Commissioners of Johnson County v. January

• Decision Date: 01 October 1876
• Citation: 94 U.S. 202,24 L.Ed. 110
• Parties: COMMISSIONERS OF JOHNSON COUNTY v. JANUARY
• Court: U.S. Supreme Court

94 U.S. 202

24 L.Ed. 110

COMMISSIONERS OF JOHNSON COUNTY v. JANUARY.

October Term, 1876

ERROR to the Circuit Court of the United States for the District of Kansas.

The case is stated in the opinion of the court.

Mr. Nelson Cobb for the plaintiffs in error.

The bonds in question derive no validity from the act of Feb. 25, 1868, as it was expressly repealed by the fourth section of the act of Feb. 27, 1869, without any saving clause as to pending proceedings. The election, ordered when the former law was in force, not having been held until after the last law took effect, was, with all the subsequent action to which it gave rise, unauthorized and void. Aspinwall v. Commissioners of Daveiss County, 22 How. 364; Covington, &c. Railroad Co. v. Kenton, 12 B. Mon. (Ky.) 144. Their issue was not authorized by the act of 1869, as after its passage no election was ordered, and the county is not estopped from contesting their validity, especially when their recitals show an absence of legal authority for the doings of the board in the premises. Marsh v. Fulton County, 10 Wall. 676.

The plaintiff below was not therefore a bona fide holder of the bonds in question. This court has repeatedly held that paper otherwise negotiable, which on its face shows that which should arouse suspicion and put the taker upon inquiry, cannot be so transferred as to cut off defences which would have been available against the original holder. Fowler v. Brantly, 14 Pet. 318; Goodman v. Simonds, 20 How. 343; Angle v. North-western Mutual Life Insurance Co., 92 U. S. 330; Harshman v. Bates County, id. 569.

The subsequent acts of the county do not estop it from setting up the defences upon which it relies in this suit. Bigelow on Estoppel, p. 80; Clark v. Session, 22 N. Y. 312; Langdon v. Dowd, 10 Allen, 423; Freeman v. Cooke, 2 Exch. Rep. 644; Howard v. Hudson, 2 El. & Bl. 1; Anderson v. Lyon, 11 Allen, 349; Wells v. Truesdell, 6 Pick. 455. The only interest paid on the bonds was that paid to the plaintiff below. The delivery of the certificates of stock was necessary to complete the subscription, and was, like it, void. The registration by the State auditor on the application of the holder of the bonds was without notice or knowledge of the county or its officers. Upon neither of these facts, therefore, can the doctrine of estoppel have any application.

Mr. James Grant, contra.

MR. JUSTICE SWAYNE delivered the opinion of the court.

This is an action brought to recover the amount of certain coupons taken from bonds issued by the plaintiffs in error to the St. Louis, Lawrence, and Denver Railroad Company, of which bonds the defendant in error was the holder.

By consent of parties the case was tried by the court without a jury. The court found the facts, and gave judgment for the defendant in error. The plaintiffs in error thereupon brought the case to this court for review.

There is no dispute between the parties as to the leading facts of the controversy. The proper authorities submitted the question to the electors of the county, whether the county should subscribe for $100,000 of the stock of the company, to be paid for by issuing its bonds to that amount. The election was ordered on the 25th of January, 1869, and took place on the 6th of April, 1869. The proposition was sanctioned by a majority of more than two to one. The bonds were thereafter executed and deposited as escrows. On the 22d of May, 1871, the commissioners made an order that they should be delivered, and they were delivered accordingly. A certificate of stock was issued and delivered by the company, and is still held by the county. It has never been surrendered, nor offered to be surrendered. The bonds were signed by the chairman and clerk of the board of commissioners, and attested by the county treasurer. There was in each one a recital 'that this bond is executed and issued by virtue of, and in accordance with, an act of the legislature of Kansas, entitled 'An Act to authorize counties and cities to issue bonds to railroad companies,' approved Feb. 25, 1868, and is in pursuance of, and in accordance with, the vote of a majority of the qualified electors of the county of Johnson, at a regular election, held on the sixth day of April, 1869.' Each one bore, also, the following indorsement:——

'I, A. Thoman, auditor of the State of Kansas, do hereby certify that this bond has been regularly and legally issued; that the signatures thereto are genuine; and that the bond has been duly registered in my office, in accordance with an act of the legislature, entitled 'An Act to authorize counties, incorporated cities, and municipal townships to issue bonds for the purpose of building bridges, aiding in the construction of railroads or other works of internal improvements, and providing for the registration of such bonds and the repealing of all laws in conflict therewith,' approved March 2, 1872. Witness my hand and official seal, this twenty-first day of March, 1872.'

The certificate is authenticated by the official signature and seal of the auditor.

The road was finished, and has since been in operation. The county and its inhabitants are in the enjoyment of the benefits arising from it.

There is no imputation of any taint of fraud upon either side.

The county authorities paid the interest upon the bonds for a time.

The county has received what it contracted to receive, and has paid what it contracted to pay.

The plaintiff in the suit is the bona fide holder of the bonds.

A case of stronger equity can hardly exist.

Several objections have been taken to the validity of the...