MADISON COUNTY'll. PRIESTLY, Treasurer,el 01.
(Oircuit Oourt, S. D. Mississippi. May 15,1890.)
trnder Con8t.. Miss. art. 12, § 14, which declares that the legislature shall not authorizeany county, city, or. town to aid any corporation, unless two-thirds of tile qUalified voters of such municipality shall aBsent thereto at a special election, railroad. aid bonds are not invalidated in the hands of innocent purchasers by the fact leBS than such majority. voted for them, where more than two-thirds of the votes cast were in favor of issuing' the bonds. Following OQIITQU 00. v. 8mi£th, 4 Sup., Ct. Rep. 539.
In Equity. On demurrer to bill. E. E. Baldwin, for complainant. Walter Troller, for the baok. E.Mayer, for Mr; Smith·.
HILL, J. This bill 'W1l.S filed by complainant against defendants in the chanceryoourt of Madison county, and removed to this court by the defendants Mrs. Condet Smith and the Bank of Commerce, both nonresidentsofthisatate. The bill seeks to enjoin Priestly, the treasurer, from paying ,the interest lind bonds, described in the bill heretofore '8ued by the supervisors of Madison county to the Vicksburg, Canton & Yazoo City Railroad Company, and purchased and now held by said defendants and others. The questions to be decided arise upon the demurrer ofthe'le defendants to complainant's bill. The allegations stated in the bill asa defense to the payment of said . bonds and interest are that the board ofsupervisors had no power toissue the same; that they purport to have been issued in payment for capital stock subscribed by said board in said corporation; and tbat, to have authorized said board to subscribe for said stock, and to issue said bonds, with interest coupons attached, it was nMessary that the assent of two-thirds of the qualified voters of said county should have been obtained, such number being ascertained bya vote had thereon at a generalor special election held for said purpose. The bill alleges that there were 6,275 registered voters in said county, and that, at the time said subscription was ordered to be made, the board of supervisors entered the order declaring that 1,067 votes were two-thirds of the votes of the qualified:voters in said county, and that number of votes were cast at the election held for tbe purpose stated, which, the bill avers, was then known to be untrue. The bill "admits the authority for holding said election, and that itwas held; that there were 1,067 votes cast ,in favor of said subscription, and 77 votes against the subscriptionjthat the order of tbe board was made, declaring that the.election bad been held "in pursuance".of the act of incorporation of said railroad company, and that more,tban two-thirds of the qualified voters of said county had'votoo .inJavor Of said subscription, whicb,' order Was mlldeon the 27th dliy;of April, 1872, directing the issuance and delivery of the bonds, with interest coupons attached, inpa.Ymentfor the i1tock\Vhichthepresidentlwas v.42F.no.14-52
directed to subscribe; that said bonds, with interest coupons attached, were day of'Septerpbef, issuedaQd to S. S. Calhoun as trustee for said board of supervisors, and by him delivered to the president of said railroad com'paHi-on the 11th day of September, 1873, and on other days from that to the 24th day of September, and being the bonds andco'llPonlthe paymentp(whichis tb"beenjoined in this suit. There are other allegations made in the they .need stated ullderstanding of the questions tile deny that these defendants li.re innocent 'h61ders for :Value, without notice. !' ' - ' The decision made by the supreme court of this state in the case of Hawkins v. CarroU Co., 50 Miss. 785Hsmainly J'Qlied upon to sustain the validity of the bonds and coupons This decision was rendered at the October terII),.1874,. Wll-S not· deliv:ered until March, 1875, and not until those banda wele issued, delhrered, and put in circulation. The bill in the case of Hawkins v. (JarroU Co. waejp'enjoin ort;tusteesi'rom 'putting the bonds in whill'l the 'eourtconstrued:,tbe provision of the con.stitution of the state!.prohibiting counties,cities, !andtowns from subscribing for capitalstpek"Q,nd iSSUing hondsill payment in railroad corporations. unless assentQd ofthe registered -voters therein, ithlil question as to whether.or not this: construction of the .constitution wonld>affect before that.:tinie.,and held by innocent holders for .value, withoutootw6; was not decided in thutcase, but was reserved. So,'ithat de.cisionJiS-n'ot binding in this case. But, if it ,the. decision '.o£1the aupl'llme: court of the United Stateso£ OarwU Oo.v.;SmUh, 111U.;,S.556,4 Sup. Ct. Rep. .539, subsett1$ ;that quastion ju Of the, v.alidity oLthe bonds iasued before tpe: declsionofHawkins. v. ·aam-ou. 00., and the same .(/}as8ofbonds enjoined in. Jilawkins v. Carroll Co. f ,8.nd.which, in my:opinion,:is deoisive of this case. The questions now presented were .before the ,court upon 'the ;validity, of the coupons upon the .same bonds in, the case :QfSm,ithv. (decided at June term, 1877,)1 when the bondsnnd cQupons wer-eheld valid, and upon which, the interest· has l:>eElnpaid, up to the:fiJingofthis bill. This decision'has been fully sustainedby th.e supJ;eme, CQU1't of this state as to these bonds issued ,and in the handsiof innQcent holders, befo.re the decision·of¥awlcinsv. Carroll Co;, oLOutlet V. Eoard,f>6 Miss. 115.authority 'now wanting to maintainthevl1lidity of the bonds and cOupons case; this: .decision would be conclusive; and I. take it thaHhis bill.would not:havebeenfiled but for the decision' 'of the supremecow:tofthe,UnitedStates of. Lake Co. v. 130U. 8·.674. \) Sup.,Ct.Rep.654.,.:Intbatcase,the,bondswere issued in payment of coun,ty warrant$. ,The.power to d9SQ was limited bythe:oonstitlition. of, the. state of Colora.'tioto a certain percentage: onrthe valbe of tlul dn· the county.: iThe con'rt, held that the taXable
.·· .\Betore:thepubUoationottheFedetal'l'tepol'* ))eiaD. ,.
AMERICAN LOAN &: TRUST CO, t7; ST: LOUIS &: Co RY. 00.
value' of the taxable property in .the· county could only be ascertained by reference to the records of 'the county containing it, and that it was the duty of the purchaser to look to the records, and, if he failed todd so, the recitals in the bonds that they were issued in conformity to the stlltute did not estop the county from showing that the bonds were issued contrary to the inhibition contained in the constitution, of which provision in the constitution the purchaser was required to take notice. The constitution of this state does not refer to any public record to ascertain the number of voters in: the county; and, indeed, there is no rec()idshowing conclusively this fact. In the case of Hawkins v. Carroll Co., tMcourt holds that the registration books are competent evidence of the numberofqualified voters in the county, but not conclusive, and that it is competent to show deaths, removals, and 'disqualifications, etc. So that the rule laid down by the court in the Case of Lake County, relied upon by counsel, does not apply to this case. If other reference were necessary to BU pport the validity of the bonds in this suit, it would be found in·· the opinion of the supreme .court of the United States 'in· the case'of TO'Wn8hip of Bernards". MorriBon,10 Sup. Ct. Rep. 333, (decided atth'e present term of that court,-reported in the Supreme Court Re:porter.) The cases of Bank lif Commerce, and that of Mrs. Condet Smith are submitted'together·on demurrer, and are'governed by the same rules. The bonds in:both'cases were issued before the decision of Hawki·ns v. Carroll Co., 50 Mies. 735. The holders in both ettses are bona flde purchasers for value, without notice, and entitled tQ recover the amount of the interest coupons held by them, and will be entitled to recover the amount of the bonds when due. The result is that the demurrer to the bill in ellchcasemust be sustained, the injunction diseolved, and the bill dismissed, 'at complainant's' Msts.
&: TRUST Co.
CmCA,GO Ry. Co. et al.
Court, S. D. mtnois. ' .tune 10, 1890.)
lUILROAD BONDs-BoNA FIDE HOLDER.
Where overdue railroad mortgage honds, which belong to the railroad company, are bought at 40 cents on the clollar from the vice-president of the company after BUit to foreclose has been begun, and a receiver has taken possession of the mortgaged property, the purchasers of such bonds are uot bonn }ide holders where inqUiry on their part would have shown that the Vice-president had no authority to sell the bonds.
In Equity. W. A-l. Safford and
H. Aldrich, for defendants.
GRE9HAM, J., (orally.) The bill was filed to foreclose the first mortgage, on January 5, 1889; and a receiver was appointed two days later, who