CAIRO
v.
ZANE.

*134 Mr. William B. Gilbert for plaintiff in error.

Mr. George A. Sanders for defendant in error.

*137 MR. JUSTICE BREWER, after stating the case, delivered the opinion of the court.

It is insisted that these bonds were void because, issued after the restrictive provisions of the constitution of 1870 had come into effect, they were in fact a mere donation, and the only authority given by the people prior to the constitution of 1870 was to issue bonds in payment of a subscription. This contention cannot be sustained. There was a vote authorizing a subscription. The bonds were issued by the city, and received by the company in payment of a subscription, and stock for an equal amount was issued by the company to the city. It is true the stock thus received was immediately thereafter sold to the company for $5000 of the city bonds, a portion of the bonds thus issued, and that this sale was in pursuance of an agreement made by the city long prior to the execution of the bonds. And it is urged that the form of the transaction must be ignored; that the resultant fact is that the company has $95,000 of the city bonds, and the city nothing; and that thus substantially there was a donation of $95,000 of bonds. But the result does not determine the true nature of the transaction. The same result would have followed if the city had given away the stock to a third party. The fact is that the city issued its $100,000 of bonds, and received its $100,000 of stock; and the wrong, if any there were, on the part of the council, was not in carrying out the subscription as directed by the vote of the people, but in wrongfully disposing of the stock received. But surely a wrong in that matter does not affect the question of the validity of the bonds, nor can it be presented as a defence against one who has purchased in good faith the bonds thus issued. In the case of Anderson County Commissioners v. Beal, 113 U.S. 227, it appeared that after bonds had been voted by the county, at an election held on September 13, 1869, the county board, on November 5, passed an order directing a subscription in accordance with the terms of the vote, and also "that the stock above subscribed for by this board in behalf of Anderson County is hereby sold and transferred, for and in *138 consideration of the sum of one dollar, the receipt whereof is hereby acknowledged, to James F. Joy, president of said railroad company, and the chairman of this board is authorized to sign a transfer of said stock to said James F. Joy, and to assign the certificate for said stock issued to Anderson County by said railroad company, and to authorize in such assignment the necessary transfer of said stock on the books of said company." And it was averred that this transfer thus ordered was for the benefit of the railroad company. In reference to this, Mr. Justice Blatchford, speaking for the court, observed (p. 240): "When the bonds were delivered to the company the transaction was complete, and the bonds, as they afterwards passed to bona fide holders, passed free from any impairment by reason of any dealing by the board with the stock subscribed for to which the county became entitled by the issuing and delivery of the bonds. The board may have committed an improper act in parting with the stock, but that is no concern of a bona fide holder of the bonds or coupons." And in Maxcy v. Williamson County, 72 Illinois, 207, it appeared, as here, that after an election authorizing a subscription of $100,000 to the stock of a railroad company the county court entered into an agreement to sell the $100,000 of stock to the railroad company for $5000, a transaction, it will be perceived, precisely like the one before us. The validity of the bonds thus issued in payment of this subscription was thereafter challenged in a suit by taxpayers to restrain the collection of taxes levied to pay the interest thereon. Their validity was sustained, and in respect to this transfer of the stock the court, on p. 212, says: "We fail to perceive how the sale of the certificate of stock to the company for $5000 can in any manner affect the rights of the holders of the bonds of the county. It surely is not intended to be insisted that because the county has, by any means, lost the consideration it received for the bonds, innocent holders, who had nothing whatever to do with the sale of the certificate, must lose their bonds."

It is said that a different rule has since been established in Illinois, and the cases of Choisser v. The People, 140 Illinois, 21, and of Post v. Pulaski County, decided by the Circuit *139 Court of Appeals for the Seventh Circuit, 9 U.S. App. 1, are cited. But even if this were so, it was not established until long after the plaintiff had purchased these bonds, and he would doubtless be entitled to claim the benefit of the rule existing when he made his purchase; and the facts as they appear in these two cases are substantially unlike those in the case before us. Thus, in Choisser v. The People, the vote to subscribe $100,000 of stock was on October 5, 1867, and on November 28 following, an agreement was entered into between the company and the county court, acting on behalf of the county, that $100,000 in stock should be issued, but that the stock should be returned back to the company for the sum of $5000, payable on the redelivery to the city of that amount of county bonds. When the bonds came to be issued, the record made by the county court recited that the $100,000 of the capital stock should be sold back to the company for $5000 of county bonds, "thereby making a payment of $95,000 of Saline County bonds to said company as a donation." And no stock was in fact issued by the company, or received by the county, and only $95,000 of bonds were issued by the county, or delivered to the company. In short, the parties to the transaction treated it as though it was a donation of $95,000 of bonds, and it was this transaction which was condemned as unauthorized by a vote prior to the constitution. Yet, even in that case, the court was careful to limit its decision to a case in which only the rights of the railroad company, the party receiving this $95,000 of bonds, were concerned, for it says: "The only presumption arising from these facts is that said bonds are still in the hands of the railroad company, and no question, therefore, is presented as to how far the alleged invalidity of said bonds would be affected by those conclusive presumptions which the law raises for the protection of bona fide holders of commercial paper... . Nothing is before us except the mere question of the legality of these bonds, as between the county and the railroad company, the original parties thereto." And the case in the Circuit Court of Appeals is simply a counterpart of the case in the Supreme Court.

*140 But the case before us is entirely different. The parties did not treat it as a donation. The city issued the full amount of $100,000 in bonds, and the company issued a certificate for $100,000 of stock, and until the receipt of this certificate, no sale had been made of it. All that the record shows was an agreement on the part of the city to sell at a named price. Nowhere is it shown that the company agreed absolutely to purchase. It was, until after the receipt of the stock, an unaccepted offer on the part of the city. No contract was signed by the company. All we have are the recitals of the record of the city. Of course, such recitals do not bind the company. Thus, on November 5, 1867, it is said that a proposition was received from the company to purchase the stock. What that proposition was is not disclosed. It is stated that it is accompanied by a contract, tendered to the city for consideration, which contract also recites that the company proposes to purchase. That contract nowhere binds the company to purchase, but does bind the city to sell on payment of $5000 in Cairo city bonds. So in the proceedings of July 21, 1871, while there is a recital of the making of an agreement for the sale of the stock, yet such recital did not bind the company; and if the contract referred to was that copied into the record of November, 1867, it contained nothing binding the company. And the second section of the ordinance then passed (the first section having provided for placing the bonds in escrow) made it the duty of the trustee holding these bonds in escrow to deliver them to the company upon its issuing to the city, and delivering to him, $100,000 of its paid-up stock, and then authorized and directed him to sell such stock to the company for $5000 of Cairo city bonds. But nowhere in this or any other of the ordinances or agreements in evidence is there any promise on the part of the company to take $95,000 in city bonds, and release the city from all obligations growing out of the subscription. On the contrary, so far as is disclosed, when the trustee delivered the $100,000 in bonds and received the $100,000 in stock, there was nothing casting any obligation on the company to repurchase its stock, or to return to the city any portion of *141 the bonds. The city had offered to sell, but it had not agreed to buy. It could have stopped with the receipt of the $100,000 of bonds, and left the city to do what it pleased with the stock.

There is, therefore, not presented the case of an ignoring of the fact or terms of a subscription. Everything authorized by the vote of the people was done, and fully done, and whatever wrong may have been committed by the city council in its proffer of sale and subsequent sale of the stock could not vitiate the bonds after they had passed into the hands of a bona fide holder.

But, further: The bonds on their face show that they were issued in payment of stock in the railroad company, and recite that they were issued in pursuance of an ordinance of the city council, and authorized by a vote of the citizens, and in accordance with the laws of the State; and they were duly registered by the auditor of the State, and his certificate of registry was endorsed on the back. It is true that the recitals do not show when the ordinance was passed, or the election held, and do not refer by title or otherwise to the particular statute granting the authority, and the bonds were dated and issued after the constitution of 1870 had come into force. It is also true that the certificate of registry is not conclusive that the bonds were issued in full compliance with the terms and conditions of a subscription. German Savings Bank v. Franklin County, 128 U.S. 526, 540.

But surely these recitals and this certificate have significance. It is unnecessary to affirm that the certificates are so "clear and unambiguous," School District v. Stone, 106 U.S. 183, 187, as to estop the city from showing that the bonds were issued in violation or without authority of law, or that they, in conjunction with the certificate, foreclose all possible defences. But when the law of the State provides for registry of municipal bonds and a certificate thereof, such certificate should be held as sufficient evidence to a purchaser of the existence of those facts upon which alone bonds can be registered. If the plaintiff in this case, not resting upon the mere terms of the certificate, had examined the records of the *142 auditor's office, he would have found there the certificate, under oath, of the mayor of the city, of the election, its date, and facts necessary to warrant the issue of the bonds, such officer being the one named in the statute as the one to furnish to the auditor the evidence necessary to justify the registry. Can it be that a purchaser, with this evidence before him, is not protected by the statement upon the face of the bonds that they were issued in payment of a subscription? Is it his duty to examine all the proceedings, to see whether that which was a subscription in the first instance, was called a subscription all the way through, and was named as a subscription in the bonds, had not been transformed by some action of the city council into a donation? It will be borne in mind that it is not a matter of law, but of fact, in respect to which an estoppel is urged against the city by virtue of the recitals and the fact of registry. But it is unnecessary to pursue this line of thought further. We are of opinion that the bonds were properly held valid in the hands of a bona fide holder.

It is finally objected that the court erred in allowing interest on the coupons. They were made payable in New York, and as such drew interest according to the laws of New York. Pana v. Bowler, 107 U.S. 529, 546; Walnut v. Wade, 103 U.S. 683, 696. Counsel, not questioning the fact that such have been the frequent rulings, insists that in this case, as found by the court, the bonds were issued under the law of 1849; that that does not authorize specifically the issue of bonds payable outside of the State; that in People v. Tazewell County, 22 Illinois, 147, it was decided that "counties and municipal corporations, unless specially authorized by legislative enactment, have no power to make their indebtedness payable at any other place than at their treasury," a decision reaffirmed in Johnson v. County of Stark, 24 Illinois, 75, 91, and adhered to in Sherlock v. Winnetka, 68 Illinois, 530.

We do not understand the findings of the court in the manner claimed. The finding is simply that the bonds are of the denomination of $1000 each, as authorized under and by the law of 1849, and not of the denomination of $500 each, as required by the charter of the railroad company. But there *143 is nothing in the nature of things preventing the city from exercising all the powers conferred by two or more acts, where the acts do not involve in and of themselves substantial contradictions. It is not a vital matter whether the bonds should be of $500.or $1000 each; and as the charter of the railroad company expressly authorized the issue of bonds payable in the city of New York, we see no reason why such stipulation could not be incorporated into a bond of the denomination of $1000, and the certificate of the mayor to the auditor is that the bonds were issued under the authority of both acts. Knox County v. Ninth National Bank, 147 U.S. 91. Indeed, counsel refers to the law of 1857, (Public Laws of Illinois, 1857, p. 38,) which provides that "where any contract or loan shall be made in this State ... it shall and may be lawful to make the amount of principal and interest of such contract or loan payable in any other State or Territory of the United States." If that statute is applicable, then of course it is immaterial whether the bonds were issued under the general railroad law, or the act incorporating the railroad company. But it is unnecessary to consider this question at length. The settled rule in Illinois is, that coupons draw interest after maturity. Harper v. Ely, 70 Illinois, 581, 586; Humphreys v. Morton, 100 Illinois, 592; Drury v. Wolfe, 134 Illinois, 294, 297; United States Mortgage Co. v. Sperry, 138 U.S. 313, 340.

These are the only matters that we deem essential to consider. We see no error in the conclusions reached, and the judgment is, therefore,

Affirmed.

MR. JUSTICE GRAY did not hear the argument and takes no part in the decision of this case.