157 F. 33 | 6th Cir. | 1907
Lead Opinion
(after stating the facts as above). The questions to be decided upon the facts found, the substance of which has been stated, and the proper inferences to be drawn therefrom, are these: First, whether it should be held that the county of Green had been exonerated from the payment of the subscription for the capital stock of the Elizabethtown & Tennessee Railroad Company; and, second, whether these bonds are invalid in the hands of the plaintiff by reason of the fact that only $150,000 of the proceeds of the bonds have been expended in the construction of the road in Green county, or by reason of the fact that the same has not been built through the county. These questions turn largely upon the proper interpretation of the so-called conditions upon which the county authorized these bonds to be issued.
Upon our conference after the original argument in this court, we were in doubt upon some of the questions presented for decision, and certified them to the Supreme Court for its opinion. One — the first of the questions — as that court thought, involved too many points. But we requested that if that question should be deemed too broad, then that the court should advise us whether, “Assuming the facts to be as found, was a bona fide purchaser, before maturity of these bonds and coupons for value, entitled to assume in his purchase that Green county had, before their issuance, been fully and completely exonerated from the payment of the capital stock subscribed for by the county court of said county for and in behalf of said county to the Elizabethtown & Tennessee Railroad Company?” The Supreme Court answered this question as follows: “Construing the second question to inquire not whether there is conclusive presumption, but whether on the facts found there is any presumption at all that the county had been exonerated from its former subscription to another railroad, we answer, Yes.” Quinlan v. Green County, 205 U. S. 410, 27 Sup. Ct. 505, 51 L. Ed. 860. On receiving this answer, we heard further argument upon the consequences of the opinion given by the Supreme Court as well as upon the question of the character of the
We agree that the exoneration of Green county from any liability on account of its former subscription to another railroad was a condition precedent to the issuance of the bonds, and that without the accomplishment of this condition the plaintiff cannot recover. We concede this, although we cannot help thinking that there is room for the belief that the Legislature of Kentucky intended that the county judge should determine when and whether the condition had been accomplished, and that to hold otherwise is to suppose that these' bonds, although they were by the terms of the statute to be negotiable coupon bonds, would, although issued and put upon the market, yet be clogged with doubt of their validity, • a doubt which even now might be and still is urged against them. Such bonds would not be marketable, and their purpose would be utterly defeated. For this reason it has sometimes been held that, although the statute does not expressly nominate any officer who is to pass upon the execution of the condition precedent to the issue of such bonds, yet that, in view of the consequences, an implication might arise that the Legislature intended that the officer of the municipality in whose behalf he was acting, and who was charged with the custody and the issuance of the bonds, should, before delivering them, ascertain and determine whether the condition had been complied with. Especially would this be so when the question whether there had been a compliance is one which calls for the exercise of judgment upon facts with which he would be most conversant. It is true that in most of these cases, perhaps in all, there were recitals in the bonds of the regularity of the anterior proceedings or the fulfillment of conditions precedent; but it would seem that for other reasons, if it is intended by the statute that the determination of the fact is committed to the official who issues the bonds, such determination ought to settle the fact. If in such conditions the bonds should be issued without such determination, the question would be open. But here the county judge acted advisedly. In the order that the bonds be issued, he recites that he was sufficiently advised — borrowing an expression from legal procedure — to denote that he had taken notice of and considered the question whether the conditions existed which authorized the issuance of the bonds; in other words, that he had exercised the function devolved upon him. Granting, what must be regarded as settled by authority, that when the condition consists of a distinct and indubitable fact, and nothing is left to the judgment of the official charged with the delivery of the bonds, his delivery of them without the occurrence of the condition would be unauthorized and the bonds be void, yet it would seem upon principle, that if the question whether tire condition has been accomplished is one of doubt and uncertainty, and it is apparent that the officer who has charge of the issuance of the bonds is to determine the fact of compliance with the condition, his determination would conclude the question, and, if in the affirmative, bind the county. This is, as we understand, the doctrine on which the judgment of the Supreme Court in Provident Trust Co.
“The rule may be stated thus: An actual manual subscription on the books of a railroad company is not indispensably necessary to bind a municipality as a subscriber to the capital stock. If the body or agency having authority to make such a subscription passes an ordinance or resolution to the effect that it does thereby, in the name and behalf of the municipality, subscribe a specified amount of stock, and presents a copy of that resolution to the company for acceptance as a subscription, and the company does, in fact, accept, and notifies the municipality, or its proper agent, to that effect, the contract of subscription is complete, and binds the parties according to its terms.”
This is a careful and undoubtedly correct statement of the law upon the subject. See, also, Morawetz on Corp. §§ 61, 134; Greene v. Sigua Iron Co., 88 Fed. 203, 31 C. C. A. 458. The county judge might well have thought that as there had been no complete subscription by an actual subscription, and by the acceptance and notification of the railroad company, the county was exonerated from its vote to authorize the proposed subscription. The language of the condition is that the county shall be “exonerated from the payment of the capital stock voted by said county and authorized to be subscribed by said Green county court to the Elizabethtown & Tennessee Railroad.” This does not import that a completed subscription had been made, but only that a subscription had been authorized by the former vote; and the county would be exonerated if the subscription which it had authorized was not completed so as to bind the county. These bonds were not issued until four years after the vote of the county authorizing the subscription for stock of the Elizabethtown & Tennessee Railroad Company had been taken and recorded. Meantime, this latter company had given no token of its acceptance, and the county had taken no further step after the direction of the county court to its clerk to make the subscription upon the terms specified in the order submitting the question to a vote. And the subscription was never completed. What more complete exoneration from its former vote could the county of Green have? But, to return to the line of reasoning which we were intending to pursue, we are advised by the answer of the Supreme Court that there was, upon the facts found, a presumption in favor of the bonds that the county had been exonerated from the vote to subscribe to the other railroad stock; not a conclusive presumption, but one that might be controverted. But there is nothing in the facts found which controvert it. On the con
We come then to the question whether the other provisions of the vote on which the bonds in suit were issued, namely, “that said company shall locate and construct said railroad through said county of Green, * * * and shall expend the amount so subscribed within the limits of Green county,” were conditions precedent to the issue of the bonds, or were stipulations imposed upon the Cumberland & Ohio Railroad Company by its acceptance of the subscription. The acceptance of a contract or an obligation which also in terms imposes obligations upon the obligee, and whereupon the latter seeks and obtains the benefit of the contract, binds the latter for their performance, although he may not have expressly undertaken to be bound. Bishop on Contracts (2d Ed.) § 203; 1 Parsons on Contracts (9th Ed.) § 13, n. 1; Storm v. U. S., 94 U. S. 76, 24 L. Ed. 42.
The question whether the performance of a stipulation in a contract is a condition precedent to the performance of other stipulations in it depends upon the order in which the parties intend the several stipulations to be performed. The calling of a provision or stipulation a condition is not conclusive, and if from the contract or other circumstances it is seen that it was not the intention of the parties that its performance should be a condition precedent it will not be held to be such. Stanley v. Colt, 5 Wall. 119, 18 L. Ed. 502; Union Stockyards Co. v. Nashville Packing Co., 140 Fed. 701, 704, 72 C. C. A. 195; Sohier v. Trinity Church, 109 Mass. 1; Greene v. O’Connor, 18 R. I. 56, 25 Atl. 692, 19 L. R. A. 262; Scovill v. McMahon, 62 Conn. 378, 26 Atl. 479, 21 L. R. A. 58, 36 Am. St. Rep. 350; Hartung v. Witte, 59 Wis. 285, 18 N. W. 175. “Conditions have no idiom,” said Virgin, Judge, in Bucksport, etc., R. Co. v. Brewer, 67 Me. 295. “Whether they are precedent or subsequent is a ques
The question we are now considering was mentioned, but not passed upon, by the Supreme Court, because it was not included in our request for its opinion. But we think it apparent, for many reasons, that the performance of these conditions, so called, was not intended to be required before the delivery of the bonds. The subscription for the stock of a railroad company by a municipality, and the issue of negotiable bonds in payment therefor for the purpose of providing means to assist in the construction of a railroad within its limits, is a transaction familiar to every one. It is not a transaction whereby the municipality contracts with the company to build a road, but is intended to provide means to assist the company in building it, in consideration of acquiring a part of its stock, and of the expected advantages of the road to the community. The statute of Kentucky under which these bonds were issued indicates very clearly, as we think, that the bonds authorized were expected to be negotiated for the means to use in the construction of the road. It is provided that they shall be payable to the bearer, that they shall have interest coupons attached payable semiannually in the city of New York, and that the bonds shall be payable at a designated time which may be as long as 30 years after their date. They were thus required to possess the attributes of commercial paper adapted to sale in public markets. And the proposition on which the electors of Green county voted followed in all particulars the provisions of the statute. And when it was provided that the company “shall expend the amount so subscribed within Green county,” we cannot doubt that what was meant was that the proceeds of those bonds should be so used, and not, as has been suggested, that the company should have expended some other money equal in amount to the bonds. Such a construction as would lead to the result suggested would leave the company without the ready means to build the road which it was the purpose to provide for. Moreover, there is a plain distinction made in the proposition voted in the very terms employed. In regard to the requirements we have been last considering, the question was whether the county would subscribe for the stock and pay for it in county bonds, upon condition that the company should construct its road as mentioned, but where the proposition comes to the matter of the exoneration from the vote to the other railroad, that was expressly made
Other reasons are also suggested by counsel; but we cannot doubt that, for those we have mentioned, the proper construction to be given to the proposition submitted to, and authorized by, the electors of Green county is that the railroad company should, upon its acceptance of the subscription, and the delivery of the stock by one, and of the bonds of the other, come under an obligation to comply with those terms of the proposition voted. And we reach this conclusion without regard to the question of an estoppel arising upon the fact that the county accepted the stock, and has continued to retain it. If the question of the intention were in doubt, the interpretation given by the county to its vote by paying the interest would be persuasive of its understanding at the time of the transaction. We think the bonds were lawfully issued, and that the fact that the company has not performed the stipulations of the agreement which it made as a consideration for the bonds does not invalidate them, when, as appears, the delivery of the bonds was final, and they have passed into the hands of other parties for value, as it was the evident intention of the statute that they would do. We need not inquire whether the county could have made a partial defense against these bonds upon the ground that there had been a partial failure of consideration if the railroad company had held them and were now bringing suit upon them. The holder of negotiable paper is entitled to the benefit of the presumption prima facie that he or some previous holder whose title he has acquired is a purchaser in good faith and for value before maturity, in the usual course of business, and without notice of any circumstances impeaching its validity; and that he is the owner thereof, if it is payable to bearer. Daniel on Neg. Inst. § 812. Nothing is here shown to contravene these presumptions. Of course it must always appear that the obligor was competent in law to incur the obligation, and had in fact attempted to incur it. We do not understand that the absence of a recital in municipal bonds that the conditions to their issue have been complied with deprives them of their character of negotiable instruments or of the ordinary presumptions which attend such instruments. Recitals of that character relate to the regularity of the proceedings precedent to their issue, and, if the recitals cover the necessary facts, conclusively establish it. But when, in a case where there are no such recitals, proof is made that the proceedings were in fact regular, the bonds are entitled to the same presumptions in their subsequent negotiation as if they had contained such recitals.
' It is suggested that the finding of the court “that the plaintiff is a citizen of the state of New York, and was so when this action was instituted on the 28th day of March}- 1899, and that the plaintiff was
The judgment of the Circuit Court must be reversed, with directions to enter a judgment in favor of the plaintiff for the amount of the bonds and coupons, with interest on the coupons from the time they severally fell due, and interest on the principal of the bonds from the date when the latest coupons thereon severally fell due.
Dissenting Opinion
(dissenting). I must in this case, and contrary to the usual practice of this court, express openly the grounds for my dissent to the conclusions reached in this case.
The county has not obtained a road constructed by the company to whose stock it proposed to subscribe. Its money has been thrown away. This suit involves its probable liability upon an issue of bonds aggregating $250,000. This series of bonds with interest already past due, aggregate three-fourths of a million. Tor this the county will obtain nothing. To prevent just such a possible result the Legislature provided that subscriptions by counties might be voted conditionally. The conditions which the county demanded were intended to absolutely secure the building of the road. By subtilty of construction, upon which I express no opinion, two of these conditions are said now to be only covenants, and, therefore, worthless against an insolvent and nonexistent railway company. For at least 30 years the county has denied its liability, and refused payment of interest. When this denial had been so long acquiesced in that the bonds were purchaseable for little more than the value of wall paper, as stated at the bar, they are acquired by speculators, who now urge that, during all this long, long period of repudiation, the defence of the county has been growing weaker and weaker, and that time, which usually only fortifies a defensive position, has all this time been making bonds valid which were invalid when issued. I will not willingly aid in the destruction of the settled principles which tend to the security of commercial paper. Neither will I agree to strain a finding of facts to hold a county upon obligations which, in my judgment, were never binding either in the forum of law or conscience.
1. The opinion and conclusion conflicts with the settled views of the Supreme Court in respect to the most important ground upon which it rests.. Assuming that the mere fact of issuing these bonds by the county judge was a determination that the conditions had been complied with which authorized their issuance, that determination only raised a presumption in favor of one who should take the bonds before maturity, for value, and without actual notice of the real facts of the case at the date of issuance. This is so because the bonds were without recital. This much was the plain ruling of the Supreme Court in Buchanan v. Litchfield, 102 U. S. 278, 26 L. Ed. 138, and Citizens’ Savings Ass’n v. Perry County, 156 U. S. 692, 15 Sup. Ct. 547, 39 L. Ed. 585. In this very case we certified the question as to the presumption upon which a purchaser before maturity for value might act in purchasing bonds without recital. Referring to the tendency of some- of the earlier cases to deny to bonds in the hands of innocent holders any other defense than want of power, the court said that tendency had been “arrested” by the cases I have cited above, which cases it is said held “that the mere facts of subscription to stock and issue of bonds containing no recitals left it open to the obligor to show that a condition precedent had not been fulfilled.” “But,” added the court, “these cases in no way conflict with the view expressed by Mr. Justice Story in Pendleton County v. Amy, 13 Wall. 297, 20 L. Ed. 579, and by Mr. Justice Bradley in Coloma v. Eaves, 92 U. S. 484, 23 L. Ed. 579, that a presumption arises from the mere fact of sub- • scription and issue, though not a conclusive one.” “Independent of authority such a presumption exists, and is but an instance of the broader presumption that officers charged with the performance of a public duty perform it correctly.” My Brethren do not, as I read the opinion of the court, accept this as an applicable rule of law or an authoritative decision in this case. It is, in conclusion of an argument in favor of the conclusiveness of facts, determined by the county judge, refusing the delivery of the bonds here in question, said:
“His delivery oi them without the occurrence of the conditions would be unauthorized and the bonds be void, yet it would seem upon principle that if the question whether the conditions had been accomplished is one of doubt and uncertainty, and it is apparent that the officers who had charge of the issuance of the bonds are to determine the fact of compliance with the condition, his determination! would conclude the question, and, if in the affirmative, bind the county.”
It is evident that the error of the court in the matter I have referred to is, after all, the real ground of the conclusion reached and its judgment colored by the view before expressed.
2. The conclusion is next placed upon the theory that no subscription had ever been made to the capital stock of the Elizabethtown & Tennessee Railroad Company, although one was authorized. It is stated in the opinion that, although the subscription was voted, and the county court ordered its clerk to subscribe for the stock, “the clerk did not so subscribe.” It is also said that, when the bonds here involved were issued, the said Elizabethtown & Tennessee Railroad Com
“That no formal or express exoneration of said county from the payment of said last-named subscription was ever made or attempted, but nothing further has, up to this date, ever been done, in respect to it, and neither bonds by the county nor stock by the said last-named railroad company have ever been issued or delivered in execution of said orders or under the terms of said subscription.”
This finding plainly assumes that there had been a subscription, not a mere authority to subscribe. What is said as to nothing further having been done evidently refers to acts subsequent to the subscription. But it is not important that no formal subscription was made by the clerk. He was commanded to do a purely administrative act, and he could have been coerced to do it by writ of mandamus. The liability of the county upon the vote and the order of the county court was the gist of the matter, and fastened a liability upon the county from which it required exoneration as a condition precedent to another liability.
3. I disagree as to the effect of the lapse of time since these bonds were issued upon their validity. I cannot agree that the liability to this plaintiff rested upon any better foundation when he started this suit in 1899 than if he had sued at date of the earliest maturing coupon. The authority to make a subscription at all depended upon the performance of the antecedent condition of exoneration from liability on account of the former subscription to a different company. Yet within 13 months after the order of the court, directing a subscription by its clerk to the Elizabethtown & Tennessee Railroad Company, we find the county judge making the subscription here involved. If the condition precedent had not been performed then, the act was without authority. In payment of this subscription he issued the bonds in suit
4. The question certified assumed that the plaintiff took these bonds before maturity. But the only finding in respect to the status of the plaintiff is the first, in these words:
“The court finds that the plaintiff is a citizen of the state of New York, and was so when this action was instituted on the 28th day of March, 1899, and that the plaintiff was then the bona fide holder for value of the bonds and coupons sued on, and fully entitled to sue the defendant thereon in this court.”
That finding, I think, should be interpreted as applying to the plea to the jurisdiction. That plea was, by agreement, submitted with the other defenses. It pleaded that the defendant was not the bona fide owner of these bonds when this suit was brought, March 28, 1899, but that the same bonds and coupons had before been in suit in the same court, and the suit abated because the then plaintiff, Herman H. Heaton, was a fictitious plaintiff; the real owners being citizens of Kentucky, and that Quinlan had acquired the bonds thereafter only for the purpose of giving jurisdiction to the circuit court, the beneficial plaintiffs being citizens of Kentucky. Issue was taken upon this plea as to whether the plaintiff was the real owner or only a fictitious plaintiff. The very terms of the finding indicate that the finding was a response to this plea to the jurisdiction. But if the finding be construed as both a finding in respect to the issue upon jurisdiction and as to the status of the plaintiff as the holder of negotiable paper, it will be most unjust to infer from that finding that the plaintiff acquired these bonds before maturity, as implied by the second interrogatory, or without notice of the defenses of the county. This finding is “that on March 28, 1899,” plaintiff was the bona fide holder for value of the bonds and coupons sued upon. That date is the date of the bringing of this suit, and the finding was enough to support his claim of right to sue in a United States court, there being diversity of citizenship',1
5. But if the judgment of the Circuit Court, holding that thé conditions precedent had not been complied with and that the bonds were invalid, is to be reversed, I think common justice requires that there should be no judgment upon these findings against the county, but a new trial awarded. The findings of .fact do not cover all of the issues, and upon those to which they are a response- áre not definite or
When a jury has been waived, and a judgment rendered upon a special finding ,of facts, this court, if it find that the judgment was erroneous, has the power to direct such judgment to be entered as the special findings require, instead of awarding a new trial. Fort Scott v. Hickman, 112 U. S. 150, 5 Sup. Ct. 56, 28 L. Ed. 636. But if the findings are doubtful, obscure, or defective, 'it is within the power of the court and its high duty, whenever justice seems to require such action, to reverse and remand for a new trial. Graham v. Bayne, 18 How. 60, 15 L. Ed. 265; Flanders v. Tweed, 9 Wall. 425, 19 L. Ed. 678, 680; St. Louis v. Western Union Telegraph Co., 148 U. S. 92, 104, 13 Sup. Ct. 485, 37 L. Ed. 380; Ward v. Cochran, 150 U. S. 597, 608, 14 Sup. Ct. 230, 37 L. Ed. 1195. No judgment ought to be rendered when the findings are silent as to a fact which is essential to a judgment. An imperfect finding like an imperfect special verdict cannot be pieced out. The burden is upon him who asks a judgment to produce a finding of every fact necessary to'support it. Hodges v. Easton, 106 U. S. 408, 1 Sup. Ct. 307, 27 L. Ed. 169. In Ward v. Cochran, cited above, there was a special verdict in an action of ejectment reversed and a new trial awarded, 'because there was no finding that the defendant’s possession was adverse and exclusive, although there was a finding that the defendant and his grantors had entered into possession of the land in controversy under a claim of ownership, and that he remained in the open, continued, notorious, and adverse possession thereof for the period of 16 years. Without comment we adopted this course in Anderson v. Messinger, 146 Fed. 179, 77 C. C. A. 179, 7 L. R. A. (N. S.) 1094. In Barber v. Coit, 118 Fed. 272, 55 C. C. A. 145, we remanded an appeal for further evidence, upon our own motion, “because great injustice might be done if the case is to be decided upon the present record.”
When the findings of fact do not support a judgment against the plaintiff, there can be no judgment for the defendant, upon a writ of error sued out by the plaintiff, where there is an issue made by the defendant, material in character, upon which there is no finding of fact. Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276, 293, 5 Sup. Ct 141, 28 L. Ed. 722. When the trial court makes no .finding upon
“We might possibly look into the rejected record and depositions, and determine the issue arising on the plea, but, by so doing, we would be trying on appeal an issue that was not tried below.”
Where an omission to make a specific finding of fact is due to the fact that the circuit court made a ruling upon a matter of law which rendered such a finding unimportant, it is the duty of the court that justice may be done, to reverse and remand, under section 701, Rev. St., for such further proceedings to be had in the inferior court as justice may require. Little Miami Railroad Co. v. United States, 108 U. S. 277, 280, 2 Sup. Ct. 627, 27 L. Ed. 724.