Case Name: J. M. Courtney, Receiver, v. The City of Cherryvale et al.
Court: Kansas Court of Appeals
Jurisdiction: Kansas
Decision Date: 1898-01-18
Citations: 7 Kan. App. 391
Docket Number: No. 243
Parties: J. M. Courtney, Receiver, v. The City of Cherryvale et al.
Judges: 
Reporter: Reports of cases decided in the Courts of Appeals of the state of Kansas
Volume: 7
Pages: 391–394

Head Matter:
J. M. Courtney, Receiver, v. The City of Cherryvale et al.
No. 243.
Injunction— General Creditor, Held not Entitled to. Under the allegations of Ms petition, plaintiff is held to have been a general creditor of the city of Cherryvale, and not entitled to a perpetual injunction against the payment of a certain warrant drawn by said city upon its treasurer.
Error from Montgomery district court; J. D. McCue, judge.
Opinion filed January 18, 1898.
Affirmed.
A. L. Wilson, for plaintiff in error.
McGue & McKinstrxy, for defendant in error.

Opinion:
The opinion of the court was delivered by
Milton, J. :
The principal allegations of the petition of plaintiff, who sued as the receiver of an insolvent water-works Corporation, on behalf of its bondholders, to perpetually enjoin the payment of a warrant drawn upon the treasurer of a city of the second class and delivered' by it to the corporation, and by the latter assigned to two of the defendants, were that the city had undertaken in the ordinance granting the waterworks. franchise to pay hydrant rentals clue from it to the trustee for the holders of bonds which might be issued by the water-works corporation ; that its bonds were thereafter issued and sold and the hydrant rentals paid by the city to the trustees for the holders of the bonds for more than five years; that the corporation owed over $2000 as interest on the bonds, and the city more than $1300 as hydrant rentals ; that the city had legally created and set apart a special fund, called the "water fund," for the payment of hydrant rentals according to the terms of the ordinance, and that it had unlawfully and wrongfully issued the aforesaid warrant, which its treasurer threatened to pay and was about to pay out of said special fund, which payment, if made, would deprive plaintiff of that fund. The said provision in the ordinance is as follows :
" If the said water-works company shall issue bonds secured by mortgage or trust Reed upon said waterworks and appurtenances, then the money due or to become due for any hydrant rentals as aforesaid, or as much thereof as may be necessary, is hereby appropriated to the payment of interest on such bonds^ and the city hereby agrees that its treasurer shall deposit the same where such interest is payable, to be applied on such payment."
The trust deed securing the bonds contained no refence to this ordinance. The warrant read : "Pay to Cherryvale Water and Manufacturing Company, or order, out of any funds in the treasury not otherwise appropriated," etc. At one end of the warrant were the words "water fund." The petition did not allege that the bondholders were in any way induced or influenced to invest in the bonds by reason of the undertaking on the part of the city, nor that they even had any knowledge of the existence of the so-called special fund. It did not allege presentment of the claim for hydrant rentals to the city, nor refusal by it to pay the same, nor insolvency on the part of the city. Some of the usual averments in a petition for an injunction were wanting. The court sustained a demurrer filed by Guernsey and the National Bank of Independence, and entered judgment for the defendants generally for the costs, although the .other defendants were in default. The record does not show that any proper exception was taken by plaintiff on this point.
The basis of plaintiff's action was the promise of the city to pay hydrant rentals at the place where the interest on the bonds was payable, and its failuré to do so constitutes plaintiff's cause of action. It was a right arising solely out of the terms of the contract. Unless the allegations of the petition showed clear grounds for interference by injunction, the demurrer was properly sustained. We think that under those allegations the plaintiff was a general creditor only, and that the warrant was payable out of the general revenue fund of the city. We think also that the allegation in respect to the creation of a special fund was not admitted by the demurrer, in the absence of a statute authorizing the creation of such a fund, and that the right of plaintiff to enjoin the payment of the warrant in question out of the "water fund," assuming that it was legally created, is not clear, as there is nothing to show that the bondholders had knowledge of or were influenced by the existence of that fund. It does not appear to have been in any way connected with the contract between the city and the water-works company, which was the foundation of the plaintiff's action. The judgment of the district court is affirmed.