Anthony v. Jasper County

DILLON, Circuit Judge.

The well-known history of the issue of municipal bonds in this state, as it appears by the many cases in this court, shows that conditions imposed by law requiring a popular vote, or conditions in the proposition submitted to the voters, intended to prevent fraud, and to secure the actual building and completion of the roads, have been often evaded, and the bonds issued without compliance therewith. Such bonds, when negotiated for value, the courts have held to be binding. To prevent such improper or improvident issue of bonds in the future, the legislature passed the act of March 30, 1872, (Laws 1872, p. 56.)

The fourth section of that act provides that ‘‘before any bond hereafter issued by any county * * * shall obtain validity or be negotiated," it must be first registered by the state auditor, who shall certify thereon that all conditions precedent, required by law, and by the contract under which the bonds were ordered to be issued, have been complied with.

In this case the bonds were signed, sealed, and issued in the manner above appearing, after this statute went into effect, and were antedated to a date prior to the passage of that enactment. In point of fact, the conditions on which the bonds had been voted had not been fully complied with; and hence they could not have been, and were not, certified by the auditor as registered bonds. The bonds have found their way into the hands of an innocent holder for value, who did not know that the bonds bore a false date.

If the bonds bore date after the act of March 30, 1872, and had not been registered, it is plain, we think, that they would have no “validity,” and hence could not support an action in the hands of any person. Pars. Bills & N. 218, 270, 279. But they are antedated, and the question is whether they have validity in the hands of the innocent purchaser. Upon the best consideration we have been able to give, our conclusion is that the bonds cannot be enforced. The case comes within the doctrine, which is well settled, that where a statute declares absolutely and without exception that a contract or bond or note is void, it is void into whosesoever hands it may come. This statute declares that no unregistered bond shall be valid or be negotiated. Bonds must first be registered. Without registration they “obtain no validity.” Such is the statute. A. declaration that bonds shall have no validity is equivalent to declaring them to be void.

Is the county estopped to set up this de-fence V We think not. The case is to be distinguished from those decided by the supreme court of the United States, in which it is held that the frauds of the officers cannot be visited upon the innocent bondholder, and falls within the case of Bayley v. Taber, 5 Mass. 286. In that case it was held, where a statute enacted that promissory notes of a certain description, “made or issued” after a specified day, should be “"utterly void, and no action should be sustained thereon,” that it was competent to the makers of such notes, when sued upon notes bearing date before the day fixed by the statute, to prove that they were, in fact, made and issued alter such day.

[NOTE. On appeal to the supreme court, the decree of the circuit court was affirmed. In speaking for the court, Mr. Chief Justice Waite | said: “When the bonds now in question were ¡ put out, the law required that, to be valid, ; they must be certified to by the auditor of the i state. In other words, that officer was to certify them, before their execution was complete, so as to bind the public for payment. * * * 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. * * * It matters not that when the bonds were voted the registration law was not in force. Before they were issued, it had gone into effect. It did not i change in any way the contract with the railroad company. * * * All the legislature at- I tempted to do was to provide what should be a i good bond, when issued. There was nothing ; changed, but the form of the execution.’’ An- i thony v. County of Jasper. 101 U. S. 693. Also see Douglass v. Pike Co., Id. 677.]

The principle of that case is the same j as in the case at bar, and if that is a sound i principle when applied to the individual . maker of prohibited paper, it should apply with at least equal force in favor of public bodies, where one or two officers, without the consent of the others, may, as in this , case, combine to evade the law, the other j officers being innocent of wrongful partid- ¡ pation. j

The principle involved is one of great con- . sequence. For illustration: Loose and gen- j eral powers have been heretofore given in i this state to municipalities and counties to j issue such bonds. This power has been i taken away by the new constitution. Can ! the protective provisions of that instrument i be evaded and rendered useless by the mere ! fraudulent act of the officers of the county in antedating the bonds. If so, the power to defraud is endowed with a fearful vitality, which survives the prohibition of the constitution, and threatens to become immortal.

Judgment for the defendant.