John B. Henderson, Kerr, Gibson & Kerr, and C. Q. B. Drummond, for defendant. BREWER, J., (orally.) This case was argued before my brother TREAT last April, and on the eighth of July he made an order to this effect: "There is no doubt the defendant's book is an infringement upon the socalled Manning Book,' provided, however, the complainant was an assignee of the said Manning book. The first question is whether Thompson assigned his copyright so that Hubbard could pursue him for an infringement. The course of dealings between the parties, and what occurred subsequent thereto, leave this proposition in doubt. Second. If such assignment was made, whether the same was rescinded. Third. Inasmuch as the imprint of plaintiff's publication did not conform to the terms of the statutes, can he maintain an action for an infringement, although the defendant, Thompson, knew that the copyright had been granted? It is deemed that these three propositions, to-wit, the assignment of the copyright, the rescission, and the right to sue for an infringement under the act of June 18, 1874, should be heard before the full bench." In pursuance of that order those questions were argued last week, and I now state the conclusions to which we have both come after the argument and the examination that has been made. Of course, it would be utterly impossible within proper limits to undertake anything like a review of this mass of testimony. The law governing contracts in the sale of copyrights, in respect to what is necessary to complete a contract, is like the law which obtains in any other case of contract. The minds of the parties must come together upon a definite understanding of all the elements of the contract. If anything remains unsettled, to be determined thereafter, it cannot be said that the contract has been entered into. That is familiar law. Now, the salient facts are these. After some prior correspondence, the defendant, being the owner of this book, and having plates prepared for its publication, on the twenty-seventh of March addressed a letter to the plaintiff containing a proposition of sale. On the thirtieth day of March the plaintiff, who meantime had passed to Hot Springs and returned, met the defendant at the Union depot in this. city, and in the hour or two which intervened between the arrival of the Hot Springs, and the departure of the eastern, train they signed a paper. The plaintiff had brought with him two pencil memorandums, one of which was left with defendant, and the other, after some changes, was signed by both parties and taken by the plaintiff eastward. The question is whether the latter paper, thus signed, was understood by the parties to be a definite and closed contract between them, or a mere preliminary statement,-a memorandum of matters upon which they had agreed, and which, with all unsettled details, were thereafter to be put into the form of a complete contract in writing, and then signed and executed. The testimony is not very clear or satisfactory, or, rather, it leaves the matter much in doubt. The paper is a rough, interlined pencil memorandum, entitled "Memoradum of Agreement." That something more was to be done is evident from the testimony of both parties. The plaintiff's understanding, as he testified, was this: "The copy I kept and brought to Philadelphia was to be the basis for a more satisfactory draught, to be made with pen and ink in good shape." The defendant testifies in response to the question: "Was there any express agreement and understanding as to the purpose for which this pencil memorandum, or either of the pencil memorandums, should be used? Answer. That was stated directly, when I objected to signing it as not embodying the contract. He said it will be simply a guide for writing out a contract. He said that was simply a memorandum of some of the features embraced in our understanding, and that it could be used as a guide for writing out a contract embodying the special features agreed upon in our conversation.' Further testimony shows the same divergence, the one testifying that it was to be taken east simply to be put into shape with pen and ink; the other, that it was to be a guide, a sort of a basis, for the preparation of a definite contract between them. On the next day after this pencil memorandum was signed the defendant writes this letter to the plaintiff: "DEAR SIR: There are so many things not covered in the brief memorandum of our agreement concerning stock-book, and not settled in our brief breakfast conversation Tuesday morning, that I think it best to enumerate some of the points that must be embodied in a more definite contract." And then he enumerates them. From time to time correspondence passed between these parties. There was a good deal of wrangling and complaint, and occasional reference to the contract which was to be prepared, this contract to be written in pen and ink,-and on July 22d, several months after, the plaintiff sent out a written contract to the defendant to be signed. That contract left out all reference to the transfer of the copyright of the book and the plates, and simply looked forward from its date, instead of being operative from the thirtieth of March. The defendant, not satisfied with it, on August 2d prepared his idea of the contract in writing, and sent it to Philadelphia, but neither of them were signed. If this was all, there would be very little doubt that the parties had not come to a definite understanding. What embarrasses the question is the fact that immediately after, or within a short time after, the signing of the pencil memorandum defendant forwarded the plates, etc., and received from the plaintiff the notes-the stipulated price. Of course, the argument on one side is very fairly and strongly made that that shows that the parties understood that this pencil memorandum was the final agreement between them, that there was a definite contract, and that all that was to be done was to reshape it and put it in ink. On the other hand, the argument is equally forcible and persuasive that the parties supposed the main features of the contract had been agreed upon between the parties, and that they were forwarding the plates, etc., leaving all details and unsettled matters to be settled in the written contract; this contract to be written with pen and ink, which by the voice of both parties it was understood should be prepared. Of course my opportunities for examing all this testimony have not been quite as good as my brother TREAT'S, who had the benefit of the prior arguments and an intermediate examination; but at the same time I have come to the same conclusion that he has, that there is not in this testimony that which enables the court to say that the parties, in respect to all the items of the proposed agreement between them, ever came to a definite understanding. There were still some matters unsettled,-undetermined,-so that a contract, as it was a single contract, and understood to be a single contract, could not be said to have been finally and definitely consummated. That, of course, ends the controversy so far as the plaintiff is concerned. Defendant has filed a cross-bill, and, as to that, my attention was not called in the argument, yet I will state the conclusion to which we have come, Judge TREAT, both in the prior argument and also from this examination. It seems to us it would be right that the cross-bill should be sustained, so far as the tender is concerned; that is, that upon the payment of so much money, and the interest, the plates will be returned to the defendant; but that, so far as any claim for accounting and damages, the course of dealing between the parties has been such that equitably the defendant is not entitled to any; so that the order will be for the redelivery of the plates, etc., on the payment of $4,000, with interest. Mr. Breckinridge. I understand the decree will be The Court. Dismissing the plaintiff's bill, and that the plaintiff will return to the defendant the plates and material on payment of the $4,000, and interest. Mr. Breckinridge. Will your honor allow me to say that Mr. Sypher, the senior counsel on the part of the plaintiff, is at present in Philadelphia. I would like to have his aid before your honor enters the decree, and I therefore make the suggestion, if agreeable to the other side, that time be given to draw up the proper form of a decree. Treat, J. You understand the views of the court. They are simply these That there was no assignment. That ends the plaintiff's case. As to the cross-bill, you are required to pay back the $4,000, with interest; on paying which, the plates, etc., will be returned. Mr. Breckinridge. How about the costs? Treat, J. Each party pays his own costs. BATES v. INDEPENDENT SCHOOL-DISTRICT OF RIVERSIDE OF LYON Co.1 (Circuit Court, N. D. Iowa, W. D. October Term, 1885.) 1. MUNICIPAL BONDS-SCHOOL-DISTRICT BOND-RECITALS-ESTOPPEL-ISSUE IN EXCESS OF CONSTITUTIONAL LIMITATION AS TO INDEBTEDNESS. Where it is recited in municipal bonds that they are issued "in pursuance of" or "in conformity with" the provisions of a given statute, this is an assertion that in issuing the bonds the provisions of the statute have been followed or conformed to; but when the recital is only that the bonds are issued "under" the provisions of a given statute, this simply asserts that the bonds are subject to or controlled by the provisions of the statute named; or, in other words, the purchaser is thereby informed where he should look in order to learn what the provisions of the statute are which confer and limit the power to issue the bonds; and the municipality issuing such bonds is not estopped from showing that they are void, because they created an indebtedness in excess of the constitutional limitation. 2. SAME-BONA FIDE PURCHASER-NOTICE. The purchaser of bonds is bound to know the constitutional limit of the indebtedness which the municipal corporation could lawfully incur, and whe:e the bonds offered for sale to him exceed this limit, he is bound to take notice that such bonds could not be legally issued, no matter what the recitals therein may set forth. At Law. I. N. Kidder and Joy, Wright & Hudson, for plaintiff. SHIRAS, J. Plaintiff seeks in this action to recover judgment against the defendant upon certain interest coupons belonging to two series of bonds issued in June, 1880, and July, 1881, by the defendant corporation. The first series, it is claimed, were issued under the powers granted to independent school-districts by the provisions of sections 1821 to 1823 of the Code of Iowa, and chapter 121 of the Acts of the Seventeenth General Assembly. The second series, it is claimed, were issued under the provisions of chapter 132 of the Acts of the Eighteenth General Assembly, for the purpose of taking up and refunding bonds of an earlier date, bearing 10 per cent. interest. Among other defenses relied upon by the defendant is that the bonds thus issued were void, because the indebtedness of the schooldistrict, at the time of the issuance of the bonds, was in excess of 5 per cent. of the assessed value of the taxable property of the district, and that, consequently, the creation of the debt evidenced by the bonds was forbidden by section 3 of article 11 of the constitution of the state of Iowa, which provides that "no county or other political or municipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount in the aggregate exceeding five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax-lists previous to the incurring of such indebtedness." 1 Reported by Robertson Howard, Esq., of the St. Paul bar. The evidence shows that the value of the taxable property within the limits of the school-district, as shown by the state and county taxlists next preceding the dates of the bonds owned by plaintiff, was, for the year 1879, $47,220, and for 1880, $44,571. Under the constitutional limitation of 5 per cent., therefore, the indebtedness could not lawfully exceed $2,400, in round numbers. The evidence shows, also, that the indebtedness against the district at the dates the bonds sued on were issued, exclusive of these bonds, was largely in excess of the limit fixed by the constitution. The bonds are therefore void, and if the defendant is not estopped from setting up this defense against the plaintiff, it is clear that the collection thereof cannot be enforced. On part of the plaintiff it is claimed that he is an innocent holder for value of these bonds; that he bought them relying on the verity of the recitals contained in the bonds, as he had a right to do; and that these recitals estop the defendant from now asserting that the bonds were issued in violation of the constitutional limitation. In the first series of bonds sued on it is recited therein that the bonds are "issued under provisions of sections 1821 to 1823 of the Code of Iowa of 1873; chapter 121, Laws of the Seventeenth General Assembly." The sections of the Code referred to give authority to independent school-districts to borrow money for certain purposes, and to issue bonds, defining the manner in which the power may be exercised, and providing that "no district shall permit a greater outstanding indebtedness than an amount equal to 5 per centum of the last assessed value of the property of the district." The plaintiff claims that the recital in the bonds that the same were "issued under the provisions" of these sections is in effect a recital that the indebtedness of the district did not exceed the constitutional limitation, and that the plaintiff could rely thereon in making the purchase, and thereby estop the defendant from showing that in fact the indebtedness of the district largely exceeded the constitutional limit. Counsel for plaintiff cite the long list of cases decided by the supreme court of the United States, beginning with Commissioners of Knox Co. v. Aspinwall, 21 How. 539, wherein it has been in substance. held that if an election or other fact is required to authorize the issue of the bonds of a municipal corporation, and if the result of that election, or the existence of that fact, is by law to be ascertained and declared by any judge, officer, or tribunal, and that judge, officer, or tribunal, on behalf of the corporation, executes or issues the bonds, with recital that the election has been held, or that the fact exists or has taken place, this will be sufficient evidence of the fact to all bona fide holders of the bonds." Kenicott v. Supervisors, 16 Wall. 452. Relying upon the doctrine of these cases, counsel for plaintiff claims that the recitals in the bonds in question are sufficient to estop the v.25, no.4-13 |