Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1874-02-13
IMPORTANT DECISION.
Liability OF Towns and Counties on
fnefr Bonds Issued I'm Ala Of the
Building of Railways.
a Question Decided Involving the Va
Iidity of Three Hundred Thou
sand Dollars worth of Bonds.

CHICAGO, February 12.-In the
United states circuit court Judge Drummond
mas overruled the demurrerto TO the replicatlons
on the Warren county bond cases. Ine SUITS
are of public interest, not only on account OF
Tie amount involved, but as presenting A.
new phase Of liability of the towns and coun-.
ties Oh their bonds issued IN ald OF the
building of railways. The arguments were
-erv e,aborate. Ex-Chief-Justice Law
renee and Mr. Harding appearing
Tor the county Of Warren, Judge Wilson and
s. r. NIcs ogg. ESQ for the bOndhOlders. The
cases involved the legality OF three hundred
thousand dollars bonds OF Warren county IN
aid OF the Rockford, Rock Island and st.
Louis railroad company. Before the bonds
We're issued certain taxpayers nled Dill IN
chancery court Of that county 10 enJoln the
board OF supervisors frOIn issuing the DOnos,
alleging that no sufficient notice of election
at which the bonds were voted had been
given, and that the county. officers had
company in issuing the bonds. Upon
hearing the Injunction was dissolved
by the circuit court on the twenty-third OF
January, ls4l. Two days after, the Donds
were issued and registered IN the state audi
tors Office and were subsequently put on the
market and sold. After the dissolution of the
Injunction and the issue of the bonds, the
complainant appealed to the supreme court
Of the State, where the decree Of the circuit
court wss reversed, and the bonds declared TO
be Unauthorized and void. Thereupon the
Taxpayers filed second bill, making as
new parties with the defendant the unknown
owners Of the bonds and asking for like de-
cree a. IN the first chancery sui, which second
bill is now pending. The Portsmouth savings
bank, Of New Hampshire, and Augustus i.
Post, Of New York, having purchased the
ponds In question in open market, without
any actual notice Of the pendency OF the
chancery proceedings in state courts, COM
nenced the present suits for the recovery Of
unpaid interest coupons in July last. The
county pleads the adjudication Of the State
81 Dreme court declaring the bonds invalid in
bar, and insists that the tendency OF the
chance.y proceedings was notice
"a the purchasers OF the bonds. To
these pleas the plaintiffs filed replications
s.-,tiy,yf mn that they are bona fde purchasers
To-. 1JaIrIe received, and that they had no ac-
mai notice that the bonds were Involved. The
comuIv demurred to the rephcatiOns, claim
me- the Dendency of the suit was notice.
N Is fbts demurrer which Judge Drum
mond overruled, holding that the doc
Irine of lite DendenS does not apply 10
commercial paper, and also IN eHect reaInrm-
ing the principle that whenever IheIe is
statute authorizing municlpaIlly 70 issue
bonds and il does issue tneiIi tney aLs @ not
liable To be impeached in the nahos ol OOIso ,
no. purchaSer- The above ruling was IN pur-
Susnce az the case of OliOtt rs. supervisors OF
FOnd du Lac county, in sixteen wallace. IN
1hat ease the question of lite pendenS was IN,
volved but the supreme court OF tne Oni'Su
States. on affirming the validity OF the Dohos,
did not refer 70 this question in any manner.
fudge Drummond, on this point. is uhosI-
stood 10 haN differed from the ruling IN lne
case above referred TO, but felt bound 10 iolloW
ITS decision. The present case VIII shorty pe
J ried on the facts, and the defendants Esil oe
a UOwed to bring up this disputed point on lhe
mtyIOn for new trial.