Skirving v. Nat'l Life Ins. Co. of Montpelier, 59 F. 742 (8th Cir. 1894)

On the 15th day of April, 1889, the proper officers of school district No. 44 of Holt county, Neb., issued three orders upon the treasurer of the district, payable to the order of Clark & Leonard Investment Company, — one for $1,-000, due one year after date; and. two for $1,500 each, due, respectively, two p. 743and three years after da.te. The payees of the orders indorsed them to the appellee, the National Life Insurance Company of Montpelier, Vt., on the 21th day of April, 1889. The insurance company purchased the orders in good faith, paying $3,710 for them. The orders were issued and sold to raise money to build a schoolhouse for the district, and the money derived from their sale was used for that purpose. After the erection of the schoolhouse, the district accepted and used it, and is still using it, as a schoolhouse. On the 27th day of Slay, 1892, the appellee brought suit on the law side of the United States circuit court for the district of Nebraska against the school district on the orders. A summons was issued in the action, and the proper officers of the district accepted service thereof in writing, a,nd at a term of the circuit court held on the 30th day of .Tune, 1892, the plaintiff in the action recovered a judgment by default against the school district for $4,990.98 and costs of suit. On the 9th day of July, 1892, the appellant tiled this bill in the court in which the judgment was rendered against the school district, to enjoin its collection. The bill alleges that the appellant lias been a resident of the district for several years, and is the owner of $5,000 worth of real estate and a large amount of personal property subject to taxation in the district, but it does not allege t.lia,t his proportion of the taxes to pay tlio judgment would be $2,000, or any other sum, and the bill is not filed on behalf of the other taxpayers of the district or of the district. The grounds upon which it is sought to enjoin the judgment are that the officers of the school district had no authority to issue the orders, or to levy a tax to pay them; that, when issued, they were in excess of the amount of indebtedness the district was allowed by law to contract; that their issue was not authorized by a vote of the electors of the district; and that in a suit brought by tlie appellant in the state court against the treasurer, moderator, and director of the district and the Clark & Leonard Investment Company a decree was rendered on the 24th day of January, 1891, adjudging that the orders had been illegally issued, and enjoining the officers of the school district from paying, and the Clark & Leonard Investment Company from collecting, them. Long before the commencement of the suit in the state court, Clark & Leonard Investment Compfiny had assigned the orders to the appellees who were not made parties to that suit. The prayer of the bill is that the appellee may be restrained “from proceeding at law against- your orator touching any of the matters in question, or in any manner seeking to enforce the collection of the aforesaid judgment at law.”

The general rules regulating the exercise of the jurisdiction of eqp. 744uity to enjoin the collection of a judgment recovered at law are well settled. The jurisdiction is not favored, and the grounds upon which it will be exercised are narrow and restricted. It will not suffice to show that injustice is done by the judgment against which relief is sought, and that it would be a hardship to enforce it, or that the defendant had a good legal defense to the cause of action upon which the judgment was rendered; but it must also appear that the defendant was prevented from interposing his defense at law by the fraud or misconduct of the plaintiff, or by some accident or mistake occurring without any fault of the defendant or his agents, and that it would be contrary to equity and good conscience to enforce the judgment. 1 High, Inj. §§ 165-178, and cases cited; 1 Black, Judgm. §§ 356, 366, 378, and cases cited; Insurance Co. v. Hodgson, 7 Cranch, 332; Sample v. Barnes, 14 How. 70, 75; Creath’s Adm’r v. Sims, 5 How. 192, 204.

The appellant cites and relies on Crampton v. Zabriskie, 101 U. S. 601, but that case is not in point. That was a suit “brought by other taxpayers of the county to compel the board to rec-onvey the p. 745land and Cramp ton to return the bonds, and to enjoin the prosecution of the action to enforce their payment.” It will be observed that no judgment had been recovered in that case, and the bill was filed to compel the board to reconvey the land which was the consideration for the bonds upon which suit had been brought. The bill did not seek to keep the consideration received for the bonds, and repudiate the bonds, but its object was to cancel the contract, return the consideration received for the bonds, and then cancel them. In this suit the appellant seeks to have the school district keep the consideration it received for the orders, and to enjoin, at his own suit, the payment of the judgment rendered upon the orders.