The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-02-13
COMPLICATED BOND TRANSACTlON.s
The Warren County, ILL.,, Issue Of Bonds
Alleged to be Illeg al-Decision Of Judge
DrummO

Drummond.
CHICAGO, H., Feb. IL, 1874.
In the United States Circuit Court Judge Drum
mond has overruied the demurrer to the replication
In the Warren county bond cases. The suits are or
public interest not only on account OF the amount
involved, but as presenting new phase OF the ia
bility Of towns and counties their bonds issued
in aid OF the building Of railways. The cases
involved the legality $780, 900 bonds OF the county
OF Warren in aid OF the Rockford, Rock Island and
st. Louis Railroad Company. Before the bonds
were issued, certain taxpayers filed bill in Chan
Gerry in the Circuit Court Of that county to enJoln
the Board OF supervisors nom issuing the bonds,
alleging that not sufficient notice OF tue election at
which the bonds were voted mad been gwen, and
that the county officers had acted col
lusivey with the railway company In
issuing the bonds. Upon nearing
the injunction was dissolved by the Circuit Court
bonds were issued and registered the State
AUDITORS ofice and were subsequently put on the
market and Sold Alter the dissolution OF the in
junction and the issue Of the bOnos the complain
ant appealed to the supreme Court OF the state,
where the decree OF the Circuit Court was re-.
versed and the bonds declared to be unauthorized
and VOID. Tnereupon the taxpayers fed second
bill, making as new parties defendant the unknown
owners OF the bonds and asking Tor like decree
as in the first chancery suit, winch second bill Is
The Portsmouth Savings Bank OF New lamp
shire and Augustus 4. POST, OF New York, having
purchased the bonds in question in open market,
without any actual notice OF the pendency oil the
cnAncery proceedings III tue otdte courts, cOm-
menced the present suits for the recovery OF the
unpaid interest coupons in July last. The county
pleads the adjudication OF the state. Supreme
Court declaring the bonds invalid IN bar,
and insists that the tendency OF the
chancery proceedings was notice to the pur-
chasers OF the bonds. To their pleas the plaintiffs
fled repcations setting up that they are BONA
Jtde purchasers Tor the value, and that they had
no actual notice of the tendency OF chancery suits
nor any notice that the bonds were invalid. The
county demurred to the replicauons, claiming
that the tendency OF the suit was notice. IL 10
this demurrer which Judge Drummond overruled
holding that the doctrine OF Us peradeas does not
apply TO commercial paper, and also in effect re-
AMIR ming the principle that whenever there Is
a statute authorizing municipality to issue
bonds, and IL does issue them, they
are not liable to be impeacbed in the hands OF q
bona dde purchaser The above ruling was in pur-
suance OF the case OF Ui0tt vs. SUPERVISORS Of
Fond du Lac county, in 10 wallace. In that case
the question OF rs pendens was involved, but the
Supreme Court OF the United States. on Affirming
the validity OF the bonds, did not refer to this
question IN any manner. Judge Drummond on
this point Is understood to have differed from the
ruling In the case above referred TO- but feels bound
to follow It's decision. The present case VIII
shortly be tried on the facts, and the defendants
will be allowed to bring up this disputed point on
this motion for new trial.