Court Opinion

ID: 8830402
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:01:43.834227+00
Date Added: 2024-06-11T17:04:54.652099
License: Public Domain

RUDKIN, Circuit Judge
(dissenting). The question before us is this: May the trustees of a school district, without even the semblance of authority to issue bonds of the district, clothe themselves with that authority by simply forging a date? To so hold violates every known rule of the law of agency. According to the majority opinion, if authority to issue bonds existed on a false date inserted in the bonds, all further inquiry is foreclosed, and it is said that this is the established doctrine of the Supreme Court of the United States. It seems to me that this is an entire misapprehension and misapplication of the decisions of that court. The whole doctrine of estoppel by recitals has been thus stated:
“Where legislative authority has been given to a municipality, or to its officers, to subscribe for the stock of a railroad company, and to issue municipal bonds in payment, but only on some precedent condition, such as a popular vote favoring the subscription, and where it may be gathered from the legislative enactment that the officers of the municipality were invested, with power to decide whether the condition precedent had been complied with, their recital that it has been, made in the bonds issued by them and held by a bona fide purchaser, is conclusive of the fact, and binding upon the municipality; for the recital is itself a decision of the fact by the appointed', tribunal.” Town of Coloma v. Eaves, 92 U. S. 484, 491, 23 L. Ed. 579.
In other words, the power to decide whether conditions precedent have been complied with is a mere incident to the power to issue bonds, and when the latter power is lacking the former cannot exist. It is said in the majority opinion:
“But it is well settled that when bonds recite that they were issued on a date at which the district had authority to issue them, it is no defense to a bona fide purchaser that they were in fact issued at a later date when authority to issue them had expired. County of Moultrie v. Savings Bank, 92 U. S. 631; Chickaming v. Carpenter, 106 U. S. 663.”
The cases cited do not sustain this broad proposition. The Constitution of Illinois, which took effect July 2, 1870,. ordained that no' county, city, town, or township should ever become a subscriber to the capital stock of any railroad or private corporation or make donation to or loan its credit in aid of such corporation. In the County of Moultrie Case the Supreme Court held that this constitutional provision did npt impair the obligation of existing contracts, and that townships might issue bonds after the adoption of the Constitution *200m fulfillment of valid subscriptions made prior to the adoption, notwithstanding the constitutional inhibition to the contrary. In other words, the court held that the township officers had authority to issue the bonds when they were in fact issued, provided the subscription was made before the adoption of the Constitution, and a recital in the bonds that the subscription was so made was binding on the township in favor of a bona fide purchaser.
A statute in Michigan provided that, if any township voted railroad aid bonds, it should within 60 days after the question of aid was determined by a vote of the electors, issue coupon bonds for the amount so determined. In the Chickaming Case the Supreme Court held that this provision of the statute was merely directory, and that valid bonds might be issued after the expiration of the 60-day limit, saying:
“We have not been referred to any decisions by the courts of Michigan to the contrary, and, construing the .statute for ourselves, we think that valid bonds may be issued after the time. This being so, the antedating does not invalidate the bonds.”
The clear inference from this language is that, if there was no authority to issue the bonds after the expiration of the 60-day limit, the mere antedating could not save or validate them.
The two cases bearing the closest analogy to the case now under consideration are Anthony v. County of Jasper, 101 U. S. 693, 25 L. Ed. 1005, and Lehman v. City of San Diego, 83 Fed. 669, 27 C. C. A. 668, from this circuit. In the former case the bonds were given a false date to avoid the effect of a registration act which took effect before the bonds were signed or executed, and in the latter case-the bonds were given a false date to avoid the effect of the repeal of a statute. In both cases the bonds were declared null and void. There is, of course, this difference between the cases: In the cases cited some of the officers who signed the bonds were not in office at the time the bonds bore date, and the court held that purchasers of municipal securities must always take the risk of the genuineness of the official signatures, of those who executed the paper they buy, and that this includes, not only the genuineness of the signature itself, but the official character of him who executes it. Under this rule, it was apparent from the face of the bonds either that the person who signed, them was not in office when the bonds were signed, or that the bonds were in fact signed at a time when they could have no validity under the law. But the courts did not rest their decisions upon this narrow ground, for in the Anthony Case, quoted in the Lehman Case, the court said:
“The public can act only through its authorized agents, and it is not bound until all who are to participate in what is to be done have performed their respective duties. The authority of a public agent depends on the law as it is when he acts. He has only such powers as are specifically granted; and he cannot bind his principal under powers that have been taken away, by simply antedating his contracts. Under such circumstances, a false date is equivalent to a false, signature; and the public, in the absence of any ratification of its own, is no more estopped by the one than it would bé by the other. After the power of an agent of a private person has been revoked, he cannot bind his principal by simply dating back what he *201does. A retiring partner, after due notice of dissolution, cannot charge hi» firm for the payment of a negotiable promissory note, even in the hands of an innocent holder, by giving it a date within the period of the existence of the partnership. Antedating under such circumstances partakes of the character of a forgery, and is always open to inquiry, no matter who relies on it. The question is one of the authority of him who attempts to bind another. Every person who deals with or through an agent assumes all the risks of a lack of authority in the agent to do what he does. Negotiable paper is no more protected against this inquiry than any other. In Bayley v. Taber, 5 Mass. 285, it was held that when a statute provided that promissory notes of a certain kind, made or issued after a certain day, should be utterly void, evidence was admissible on behalf of the makers to prove that the notes were issued after that day, although they bore a previous date.”
That this language had special reference to the false date is apparent from the language of the court in the later cáse of Coler v. Cleburne, 131 U. S. 162, 173, 9 Sup. Ct. 720, 724 (33 L. Ed. 146), where it is said:
“In the present case, the bonds were not signed by an officer who was in office when they .were signed, but by a person who was in office on the antedated day on which they bore date. In the Jasper County Case there was a false date inserted in the bonds in order to avoid the effect of a registration act which took effect between the antedated date and the actual date of signing. In the present case, there was a false signature. But the principle declared in the Jasper County Case is equally applicable to the present case.”
From this language it seems apparent that a false date, as well as a false signature, will invalidate bonds as against all the world.
Under the majority opinion the Legislature is powerless to take away from municipal officers authority to issue bonds. Notwithstanding the repeal of all statutes on the subject, the power to bind the public still remains. To such a doctrine I cannot subscribe. Repudiation is an ugly word at best, but falsehood and forgery are even worse. We are concerned with the law, however, and not with the example.
The judgment should be reversed.