Bolton v. Wharton, Mayor

161 S.E. 454, 163 S.C. 242, 86 A.L.R. 1101, 1931 S.C. LEXIS 19

• Court: Supreme Court of South Carolina
• Decided: October 14, 1931
• Docket: 13255
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. ChiUT Justice; BuUasu.

The able and interesting decree of Honorable Thomas S. Sease, Circuit Judge, in this case, is convincing that the conclusions reached by him are correct. It will be reported.

In addition to the many authorities cited by the Circuit Judge to sustain his conclusions, we call attention to the very recent case of City of Sanford, Florida, v. Chase Nat ional Bank of City of New York, 50 F. (2d), 400, 405, decided by the Circuit Court of Appeals, Second Circuit. In that case, where the Court had under consideration the liability of the City of Sanford on certain municipal bonds executed by the city authorities, the validity of which was questioned by the city, which bonds were wrongfully pledged with the defendant bank by a Florida bank, the Court held that the city was not liable on the bonds, and in the course of the opinion, Judge Mantón for the Court said this: “Municipal bonds executed by the properly authorized officials will estop the municipality as against bona fide holders for value of the bonds from asserting that necessary conditions precedent to the issuance of the bonds have not been fulfilled. Knox County v. Aspinwall, 62 U. S. (21 How.), 539, 16 L. Ed., 208; Waite v. Santa Cruz, 184 U. S., 302, 22 S. Ct., 327, 46 L. Ed., 552; Presidio County v. Noel-Young Bond Co., 212 U. S., 58, 29 S. Ct., 237, 53 L. Ed., 402. But, if the municipality has no statutory power to issue the bonds under any possible situation of facts, it cannot be estopped by any recitals in them from setting up its lack of power. Northern Bank v. Porter Township, 110 U. S., 608, 4 S. Ct., 254, 28 L. Ed., 258; Merrill v. Monticello, 138 U. S., 673, 11 S. Ct., 441, 34 L. Ed., 1069.” (Italics ours.)

In the case at bar, the City of Union and none of its officials had either constitutional or statutory authority to issue the notes (regarded as bonds under our decisions) for the purpose for which they were issued.

If the holding of Judge Sease in this case is incorrect, every municipality in South Carolina can be bankrupted, and the property of its taxpayers confiscated, through the issuance of bonds not legally authorized.

The decree of the Circuit Judge is affirmed.

Messrs. Justices StabuEr and Carter and Mr. Acting Associate Justice John I. Cosgrove concur.