105 Pa. 282 | Pa. | 1884
delivered the opinion of the court February 25, 1884.
It does not seem to be disputed but that the plaintiff, .James B. Kerr, the owner of the bonds upon the coupons of 'which, or some of them, this suit has been brought, is a bona fide
But the question we have to deal with is not one of power, but rather, as the learned judge of the court below has put it, the effect of the perversion oí: a lawful power by the application of the bonds to an unlawful purpose. The mayor and council had no power to bind tlie city by the certificate of indebtedness issued to Gibbs, Sterrett & Co., on the 24th of March, 1873; the city owed this firm nothing, and its credit could not be thus loaned, lienee, the exchange of bonds for this certificate was a void act; it was a mere gift of these valuable securities to Gibbs, Sterrett & Co., and in their hands they were no better, as evidences of indebtedness against the municipality, than was the original certificate for which they had been exchanged. The contest here, however, is not with the original holders of these bonds, but with an innocent pur
It follows, that the material inquiry involved in this case is, was the plaintiff bound not only to inform himself, through the Act of Assembly, of the power of the city authorities to issue the bonds, but did he take them charged with all the equities to which they were subject when in the hands of the first holders? In other words, do they oecupjr no other relation to the commercial community than do ordinary specialties, and have thejr in them no element of negotiability ? In the court below these questions, on the authority of Diamond v. Lawrence County, 1 Wr., 353, were answered adversely to the plaintiff, and the bonds were held to be nothing more than ordinary specialties, against which any defence might be set up which the city had against Gibbs, Sterrett & Co.
But we cannot agree that the case cited supports the judgment of the court below. The coupon there sued upon was from a bond which, with others, had been issued by the County of Lawrence and passed to the Northwest Railroad Company, in payment of the county’s subscription to the stock of that company. On the 5th of June, 1857, and before the railroad company had transferred the bond, afterwards held by Diamond, a bill was filed by the county against the company to prevent a transfer of the bonds, and compel a surrender of them for cancellation. On that bill a decree was made as prayed for, on the ground that there had been a direct violation, by the corporation, of the Act of Assembly in selling the bonds for sixty-four cents on the dollar. Under these circumstances, Diamond having received a transfer of his bond pending the bill, it was held that he was bound to take notice of the suit then in progress; in other words, the case was disposed of on the doctrine of lis pendens, and the assertion found in the opinion that bonds of this character are not to be regarded as negotiable securities, must be taken to mean only that they are not to be treated as paper of that strictly commercial character which relieves its holder from the effects of the doctrine of lis pendens. If we were compelled to interpret this opinion as did the court below, we would reject it altogether, for thus interpreted it is not law in this commonwealth nor anywhere else. This decision, even when applied as it was intended, is not satisfactory, since it puts us, as a court, into this anomalous condition, that by it we are made to antagonize the sentiment of the commercial world, and the doctrine of every other court, whether in this country or England. It has been repudiated by the Supreme
least, a quasi negotiability in these particulars; they pass by delivery, and the holder may sue in his own name; the transferee for value holds title as an original obligee; he cannot bo affected by equities existing between the previous holders and the municipality, of which he had no notice, neither can he be affected by the default of the officers issuing them, unless such default directly affects their power to make and put them upon the market.
The judgment is reversed, and a procedendo awarded.
Subsequently, on October 27, 1884, on motion of the plaintiff, the court ordered that judgment be entered for the plaintiff, to be liquidated by the prothonotary of the Court of Common Pleas, of the county of Erie, in the amount of the several coupons found due the plaintiff by the legal arbitrator, with interest on the same at the rate of seven per cent.