Bernards Township v. Stebbins - 109 U.S. 341 (1883)
U.S. Supreme Court
Bernards Township v. Stebbins, 109 U.S. 341 (1883)
Bernards Township v. Stebbins
Argued November 7-8, 1883
Decided November 26, 1883
109 U.S. 341
If commissioners, authorized by statute to subscribe in the corporate name of a town for stock in a railroad company, and, upon obtaining the consent of a certain majority of taxpayers, to issue bonds of the town under the hands and seals of the commissioners and to sell the bonds and invest the proceeds of the sale in stock of the railroad company, which shall be held by the town with all the rights of other stockholders, issue, without obtaining the requisite consent of taxpayers, to the railroad company, in exchange for stock, such bonds signed by the commissioners, but on which the seals are omitted by oversight and mistake, and the town sets up the want of seals in defense of an action at law afterwards brought against it by one who has purchased such bonds for value in good faith and without observing the omission, to recover interest on the bonds, a court of equity, at his suit, will decree that the bonds be held as valid as if actually sealed before being issued, and will restrain the setting up of the want of seals in the action at law.
A bill in equity in the circuit court of the United States against a town in one state by a citizen of another for relief against the accidental omission of seals from bonds of the defendant, payable to bearer and held by the plaintiff, some of which are owned by him and others of which are owned in different amounts, part by citizens of the state in which the town is and part by citizens of other states, and have been transferred to him by the real owners for the mere purpose of being sued, should be dismissed under the Act of March 3d 1875, c. 137, § 5, so far as regards all bonds held by citizens of the same state as the defendant and bonds held by a citizen of another state to a less amount than $500.
The facts are fully stated in the opinion of the Court.