Ackley School District v. Hall - 113 U.S. 135 (1885)
U.S. Supreme Court
Ackley School District v. Hall, 113 U.S. 135 (1885)
Ackley School District v. Hall
Argued December 2-3, 1884
Decided January 19, 1885
113 U.S. 135
A municipal bond issued under the authority of law for the payment at all events to a named person or order a fixed sum of money at a designated tune therein limited, being endorsed in blank, is a negotiable security within the law merchant.
Its negotiability is not affected by a provision of the statute under which it was issued that it should be "payable at the pleasure of the district at any time before due."
Consistently with the Act of March 3, 1875, determining the jurisdiction of the circuit court of the United States, the holder may sue thereon without reference to the citizenship of any prior holder and unaffected by the circumstance that the municipality may be entitled to make a defense based upon equities between the original parties.
An act of the Legislature of Iowa entitled
"An act to authorize independent school districts to borrow money and issue bonds therefor for the purpose of erecting and completing schoolhouses, legalizing bonds heretofore issued, and making school orders draw six percent interest in certain cases"
is not in violation of the provision in the Constitution of that state which declares that "every act shall embrace but one subject and matters properly connected therewith, which subject shall be expressed in the title."
This was a suit to recover principal and interest claimed to be due the defendant in error on negotiable bonds issued by the plaintiff in error.
By an Act of the General Assembly of the State of Iowa approved April 6, 1868, it is provided that independent school districts shall have power and authority to borrow money for the purpose of erecting and completing school houses
issuing negotiable bonds of the independent district, to run any period not exceeding ten years, drawing a rate of interest not exceeding ten percent, which interest may be paid semiannually, which indebtedness shall be binding and obligatory on the independent school district for the use of which said loan shall have been made."
The act prescribes the mode in which the school board shall submit to the voters of the district the question of issuing bonds, and declares that
"If a majority of the votes cast on that question be in favor of such loan, then said school board shall issue bonds to the amount voted, . . . due not more than ten years after date, and payable at the pleasure of the district at any time before due, which said bonds shall be given in the name of the independent district issuing them, and shall be signed by the president of the board and delivered to the treasurer, taking his receipt therefor, who shall negotiate said bonds at not less than their par value and countersign the same when negotiated."
With those statutes in force there was issued, in the name of the plaintiff in error (defendant below), certain instruments in the following form:
"No. 1 $500.00"
Independent School District, Ackley, Hardin County, Iowa"
"The Independent School District of Ackley, Hardin County, Iowa, promises to pay to Foster Brothers, or order at the Hardin County Bank at Eldora, Iowa, on the first day of May, 1872, five hundred dollars for value received, with interest at the rate of ten percent per annum, said interest payable semiannually, on the first day of May and November in each year thereafter at the Hardin County Bank at Eldora, on the presentation and surrender of the interest coupons hereto attached."
"This bond is issued by the board of school directors by authority of an election of the voters of said school district held on the 23d day of August, 1869, in conformity with the provisions of chapter 98, acts 12, General Assembly of the State of Iowa."
"In testimony whereof the said Independent School District, by the board of directors thereof, have caused the same to be
signed by the President and secretary, this first day of November, 1869."
"W. H. ROBERTS"
"President of the Board of Directors"
"S. S. LOCKWOOD"
"Secretary of the Board of Directors"
"F. EGGERT, Treasurer School District"
To each was attached coupons in the following form:
"Treasurer of Independent School District, Ackley, Hardin County, Iowa, will pay the holder hereof, on the 1st day of November, 1874 at the Hardin County Bank at Eldora, Iowa, twenty-five dollars, for interest due on school house bond No. 8."
"[Signed] W. H. ROBERTS, President"
"S. S. LOCKWOOD, Secretary"
The defendant in error (plaintiff below), who is averred to be a citizen of New York, became the holder of eight of these obligations with interest coupons attached, each one being endorsed in blank by Foster Brothers, the original payees. This suit was brought to recover the amount due thereon, without any averment in the pleadings as to the citizenship of the payees. The district made defense upon various grounds. The case was tried by the court without the intervention of a jury, and there was a general finding for the plaintiff, upon which a judgment was entered against the district. To that finding and judgment the defendant excepted (but without preserving, by bill of exceptions, the evidence upon which the court acted), and brought this writ of error.