Beiser v. Supervisor's District No. 2

Ethridge, J.,

delivered the opinion of the court.

The appellant was the plaintiff in the court below, and bled suit against the board of supervisors and road commissioners of district No. 2 for interest on a twenty-five thousand dollar bond issue of road district No. 2 for a period from July 1, 1914, to January 1, 1915, amounting to seven hundred and fifty dollars. . It, appears that the board of supervisors of Smith county for district No. 2 of Smith county, on the 1st of July, 1914, sold an issue of twenty-five thousand dollars of its road bonds for said *848district bearing six per cent, interest, payable.semi-annually on tbe 1st days of July and January of each year, and at the July meeting, 1914, J. B. Sutherlin & Co., of Kansas City, Mo.) bid for said bonds the sum of twenty-five thousand one hundred and eighty-seven dollars, depositing its check for five hundred dollars guaranteeing its compliance with the terms of the contract, and its agent instructed the board of supervisors to make up a transcript of the proceedings certified to showing the regularity of the bond issue and to draw a draft for the purchase money upon said Sutherlin & Co. at Kansas City, Mo. There was some delay in making up the certified transcript but on the 15th day of August the bonds, transcript of proceedings, and county treasurer’s receipt for the money signed by the county treasurer was forwarded through the bank with the draft on the Sutherlin Company for the purchase money of the bonds at Kansas City, Mo. In the meantime the European war broke out, and the buyer had some difficulty in placing the bonds and paying for them, and the draft was not paid until the 6th day of October, 1914, when the buyer paid for ten thousand dollars of the bonds, and said amount of bonds was delivered to him, and on the • 24th day of December, 1914, the buyer paid for the remaining bonds, and they were delivered to him, but it did not pay the county the accrued interest from July 1st to the date of the delivery of the bonds; but, notwithstanding such failure, the bonds were delivered, together with the certificate of regularity and the county treasurer^ receipt, .and on the 27th day of December Sutherlin & Co. sold the bonds to Weil, Both & Co., a banking establishment at Cincinnati, Ohio, which said bank bought for the account of plaintiff, and plaintiff placed the bonds with clients of his, and the coupons due January 1, 1915, were clipped from the bonds and sent to Smith county for payment, but payment was refused and the coupons were returned to plaintiff; and plaintiff paid for the said coupons, according to his testimony, which is undisputed in the *849record, full value of said coupons. It is in testimony that the purchasers, Weil, Both & Co., bought from Sutherlin & Co., and were bona fide purchasers without notice of the failure of Sutherlin & Co. to pay the accrued interest, but that they bought on the faith of the transcript of the regularity of the proceedings and the county treasurer’s receipt, and had no knowledge of any default on the part of Sutherlin & Co. in complying with its bid. The case was submitted to the circuit judge without a jury, by agreement, and the circuit judge allowed the plaintiff interest on ten thousand dollars from the 6th day of October, 1914, to the 1st day of January, 1915, and interest on fifteen thousand dollars from the 24th day of December, 1914, to January 1, 1915, and denied plaintiff’s right to recover for the balance. The question arises as to whether a. bona-fide purchaser of bonds is entitled to recover on the-facts above stated from the county for that period of time from the issue and date of the bonds until the actual payment by the purchaser from the county. The bonds are payable to bearer and we think that, when the bonds are delivered with the receipt of the county treasurer acknowledging- payment of the money, and the certificate of regularity as to the issuance of the bonds as above stated, that the county is liable to the bona-fide purchaser for value without notice. People dealing with paper of the character involved in this suit, that is, negotiable paper payable to bearer, are entitled to protection when the transcript of proceedings shows that the bonds have been regularly issued, sold, and paid for. The county could refuse to surrender the bonds until they are paid for by the purchaser, being the amount of his bid with accrued interest to date of payment, and the county could recover of the purchaser, if it delivers the bonds without payment, the amount that is still due; and the county in proper cases could recover on the bonds of the county officers charged with the sale of such bonds any loss occasioned by their neglect of duty in requiring the full amount of the pur*850díase money to be paid before delivery, but as to bona-fide purchasers for value before maturity without notice the county is liable for the full amount of its bonds and interest thereon when it has delivered bonds to purchasers when they have been sold to innocent parties. It would be destructive of the public credit and work untold injury upon counties where the sale of bonds is necessary, to hold that such purchasers are not protected. Madison County v. Brown, 67 Miss. 684, 7 So. 516; Vicksburg v. Lombard, 51 Miss. 111; Cutler v. Madison County, 56 Miss. 115; Aberdeen v. Sykes, 59 Miss. 236.

It follows that the learned circuit judge was in error in refusing to allow the plaintiff the full amount sued for.

Judgment is accordingly reversed, and judgment entered here for the appellant for said amount, with interest at six per cent, thereon from January 1, 1915.

Reversed, and judgment here.