Court Opinion

ID: 6570094
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:26:46.124797+00
Date Added: 2024-06-11T15:56:52.576220
License: Public Domain

Mr. Justice Butler
dissenting.
I am unable to concur in the decision or in the opinion in support thereof.
On November 7, 1931, in the case of M. E. Hyde v. Town of Castle Rock, judgment was rendered in favor of Hyde for $27,112.50, the town having consented to the entry thereof. On April 11, 1932, the Denver and Rio Grande Western Railroad Company, a taxpayer, the Board of County Commissioners of Douglas County, and George P. Stewart and O. P. West, taxpayers, for themselves and on behalf of all taxpayers in said town, filed a petition to vacate said judgment and for permission to file an answer for and on behalf of the town and to defend the action.
The Hyde suit was based upon certain certificates of indebtedness issued by the town and alleged by Hyde to have been assigned to her for a valuable consideration. The petition alleges the falsity of all material allegations of the complaint, and charges that the action was brought by Hyde and the judgment therein was confessed and entered pursuant to a conspiracy between the town and one Joseph D. Grigsby. It alleges that the *344town illegally issued and guaranteed the payment of certain sanitary sewer special assessment bonds; that thereafter the conspiracy was formed; that in pursuance of the conspiracy, the town pretended to purchase the bonds from the “special improvement district”; that the transaction was without consideration; that the town illegally issued and delivered to Grigsby the certificates of indebtedness sued upon; that they were issued and delivered without any consideration, and for the purpose of misrepresenting to the court and as a pretense that the town had' received the sum of $27,000; that Grigsby caused to be prepared and filed the complaint in the Hyde action; that Hyde was not the real party in interest, but a mere “dummy” in the employ of Grigsby; that the allegations in the complaint were well known to be false; that the town filed an answer admitting the truth of the false matters alleged in the complaint and confessed judgment, which accordingly was rendered in favor of Hyde; that the transactions constituted a fraud upon the court and upon the town and its taxpayers; that the town authorities “are parties to the injuries” sought to be redressed and any demand upon them to move for the vacation of the judgment would be futile.
To the petition the town filed an answer consisting of denials and affirmative allegations. The answer alleges matters to relieve itself of the charges of bad faith and conspiracy. It also interposes a plea to the jurisdiction, in which it is alleged that the judgment sought to be set aside was funded or paid by the issuance of bonds; that said bonds are held by the state of Colorado; that the state has not been made a party to the proceeding, and that the court therefore is without jurisdiction to entertain the petition and give the petitioners the relief prayed for.
The trial court overruled petitioners ’ demurrer to the town’s answer, petitioners stood upon their demurrer, and the court rendered judgment denying the relief sought by petitioners. The court held that it had no *345jurisdiction to set aside the judgment because the state of Colorado, the holder of all the funding bonds, was not a party to the proceeding.
1. The funding bonds were purchased with money constituting a part of the public school fund of the state. The State Board of Land Commissioners was made a party to the petition and it is contended that that is equivalent to making the state a party. That contention is without merit. Section 3, article IX of the state Constitution provides: “ * * * The state treasurer shall be the custodian of this fund, and the same shall be securely and profitably invested as may be by law directed. * * * ” Section 8298 of Compiled Laws of 1921 provides: “All school funds of the state., whether permanent or income, unless otherwise disposed of by law, shall be invested as directed by the state board of land commissioners: * * * Fifth — In bonds of the several counties, cities, town or city, and city and counties of the state of Colorado. * * *” When the bonds were purchased under the direction of the board, they were paid for, not by the board, but by the state treasurer to whom they were delivered and by whom they are held as custodian of the public school fund of the state. The board’s duties with reference to the public school fund of the state are clearly defined and limited. The board is not, and never was, the holder of the bonds. After directing the purchase of the bonds, the board’s duties and powers with reference thereto were ended.
2. It is unnecessary to determine at this time what, if any, effect the granting of the petition would have upon the funding bonds held by the state. The petitioning taxpayers allege that the town, through its officers, committed a fraud upon the court, the town and the taxpayers, in consenting to the entry of a judgment in an action to which there existed a valid defense. They do not seek a cancellation of the funding bonds issued, but merely ask that the judgment be vacated and that they be permitted to defend the action. They have a right to *346that relief if their allegations are sustained by proof, for if it should judicially be determined that the officers have committed a fraud, as alleged, the town, or the taxpayers in its behalf, could, in an appropriate action proceed against those who were parties to the fraud. The order setting aside the judgment would not be res adjudicata against the state. In a suit to recover on the bonds the rights of the state could be considered and determined. The right of petitioners to have the question of fraud determined as between them acting in the town’s behalf, and those committing such fraud, if any, and thereafter, in behalf of the town, to proceed against the wrongdoers if the state, as an innocent purchaser, should recover judgment on the bonds, cannot be defeated by the sale of the bonds to the state.
I respectfully submit that the judgment should be reversed.
Mr. Chief Justice Campbell and Mr. Justice Burke concur in this dissenting opinion.