Rouede v. Mayor, etc., of Jersey City

• Decision Date: 12 December 1883
• Citation: 18 F. 719
• Parties: ROUEDE v. MAYOR, ETC., OF JERSEY CITY.
• Court: U.S. District Court — District of New Jersey

18 F. 719

ROUEDE v. MAYOR, ETC., OF JERSEY CITY.

United States Circuit Court, D. New Jersey.

December 12, 1883

Robt. O. Babbitt, for plaintiff.

Allan L. McDermott, for defendant.

NIXON J.

The principle is well settled by the supreme court that in a suit by a bona fide holder against a municipal corporation to recover the amount of coupons due or bonds issued under authority conferred by law, no questions of form merely, or irregularity or fraud or misconduct on the part of the agents of the corporation, can be considered. The only matters left open in this case for inquiry are (1) the authority to issue the bonds by the laws of the state, and (2) the bona fides of the holder. East Lincoln v. Davenport, 94 U.S. 801; Pompton v. Cooper Union, 101 U.S. 196; Copper v Mayor, etc., of Jersey City, 15 Vroom, 634.

This suit is brought upon 20 bonds of the defendant corporation of the denomination of $1,000 each, 16 of which are dated July 1, 1873, and the remaining four, October 1, 1873. The recital appears upon the fact of the 16 that they were issued under a resolution of the board of finance and taxation of Jersey City, of the date of June 1, 1873, and in conformity with an act of the legislature of New Jersey entitled 'An act to reorganize the local government of Jersey City,' approved March 31, 1871, and the several supplements thereto and under the second section of the supplement of April 4, 1873. The recital upon the face of the other four bonds is that they also are issued by the board of finance and taxation, under the authority of section 156 of the city charter. An examination of the charter and supplements referred to renders it certain that ample legislative authority was granted for the issue of the bonds. It is of no importance in the pending suit whether or not the city officials complied with all the requirements of the law in the method or manner of their issue. If there was any dereliction on their part, as was so strongly urged by the counsel for the defendant on the argument, the rights of a bona fide holder are not to be prejudiced thereby.

2. Is the plaintiff such holder? The evidence is quite meager in regard to the facts. But I gather the following, either from the testimony of the witnesses, or from the admissions of counsel at the hearing. Just after the panic of 1873 Jersey City was found to be unable to meet a number of matured claims, which were being pressed for payment. The board of finance and taxation, in which was vested the power of issuing the bonds of the city, made arrangements with a number of holders of claims to pay them with bonds of the city at par. These were issued, and after consultation with the mayor it was agreed that they should be delivered into the hands of Alexander D. Hamilton, Jr., the city treasurer who was to use them in settlement of the claims as they were presented. Mr. Lockwood, chairman of the committee of finance and taxation, states that the treasurer had a list of certain specified claims, which consisted largely of improvement certificates, and upon presentation of these certificates, as specified, he was to make the exchange in bonds and settle the difference in cash. Instead of using the bonds for the purpose designated, the treasurer absconded in the fall of 1873, carrying with him city bonds of the par value of $47,000. They were all of the denomination of $1,000 each, and the coupons on which this suit is brought were attached to 20 of them. Hamilton turned up in Mexico, where, it is presumed, he negotiated the bonds. The next information we have respecting them is that on May 10, 1879, the plaintiff, then residing at Matamoras, in Mexico, purchased, for the sum of $18,000, 20 of the bonds of one M. Jesus De Lira, a life-long resident of Matamoras,-- a gentleman who had been a general merchant, but had then retired from general business, and only undertook such occasional matters as presented themselves from time to time. The plaintiff, on his examination, states that he had been acquainted with De Lira 14 years,...