Humboldt Township v. Long

92 U.S. 642, 23 L. Ed. 752, 1875 U.S. LEXIS 1801

• Court: Supreme Court of the United States
• Decided: May 18, 1876
• Docket: 728
• Status: Published

Opinions

Mr. Justice Strong

delivered tbe opinion of tbe court.

Tbe first question certified from tbe court below, is, whether tbe bonds to which tbe coupons in suit were attached are negotiable bonds, such as to entitle tbe plaintiff to tbe rights of a Iona fide bolder of negotiable paper taken in tbe ordinary course of business before maturity.

They are certificates of indebtedness to tbe railroad company, or bearer, each for §1,000, lawful money of tbe United States, payable on a day certain, with interest at the rate of seven per cent, payable annually on tbe first days of January in each year, at a specified banking-house, on tbe presentation and surrender of tbe respective interest-coupons thereto annexed. If this were all, there could be no doubt of their complete negotiability. But, it is said, tbe subsequent language of tbe certificates controls the absolute promise, and shows that payment was to be made only on a contingency. This is argued from tbe recital contained in tbe instrument, and from what follows it. We quote: “ This bond is issued for tbe purpose of subscribing to tbe capital stock of tbe Fort Scott and Allen County Railroad, and for tbe construction of tbe same through tbe said township, in pursuance of, and in accordance with, an act of tbe legislature of the State of Kansas, entitled, ‘ An Act to enable municipal townships to subscribe for stock in any railroad, and to provide for tbe payment of tbe same, approved Feb. 25, 1870;’ and for the payment of the said sum of money and accruing interest thereon, in manner aforesaid, upon the performance of the said condition, tbe faith of tbe aforesaid Humboldt Township, as also its property, revenue, and resources, is pledged.” Relying upon this clause of the certificate, the township contends that the construction of the railroad through the township was a condition upon which the payment was agreed to be made. We think, however, this is not the true construction of the contract. The construction of the road, as well as the subscription for stock, were mentioned in the recital as the reasons why the township entered into the contract, not as conditions upon which its performance was made to depend. It was for the purpose of subscribing, and to aid in the construction of the road, that the bond was given. The words, “upon the performance of the said condition,” cannot then refer to any thing mentioned in the recital, for there is no condition there. A much more reasonable construction is, that they' refer to a former part of the bond, where the annual interest is stipulated to be payable at a banker’s, “ on the presentation and surrender of the respective interest-coupons.” Such presentation and surrender is the only condition mentioned in the instrument. But that stipulation presents no such contingency as destroys the negotiability of the instrument. It is what is always implied in every promissory note or bill of exchange, — that it is to be presented and surrendered when paid. As well might it be said that a note payable on demand is payable upon a contingency, and therefore non-negotiable, as to affirm that one payable on its presentation and surrender is, for that reason, destitute of negotiability.

The next question certified is, whether the bonds are invalid because of the fact that the' election was held within less than thirty days after the day of the order calling for it.

The act of the legislature under which the bonds purport to have been issued (passed in 1870) is the act under which the bonds considered in the case of Marcy v. Township of Oswego, supra, p. 637, were issued. We held in that case, that, by its provisions the board of county commissioners, who caused the bonds to be issued, were constituted the authority to determine whether the conditions of fact, made by the statute precedent to the exercise of the authority granted to execute and issue the bonds, had been performed, and that their recital in the bonds issued by them was conclusive in a suit against the township brought by a bona fide holder. In so ruling, we but decided Avhat had often before been decided, and AAdiat ought to be regarded as a fixed rule. Applying it to the solution of the question novr before us, it is plain that the bonds are not invalid, because all the notice of the popular election Avas not given Avhich the legislative act directed. The election Avas a step in the process of execution of the poAver granted to issue bonds in payment of a municipal subscription to the stock of a railroad company. It did not itself confer the power. Whether that step had been taken or not, and whether the election had been regularly conducted Avith sufficient notice, and whether the requisite majority of votes had been cast in favor of a subscription, and consequent bond issue, were questions which the law submitted to the board of county commissioners, and which it was necessary for them to answer before they could act'. In the present case, the board passed upon them and issued the bonds, asserting by the recitals that they Avere issued “ in pursuance of and in accordance with the act of the legislature.” Thus the plaintiff below took them, without knoAvledge of any irregularities in the process through Avhich the legislative authority was exercised, and relying upon the assurance given by the board, that the bonds had been issued in accordance Avith the laAV. In his hands, therefore, they are valid instruments.

The third question certified is answered by what was decided in the case of Marcy v. Township of Oswego, supra, p. 687, to which we have already referred. There is no essential difference between this case and that. The assessment-rolls of the township may have been proper evidence for the consideration of the board of county commissioners, when they were inquiring what the value of the taxable property of the toAvnship was; but the bonds are not invalid in the hands of a bona fide holder by reason of their having been voted and issued in excess of the statutory limit, as shown by the rolls. Whatever may be the right of the toAvnship as against those Avho issued the bonds, it cannot set up against a bona fide holder of the bonds that the amount issued Avas too large, in the face of the decision of the board, and their recital that the bonds Avere issued pursuant to and in accordance Avith the act of 1870.

Judgment affirmed.