Evansville v. Dennett - 161 U.S. 434 (1896)
U.S. Supreme Court
Evansville v. Dennett, 161 U.S. 434 (1896)
Evansville v. Dennett
Submitted May 2, 1895
Decided March 2, 1896
161 U.S. 434
The recital in a series of bonds, issued by a municipal corporation in Indiana in payment of its subscription to the stock of a railroad company, that they were issued "in pursuance of an act of the Legislature of the State of Indiana and ordinances of the city council of said city, passed in pursuance thereof" do not put a purchaser upon inquiry as to the terms of the ordinances under which the bonds were issued.
The recital in such series that the bonds were issued to the railroad company "by virtue of a resolution of said city council passed May 23, 1570" do not put a purchaser upon inquiry as to the terms of that resolution and charge him with knowledge of its terms.
Such recitals in such bonds as against a bona fide purchaser for value of such bonds estop the municipal corporation from asserting that the bonds were not issued, for stock subscribed, upon a petition of two-thirds of the resident freeholders of the city, distinctly setting forth the company in which stock was to be taken and the number and amount of shares to be subscribed.
Under the recitals in the bonds issued to the railroad company, a bona fide purchaser for value was not put upon inquiry to ascertain whether a proper petition of two-thirds of the residents of Evansville, freeholders of that city, had been presented to the common council before that body had subscribed for stock in the said railroad company.
A bona fide purchaser for value of the bonds issued to the Evansville, Carmi, and Paducah Railroad Company is not charged by the recitals in said bonds with notice that they were issued in pursuance of an invalid act and in pursuance of an election under it, and he had a right to assume from the recital that the prerequisites of both the valid act and the invalid act had been observed by the common council before the issuance of such bonds.
The case is stated in the opinion.