Court Opinion

ID: 8847563
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:02:37.236631+00
Date Added: 2024-06-11T17:05:23.531432
License: Public Domain

SWAN, District Judge,
(after stating tke facts.) It is conceded that tke entire issue of bonds of wkick those here in suit are part were delivered to tke Fourth National Bank of New York, and by that bank were turned over to J. M. Ashley for the consideration set forth in the ordinance of the common council of the village of Howell recited above. There is no evidence, that the plaintiff or his *547predecessors in the ownership of the bonds, except Ashley, had any other notice of the purpose and circumstances under which they were issued than that imparted by the reference on their face to the ordinance of August 12, 1885, passed by the common council of the village of Howell. The' questions are: (1) Was the issue of the bonds for the purpose for which they were given authorized by law? and, (2) if not so authorized, were the purchasers chargeable with notice of their invalidity by reason of the express mention on the face of the bonds of the ordinance of August 12,1885?
Et is clear that under the laws of Michigan the legislature could not lawfully authorize the submission to the electors of a munici.pality of a proposition to issue its bonds in aid of a railroad. People v. Salem, 20 Mich. 452; Bay City v. State Treasurer, 23 Mich. 499. It is equally clear that the act of February 25, 1885, did not sanction the submission of that question, nor was the question submitted, to the vote of the electors. The common council,, by the ordinance in question, formally enacted that the issue of bonds voted for “public imjirovements in said village of Howell” should be issued for and devoted to the benefit of the Toledo, Ann Arbor & Northern Michigan Railroad Company. This action was manifestly and undeniably unlawful. The common council not only exceeded its authority, hut acted without authority. That body could not by its fiat make that a “public improvement” for which the legislature itself could not authorize the municipality to expend money or create indebtedness.
Each of the securities on its face is styled “Improvement Bond.” Had there been nothing on these instruments to challenge the attention of a purchaser to the ordinance, and had they omitted all reference thereto, and had these recitals made mention only of the statute of February 25, 1885, as the authority for their issue, the effect of that recital on the liability of the village would he presented. The express reference to the ordinance of August 12, 1885, as one of the sources of authority for the issue of the bonds confines the inquiry, oil this feature of the case, to the effect of that reference upon the rights of the purchasers of the bonds. Unfortunately for the plaintiff, this question is concluded by controlling authority. “Ordinarily the recital of the fact that the bonds were issued in pursuance of a certain ordinance would he notice that they were issued for a purpose specified in such ordinance.” Barnett v. Denison, 145 U. S. 135, 12 Sup. Ct. Rep. 819. See, also, Post v. Pulaski Co., 1 C. C. A. 405, 49 Fed. Rep. 628. The purpose specified in the ordinance being unlawful, the bonds in suit were not authorized obligations of the village of Howell. Their invalidity was notified to the purchaser by the ordinance, of which he was bound to take notice.
For these reasons judgment must he entered for the defendant, with costs.