Court Opinion

ID: 8757861
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:54:01.136603+00
Date Added: 2024-06-11T17:01:22.032170
License: Public Domain

GILBERT, Circuit Judge
(dissenting). The defects which are relied upon as rendering the bonds void are three. That which is principally urged is that they were not issued on the day they bore ¿ate, to wit, December 30, 1890, nor for more than one year thereafter, and did not bear date as at the time of their issuance. The statute provided as follows: “If a majority of the votes cast are 'Bonds — Yes,’ the board of directors shall immediately cause bonds in such amount to be issued.” It is admitted by counsel for the defendant in error that the word “issued” is in similar statutes used in two distinct senses; and this is undoubtedly true. Bonds are sometimes said to be issued when they are merely authorized. Again, they are said to be issued when they are actually executed and delivered for value. The word “issued” is used in the former sense in the statute above quoted. This is made clear by the language which follows:
“They shall be numbered as issued, and bear date at the time of their issue. * * * The board may sell said bonds from time to time in such quantities as may be necessary and most advantageous, to raise money for the construction of said canals and works, the acquisition of such property and rights, and otherwise to fully carry out the objects and purposes of the act.’’
It thus appears that there was no limit placed by law on the time when the bonds might be sold and delivered. They could lawfully be sold and delivered, as they were in this case, 18. months after the time when they were authorized. The issue of bonds referred to in the statute clearly means the authorization of the bonds, their preparation, and the date thereof from which they were to begin to run. It is not reasonable to hold that the power to execute the bonds expired during the period in which they might be sold. It was no violation of the statute to sign and seal them on the day when they were sold and delivered. At that time the contract was made, but made subject to the provision that the bonds should begin to run from December 30, 1890, the date when they were authorized. The law was therefore complied with. The bonds were issued and dated in the sense which the statute contemplated; that is, they were lithographed and were dated December 30, 1890. At that date, however, no obligation was assumed. The bonds were of no more effect than blank paper until they were sold and delivered and became a binding obligation upon the district. At that time they were signed and sealed. They were signed by the then president and secretary of the district, the officers who alone had the authority to execute them. The case of Coler v. Cleburne, 131 U. S. 162, 9 Sup. Ct. 720, 33 L. Ed. 146, is directly in point. In that case the ordinance authorizing the bonds was adopted September *32413, 1883. The bonds on their face purported to have been executed on January 1, 1884. They were in fact executed on July 3, 1884, and were signed by the former mayor, who was such officer on January 1, 1884, but whose term had expired before July 3, 1884. Mr. Justice Blatchford, speaking for the court, said of those bonds, “They could not be issued until they were properly signed by a person who was the mayor at the time they were signed,” and the bonds were held void, for the reason that they were not signed by the mayor who held that office on the date when they were actually executed. There are numerous cases holding that bonds executed at a date subsequent to the time when they are authorized may be executed by the officers who are at that time the proper officers-to execute the same, and may be antedated as of the time when they were authorized to be issued. In the case of Marion County v. Clark, 94 U. S. 278, 24 L. Ed. 59, the court sustained bonds which bore date of September 3,1872, but were not executed and delivered until November 4th following. In Morrill v. Smith County (Tex. Civ. App.) 33 S. W. 899, the right to issue the bonds became fixed on May 13, 1873. They were not executed until October 2, 1873. The court said:
“Tlie right to have the bonds issued having become perfect on May 13th, we do not think it affects their validity to have antedated them after that date, or to have them run to maturity in twenty years after that time.”
In State v. Moore, 46 Neb. 590, 65 N. W. 193, 50 Am. St. Rep. 626, the proposition submitted to the electors was the issuance of bonds to be dated January 2, 1895, and to run for 20 years from the date thereof. The bonds bore date January 2, 1895, but they were not executed until April, 1895. It was held that the fact that they were so antedated did not invalidate them. In Yesler v. Seattle, 1 Wash. 308, 25 Pac. 1014, the statute required that the bonds “bear the date of their issue,” to run for 20 years. The bonds were prepared as-of the date July 1, 1890. They were not delivered for many months-thereafter. The court said:
“ ‘Date of issue,’ when applied to notes, bonds, etc., of a series, ordinarily means the arbitrary date fixed as the beginning of the term for which they run, without reference to the precise time when convenience or the state of the market may permit of their sale or delivery. * * * It was a fair contract. There can be no wrong done if the term of some of the bonds in, the hands of the purchasers is something less than twenty years.”
In Syracuse Township v. Rollins, 104 Fed. 958, 44 C. C. A. 277, the authorized bonds were to run 10 years. They bore date June 1, 1887. They were executed July 20, 1887, and made payable July 1, 1897. The court said of these bonds:
“They matured in a little less than ten years from the date of their issue, which is the date from which to compute the time they had to run. They became binding obligations on the township from the date of the issue only.”'
In Town Council of Lexington v. Union National Bank (Miss.) 22 South. 291, the legislative act authorized the city of Lexington to issue 20-year bonds to bear date May 1, 1884. The court said:
“The bonds were lithographed as of date May 1, 1884, according to the-terms of the act. But, not being delivered until November 7, 1884, the offi*325cers issuing them inserted the true date, which in no way affected the obligations of Lexington, the rights of any party, nor in any way violated the spirit or direction of the act.”
In Town of Solon v. Williamsburgh, 35 Hun, 1, the town commissioners were authorized to deliver bonds from time to time, as might be agreed upon between them, to the railroad company. The bonds were issued and dated September 1, 1870, and made payable 30 years from that date. Some were not delivered until two years thereafter. The court said:
“It was not intended that they should be dated at the time of their delivery. Such a construction would require the bonds to be payable at different dates.”
The case of Anthony v. County of Jasper, 101 U. S. 693, 25 L. Ed. 1005, cited by the defendant in error as authority against the construction of the act contended for by the plaintiff in error, is, I submit, an authority in its support. In that case it appeared that it was ordered on June 4, 1872, that bonds should issue. In October, 1872, the bonds were issued and signed, but they were dated back as of March 28, 1872. The court said:
“In order to recover in this ease, it became necessary for the plaintiff to prove that the bonds from which the coupons sued on were cut had been executed according to law. He did prove that they were signed by the presiding justice and clerk of the court, and were sealed with the seal of the court. This, before the act of March 30, 1872, would have been enough, but after that more was necessary.”
And the court held that the bonds were void for the reason that they were antedated for the purpose of avoiding the act of March 30, 1872, which required their certification by the State Auditor. But the clear intimation of the decision is that, if there had been no wrongful purpose in antedating the bonds, they would have been held valid, for the court said of the method of their execution and the antedating, “This, before the act of March 30, 1872, would have been enough.”
Again, it is said that the bonds are void for the reason that the first installment of the principal of each bond is to be paid January 1, 1902, and each succeeding installment on January 1st of each succeeding year, and thereby the time of payment is extended from the date of the bonds, which was December 3, 1890, in excess of the time provided by the statute. The contention is, in other words, that, because the bonds were payable in 30 years and 2 days from their date, they are void. Such a contention is directly against the uniform current of authority. In Township of Rock Creek v. Strong, 96 U. S. 271, 24 L. Ed. 815, the act authorized the issuance of bonds payable in not less than 5 nor more than 30 years. The bonds issued were dated September 10, 1872, and were made payable 30 years from October 17, 1872. The court said, “They were thus practically thirty-year bonds.” In Dows v. Town of Elmwood (C. C.) 34 Fed. 114, the bonds were dated April 27, 1869, and were issued and delivered on that day. By their terms they ran 30 years from July 1, 1869, and drew interest from that date. The court held that they were issued in substantial com*326pliance with the law, which declared that they should run for 20 years. In South St. Paul v. Lamprecht Bros. Co., 88 Fed. 449, 31 C. C. A. 585, it was urged that the bonds in question did not mature for more than 30 years after they were executed. The court said:
“The fact is, however, that the bonds did not begin to bear interest until June 1, 1894, and they were payable on that day thirty years after. This was a substantial compliance with the law.”
In that case the bonds were executed on May 29, 1891. Substantially to the same effect are the cases of Flagg et al. v. City of Palmyra, 33 Mo. 440, and Board of Commissioners v. Vandriss, 115 Fed. 866, 53 C. C. A. 192. The bonds in the present case, it may be observed, do not call for the payment of interest for any period whatever in excess of 30 years.
The third defense is that each of the installment coupons and interest coupons bore the lithographed signature of J. A. Van Arsdale, secretary, and were not otherwise signed, and that at the time of the execution of the bonds on June 27, 1892, said Van Arsdale was not the secretary of the defendant in error. As to the installment coupons, it is a sufficient answer to this objection to say that the statute did not authorize or contemplate the execution of such coupons, and the fact that they were issued cannot in any way affect the questions involved on the present hearing. As to the interest coupons, the statute provided as follows: “Coupons for the interest shall be attached to each bond, signed by the secretary." The bonds themselves contain all the terms of the contract, including a specification of the rate of interest and the times of the payment thereof. The purpose of attaching interest coupons is thus stated in City of Kenosha v. Lamson, 9 Wall. 477, 19 L. Ed. 725:
“The coupon is not an independent instrument, like a promissory note for a sum of money, but is given for interest thereafter to become due upon the bond, which interest is parcel of the bond,, and partakes of its nature. * * * The coupon is simply a mode agreed upon between the parties for the convenience of the holder in collecting the interest as it becomes due.”
In Blair v. Cumming County, 111 U. S. 363, 368, 4 Sup. Ct. 449, 452, 28 L. Ed. 457, the court said:
“It was not necessary that all the commissioners should sign the bonds. What was done was not an issuing of the bonds by the chairman and clerk. The coupons, in the form in which they were issued, annexed to the bond, were adopted as coupons by the statement in the body of the bond; and the question as to any one of them, when detached, is only one of genuineness and identity.”
In McCoy v. Washington County, 3 Wall. Jr. 381, Fed. Cas. No. 8,731, Mr. Justice Grier said:
“If the commissioners had power to bind the county for the payment of the principal and interest of a bond transferable by delivery, the coupons which are appended to them are the appointed evidence of the agreement of the parties, to show who is entitled, as holder of the bond, to receive the interest due at a particular date. They are attached to the bonds for the convenience of the officers of the county, and to facilitate their negotiation, and thereby add to their commercial value. The obligation to pay the interest is to be found in. the bond, not in the coupon.”
*327In Thayer v. Montgomery County, 3 Dill. 389, Fed. Cas. No. 13,-870, Miller, Circuit Justice, said:
“The bond itself being duly signed by the officers of the county, and the coupons being part of the bond, it is no defense to the coupons that they are not signed by the chairman of the board as well as by the clerk.”
Of similar import is Phelps v. Town of Lewiston, 15 Blatchf. 131, Fed. Cas. No. 11,076. Taking it to be true, then, as stated in these decisions, that the obligation of the defendant in error is to be found in the bonds, and that the question of the signatures to the coupons is only one of “genuineness and identity,” it would seem that no difficulty should be encountered in reaching the conclusion that the lithographed signature of J. A. Van Arsdale, secretary, having been adopted by the officers who executed the bonds at the time when they were delivered, constitutes a sufficient compliance with the directory provision of the statute that the coupons be signed by the secretary. In Weyauwega v. Ayling, 99 U. S. 112, 25 L. Ed. 470, bonds bearing date June 1st, and purporting to be signed by the chairman of the board of supervisors and by the town clerk, were shown not to have been signed by the person signing as town clerk until July 13th, at which time he had ceased to be clerk. The court held the bonds good, on the presumption that they had been delivered with the consent of the clerk then in office. If that presumption could avail in aid of the execution of bonds, it certainly should apply to the execution of coupons, which are but an incident to the bonds.
I submit that the judgment of the Circuit Court should be reversed.