County of Macon v. Shores/Opinion of the Court

by Noah Haynes Swayne

United States Supreme Court

97 U.S. 272

County of Macon  v.  Shores

The declaration in this case covers a hundred and eleven printed pages. Each count is upon a coupon averred to have been detached from a bond for $1,000, issued by the county of Macon on the 2d of May, 1870, and payable to the Missouri and Mississippi Railroad Company or bearer, at the National Bank of Commerce, in the city of New York, on the second day of May, 1890, with interest at the rate of eight per cent per annum, to be paid semi-annually on the presentation of the coupons attached. It is further averred that the bond was issued pursuant to the orders of the county court of Macon County, in payment of the subscription to the stock of the railroad company, and was authorized by the act of the General Assembly of the State, entitled 'An act to incorporate the Missouri and Mississippi Railroad Company, approved Feb. 20, 1865,' and that the bond so recites on its face.

It is also alleged that the defendant paid the interest on the bond for the year 1870, and that the plaintiff is the holder and bearer of the coupon for value. There are other averments which show the liability of the defendant and make the count good. The further counts are upon coupons taken from other bonds of the same issue. The counts are all alike mutatis mutandis.

The defendant filed a multitude of pleas. It is not necessary particularly to advert to any of them.

Upon the trial the defendant took an elaborate bill of exceptions.

Our remarks will be confined to the errors assigned.

The plaintiff had a right to prove that he was a bona fide holder of the coupons.

The petition averred the fact. It was denied by the answer. It is true the presumption of law, prima facie, was that the plaintiff was such holder. But if he chose to meet the issue by direct affirmative proof, it was clearly competent for him to do so.

The testimony tending to show fraud and irregularities touching the issuing of the bonds and in disposing of them was properly rejected. The plaintiff being a bona fide holder of the coupons, it was incompetent to affect his rights. He could not be expected to know, and was not bound to know, the facts sought to be established. So far as the testimony respected the action of the county court, it was liable to the further objection that a court of record can speak, and its doings can be shown, only by the record. None of the evidence offered was of this character. Irrelevant and incompetent testimony should always be carefully excluded, because the tendency of both is to mislead and confuse the minds of the jury, and thus defeat the ends of justice.

The objection that the corporation was not organized within the time limited by the charter is unavailing. It is in effect a plea of nul tiel corporation. In Kayser v. Trustees of Bremen (16 Mo. 88), the Supreme Court of the State said: 'It cannot be shown in defence to a suit of a corporation that the charter was obtained by fraud; neither can it be shown that the charter has been forfeited by misuser or nonuser. Advantage can only be taken of such forfeiture by process on behalf of the State, instituted directly against the corporation for the purpose of avoiding its charter; and individuals cannot avail themselves of it in collateral suits until it be judicially declared.' See also Smith et al. v. County of Clarke (54 Mo. 58), which is to the same effect. This case being a Missouri case, these authorities are conclusive. Olcott v. Bynum et al., 17 Wall. 44.

The learned counsel for the plaintiff in error could hardly have been serious in insisting that proof that the road authorized by the charter to be built 'was a wild and visionary enterprise,' and that meetings of tax-payers denouncing the issuing of the bonds was competent in the case as it stood for any purpose. No further remark upon the subject is necessary.

The proceedings in Newmeyer et al. v. Missouri & Mississippi Railroad Co. et al., reported in 52 Mo. 81, offered in evidence, decided nothing finally. The bill of the complainants was demurred to by the defendants. The demurrer was overruled and the case remanded to the lower court. Whatever the result, it could not affect the rights of a bona fide purchaser of the bonds and coupons without notice.

The objection claimed to arise from the Constitution of 1865 is without foundation. That instrument took effect on the 4th of July, 1865, and the act of incorporation on the 20th of February of that year. The Constitution looked entirely to the future. Its language is: 'The General Assembly shall not authorize,' &c., . . . 'unless two-thirds of the qualified voters of such county, city, or town, at a regular or special election to be held therein, shall assent thereto.' Const. Mo., sect. 14, art. 11.

The act was in the past. The Constitution, therefore, had no effect upon it. This point has been so decided by the Supreme Court of Missouri and by this court, following the adjudication of that tribunal. State of Missouri v. Macon County Court, 41 Mo. 453; State ex rel. v. Greene County et al., 54 id. 540; County of Henry v. Nicolay, 95 U.S. 619.

The thirteenth section of the charter authorized the county court to subscribe and issue the bonds. No limit is prescribed either as to the time or amount of the subscription.

The court instructed the jury to find for the plaintiff.

It appears that the evidence is all in the record. The plaintiff had shown a clear right to recover. The defendant had shown no defence. There was no question for the jury to pass upon.

Under these circumstances, it is always competent for the court to instruct accordingly, and it is not error to do so. Merchants' Bank v. State Bank, 10 Wall. 604; Railroad Company v. Jones, 95 U.S. 439.

The court has repeatedly held that where a corporation has power under any circumstances to issue such securities, the bona fide taker has a right to presume they were issued under circumstances which gave the requisite authority, and that they are no more liable to be impeached for any infirmity, in the hands of the holder, than any other commercial paper. Supervisors v. Schenck, 5 Wall. 772.

The function of making the subscription and issuing the bonds was confided to the county court. They had jurisdiction over the entire subject. They were clothed with the power and duty to hear and determine. The power was exercised and the duty performed. In this case, as it is before us, the result is conclusive, and the county is estopped to deny that such is its effect. Lynde v. The County, 16 Wall. 6.

Where a loss is to be suffered through the misconduct of an agent, it should be borne by those who put it in his power to do the wrong, rather than by a stranger. Hern v. Nichols, 1 Salk. 289; Merchants' Bank v. State Bank, supra.

In Steamboat Company v. McCutchen & Collins (13 Pa. St. 13), the company, which was a corporation, had occupied for a term agreed upon, as an office, premises belonging to the other parties. When sued for the rent, the corporation set up as a defence that the contract was ultra vires, and claimed exemption from liability upon that ground. Coulter, J., in the opinion of the court affirming the liability, said: 'Some things lie too deep in the common sense and common honesty of mankind to require either argument or authority to support them, and this, I think, is one of them.'

Judgment affirmed.

Notes