointed receiver to collect rents and care for and sell the mortgaged property. Upon the coming in of the report of the receiver, and a settlement of his accounts, it was found he had in his hands, collected from the rentals and sale of the mortgaged property, the net sum of $13,797.27, which was by the court ordered applied upon the judgment of plaintiff. It was further ordered by the court that the sale of the real estate made by the receiver was subject to the 18-months statutory period of redemption. The receiver was continued in possession of the real estate during this period of redemption, to prevent waste, and was directed by the court to rent the properties during this period of redemption, which was done by the receiver leasing the same to plaintiff in error for the sum of $1,200; plaintiff in error having theretofore purchased the same at the receiver's sale. Before the expiration of the period of redemption the grain company filed its motion claiming the proceeds of the rentals in the hands of the receiver, accruing during the period of redemption. Plaintiff in error, having caused execution to issue upon the deficiency judgment, which was returned nulla bona, also filed its motion asking an order of the court upon the receiver to pay the proceeds in his hands arising during the period of redemption upon its judgment remaining unsatisfied. The grain company, however, by assignment in writing, conveyed one-half of its interest in such rentals to L. B. Young, and the remaining one-half to H. Whiteside, in payment of attorney's fees. On January 23, 1897, Young and Whiteside filed their interpleas, duly verified, each claiming one-half of the proceeds in the hands of the receiver arising from the rental of the property during the period of redemption. At the expiration of the period of redemption the settlement of the accounts of the receiver for moneys collected during the period of redemption came on before the court. It was by the court found that there remained in the hands of the receiver, arising out of the rental of the properties during the period of redemption, over and above expenses incurred by the receiver in the payment of taxes and caring for the property, and his compensation, the sum of $807.37, and that each of said interpleaders was entitled to receive the one-half thereof, being the sum of $403.69. The application of plaintiff in error that the net proceeds in the hands of the receiver arising from rentals of the property during the period of redemption be applied upon the unsatisfied judgment of plaintiff in error was refused and denied. To obtain a reversal of this order making distribution of the proceeds in the hands of the

receiver, this proceeding in error is brought.

The only question to be determined by this court is, where real estate is sold under the act of 1893, subject to the right of redemption in the mortgagor, and a receiver is appointed to take charge of and rent the real estate during the period of redemption, to prevent waste of the property, who is entitled to the proceeds arising from the renting of the same by the receiver,-the holder of the unsatisfied deficiency judgment rendered in the foreclosure proceeding, having a first lien upon the mortgaged property, and first moving for an order upon the receiver to apply the same to the payment of such judgment after return of execution nulla bona, or the assignee of the mortgagor, taking by assignment made after the holder of the deficiency judgment has made application for the same? It is insisted by counsel for plaintiff in error, as there remained unpaid a large amount of the judgment rendered in its favor a first lien upon the property, and as plaintiff in error, after issuance and return of execution on such deficiency judgment nulla bona, filed its application for an order upon the receiver to pay over to plaintiff in error the proceeds arising from the rentals of the mortgaged property during the period of redemption prior to the assignment of such rentals by the mortgagor, and as the mortgagor corporation was insolvent, that, in equity, plaintiff in error was entitled to a distribution of the funds in the hands of the receiver to apply upon its judgment; and many cases are cited by counsel in support of this proposition. It is insisted by counsel for the assignees of the mortgagors, interpleaders herein, Young and Whiteside, that by the terms of the statute itself, as construed by this court, independent of any principle of equity, the order of the trial court in its disbursement of this fund must be upheld. It is undoubtedly true, independent of statuto tory provisions, that where an execution on a deficiency judgment has been returned nulla bona, and the judgment debtor is insolvent, and a bill in equity has been filed to subject any remaining property of the judgment debtor to the payment of a deficiency judgment, an equitable lien is created upon any fund at the time in the custody of the court. But this general doctrine of the application of equitable principles must give way before positive statutory provisions enacted for the purpose of determining the rights of parties to such funds. Section 24, c. 109, Laws 1893, provides: "The holder of a certificate of purchase shall be entitled to prevent any waste or destruction of the premises purchased, and for that purpose the court, on proper showing, may issue an injunction; or, when required to protect said premises against waste, appoint and place in charge thereof a receiver, who shall hold said premises until such time as the purchaser is entitled to a deed, and shall be entitled to rent, control and manage the same,