246

FEDERAL REPORTER.

to withdmwits denlUrret: to Schley'lrbiU on payment of costs; if not so' withdrawn, then to be overruled with costs; and declaring the said plea i'n abatement and plea in bar filed by Schley to the bill of the American Loan & Trust Oompany to be insufficient, and that they be overruled, with costs.

DEYO V. OTOE COUNTY.

(Circuit Oourt,

n. Nebraska.

January 2, 1889.)

VALIDATING ACTS LEGISLATIVE

1.

RAILROAD COMPANIES POWER.

MUNICIPAL AID -

If the holder of valid municipal bonds. such as the ones which form the basis of this suit, surrenders them, .to the municipality, and receives in exchange therefor other bonds which the municipality had not the lawful right to issue, he is not thereby divested of his title to the bonds so surrendered; and such owner and holder of the bonds so surrendered may maintain an ac· tion thereon after the same matures. (Sgllab'U8 by the OQurt.) .

:a.

Municipal bonds issued without authority of law. and therefore void, may be validated.by an act of the legislature passed for that purpose, if the legis· lature of the state could authorize the issuing of similar bonds. The bonds sued on.in this case, though void whon issued. for want of authority to issue them,. were made valid obligations of the county by a curative act of the. leg· islature of the state on the 15th day of February, 1869.

BUIE-SURRENDER OF BONDS FOR NEW ISSUE.

At Law. Action on count)"b6nds. WatBoni!c &ofield, for plaintiff. D. T.. Hayden and Montgomery&: Jeffrt'!!/' for defendant.
DUNDY,J. This suit is based upon several bonds issued by Otoe county, aggregating the sum of $5,000. The bonds were originally issued to the Midland Pacific Railway Oompany, a railroad corporation organizes! under the laws of this state. The bonds bear date the 1st day of April, 1868, and matured the, 1st day of April, 1888. These bonds are but a small portion of those issued at the sallle time, and under the same alleged authority. The bonds were issued by the county sioners of the county, after a vote Of the people of the county seemed. to authorize the iSsue, and by virtue of the said vote and the orders made by the pursuant thereto. The bonds had been put on the market by tpe railroad company, and had mostly passed into the hands of innocent holders. But the rightful authority to issue the bonds was soon qnestioiled, and' the interposed for the purpose of validating the bonds. On the15th day of February, 18q9. the legislature passed an act to enab1e comities, cities, and precincts to issue bonds, etc., and to legalize bonds already issued. The eighth section of that act is as follows: ' ' . . .. AU bo'nds heretofore voted and l!lslloo 'by any county or city in state to aid in the construction of any railroad, or other work of internal improv&-

ment,are hel'ebydeclaJ.'ed to be legal and valid, and a lien upon all the tuxable

DEYO II. OTO,E COUNTY.

247

property in such county any; dEfector irregularity in the submission of the qUejiltion to a vote of the: people, or in taltingthe vote, or In the .6xe,cution of and the same may not have been voted upon, executed,or In conformIty wIth law; and 'such bonds shall have the samelegal validity and binding force as if they had been legally authorized,.v{)ted upon, executed: prOVided," etc. . . This seetiollseems to.apply to aU bOlldl!3voted and issued·in the several coulltiesandcities in the state except Nemaha county, which is specially namtld in the proviso. The county. paid the interest on .thebonds until a short time before the suit was instituted, and it is claimed is still willing to pay both interest and principal, except for a E\upposed legal in the way of doing so. The holders of impediment which seems these bonds were willing to receive in exchange from the county refunding bonda, drawing a lower rate of interest, and having a long time to run. willingness led to an arrangement between the holders and the county, that was mutually satisfactO,ry..Consequently, on the 2d N0vember, 1;880,an election was had in the county for the purpose of votiogon the proposition to refund the h>n(,ied indebtedness. The vote . was favorable to refunding, and on the 1st January following:refumling bonds were issued in lieu of the ones iosuit. But in order .4> give life and validity tosuch bonds, so as to make them valid. and negotiable, it .was necessary to have them certified by the :state auditor. Thisindispensable requisite was neVj:lr complied with. The auditor declined to certify that the bouds were legally and properly.is!\uedj. whereuponOtoe,co:tlnty.commenced proceedings inthesl,.lpreme w;urt afthe state to compel the auditor to certify and register the; bonds asi required by law. Theaupreme conrt, after fqll Qf-the controversy, declined ,to. issue the man.dam1JJ1 prayed JOI.', and held the rafUlldingbonds VQid for the want of authority in the county commissioners to call an election, or toissue such bonds. Otoe Co. v. Bab(X)ck;23 Neb. 802, 37 N. W. Rep. 645. After all this, the plaintiff offers to surrender to the county, the refunding bonds 80 declared to be void, and: pemands the return of the valid oneSI which he hnd delivered to the couQ.tyin,exchange for the worthless refunding bonds. This demand was not complied with for reasons unnecessary to state, nor would the county pay the money alleged to be due on the valid bonds, though often.l'equested, eto·. jhence this' suit. The admitted facts were reduced to writing, a jury was.duly waived, and the cause submitted to,the court. The facts were about as the same are detailed herein. It may be conceded, for all purposes connected with this controversy, that the bonds originally issued, and on which this suit is. based, were void from· their very inception, for want of authority to issue them·. It must beconceded,also, that the eighth section ofthe act of the. state legislature before quoted, was aT. attempt made to cure the want ofauthority to issue the bonds, and was really and in fact to give life and vitality to a dead or void bond. If the leg1sUttureof a state has the constitutiomd·right to· this, the original. infirmity which: tainted these bonda has been completely: overcome. Counsel for

do

248

FEDERAL REPORTER.

strenuously contend that the legislature has no such right, and when it attempted to arrogate to itself any such right or authority, it transcended its legitimate constitutional authority. This.is a pleasing view to take of legislative functions, especially by a strict constructionist, as I am supposed to be; but unfortunately for those who rely on that in this case, the supreme court of the United States' has had under consideration this very eighth section, and has held that the legislature had the constitutional right to pass it, and that bonds voted and issued without authority before its passage were validated and binding after the same became a law. See Otoe Co. v. Baldwin, 111 U. S. 1,4 Sup. Ct. Rep. 265. After such an authoritative exposition of the law, there is no room left for argument thereon in this court. We will therefore now and hereafter treat this question as no longer open to dispute. Again, it is claimed that because the plaintiff exchanged his valid original bonds for the refunding bonds that no action can be maintained until the latter bonds mature. Defendant's counsel insist that the refunding bonds are valid, subsisting obligations, and, as the plaintiff received them in exchange for the others, he cannot now maintain this action. That claim would be difficult to meet and answer if the refunding bonds were valid. But are they valid? The highest court in this state has pronounoed against their validity, and that, too, in a case before it in which Otoe county was a party. Owe Co. v. Babcock, supra. Notwithstanding this decision it is claimed that the case was not well considered, and that the law of the state then under consideration is the other way, and I am asked to disregard the decision. It may be that the decision is open to criticism, as counsel claim. However that may be, it is a sufficient reply to say that the federal courts usually follow the interpretation put on state laws by the highest courts of the states, and there is no necessity or inclination to depart from the general rule in considering this case. It must, then, be here held that the refunding bonds received by plaintiff in exchange for his valid ones were void and worthless obligations, and that the plaintiff, by his act of surrender or exchange, did not alienate his title to the original bonds, notwithstanding they are not under his absolute control. The remaining question relates to the right of the plaintiff to bring and maintain his suit when not in the actual possession of the bonds on which he sues. This question, it seems to me, does not present any serious difficulty. The bonds were certainly issued, and came to the plaintiff' in due course of business. He was the owner of the same at the time of the exchange. He received interest on the same for many years. There is no question about their identity or ownership. When he surrendered them to the county he received some worthle'ss paper, and nothing else. The consideration for the exchange was a total failure. The county ought to have placed the plaintiff where he was before the exchange; and in legal contemplation, the title of the plaintiff to the bonds in suit was never divested. He is still in a position to sue and maintain suit on the bonds. The supreme court Of the state had this same question before it, and the right to maintain the suit was upheld. Platts-

HAGOOD V. B1<YTHE.

249

17Wuth v. F'itagerald, 10 Neb. 401, 6 N. W. Rep. 470. The views here expressed ep.title tbe plaintiff to a judgment for tbe amount claimed, and judgment will accordingly be entered, on plaintiff filing with the clerk of the court the refunding bonds in his possession, hereby held to be invalid.

HAGOOD V. BLYTHE

et al.

January 11,1889.)

((Jireuit Oourt, D. South Oarolina.

1.

PRINCIPAL AND SURETy-DISCHARGE OF SURETY.-

In order to discharge a surety short of payment 'of the debt there must be some dealing between the creditor and the principal changing the cause of action, or suspending the right of action.

j. UNITED STATES MARSHAL-BoND-JUDGMENT.

When a private person brings suit against a marshal and his sureties on his official bond for official default. the judgment should be, not for the penalty, but for his damages legally assessed. Such suit, and the judgment thereon, are for his sole use. Rev. St. U. 8. §§ 784, 785.

(Syllabu8 by the Oourt.)

At Law. Action on marshal's bond. ,Mitchell Smith, for plaintiff. Barker, Gilliland Fitz Sim0n8 and Brawley

Barnwell, for defendants.

SIMONTON, J. Action at law on a marshal's bond, against him and his sureties. A trial by jury waived. Complaint alleges the collection by the United States marshal of certain costs due plaintiff as clerk of the -court in Farr v. Chick,-$187. 75; the failure to pay the same to plaintiff; and demands judgment on the penalty of the bond. The collection -of the money in July, 1883, by Blythe, marshal, and the failure on his part to pay it over, have been proved, except as to the sum of$12.32, which should be credited on the claim. The answer on behalf of the llureties sets up certain dealings between the plaintiff and Blythe, which they claim dischargethem. It appears from the evidence that in July, 1883, Blythewas removed from office as marshal; that he called on the plaintiff and told him that he had collected these costs, but that he was put to such heavy expenses attending the removal from his office, such :as paying house-rent and other charges, that he was compelled to use the money. He promised, however, to pay it as soon as he returned to his home in the interior of the state. It does not appear what reply plaintiff made to this. This suit began 25th February, 1887. In order to discharge a surety short of the payment of the debt there must be some dealing on the part of the creditor and the principal changing the cause of action, or suspending the right of action. Perhaps, in s court of equity, .unreasonable and inexcusable delay on the part of the creditor, working injury to the surety, may operate so as to discharge him. In this court there must be a contract to give time; that is, an agree-