Grattan Tp. v. Chilton, 1,096.

• Citation: 97 F. 145
• Decision Date: 09 October 1899
• Docket Number: 1,096.
• Parties: GRATTAN TP. v. CHILTON.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

97 F. 145

GRATTAN TP. v. CHILTON.

No. 1,096.

United States Court of Appeals, Eighth Circuit.

October 9, 1899

H. E Murphy, B. T. White, and James B. Sheean, for plaintiff in error.

George W. Seevers and M. F. Harrington, for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge.

The defendant in error, Henry Percy Chilton, was the innocent purchaser, for value, of certain bonds and coupons issued by the plaintiff in error, the township of Grattan. The coupons were not paid when they became due, and he brought this action to recover upon them. The township interposed various defenses, and the case was tried by the court below upon an agreed statement of facts, and a judgment was rendered against the plaintiff in error. The opinion of the circuit court upon which this judgment rests may be found in 82 F 873.

Counsel for the plaintiff in error insist that the judgment is erroneous: (1) Because the board of supervisors of the county of Holt, which issued the bonds, had no power to do so, for the reason that the Nebraska & Western Railway, to aid in the construction of which the bonds were issued, was not built through the township of Grattan and (2) because the defendant in error did not plead or prove that this railroad was built within 40 rods of the line of its route as that line was shown on the survey thereof filed by the Nebraska & Western Railway Company in the office of the clerk of the county of Holt. We will consider these contentions in their order.

1. The agreed facts on which the first position taken by counsel is based are these: Under the constitution and statutes of the state of Nebraska the board of supervisors of the county of Holt was empowered to issue the bonds of the township of Grattan to aid in the construction of a railroad upon a favorable vote of two-thirds of the electors of the township voting upon the question. Comp. St. Neb. 1897, c. 45, Secs 3518, 3519, p. 696. A proper petition for the submission of the question of the issue of the bonds to the vote of the electors was made, the proposition to issue them was submitted, and more than two-thirds of the electors voted in its favor. The petition for the election and the proposition for the issue of the bonds contained this clause:

'The proceeds of said bonds to be used in aid of the construction of a line of railroad passing into the county of Holt from the east, and through the said township to the city of O'Neill, in said county, such proceeds to be given to the Nebraska & Western Railway Company when it shall complete a line of said railroad, and have cars running thereon, to the city of O'Neill, on or before August 1, 1890.'

The railway was constructed from the east into the township of Grattan, a distance of about five miles, and it was completed to the city of O'Neill, which is situated within the township, and cars were running thereon, on or before August 1, 1890, but it never was constructed to or across the western boundary of the township of Grattan. After it was completed to O'Neill, the board of county supervisors issued and delivered the bonds to the Nebraska & Western Railway Company. That company sold them on the market, and they were finally purchased for value by the defendant in error in the usual course of such commercial transactions. Each of the bonds contained this recital:

'This bond is issued for the purpose of aiding the Nebraska & Western Railway Company in the construction of a railroad through said Grattan township; said railroad to pass into the county of Holt from the east through the said Grattan township, and have cars running thereon to the city of O'Neill on or before August 1st, 1890, and is one of a series of thirty-six bonds of one thousand dollars each, and numbered from one to thirty-six, inclusive; and said bonds are issued under and by authority of the laws of the state of Nebraska found in chapter 45, on pages 540, 541, and 542, of the Compiled and Annotated Statutes of the State of Nebraska of the year 1889, and the other laws of the state of Nebraska in relation thereto.'

Upon these facts it is urged that the construction of the railroad through the township of Grattan was a condition precedent to the issue of the bonds, and that, since the condition was not complied with, the board of county supervisors had no power to issue them, and they are void in the hands of all classes of purchasers. But the board certified that these bonds were issued under and by authority of the statutes. If, under any circumstances, the board would have had authority to issue them, and the bonds would have been valid, innocent purchasers had the right to presume that those circumstances existed when they were issued, and the township was estopped to deny their existence after such purchasers had bought them in reliance upon the certificate that they were issued in compliance with the statute. There were circumstances under which the bonds might have been valid. The railroad might have been constructed through the township. The township is, therefore, estopped by the certificate in the bonds from avoiding or repudiating them on the ground that it was not constructed through the township. The state of Nebraska imposed the duty and vested the power of determining whether or not two-thirds of the voting electors of the township of Grattan had voted in favor of issuing these bonds, of determining whether or not the railroad had been constructed and put in operation to the city of O'Neill on or prior to August 1, 1890, and of determining whether or not it had been constructed through the township of Grattan, if that was a condition precedent to their issue, in the board of supervisors of the county of Holt. That board decided that all the requisite conditions precedent to their issue had been fulfilled. It sent the bonds forth, and certified on the face of each one of them that they had been issued under and by authority of the statutes of the state. The recitals of officers who are invested with authority to determine when conditions precedent to the issue of negotiable bonds are complied with, and with power to issue them upon the fulfillment of such conditions, that they have been sent forth 'in pursuance of,' or 'in conformity with,' or 'by virtue of' the statute which authorizes their issue under the prescribed conditions, preclude inquiry, as against innocent purchasers for value, as to whether or not the precedent conditions had been performed when the bonds were issued. City of Huron v. Second Ward Sav. Bank, 57 U.S.App. 593, 606, 30 C.C.A. 38, 45, 86 F. 272, 279; National Life Ins. Co. v. Board of Education of City of Huron, 27 U.S.App. 244, 266, 268, 10 C.C.A. 637, 651, 652, and 62 F. 778, 792, 793, and cases there cited; West Plains Tp. v. Sage, 32 U.S.App. 725, 736, 16 C.C.A. 553, 558, and 69 F. 943, 948; E. H. Rollins & Sons v. Board of Com'rs of Gunnison Co., 49 U.S.App. 399, 412, 26 C.C.A. 91, 98, and 80 F. 692, 699; Brown's Ex'x v. Ingalls Tp., 57 U.S.App. 611, 615, 616, 30 C.C.A. 27, 29, and 86 F. 261, 263; City of South St. Paul v. Lamprecht Bros. Co., 69...