County of Beaver v. Armstrong

• Decision Date: 05 January 1863
• Citation: 44 Pa. 63
• Parties: The County of Beaver <I>versus</I> Armstrong.
• Court: Pennsylvania Supreme Court

44 Pa. 63

The County of Beaver versus Armstrong.

Supreme Court of Pennsylvania.

January 5, 1863.

ERROR to the Common Pleas of Beaver county.

B. B. Chamberlin, for plaintiff in error.

N. P. Fetterman, for defendant in error.

The opinion of the court was delivered, January 5th 1863, by READ, J.

The first, second, and third specifications of error turn upon the legality of the exercise of the power conferred by the 17th section of the Act of the 7th April 1853 on the county commissioners of Beaver county, to subscribe to the capital stock of the Cleveland and Pittsburgh Railroad Company, and to issue bonds in payment of such subscription. The learned judge in the court below held that the subscription was made, and the bonds, with coupons attached, were issued in strict conformity to law, and the reasons he has assigned in his charge, and the numerous decisions of this court, clearly show that he was right in coming to this conclusion. Contenting ourselves, therefore, with the reasoning of the court below, we assume that the bonds and coupons were legally binding on the county of Beaver, and this brings us to the fourth specification of error, which was the real point argued before us.

The suit was brought on coupons, of five bonds of the county of Beaver, to the railroad company or bearer for the payment of one thousand dollars each, thirty years after date, with semi-annual interest at the rate of six per centum per annum from the date. The bonds were dated 15th September 1853, and the principal and interest were payable at the office of the Ohio Life Insurance and Trust Company, in the city of New York. The coupons were numbered from eight to fourteen, inclusive, for the payment of $30 interest from the 15th of September 1857 to the 15th of September 1860, inclusive. The bonds stipulated that the interest was payable upon the delivery of the coupons severally at the said office in New York. It appeared that these coupons were left unpaid, and that no provision was made for the payment in New York or elsewhere, and that the county disputed the legal obligation of the bonds and coupons, and declined payment. Having therefore decided that the plaintiff could recover on the coupons, the next question was whether he was entitled to interest on them. This question the court decided in the affirmative, at the same time making a very learned argument to show that they were wrong. This forms the subject of the fourth specification of error, and this brings us to the consideration of whether such coupons are recoverable without interest no matter what may be the delays interposed by the corporation or individuals issuing such bonds and coupons, which pass from hand to hand by delivery merely.

Before proceeding to the determination of this question it will be proper to state clearly in what light these coupons, settled in this case to be legally issued, and to be held by a person against whom there is neither legal nor equitable defence to the recovery of the amount on their face, are to be considered. In Gorgier v. Mieville, 3 B. & C. 45, Ld. Chief Justice Abbott, in 1824, in speaking of bonds issued by the king of Prussia, said: "This instrument, in its form, is an acknowledgment by the king of Prussia that the sum mentioned in the bond is due to every person who shall, for the time being, be the holder of it. And the principal and interest is payable in a certain mode, and at certain periods, mentioned in the bond. It is therefore in its nature precisely analogous to a bank note payable to bearer, or to a bill of exchange endorsed in blank. Being an instrument, therefore, of the same description, it must be subject to the same rule of law that whoever is the holder of it has power to give title to any person honestly acquiring it. It is distinguishable from the case of Glyn v. Baker, because there it did not appear that India bonds were negotiable, and no other person could have sued on them but the obligee. Here, on the contrary, the bond is payable to the bearer, and it was proved at the trial that bonds of this description were negotiated like exchequer bills."

This case was preceded four years before, by Wookey v Pole, 4 B. & Ald. 1, where it was held that exchequer bills were negotiable, and were of the same nature as notes and bills of exchange. The opinions of the judges examine all the early cases, and are very instructive as to the principles upon which instruments for the payment of money assume the character and qualities of negotiable paper. Lord Chief Justice Abbott, speaking of the exchequer bill which was the subject of the suit, says: "But, abstracted from authority, I think this instrument is of the same nature as notes and bills of exchange. Like them it is neither valuable nor useful in itself, as goods and chattels, such as a horse, a book, a picture or a pipe of wine are; it is valuable only as entitling the holder to receive at some future time, a certain sum of money, which is a value precisely of the same nature as the value of a note or bill. Notes and bills have been distinguished from goods in regard to their transfer, for the convenience of trade and commerce; and in regard to their being mercantile and commercial instruments and by law negotiable. It may be true that exchequer bills are not so frequently negotiated, in fact, as some other bills or notes; but I think we are to regard the negotiability of the instrument, and not the frequency of actual negotiation. Exchequer bills are not made for very small sums, and on that account alone they would not become the subject of frequent actual negotiation. A bank note for 5000l. passes through very few hands; a bank note for 5l. usually passes through a great number. Many country bank notes have no ordinary circulation beyond a very narrow district. Bills of exchange usually pass through very few hands, but the character of these instruments is in no degree affected by these circumstances. In the case of Grant v. Vaughan, 3 Burr. 1526, which arose upon a draft on a banker, payable to the ship Fortune or bearer, the court held it ought not to have been left to the jury to say whether such drafts were, in fact and practice, negotiable; for that the question whether a bill or note be negotiable or not, is a question of law. And upon such a question of law regarding an exchequer bill, I should, looking at the form of the instrument, and observing that the money is to be payable to the bearer, answer that it is, by law, negotiable.

"For these reasons, I am of opinion that exchequer bills are negotiable, and may be transferred in the same manner as bills of exchange, and that in those bills, as in bills of exchange, the property passes with the possession, by every mode of transfer, fraud and collusion apart."

Best, Justice, said: "The question which the court is called on to decide is whether exchequer bills are to be considered as goods or as the representatives of money, and as such, subject to the same rules, as to the transfer of property in them, as are applicable to money. The delivery of goods by a person who is not the owner (except in the manner authorized by the owner), does not transfer the right to such goods; but it has long been settled that the right to money is inseparable from the possession of it. I conceive that the representative of money, which is made transferrable by delivery only, must be subject to the same rules as the money which it represents."

"It cannot be disputed but that this exchequer bill was made to represent money as much as a bank note or bill of exchange. It was given for a debt due from government; it is payable (the blank not being filled up) to bearer, and transferrable by delivery; and is, on its face, made current, and to pass in any of the public revenues, or at the receipt of the exchequer." "The receiver never inquires from whom they come, further than to satisfy himself that they are genuine bills. Indeed, when they are in blank, he has no means of ascertaining from whom they come."

And the same doctrine was held to be applicable to bonds issued by the Russian, Danish, and Dutch governments: Attorney-General v. Bouwens, 4 M. & W. 171. The same principles were enunciated two years afterwards by Chancellor Walworth, in The State of Illinois v. Delafield, 8 Paige 527, and affirmed by the Court of Errors: Delafield v. State of Illinois, 2 Hill 159. Mr. Webster, in his argument before the chancellor, p. 531, says: "The bonds are instruments transferrable by delivery, and the state is bound in honour to pay them to a bonâ fide holder. A subsequent purchaser in good faith would not be required to know that their original transfer had been unauthorized or illegal." And the chancellor said, p. 533: "If these securities, therefore, pass into the hands of bonâ fide holders who have no notice of any irregularity, or want of authority on the part of the officers or agents of the state, who put them in circulation, the complainant is both legally and equitably bound to pay them to such holders." Mr. Justice Bronson, delivering the opinion of the Court of Errors, says, p. 177: "The bonds are negotiable instruments, the title to which will pass by mere delivery; and although void in the hands of the appellant, they will be valid securities in the hands of a bonâ fide holder."

The same doctrine was applied by the chancellor in Stoney v. American Life Insurance Company, 11 Paige 635, to certificates of deposit. "The company," said he, page 637, "was bound to pay its certificates to the holders thereof; for such certificates are legal on their faces, and bonâ fide holders who have bought them without knowing that they were not in fact issued at Baltimore, and upon actual deposits in trust, can recover on them even if they were issued in this state in violation of our restraining laws."

In The Mechanics' Bank v. The New York and New Haven Railroad Company, 3 Kernan 599, Mr. Justice Comstock,...