New Providence v. Halsey/Opinion of the Court

by Morrison Waite

United States Supreme Court

117 U.S. 336

New Providence  v.  Halsey

 Argued: March 22, 1886. ---

This suit was brought by Abraham Halsey, a citizen of California, to recover the amount due on 26 bonds, amounting in the aggregate, without interest, to $8,200, given by the inhabitants of the township of New Providence, New Jersey, for stock in the Passaic Valley & Peapack Railroad Company. It is conceded that Halsey holds in his own right but nine of the bonds, on which there is due, without interest, $900. The rest belong to citizens of New Jersey, who assigned them to him for collection only. Of the nine which he holds in his own right, seven belonged at one time to his father, a citizen of New Jersey, who was a purchaser, before maturity, for value, without notice. Three of these seven came to him on the distribution of his father's estate, and the other four he bought from his brothers and sisters, citizens of New Jersey, who got them in the same way. The remaining two he bought from a brother, who had bought from another brother, who was a bona fide holder for value, and both these brothers were citizens of New Jersey. The evidence does not show how much he paid for what he bought, but it does appear that he paid something. The bonds were issued under the same statute which was before this court for consideration in Bernards Tp. v. Stebbins, 109 U.S. 341, S.C.. 3 Sup. Ct. Rep. 252, and is found fully stated on pages 342, 343, and 344 of that case.

On the trial several questions arose, but the following are all that have been brought to the attention of this court by the argument for the plaintiffs in error: (1) Whether a recovery can be had in this action for the bonds actually owned by citizens of New Jersey and held by Halsey only to collect for their account. (2) Whether Halsey can recover on the nine bonds he holds in his own right, inasmuch as he got them by assignment from citizens of New Jersey, who could not sue in the courts of the United States, and he is compelled to rely on the title of his assignors to avoid the matters pleaded in bar to the action. (3) Whether the issue of the bonds under the statute by the commissioners appointed for that purpose estops the township from setting up, as a defense against a bona fide holder, that the original issue was in excess of the amount authorized.

The circuit court ruled against the township on all these questions, and gave judgment upon a verdict of the jury for the full amount claimed, being $15,981.88. To reverse that judgment this writ of error was brought.

It is conceded that the ruling on the first of the questions was wrong, and that the judgment is erroneous to the extent of the bonds not held by Halsey in his own right. That was decided in Bernards Tp. v. Stebbins, above referred to.

The second question is disposed of by the case of Ackley School-dist. v. Hall, 113 U.S. 135, S.C.. 5 Sup. Ct. Rep. 371, where it was decided that a municipal bond in the ordinary form was 'a promissory note negotiable by the law-merchant,' within the meaning of that term in the act of March 3, 1875, (18 St. 470, c. 137, § 1,) which allows a suit on instruments of that class to be brought in the courts of the United States by an assignee, notwithstanding a suit could not have been prosecuted in such court if no assignment had been made. These bonds are of that character. Such being the case, it is a matter of no importance that Halsey makes title to the bonds he owns through assignments by citizens of New Jersey.

The court of errors of New Jersey has recently decided in Cotton v. New Providence, 47 N. J. Law, 401, following the rule laid down in Mutual Benefit Life Ins. Co. v. Elizabeth, 42 N. J. Law, 235, that purchasers of bonds of the issue of those now in suit had the right to rely on the decision of the commissioners as conclusive in respect to the amount that could be put out under the statute. The language of the court is: 'When they [the commissioners] issued bonds, they averred that the issue was within the limit. Construing the act by the rule laid down in the case cited, [Insurance Co. v. Elizabeth,] the legislative intent that their decision on this subject should be final, appears. The holder of the bonds had the right to rely thereon. For this reason I feel constrained to hold that bonds issued beyond the limit would be enforceable.' To this we agree, and it is conclusive as to the correctness of the ruling of the court below upon the third question presented. It follows that the judgment of the court below must be reversed.

A question was, however, raised at the argument as to costs. Annexed to the brief of counsel for the defendant in error is a copy of what purports to be an offer by the township to Halsey, after the decision of this court in Bernards Tp. v. Stebbins, and before the record in this case was printed, to allow the judgment to be reversed at once, so far as the bonds not owned by him were concerned, 'with permission to the defendant in error to discontinue as to those bonds, and to strike from the record the counts founded thereon.' and that as to the other bonds it be affirmed, 'and that the court may make such order as to the costs incurred in this court as it shall deem just;' 'or that the court be requested at once to pronounce judgment on the basis of the plaintiff being entitled to recover only upon the bonds' owned by him, 'and that as to all the other bonds mentioned in the record the plaintiff was not entitled to recover,' under the decision in Bernards Tp. v. Stebbins. We are asked now, on account of this offer, to adjudge that the plaintiff in error pay the costs which have been incurred in printing the record, including the clerk's fee for supervising. The offer, although printed in the brief, was not proved at the hearing, but if it had been we could not have given it the effect now asked. Offers of this kind, made out of court, cannot be considered by us. The offer should have been made in open court, and the court asked to act thereon after the township had been notified in due form to show cause against it. The case of Bernards Tp. v. Stebbins was decided at the October term, 1883, and the offer is said to have been made January 24, 1884. There was abundance of time, after the decision in that case had become known, for counsel to have applied for an order in the premises before the end of that term, and before the record was printed. This was not done.

The judgment is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

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