Municipal Bonos

Evidences of indebtedness issued by a municipality.

In the ordinary commercial sense, they are negotiable bonds. Austin v. Nalle, 85 Tex. 620, 22 S. W. 068, 960. This class of securities is issued for sale in the ma/ket, with the object of raising money, under the express authority of the legislature. As to the power of municipal corporations to issue and sell bonds and borrow money, see Municipal Corporations. Notwithstanding they are under seal, they are clothed with ali the attributes of negotiable or commercial paper, pass by delivery or indorsement, and are not subject to prior equities (where the power to issue them exists) in the hands of holders for value, who took before maturity and without notice. Payment of interest on such bonds for a number of years will estop the corporation from setting up a mere irregularity in their issue, as against bona fide holders for value"; Dudley V. Board, 80 Fed. 672, 26 C. O. A. 82. The coupons usually attached to such bonds are likewise negotiable, and may be detached and held separately from the bond, and may be sued on by the holder in his own name without his being the owner of the bonds to which they were originally attached; 1 Dill. Mui}. Corp. § 486; Thompson v. Lee Co., 3 WalL (U. S.) 327, 18 L. Ed. 177; Chicago, B. & Q. R. Co. v. Otoe Co., 1 Dill. 338, Fed. Cas. No. 2667; whether he has given consideration for them or not; Dudley v. Board, 80 Fed. 672, 26 C. C. A 82. Coupons when severed from the bonds their validity, if for any cause the bonds are cancelled or paid before maturity; Clark v. Iowa City, 20 Wall. (U. S.) 583, 22 L. Ed. 427. See as to coupons as distinct and separate instruments, 6 L. R. A. 562, note; Coupons. The fact that such bonds are payable out of a special fund, known as a “sinking fund,” does not prevent the holder from suing at law to enforce collection; Waite v. Santa Cruz, 75 Fed. 967. As to the rule in Gelpcke v. Dubuque, 1 Wall. (U. S.) 175, 17 L. Ed. 520, that bonds valid under a state decision when issued will be sustained, although the state court had subsequently overruled its earlier decision, see iHPAIBINQ THK OBLIOATION OP CON-