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Commissioners of Knox County v. Aspinwall.

meeting of the board of commissioners of the county of Knox, on the 26th February, 1849, it ordered, under the power given in the second section above referred to, that the county subscribe $200,000 of the capital stock of the Ohio and Mississippi Railroad Company. And, also, that at a meeting on the 25th October, 1850, after reciting that, in accordance with the wishes of the voters of the county, as expressed at the election held for that purpose in the several townships on the first Monday of March, 1849, it is ordered that the auditor, in the name and for the county of Knox, subscribe to the capital stock of the Ohio and Mississippi Railroad Company four thousand shares of fifty dollars each, or the sum of $200,000; and that the auditor be authorized to vote at all elections and meetings of stockholders, or to appoint a proxy in his stead. And that, in pursuance of this direction, the auditor subscribed the four thousand shares, and received certificates in the name of the board of commissioners of the county for the same; and also executed and delivered the bonds of the county, as provided for in the third section of the act of 1849, attaching thereto coupons for the interest. The bonds and coupons in question were issued under this authority.

This is the substance of the case, as presented on the record.

The ground upon which the want of authority to execute the bonds in question is placed, is the alleged omission to comply with the requisition of the statute of 1849, in respect to the notices to be given of the election to be held on the first Monday of March, at which a vote was to be taken for or against a subscription of stock to the railroad company.

It is insisted that an irregularity or omission in these notices had the effect to deprive the board of this authority, or rather furnish evidence that the power had never vested in it under the act; and, further, that the plaintiffs are chargeable with a knowledge of all substantial defects or irregularities in these notices of the election, and not therefore entitled to the character of bona fide holders of the securities.

The act in pursuance of which the bonds were issued is a public

statute of a State, and it is undoubtedly true that any [*544] * person dealing in them is chargeable with a knowledge of it; and as this board was acting under delegated authority, he must show that the authority has been properly conferred. The court must therefore look into the statute for the purpose of determining this question; and upon looking into it, we see that full power is conferred upon the board to subscribe for the stock and issue the bonds, when a majority of the voters of the county have

Commissioners of Knox County v. Aspinwall.

determined in favor of the subscription, after due notice of the time and place of the election. The case assumes that the requisite notices were not given of the election, and hence that the vote has not been in conformity with the law.

This view would seem to be decisive against the authority on the part of the board to issue the bonds, were it not for a question that underlies it; and that is, who is to determine whether or not the election has been properly held, and a majority of the votes of the county cast in favor of the subscription? Is it to be determined by the court, in this collateral way, in every suit upon the bond, or coupon attached, or by the board of commissioners, as a duty imposed upon it before making the subscription?

The court is of opinion that the question belonged to this board. The act makes it the duty of the sheriff to give the notices of the election for the day mentioned, and then declares, if a majority of the votes given shall be in favor of the subscription, the county board shall subscribe the stock. The right of the board to act in an execution of the authority is placed upon the fact that a majority of the votes had been cast in favor of the subscription; and to have acted without first ascertaining it, would have been a clear violation of duty; and the ascertainment of the fact was necessarily left to the inquiry and judgment of the board itself, as no other tribunal was provided for the purpose. This board was one, from its organization and general duties, fit and competent to be the depository of the trust thus confided to it. The persons composing it were elected by the county, and it was already invested with the highest functions concerning its general police and fiscal interests.

We do not say that the decision of the board would be conclusive in a direct proceeding to inquire into the facts previously

* to the execution of the power, and before the rights and [* 545] interests of third parties had attached; but, after the authority has been executed, the stock subscribed, and the bonds issued, and in the hands of innocent holders, it would be too late, even in a direct proceeding, to call it in question. Much less can it be called in question to the prejudice of a bona fide holder of the bonds in this collateral way.

Another answer to this ground of defense is, that the purchaser of the bonds had a right to assume that the vote of the county, which was made a condition to the grant of the power, had been obtained, from the fact of the subscription, by the board, to the stock of the railroad company, and the issuing of the bonds.

The bonds on their face import a compliance with the law under which they were issued. "This bond," we quote, "is issued in

Commissioners of Knox County v. Aspinwall.

part payment of a subscription of two hundred thousand dollars, by the said Knox county, to the capital stock, &c., by order of the board of commissioners," in pursuance of the third section of act, &c., passed by the general assembly of the State of Indiana, and approved 15th January, 1849.

The purchaser was not bound to look further for evidence of a compliance with the conditions to the grant of the power. This principle was recently applied in a case in the Court of Exchequer in England. (6 Ellis & Blackburn, p. 327, The Royal British Bank v. Tarquand.) It was an action upon a bond against the defendant, as the manager of a joint stock company. The defense was a want of power under the deed of settlement or charter to give the bond. One of the clauses in the charter provided that the directors might borrow money on bonds in such sums as should from time to time by a general resolution of the company be authorized to be borrowed. The resolution passed was considered defective. Jervis, Ch. B., in delivering the judgment of the court, observed: "We may now take it for granted that the dealings with these companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. But they are not bound to do more. And the party

here, on reading the deed of settlement, would find, not [*546] a prohibition from borrowing, but a permission * to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which, on the face of the document, appeared to be legitimately done." (See also 5 Ellis and Bl. p. 245, S. C. and 25 E. L. and Eq. p. 114, Macle v. Sutherland.) The principle we think sound, and is entirely applicable to the question before us.

A question was made upon the argument, that the suit could not be maintained upon the coupous without the production of the bonds to which they had been attached. But the answer is, that these coupons or warrants for the interest were drawn and executed in a form and mode for the very purpose of separating them from the bond, and thereby dispensing with the necessity of its production at the time of the accuring of each installment of interest, and at the same time to furnish complete evidence of the payment of the interest to the makers of the obligation.

Some other minor points were made in the case upon the argument, which we have considered, but which it is not important should be particularly noticed. We are satisfied the judgment below is right, and should be affirmed.

Commissioners of Knox County v. Wallace.

Mr. Justice DANIEL dissenting.

In the case of the Knox County Commissioners v. Aspinwall et al., it is my opinion, in the first place, that the circuit court had not jurisdiction of the cause, one of the parties being a corporation; and, secondly, I think that the commissioners being known to be a party, it was the duty of those who dealt with them to ascertain the extent of their powers.

BOARD OF COMMISSIONERS OF KNOX COUNTY, Plaintiffs in Error, v. DAVID C. WALLACE.

21 H. 546.

WRIT of error to the circuit court for the district of Indiana. The facts and principles of this case are precisely the same as those of the one just preceding.

It was argued by Mr. Thompson, for plaintiffs.

Mr. McLean, for defendants.

* Mr. Justice NELSON delivered the opinion of the court. [* 547 ] This is a writ of error to the circuit court of the United States for the district of Indiana.

The suit was brought by Wallace against the board, upon several coupons, for installments of interest which had been attached to certain bonds issued by the defendants to the Ohio and Mississippi R. R. Co. The coupons were owned by the plaintiff, and had been duly presented for payment, which was refused. The defendants. plead the general issue, and six special pleas, to which there were replications, except the second and sixth pleas, to which there were demurrers.

The court sustained the demurrers. There were afterwards amendments and demurrers to pleadings not very intelligible in the record, and seem not to have been relied on by either party. The case was tried upon the general issue, and the facts disclosed upon the trial were substantially the same, mutatis mutandis, as those which were proved or admitted in the previous case of Aspinwall and others against these same defendants. After the evidence was closed, the defendants presented ten prayers to the court, upon each of which instructions were given. It is unnecessary to go through them; the questions involved have already been examined

Vol. iii-11

Chamberlain v. Ward.

in the case above mentioned, and the result there arrived at affirms

the judgment in this case.

Judgment affirmed.

Mr. Justice DANIEL dissented.

PHILO CHAMBERLAIN and others, Appellants, v. EBER B. WARD and others. and

EBER B. WARD and others, Appellants, v. PHILO CHAMBERLAIN and

others.

21 H. 548-572.

ADMIRALTY-COLLISION-MUTUAL FAULT.

In a collision between a steamer and a propeller on Lake Erie, the vessels approaching each other from opposite directions, or nearly so, in the night, with fair starlight, it was held

1. That the propeller was in fault for the want of knowledge and skill of the mate in charge of her.

2. For his persistence in pursuing his course, when he had ample time to avoid the danger by changing.

3. Because the signal light, though sufficient when put up, had been permitted to become dim for want of trimming and other attention.

4. The steamer was also chargeable with fault for want of a look-out or watch. The mate who has other duties, and attends to them, is not such sufficient look-out. The look-out should give his exclusive attention to that business, and should be stationed where he could best see without obstruction by rigging, and without being too much elevated above the water.

5. Also because the mate in charge of the vessel, who discovered the lights of the propeller a mile away, though doubting what it was, did not take suitable steps to avoid a collision, while running at the rate of sixteen miles an hour.

6. The true construction of the act of March 3, 1859, which makes a vessel liable for all the damages arising for want of proper signal lights, does not impair the admiralty rule that where, in case of collision, the other vessel is also in fault, the damages should be divided. The other vessel in such case is not relieved from the consequences of her own wrong by this provision.

7 The result in this case is, that their damages must be equally divided between the owners of the two vessels, as it is a suit in personam.

THESE are cross appeals from the decree of the circuit court for the southern district of Ohio, which divided the damages in an admiralty suit between the owners of the steamer Atlantic and propeller Ogdensburgh. The case is very fully stated in the first opinion, as well as an abstract of pleadings and stipulations.

Mr. Stanbery and Mr. Spalding, for Chamberlain and others. Mr. Newberry and Mr. Swayne, for Ward and others.

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