Telegram-herald., 1889-09-24
THE CEDAR SPRINGS BONDS.



De f@la
IL the suit brougns ~ TIE village q
Ce1ar springs sgSmsG Bartholomew
>cAl.ch and the Toledo, saginaw &nd
Auskesou railroad. Jaege huIea yes
terc4y handed down = decision deciAr-
.ag gae disputed honds uul and VOID,
ana directing shat Mr.. Schhcn oe re-
strained from negotiating them. iAe
e.,e IS az important one ana involves q
rake VI la~ winch. L the dec.slon -
affirmed .> different 70 this state irom
nearly every other slate in the Dmon.
Ihe bonds. amounting 10 s55fQ. ~ere
issued rs lAe village Do Ald OF ghe rail-
Ioad. They were issued by the council
under a statute authorizing them L.
bond the village "i9r public improve
lAtnts. llsy were piacso lu tAe
hands ~ >pltzrr a Co.., a Toledo bank
lrg ngm, bi whom they We're sold -
ocnilch. A ueW council Was elected
and the sQlt begun ia the
progress az the litigation no
preteuse was made that the bonds were
legal TIE sole point Was whether
Schllch Was al innocent holder wSiO
should be protected ~ his purchase.
The attorney, tDT tae village, MessTs.
smith q stevens, claimed that tie
supreme Courts Interpretation OF the
construction 10 be put upon ule subject
ot railroad AID, A. laid down los Judge
Cooley in the celebrated salem case,
was such that the bonds were wholly
VOID and the actions OF the Cedar
Springs authorities wrong; that = Was
incumbent upon the purchaser not
only 10 investigate As 70 the regularity
and cOnsututonally Of tie leg sla-
ture's acts bat 10 examine the steps ~
record taken by the municipality re-
gard.ng the bonds and their ISSUANCE.
II tins course had been pursued they
claim no one could have become a
holder of the bonds without bad faith.
They claim the council perpctratcd a
fraud, and that the people had 10
means 10y which they could cOunieact
il save by the election OF the ne~ coun-
ell.
Mr.. Smiley for the defense argued
that the bonds OF municipality. neg0-
TABLE IN nature, and before their ma
turity, hold very similar position to
negotiable prOmlssOrY notes issued by
individuals or corporations; that moth
ing bat actual bad faith IA purchaser
! for value would avoid the bonds IN las
! hands that all that 10 j. necessary for
the purchaser TO know Is that the act
authorizing their Issuance was legally
and regularly passed and that the
bonds, upon their face, showed they
were ISSUED IN accordance with this act.
Mr.. Smiley said the purchaser need
know nothing more; that the Toledo
bankers had not shown themselves
guilty of bad faith and that Schlick
succeeded 10 their rights, although he
might be informed of the nature Of the
bonds and the action OF the village IN
regard 10 them.
The court held that, while admitting
| the federal courts have handed down q
| long line of decisions founded upon
cases coming up from the other State
courts where authorities were author
lied to issue bonds, held such a degree
of examination was not necessary, yet
| IN this State, where an Interpretation
had been adopted by our own Supreme
| Court relative 10 the constitutional
| power of municipalities, II seems ncces-
sary that all purchasers should be held
TO examine the records, because other
wise 1t would be easy 10 eyade the law;
that, therefore, purchasers ought to be
! held to a careful examination of the
records of the proceedings upon which
the bonds are founded. II tins rule
obtained, the court holds neither the
Toledo bankers nor Schlick. could be,
from the evidence, considered innO-
cent purchasers; that the Common
Council, the bonds being Illegal, and
the parties not being purchasers n good
faith, acting as representative body
could file the bill 10 have the collec-
ton of the bonds enjolned and the
| bonds surrendered for cancellation.