A petition for a rehearing: having.been filed, the following opinion, overruling the petition, was delivered by
Frazer, J.In an earnest petition for a rehearing, the appellant insists .that the. bonds bore evidence upon their face that they were being sold for the benefit of the Martinsville. Company, and that the Madison Company had no interest in them,:and was therefore, a .mere accommodation-indorser and,guarantor, .and,that this fact, patent upon the bonds, was notice.to.every, holder. The matter which it is .urged -was sufficient to give this notice, consists of a certificate by the trustee, Mr. Lanier, .and an. order of the board of directors of the Martinsville Company,, printed on the face of ¡each bond, to-wit:
.CERTIFICATE.
“ I, James F. D. Lanier, trustee, do hereby certify that the Martinsville-§ Franklin Railroad Company have.conveyed to me, by deed bearing date the .28th day of April, 1851, their road from Martinsville, to. Franklin,.about twenty-five miles, with its income and franchises, and ¡all the property, rights tand privileges, of the company pertaining thereto,.in. trust ■.for the-useand .benefit of the holders .of their obligations, *463issued and to be issued; that is to say, the sum of $30,000 dollars on the 1st day of May, 1851, and not exceeding the sum of $50,000, and only so much thereof as may be requisite to be issued, from time to time, after the 1st day of May, 1851, as the same may be necessary to make payment for iron purchased for said road. The first class of said bonds to be redeemable May 1st, 1861, and the latter class redeemable November 1st, 1863, as by reference to said deed of trust, which I have caused to be recorded in the several counties in, or through, which said railroad is located, will more fully and at large appear. I further certify that this bond is one of the obligations issued under said deed. J. E. D. Lanier, Trustee.
New York, May 1st, 1851.”
OEDEE.
“At a regular meeting of the Board of Directors of the Martinsville § Franklin Railroad Company, in the town of Martinsville, county of Morgan, state of Indiana, on Monday, the 7th day of April, 1851, it was ordered by the board: That the president of the board be, and he is hereby, authorized to effect a loan, or otherwise raise a sufficient sum of money, say $35,000, to defray the expenses of putting the superstructure on this road, by the sale of the bonds of this company, the principal of the bonds to be made payable in ten years from date, drawing interest at the rate of seven per cent, per annum; and that he be authorized to purchase or procure the iron necessary for the road, on the best possible terms; also, that he be empowered to execute, or cause to be executed, a mortgage on the road, to secure the payment of the price of the iron aforesaid, and the principal and interest of the said bonds; and that he fix the time of paying the principal of the price of the iron at twelve years, and the rate of interest on the price of the same at a rate not to exceed seven per cent, per annum.”
*464We cannot perceive how all this can fairly be held sufficient to impart to the holder of the bonds notice that the Madison Company was but an accommodation guarantor. What does appear by the face of the bonds, taken altogether? 1. That the directors of the Martinsville Company authorized the issue of bonds, not exceeding $35,000, to obtain money to put the superstructure on its road; such bonds to be payable in ten years from date. 2. That these bonds were issued under that authority. • 3. That they were payable to the Madison Company, or assigns. 4. That the latter company, a year afterward, indorsed them, and guaranteed their payment. Then it otherwise appears that the latter company afterward pretended to own them; had them in its possession; put them on the market, sold them, and received the proceeds. Thus they were put in circulation with not a circumstance appearing on their face, or extrinsically, suggestive of a doubt that the Madison Company owned the bonds and was selling them on its own account. We find it difficult to imagine any course of conduct possible to have been pursued, which would have been likely to be more effectual in creating a belief among capitalists that the bonds were owned by that company. By assigning them, the company covenanted that they were its property. It is not graceful to deny this now, after parties have been induced to part with their money in consequence of their reliance upon this fact.
If the bonds had been payable to bearer, then the guaranty would have implied little or nothing as to the fact of ownership by the appellant, and would have had little tendency to mislead as to a fact upon the existence of which the power to make the guaranty depended, and, in that case, the question would have been a different one. Every person taking the bonds in suit was bound, it is true, to take notice of the limits of the power of the corporation which had guaranteed the paper. But whether the bonds in question had been received by the company in the course of its lawful business, or whether the company had no Ownership *465or interest in them, was a question of fact, and not of law. ¡ To hold that, in this ease, the purchaser of the bonds, pos-, sessing as they do the attributes of commercial paper, > must, at his peril, ascertain these extrinsic facts, would be j so utterly at variance with the well settled and just princi-i pies of law relating to such paper, and would, if made a precedent, be fraught with such incalculable mischiefs to public and private interests, that we are not disposed to', take the step. It is not entirely certain that its evil consequences would not be quite as adverse to the interests of railroad corporations, as to those of the community at large.
T. A. Hendricks and O. B. Hord, for appellant. J. S. Newman, H. C. Newcomb and J. 8. Tarkington, for appellee.The petition for a rehearing is overruled.