1. The bonds of "the inhabitants of the Township of Pompton, in
the County of Passaic" and State of New Jersey, for $1,000 each,
bearing date Jan. 1, 1870, issued by the commissioners appointed
for that township, and reciting that they are issued in pursuance
of an Act of the Legislature of New Jersey approved April 9, 1868,
entitled "An Act to authorize certain townships, towns, and cities
to issue bonds and take the bonds of the Montclair Railway
Company," are valid in the hands of a
bona fide purchaser
for value before maturity.
2. The Act of the Legislature approved March 18, 1867,
incorporating that company authorized it to construct a railway
from the Village of Montclair, in the Township of Bloomfield, to
the Hudson River, at one or the other of certain designated points,
and also to construct a branch thereof in said township, and to
"extend the said railway into the Townships of Caldwell and Wayne."
By the act of April 9, 1868, provision was made for the appointment
of commissioners for any township, town, or city "along the routes
of the Montclair Railway Company, or at the termini thereof," who,
upon the performance of certain precedent conditions, were
authorized to issue its bonds, dispose of the same, and invest the
proceeds thereof in the bonds of said company. By a supplemental
Act approved March 16, 1869, the company was authorized to extend
its railway from any point thereon to any point in the Township of
West Milford, provided that said act should not be construed as
extending the operation of said act of 1868 to any township,
Page 101 U. S. 197
town, or city through or to which the said railway was not
authorized to be made before the passage of said act of 1869. When
the bonds were disposed of by the commissioners, no route of the
road west of Montclair had been surveyed. A survey which commenced
at that village and extended to a point in the southern part of
Wayne Township was filed April
6, 1870. Another survey was filed June 9, and in accordance
therewith the road was built. It began at the terminus last
mentioned, crossed the line between Wayne and Pequannock Townships,
then proceeded to the line between Pequannock and Pompton (the
latter being a parallelogram), and after traversing Pompton
diagonally about two-thirds of its length, crossed its west line
into West Milford, and thence proceeded in that township to the
boundary line between New Jersey and New York. Thus, though Pompton
did not get a terminus on its southwest line, as originally
contemplated, it got for the same consideration the length of the
road within its territory and the extension beyond its limits.
Held:
1. That the commissioners being the sole judges upon the
question of disposing of the bonds, their decision was
conclusive.
2. That the fact that under the act of 1869, Pompton, instead of
being a terminal township, became thereafter a township "along the
route of the road," cannot affect the previously vested rights of a
bona fide transferee of the securities.
3. That the act of 1869 was in effect a legislative declaration
that the authorized, and not the actual, routes were those intended
by the act of 1868.
The facts are stated in the opinion of the Court.
MR. JUSTICE SWAYNE delivered the opinion of the Court.
This is a controversy touching the validity of certain municipal
bonds issued by the inhabitants of the Township of Pompton, in the
County of Passaic, N.J., which came into the hands of The Cooper
Union for the Advancement of Science and Art. The latter brought
suit on them and recovered judgment. The case was then removed
here. There is no conflict as to the facts. The questions to be
considered all involve the effect of the facts as matter of law
upon the rights of the parties.
The Montclair Railway Company was incorporated by an Act of the
legislature of New Jersey approved March 18, 1867. The sixth
section authorized the company to construct a railway from the
Village of Montclair, in the Township of Bloomfield, to the Hudson
River, at one or the other of certain
Page 101 U. S. 198
designated points, and also to attach a branch to the main stem
in the township named, and "to extend the said railway into the
Townships of Caldwell and Wayne."
Sec. 1 of an Act approved April 9, 1868, provided that on the
application in writing of twelve freeholders, residents of any
township, town, or city "along the routes of the Montclair Railway
Company or at the termini thereof," except the Township of
Bloomfield, it should be the duty of the circuit judge of the
county, within ten days after receiving the application, to appoint
three freeholders, residents of such township, town, or city, to be
commissioners to carry into effect the provisions of the act. They
were to hold their offices five years and until their successors
were appointed. The third and fourth sections of the act are also
necessary to be considered. Their provisions may be thus summarized
and sufficiently presented for the purposes of this opinion. The
commissioners were authorized to borrow money, not exceeding in
amount twenty percent of the valuation of the real estate in such
township, town, or city, according to the assessment rolls, at a
rate of interest not exceeding seven percent per annum, to be paid
half-yearly, and to execute under their hands and seals bonds
therefor, in such sums and payable at such times and places as they
might deem proper, but no bonds were to be issued or debt
contracted until the written consent of those owning at least
two-thirds of the real estate of the township, town, or city on the
assessment roll, according to the valuation on such roll, should
have been obtained. The consent was to state the amount of money to
be borrowed and that the fund was to be invested in the bonds of
the railway company. The signatures of those consenting were to be
proved by the oath of one or more of the commissioners. The
valuation of the property owned and represented was to be proved by
the affidavit of the assessor. The consent and affidavit were to be
filed in the office of the clerk of the proper locality. The
commissioners were authorized to sell the bonds as they might think
proper, but not for less than par. The proceeds were to be invested
in the bonds of the railway company issued for the purpose of
building and equipping the road, and not otherwise. The
commissioners were to subscribe for the purchase of bonds to
Page 101 U. S. 199
the amount they were authorized to borrow. By the first section
of the supplementary Act of March 16, 1869, the railway company was
authorized to extend the road from any point upon it to any point
in the Township of West Milford. By the fourth section, it was
provided that the operation of the last-named prior act should not
be extended to any township, town, or city through or to which the
road was not authorized to be extended before the passage of this
act. On the 6th of July, 1868, the proper previous steps having
been taken, the judge appointed the commissioners for Pompton
Township. On the 4th of May, 1870, the commissioners issued bonds
to the amount of $100,000, all of which subsequently came into the
hands of the defendant in error. When the bonds were disposed of by
the commissioners, no route of the road west of Montclair had been
surveyed, but it was distinctly proved on the trial that the
southeast line of Pompton was then the contemplated and intended
southwestern terminus. On the 6th of April, 1870, a survey was
filed which commenced at that village and extended to a point
between Mead's Basin and the Pequannock River, in the southern part
of Wayne Township. On the following 9th of June, another survey was
filed which began at the terminus last mentioned, crossed the line
between Wayne and Pequannock Townships, then proceeded to the line
between Pequannock and Pompton (the latter being a parallelogram),
and after traversing Pompton diagonally about two-thirds of its
length, crossed its west line into West Milford, and thence
proceeded in that township to the boundary line between New Jersey
any New York. This line was finally adopted, and the road was built
accordingly. Thus, though Pompton did not get a terminus on its
southeast line, as originally contemplated, it got for the same
consideration the length of the road within its territory and the
extension beyond its limits. The change was obviously beneficial to
the township. No ground is disclosed for the slightest imputation
of bad faith against anyone touching either the road or the sale of
the bonds. It does not appear that the township authorities made
the slightest complaint. Doubtless all believed that what was done
was best for all concerned.
According to the record, the defendant in error is clearly a
Page 101 U. S. 200
bona fide holder of the bonds. Full value was paid for
them, and they were taken underdue without knowledge or notice of
any infirmity, if there were any, belonging to them. The learned
judge who tried the case below so instructed the jury, and properly
withdrew the subject from their consideration.
It is objected to the validity of the bonds:
1. That they could not be competently issued until the route of
the road had been surveyed and the termini thus fixed.
2. That no terminus at Pompton was ever so fixed or designated
as to be effectual.
3. That when the route of the road was changed and fixed
pursuant to the act amending the charter of the company, the
necessary consideration for the bonds became in a vital part
impossible or failed, and that the bonds were thereupon void.
These several points may well be grouped and considered
together.
The act under which the bonds were issued must be regarded in
the light of the circumstances. At the outset, it is material to
note that the power of the commissioners was hedged about by
checks, limitations, and safeguards with the most careful
elaboration. Yet it is nowhere said or intimated when or under what
circumstances the bonds should be sold. In these respects, there
was no restriction. The discretion of those who were empowered and
directed to make the sale was left unfettered. The bonds were to be
issued to aid the company to complete the road. Such is the
language of the act. Without such help, the road might not be
begun, or, if begun, might not be finished. After the work was
done, assistance would not be needed. Fraud and abandonment of the
enterprise were possible as well after the survey was definitely
made as before. Such results touching a work in the hands of
persons of known good character were not to be anticipated and
could hardly occur. The commissioners being constituted the sole
judges as to the points mentioned with reference to parting with
the bonds, their decision was conclusive. There could be no appeal
and no review. It was a matter with which a
bona fide
purchaser had nothing to do. The phrases "along the route" "or at
the termini" have a meaning as plain and clear as that
Page 101 U. S. 201
of any other terms the lawmakers could have employed. It was
expressly declared that the road might go "into" the Township of
Wayne -- which meant to any part of it -- and it was intended that
it should stop at the line between Wayne and Pompton. There the two
territories came in contact. The boundary of one was the boundary
of the other, and to stop at that line made Pompton one of the
termini of the road. This brought the case within the category
expressly defined by the statute and justified the action of the
commissioners. That the terminus was potential and contemplated was
sufficient. It was not required to be fixed or unalterable. We
hold, therefore, that the bonds were rightfully issued. That under
the act amending the charter Pompton, instead of being a terminal
township, became thereafter a township "along the route" of the
road cannot affect the previously vested rights of a
bona
fide transferee of the securities. It would be a singular
result if a larger and better consideration than was contemplated
when the bonds were issued should be held to destroy their
validity. There was in effect an exchange of obligations between
the company and the township, but the motive and object of the
latter was the benefit expected to accrue from the road.
There are several things which go strongly to sustain the
construction and effect we have given to the act of 1868.
The coupons for the half-yearly interest upon the township
bonds, and those for the half-yearly interest upon the railroad
bonds belonging to the township, were paid to the respective
holders to Nov. 1, 1872, inclusive. Up to that time, it does not
appear that the validity of the township bonds was questioned by
anyone. There seems to have been entire acquiescence on the part of
all concerned, including the township authorities.
By the fourth section of the act of 1869, the legislature
declared in effect that the authorized and not the actual routes
were those intended by the bonding act of 1868.
By the first section of the act of 1874, the office of the
commissioners of Pompton Township was abolished, and their duties
were devolved upon the township committee. One of those duties was
to provide the necessary funds in the ways
Page 101 U. S. 202
prescribed, and to pay the interest upon the bonds involved in
this controversy.
In cases like this, legislative ratification is the equivalent
of original authority, and what is clearly implied in a statute is
as effectual as what is expressed. 1 Dillon, Mun.Corp., sec. 46;
United States v.
Babbit, 1 Black 55. Whether this statute was a
ratification of the sale of the bonds as made, if such ratification
were needed, is a point which the view we take of the case renders
it unnecessary to consider. It was certainly a clear recognition of
Pompton as one of the townships authorized to issue bonds in aid of
the railroad company -- a legislative construction entitled to
great respect.
The bonds of the railroad company held by the commissioners are
still in the hands of the township. It does not appear that there
has been any offer to return them.
In
County of Scotland v. Thomas, 94 U. S.
682, the county was authorized to issue bonds in aid of
the construction of a railroad authorized to be built by the
Alexandria and Bloomfield Railroad Company, a Missouri corporation.
Pursuant to law, that company became consolidated with an Iowa
corporation, bearing the name of the Iowa and Southern Railway
Company, whereby an important elongation of the road originally
authorized was secured. The combined corporations took the name of
the Missouri, Iowa, and Nebraska Railway Company. The bonds were
issued to that company. This court held them to be valid. It was
said, in effect, that this conclusion was the result of "a broad
and general view" of the facts of the case.
In
County of Callaway v. Foster, 93 U. S.
567, a statute authorized the stock of a railroad
company to be subscribed for, and bonds to provide the means of
paying for it to be issued and sold "by the county court of any
county in which any part of said railroad may be." The stock was
subscribed and the bonds were issued and sold before the route of
the road was surveyed or located. In construing the phrase "may
be," this Court said:
"May be what? This expression is incomplete, and is to be
construed with reference to the subject matter. If used in a
statute where a road already built was the subject matter, it would
refer to the presence or existence there of the
Page 101 U. S. 203
road. . . . But when used in reference to a railroad not yet
built, not located or surveyed, and indeed not yet organized, it
must have quite a different meaning. . . . Upon any reasonable
construction it embraces Callaway, which was one of the possible
sites, and a site ultimately occupied in fact."
The bonds were sustained.
In
County of Ray v. Vansyckle, 96 U. S.
675, the facts were as follows:
In 1860, Ray County, in Missouri, under authority conferred by a
statute and the sanction of its legal voters, subscribed by its
county court for the stock of railroad company A., and agreed to
issue its bonds in payment. Under an act passed in 1864 and
pursuant to a popular vote of the county, company A. transferred
all its rights, privileges, property, and effects to company B. By
an agreement between companies B. and C. and the county court, the
subscription of the county for the stock of A. was released, and in
consideration of the release the county court subscribed for the
same amount of the stock of C., and issued its bonds in payment. By
this arrangement the county secured increased railroad facilities,
and it still held the certificates of stock. There had been no
offer to return them. The county paid the interest on its bonds
continuously for five years. It then repudiated. It was held by
this Court:
1. That B. was entitled to the bonds of the county by reason of
the first subscription.
2. That as against a
bona fide holder, it could not be
objected that the qualified voters had not assented to the
subscription to C.
3. That the taxpayers were concluded by the act of the county
court and by their failure to take action, if it could have availed
them, to prevent the transfer from one company to the other.
In
County of Schuyler v. Thomas, 98 U. S.
169,
County of Callaway v. Foster and
County of Scotland v. Thomas were cited and strongly
approved.
The analogies of all these cases to the one in hand are too
obvious to need comment.
If any error or wrong was committed in issuing these bonds, it
was the act of the agents of the plaintiffs in error.
Page 101 U. S. 204
Where one of two innocent persons must suffer a loss and one of
them has contributed to produce it, the law throws the burden upon
him and not upon the other party.
Hearn v. Nichols, 1
Salk. 289;
Merchants' Bank v. State
Bank, 10 Wall. 604.
The bonds in question recite on their face that they were
issued
"in pursuance of an Act of the Legislature of New Jersey,
approved April 9, 1868, entitled 'An Act to authorize certain
townships, towns, and cities to issue bonds and to take the bonds
of the Montclair Railway Company.'"
In
Orleans v. Platt, 99 U. S. 676, this
Court said:
"The bonds in question have all the properties of commercial
paper, and in the view of the law, they belong to that category.
Murray
v. Lardner, 2 Wall. 110. This Court has uniformly
held when the question has been presented that where a corporation
has lawful power to issue such securities and does so, the
bona
fide holder has a right to presume the power was properly
exercised, and is not bound to look beyond the question of its
existence. Where the bonds on their face recite the circumstances
which bring them within the power, the corporation is estopped to
deny the truth of the recital.
Mercer County v. Hacket, 1
Wall. 83;
San Antonio v. Mehaffy, 96 U. S.
312;
County of Moultrie v. Savings Bank,
92 U. S.
631;
Moran v. Commissioners of Miami
County, 2 Black 722;
Knox v.
Aspinwall, 21 How. 539;
The Royal British Bank
v. Turquand, 6 El. & Bl. 325."
These rules are the settled law of this Court, and they are
decisive of the case in hand. The constitutional objection was not
taken in the court below, but aside from this, we are of opinion
that it is without validity. It would be supererogatory to discuss
the minor points set forth in the assignment of errors to which we
have not specifically adverted. They are all covered and concluded
by what we have said.
Judgment affirmed.
MR. JUSTICE FIELD and MR. JUSTICE BRADLEY dissented.