Court Opinion

ID: 8765467
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:23:49.049225+00
Date Added: 2024-06-11T17:01:50.741748
License: Public Domain

LURTON, Circuit Judge
(dissenting). I must in this case, and contrary to the usual practice of this court, express openly the grounds for my dissent to the conclusions reached in this case.
The county has not obtained a road constructed by the company to whose stock it proposed to subscribe. Its money has been thrown away. This suit involves its probable liability upon an issue of bonds aggregating $250,000. This series of bonds with interest already past due, aggregate three-fourths of a million. Tor this the county will obtain nothing. To prevent just such a possible result the Legislature provided that subscriptions by counties might be voted conditionally. The conditions which the county demanded were intended to absolutely secure the building of the road. By subtilty of construction, upon which I express no opinion, two of these conditions are said now to be only covenants, and, therefore, worthless against an insolvent and nonexistent railway company. For at least 30 years the county has denied its liability, and refused payment of interest. When this denial had been so long acquiesced in that the bonds were purchaseable for little more than the value of wall paper, as stated at the bar, they are acquired by speculators, who now urge that, during all this long, long period of repudiation, the defence of the county has been growing weaker and weaker, and that time, which usually only fortifies a defensive position, has all this time been making bonds valid which were invalid when issued. I will not willingly aid in the destruction of the settled principles which tend to the security of commercial paper. Neither will I agree to strain a finding of facts to hold a county upon obligations which, in my judgment, were never binding either in the forum of law or conscience.
*44The principal grounds- upon which I find myself unable to agree with the court are these: ' .
1. The opinion and conclusion conflicts with the settled views of the Supreme Court in respect to the most important ground upon which it rests.. Assuming that the mere fact of issuing these bonds by the county judge was a determination that the conditions had been complied with which authorized their issuance, that determination only raised a presumption in favor of one who should take the bonds before maturity, for value, and without actual notice of the real facts of the case at the date of issuance. This is so because the bonds were without recital. This much was the plain ruling of the Supreme Court in Buchanan v. Litchfield, 102 U. S. 278, 26 L. Ed. 138, and Citizens’ Savings Ass’n v. Perry County, 156 U. S. 692, 15 Sup. Ct. 547, 39 L. Ed. 585. In this very case we certified the question as to the presumption upon which a purchaser before maturity for value might act in purchasing bonds without recital. Referring to the tendency of some- of the earlier cases to deny to bonds in the hands of innocent holders any other defense than want of power, the court said that tendency had been “arrested” by the cases I have cited above, which cases it is said held “that the mere facts of subscription to stock and issue of bonds containing no recitals left it open to the obligor to show that a condition precedent had not been fulfilled.” “But,” added the court, “these cases in no way conflict with the view expressed by Mr. Justice Story in Pendleton County v. Amy, 13 Wall. 297, 20 L. Ed. 579, and by Mr. Justice Bradley in Coloma v. Eaves, 92 U. S. 484, 23 L. Ed. 579, that a presumption arises from the mere fact of sub- • scription and issue, though not a conclusive one.” “Independent of authority such a presumption exists, and is but an instance of the broader presumption that officers charged with the performance of a public duty perform it correctly.” My Brethren do not, as I read the opinion of the court, accept this as an applicable rule of law or an authoritative decision in this case. It is, in conclusion of an argument in favor of the conclusiveness of facts, determined by the county judge, refusing the delivery of the bonds here in question, said:
“His delivery oi them without the occurrence of the conditions would be unauthorized and the bonds be void, yet it would seem upon principle that if the question whether the conditions had been accomplished is one of doubt and uncertainty, and it is apparent that the officers who had charge of the issuance of the bonds are to determine the fact of compliance with the condition, his determination! would conclude the question, and, if in the affirmative, bind the county.”
It is evident that the error of the court in the matter I have referred to is, after all, the real ground of the conclusion reached and its judgment colored by the view before expressed.
2. The conclusion is next placed upon the theory that no subscription had ever been made to the capital stock of the Elizabethtown & Tennessee Railroad Company, although one was authorized. It is stated in the opinion that, although the subscription was voted, and the county court ordered its clerk to subscribe for the stock, “the clerk did not so subscribe.” It is also said that, when the bonds here involved were issued, the said Elizabethtown & Tennessee Railroad Com*45pany had given no token of its acceptance, and the county had taken no further step after the direction of the county court to its clerk to make the subscription upon the terms specified. Both in this court and in the Supreme Court this case has proceeded upon the theory that a subscription had been made as authorized. The condition precedent presupposes a subscription had been made from which the county was to be released. The defense has been that it was invalid, because the authority had been delegated to the clerk, and that the case of Mercer, etc., v. Navigation Co., 8 Bush (Ky.) 300, was an express authority supporting the county judge’s assumption that a subscription so made was void as a delegation of power which could not be delegated. The subsequent case of Green County v. Shortell, 116 Ky. 108, 75 S. W. 251, was an action upon some of the same series of bonds here in issue, and the Kentucky court there, assuming that the subscription had been made, distinguished the former case upon the ground that in the former case the clerk or commissioner had a discretion to exercise, while in the case before it he had none, the terms and conditions being settled already. There is no finding that no subscription had ever, in fact, been made by the clerk as directed. The presumption that the clerk, as a public official, correctly discharged his duty ought to stand as well when the presumption operates in favor of the county as it does when its effect is detrimental. The only finding of fact which bears upon the question is the seventeenth. That reads as follows:
“That no formal or express exoneration of said county from the payment of said last-named subscription was ever made or attempted, but nothing further has, up to this date, ever been done, in respect to it, and neither bonds by the county nor stock by the said last-named railroad company have ever been issued or delivered in execution of said orders or under the terms of said subscription.”
This finding plainly assumes that there had been a subscription, not a mere authority to subscribe. What is said as to nothing further having been done evidently refers to acts subsequent to the subscription. But it is not important that no formal subscription was made by the clerk. He was commanded to do a purely administrative act, and he could have been coerced to do it by writ of mandamus. The liability of the county upon the vote and the order of the county court was the gist of the matter, and fastened a liability upon the county from which it required exoneration as a condition precedent to another liability.
3. I disagree as to the effect of the lapse of time since these bonds were issued upon their validity. I cannot agree that the liability to this plaintiff rested upon any better foundation when he started this suit in 1899 than if he had sued at date of the earliest maturing coupon. The authority to make a subscription at all depended upon the performance of the antecedent condition of exoneration from liability on account of the former subscription to a different company. Yet within 13 months after the order of the court, directing a subscription by its clerk to the Elizabethtown & Tennessee Railroad Company, we find the county judge making the subscription here involved. If the condition precedent had not been performed then, the act was without authority. In payment of this subscription he issued the bonds in suit *46in batches, .beginning in January, 1872, and completing the issue in April of the same year. The bonds bear date of April 1, 1871. Now, neither at the date of the subscription, June, 1869, nor at the date of the bonds, April, 1871, nor at the date of their issuance between January and April, 1872, had there been any compliance with the condition in respect of exoneration from the prior liability by the execution of any release, exoneration, or through the judgment of any court. The only finding of fact in respect of this condition is the seventeenth finding of fact set out above. That there had been “no formal or .express exoneration” is expressly found. Then upon what facts are we to predicate an'exoneration ? None are found except the vague statement that “nothing further up to this date [has] ever been done in respect to it, and neither bonds by the county nor stock by the last-named railroad company has ever been issued or delivered in execution of said orders or under the terms of said subscription.” The plain meaning is that neither the county nor the railroad company took any further step in pursuance of the subscription. Why? Many reasons may be conjectured. After years of effort to obtain subscriptions enough to c.arry out the project, the promoters may have become disheartened, and finding themselves unable to comply with the conditions made no issue of shares and no demand of payment of this subscription. But if the lapse of time without demand for payment or tender of stock at the date of the issuance of these bonds was not such as to raise a legal presumption of abandonment or release, the bonds when issued were illegal as having been issued before there had been any release or exoneration, formal or informal, express or implied. If then illegal, when did they become good? If the county could not have defended itself when the bonds were issued against its liability upon the Elizabethtown & Tennessee Railroad subscription, would there have been any pretense that this condition precedent had been complied with?' Twenty years went by after the Elizabethtown & Tennessee Railroad subscription was made before this suit was brought. How does it happen that from mere lapse of time a defense, good when these bonds were unlawfully issued and put upon the market, has become ineffectual and the bonds valid, although the applicable evidence then and now is identical? I have given attention to what is said upon this subject by Mr. Justice Moody, who, referring to the determination of the county judge when he issued these bonds that this condition of exoneration had been complied with, said that “the fact that for 38 years no one has made any claim against the county, on account of its supposed liability to subscribe to the stock of the Elizabethtown & Tennessee Railroad, shows conclusively that he was right.” But I am unable to regard this as an authoritative point of the opinion. The single question which was answered related' only to whether “on the facts found” there was “any presumption” at.all that the county had been exonerated. This was answered in the affirmative. It is evident that the court did not mean that a rebuttable presumption of exoneration had become conclusive by lapse of time after the fact of issuance. The effect of the fact that the railroad company had done nothing must, in reason, be limited to the date of the issue of the bonds. If the inquiry is,, indeed, whether at this date, 38 years after *47the subscription, the county can now be regarded as relieved from liability, I should say “Yes.” The lapse of time without an action brought to enforce liability would, undoubtedly, raise a presumption of a release or abandonment. Indeed, the positive statutory limitation of actions would justify a holding that there was no longer an existing liability on account of that subscription. But, if the subsequent lapse of time is to be given effect, then I insist that the conduct of the plaintiff and his predecessors in title, as well as that of the county, must be taken into account. These bonds were dated April, 1871. They matured in 1891. This suit was brought in 1899. The coupons which matured in 1878 and for each year subsequent are sued upon. Thus for more than 21 years the county has refused to pay interest, and for all that time this plaintiff and those from whom he took the bonds have acquiesced in the attitude of the county. Has time been steadily strengthening the claim of the holder and destroying the defense of the county?
4. The question certified assumed that the plaintiff took these bonds before maturity. But the only finding in respect to the status of the plaintiff is the first, in these words:
“The court finds that the plaintiff is a citizen of the state of New York, and was so when this action was instituted on the 28th day of March, 1899, and that the plaintiff was then the bona fide holder for value of the bonds and coupons sued on, and fully entitled to sue the defendant thereon in this court.”
That finding, I think, should be interpreted as applying to the plea to the jurisdiction. That plea was, by agreement, submitted with the other defenses. It pleaded that the defendant was not the bona fide owner of these bonds when this suit was brought, March 28, 1899, but that the same bonds and coupons had before been in suit in the same court, and the suit abated because the then plaintiff, Herman H. Heaton, was a fictitious plaintiff; the real owners being citizens of Kentucky, and that Quinlan had acquired the bonds thereafter only for the purpose of giving jurisdiction to the circuit court, the beneficial plaintiffs being citizens of Kentucky. Issue was taken upon this plea as to whether the plaintiff was the real owner or only a fictitious plaintiff. The very terms of the finding indicate that the finding was a response to this plea to the jurisdiction. But if the finding be construed as both a finding in respect to the issue upon jurisdiction and as to the status of the plaintiff as the holder of negotiable paper, it will be most unjust to infer from that finding that the plaintiff acquired these bonds before maturity, as implied by the second interrogatory, or without notice of the defenses of the county. This finding is “that on March 28, 1899,” plaintiff was the bona fide holder for value of the bonds and coupons sued upon. That date is the date of the bringing of this suit, and the finding was enough to support his claim of right to sue in a United States court, there being diversity of citizenship',1
5. But if the judgment of the Circuit Court, holding that thé conditions precedent had not been complied with and that the bonds were invalid, is to be reversed, I think common justice requires that there should be no judgment upon these findings against the county, but a new trial awarded. The findings of .fact do not cover all of the issues, and upon those to which they are a response- áre not definite or *48full enough i» justify a judgment in favor' of the plaintiff. If it is of any moment whether the plaintiff is constructively chargeable with knowledge of the situation when these bonds were issued, then it is* im-r portant to know whether he took these bonds before maturity, or, if not, whether he has acquired the title of one who did. That he was on March 28, 1899, the bona fide holder for value is too indefinite to justify a judgment for him. The same is true in respect to the defense of the statute of limitations. There is no finding upon this, and it is not permissible to piece out defective findings. An examination of the pleadings will show that a large proportion of the coupons in suit matured prior to 1884. Obviously the defense of the statute of limitation was a good defense to all such coupons, unless the plaintiff can in some way show that it ought not to apply to him. But there is no finding as to this defense. Why shall the county be cut off from the benefit of this defense by refusing to award a new trial and the direction of a judgment upon the bonds and coupons in suit.
When a jury has been waived, and a judgment rendered upon a special finding ,of facts, this court, if it find that the judgment was erroneous, has the power to direct such judgment to be entered as the special findings require, instead of awarding a new trial. Fort Scott v. Hickman, 112 U. S. 150, 5 Sup. Ct. 56, 28 L. Ed. 636. But if the findings are doubtful, obscure, or defective, 'it is within the power of the court and its high duty, whenever justice seems to require such action, to reverse and remand for a new trial. Graham v. Bayne, 18 How. 60, 15 L. Ed. 265; Flanders v. Tweed, 9 Wall. 425, 19 L. Ed. 678, 680; St. Louis v. Western Union Telegraph Co., 148 U. S. 92, 104, 13 Sup. Ct. 485, 37 L. Ed. 380; Ward v. Cochran, 150 U. S. 597, 608, 14 Sup. Ct. 230, 37 L. Ed. 1195. No judgment ought to be rendered when the findings are silent as to a fact which is essential to a judgment. An imperfect finding like an imperfect special verdict cannot be pieced out. The burden is upon him who asks a judgment to produce a finding of every fact necessary to'support it. Hodges v. Easton, 106 U. S. 408, 1 Sup. Ct. 307, 27 L. Ed. 169. In Ward v. Cochran, cited above, there was a special verdict in an action of ejectment reversed and a new trial awarded, 'because there was no finding that the defendant’s possession was adverse and exclusive, although there was a finding that the defendant and his grantors had entered into possession of the land in controversy under a claim of ownership, and that he remained in the open, continued, notorious, and adverse possession thereof for the period of 16 years. Without comment we adopted this course in Anderson v. Messinger, 146 Fed. 179, 77 C. C. A. 179, 7 L. R. A. (N. S.) 1094. In Barber v. Coit, 118 Fed. 272, 55 C. C. A. 145, we remanded an appeal for further evidence, upon our own motion, “because great injustice might be done if the case is to be decided upon the present record.”
When the findings of fact do not support a judgment against the plaintiff, there can be no judgment for the defendant, upon a writ of error sued out by the plaintiff, where there is an issue made by the defendant, material in character, upon which there is no finding of fact. Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276, 293, 5 Sup. Ct 141, 28 L. Ed. 722. When the trial court makes no .finding upon *49an issue made by the pleadings, because it was deemed unimportant, a court of review will remand for a finding upon the facts bearing upon that issue, if found to be material to a judgment, although all of the evidence relating to the question is in the record. In City of Abilene v. Cornell University, 118 Fed. 379, 382, 55 C. C. A. 205, the Circuit Court of Appeals for the Eighth Circuit said of such a situation:
“We might possibly look into the rejected record and depositions, and determine the issue arising on the plea, but, by so doing, we would be trying on appeal an issue that was not tried below.”
Where an omission to make a specific finding of fact is due to the fact that the circuit court made a ruling upon a matter of law which rendered such a finding unimportant, it is the duty of the court that justice may be done, to reverse and remand, under section 701, Rev. St., for such further proceedings to be had in the inferior court as justice may require. Little Miami Railroad Co. v. United States, 108 U. S. 277, 280, 2 Sup. Ct. 627, 27 L. Ed. 724.