# Merchants' Exch Nat Bank of the City of New York v. Board of Chosen Freeholders County of Bergen/Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
United States Supreme Court
115 U.S. 384
Merchants' Exch Nat Bank of the City of New York v. Board of Chosen Freeholders County of Bergen
Argued: November 16, 1885. ---
There was evidence at the hearing of a very persuasive character that the 78 bonds deposited with the bank on the twenty-eighth of September, 1878, when the two loans of Bogert were consolidated, were not signed by him, and that the seal of the county was not attached until after he had ceased to be collector. Our judgment leads to that conclusion. If this be the fact, they fall within the rule in Anthony v. County of Jasper, 101 U.S. 699, where the court said that 'purchasers of municipal securities must always take the risk of the genuineness of the official signature of those who execute the paper they buy. This includes not only the genuineness of the signature itself, but the official character of him who makes it.' But, in the view we take of this case, it is not material whether the bonds were signed before or after Bogert had ceased to be collector. The board of chosen freeholders of the county never directed nor permitted their issue. The law under which it derived all its powers provided only for the issue of bonds to meet the indebtedness from those then about to mature. All such maturing bonds had been surrendered for the new bonds, except for a small amount, which was paid in cash. The power of the board under the law was then exhausted. Any further issue was beyond its authority. Unless, therefore, there is something in connection with their issue to estop the board from contesting their validity, they can in no manner bind the county. This is not a case where there existed in the board a general power to issue negotiable securities of the county, so that parties would be justified in taking them when properly executed in form by its officers. It is a case where there was no power, except as specially delegated by law for a particular purpose. All persons taking securities of municipalities having only such special power must see to it that the conditions prescribed for the exercise of the power existed. As an essential preliminary to protection as a bona fide holder, authority to issue them must appear. If such authority did not exist, the doctrine of protection to a bona fide purchaser has no application. This is the rule even with commercial paper purporting to be issued under a delegated authority. The delegation must be first established before the doctrine can come in for consideration. See case of Floyd Acceptances, 7 Wall. 676; Marsh v. Fulton Co., 10 Wall. 676; Mayor v. Ray, 19 Wall. 469.
There is a class of cases where recitals in obligations are held to supply such proof of compliance with the special authority delegated as to preclude the taking of any testimony on the subject, and estop the obligor from denying the fact. These have generally arisen upon municipal bonds, authorized by statute, upon the vote of the majority of the citizens of a particular city, county, or town, and in which certain persons or officers are designated to ascertain and certify as to the result. If, in such cases, the bonds refer to the statute, and recite a compliance with its provisions, and have passed for a valuable consideration into the hands of a bona fide purchaser, without notice of any defect in the proceedings, the municipality has been held to be estopped from denying the truth of the recitals. The ground of the estoppel is that the officers issuing the bonds and inserting the recitals are agents of the municipality, empowered to determine whether the statute has been followed, and thus bind the municipality by their determination. See, of the late cases on this point, Northern Bank of Toledo v. Porter Township Trustees, 110 U.S. 608; S.C.. 4 Sup. Ct. Rep. 254; and Dixon Co. v. Field, 111 U.S. 83; S.C.. 4 Sup. Ct. Rep. 315.
In the bonds of Bergen county there are no recitals. The bank, in taking them, was bound to ascertain whether or not they were authorized. Had it examined the register of the bonds issued to take up the matured bonds, which was a public record of the county and open to inspection, it would have learned that the bonds which it received were not of the number thus authorized. Content to rely upon the unsupported representations of Bogert, it cannot now cast upon the county the consequences of its own mistake. Buchanan v. Litchfield, 102 U.S. 278.
Judgment affirmed.

## Notes

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