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PRESIDIO COUNTY v. NOEL-YOUNG BOND & STOCK COMPANY.

decided: January 18, 1909.

PRESIDIO COUNTY, TEXAS
v.
THE NOEL-YOUNG BOND & STOCK COMPANY.



CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.

Author: Harlan

[ 212 U.S. Page 63]

 MR. JUSTICE HARLAN delivered the opinion of the court.

By an act of the legislature of Texas approved February 11th, 1881, the County Commissioners' Court of every county that had no courthouse was authorized and empowered to issue county bonds, with interest coupons attached, in such amount as might be necessary to erect a suitable building for a courthouse -- such bonds to run not exceeding fifteen years, redeemable at the pleasure of the county, and bearing interest at a rate not exceeding eight per cent per annum.The act provided that the bonds should be signed by the County Judge, countersigned by the County Clerk and registered by the County Treasurer before being delivered. It also provided that the county should not issue a larger number of bonds than a tax of one-fourth of one per cent annually would liquidate in ten years, and that the bonds should be sold only at par value. General Laws, Texas, 1881, p. 5.

This act was amended in 1884, at a called session of the eighteenth legislature of Texas, so as to authorize the Commissioners' Court to issue county bonds (running not exceeding fifteen years) with interest coupons attached in such amount as might be necessary to erect a suitable courthouse building or jail, or both. General Law, Texas, 1884, p. 28.

By another act passed March 27th, 1885, the power given by the act of 1884 to issue bonds for courthouse and jail purposes, or both in such amount as might be necessary, was recognized, and in addition county bonds theretofore issued for jail purposes under the act of 1881, as amended by the act of 1884, were validated. General Laws, Texas, 1885, p. 56.

The present action was brought July 26th, 1904, by the Noel-Young Bond & Stock Company, a Missouri corporation, as

[ 212 U.S. Page 64]

     holder, owner and bearer, to recover the amount of certain bonds -- numbered 90, 91, 92, 94, 95 and 96, respectively -- with interest coupons attached.

Each of the bonds sued on is in the name of the county, is for $1,000 and payable to bearer fifteen years after date, at 8 per cent per annum interest, on the tenth of April, at the State Treasury. It recites that it was "issued by virtue of an act of the Legislature of the State of Texas, entitled 'An act to authorize the County Commissioners' Court of the several counties of the State to issue bonds for the erection of a courthouse and to levy a tax to pay for the same,' approved February 11, 1881, and by virtue of the provisions of chapter 17, laws of called session of the Eighteenth Legislature, which said chapter has since been validated by the act of March 27, 1885, authorizing the County Commissioners' Court of the several counties of the State to issue bonds for the erection of a county jail, and by order of the County Commissioners' Court of said County of Presidio, on the 9th day of February, 1886, and is redeemable before maturity at the pleasure of the county."

To each bond was affixed the seal of the County Commissioners' Court and was signed by the County Judge, countersigned by the Clerk of the County Court and by the County Treasurer, the latter certifying that it had been registered.

At the trial the court instructed the jury that the suit on the coupons was barred by the Texas statute of limitations, but it directed a verdict for the amount of the bonds with interest from December 6, 1900. That judgment was affirmed in the Circuit Court of Appeals, but without any opinion.

The county insists that although the bonds purport to have been issued by order of the County Commissioners' Court in virtue of certain legislative enactments referred to on the face of the bonds, and which authorizes that court to issue bonds for the erection of a courthouse or jail, or both, and although each bond is attested by the seal of the Commissioners' Court and the signatures of the officers who alone could attest and sign bonds issued for courthouse and jail purposes, the court

[ 212 U.S. Page 65]

     exceeded its powers in issuing the present bonds in that by its order of February 9th, 1886 bonds to the extent of only $86,000 were authorized -- $60,000 for a courthouse and $26,000 for a jail; whereas, that amount of bonds for such purposes had in fact been issued before the bonds in suit. This contention means that the bonds in suit are to be deemed void if they were in fact in excess of the amount authorized by the order of February 9th, 1886. But that view cannot be maintained consistently with a long line of decisions.

Whether the Commissioners' Court, which had statutory authority to issue such bonds as were necessary for courthouse and jail purposes, had previously made the requisite order therefor was a matter peculiarly within the knowledge of its officers. They knew whether they had or had not directed bonds to be issued for such purposes. They knew, or ought to have known, whether the bonds, ordered to be issued, were in excess of the amount authorized by the legislature. They had authority to determine whether the precedent conditions had been fully performed. When, therefore, the county, acting by the Commissioners' Court, did issue bonds, attested by the seal of the court and the signatures of its officers, and reciting that they were issued under the order of the court, in virtue of the statute named, and were registered -- such recitals fairly importing a compliance, in all substantial respects, with the statute giving authority to issue bonds -- a bona fide purchaser was entitled to accept the recitals as stating the truth, and the county cannot, as against such purchaser, allege the contrary. It will not be heard to say that the bonds were in excess of the amount authorized, or that they were not issued for the purposes contemplated by the statutes referred to. These principles have become firmly established, as will be seen by an examination of the adjudged cases, some of which are cited in the margin.*fn1

[ 212 U.S. Page 66]

     The county, however, insists that an examination of the order of the Commissioners' Court of February 9th, 1886, referred to in the bonds, would have informed any purchaser (1) that that court on that day ordered only $86,000 in bonds to be issued -- $60,000 for a courthouse and $26,000 for a jail; (2) that the particular bonds now in suit, dated December 6th, 1886, and numbered 91 to 96 inclusive, were not covered by that order and therefore were in excess of the amount so ordered for courthouse and jail buildings. Assuming for the moment, but only for the moment, that the purchaser was bound to ascertain what the order of February 9th, 1886 contained, we observe that the statutes recited in the bonds did not name a specific amount beyond which the Commissioners' Court could not go in issuing bonds for courthouse and jail purposes. They were authorized to issue for those purposes such an amount in bonds as was necessary up to the point that no more be issued than could be liquidated in ten years by a tax of one-fourth of one per cent for any one year. It was for the Commissioners' Court in the first instance to determine what amount of bonds on that basis was required. We observe, also, as did the Civil Court of Appeals of Texas in a case to be presently referred to (27 S.W. Rep. 702, 720), that the order of February 9th, 1886 did not require that the bonds issued for courthouse and jail ...


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