1. The act of the General Assembly of Missouri entitled "An Act
to provide for the registration of bonds issued by counties,
cities, and incorporated towns, and to limit the issue thereof,"
approved March 30, 1872, applies to bonds issued under the act
approved March 23, 1808, commonly known as "The Township Aid
Act."
2. The said Act of March 30, 1872, declares that before a
municipal bond thereafter issued shall obtain validity or be
negotiated, it shall be presented to the state auditor, who shall
register it and certify by endorsement that all the conditions of
the laws and of the contract under which it was ordered to be
issued have been complied with.
Held that unless the bonds
are so endorsed, a holder of them cannot maintain an action
thereon.
3. A township in Missouri voted to subscribe for stock in a
railroad company. The proper county court, March 28, 1872, made the
subscription, and, June 4, ordered that the bonds in payment
therefor be issued. They were issued in October following, but bore
date the day of the subscription. They were sealed with the seal of
the court, and signed by the clerk and by A., as presiding justice,
although the latter did not become such until October. Neither the
county court nor the other justice thereof consented to A.'s act.
The bonds were not registered, nor was the certificate of
registration required by said Act of March 30 endorsed thereon. In
a suit by B., a holder for value, upon the bonds,
held: 1.
That he was charged with notice that A. was not presiding justice
at the time they bear date; 2. that the bonds' being signed by A.
was equivalent to notice that they were not in fact issued before
the passage of said act, and that they are consequently void.
4.
Town of Weyauwega v. Ayling, 99 U. S.
112, distinguished.
The facts are stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This is a suit upon interest coupons originally attached to
bonds issued under the Township Aid Act of Missouri, and presents
the following facts:
On the 10th of February, 1872, the township of Marion, in
Page 101 U. S. 694
Jasper County, upon a call duly made under the law, voted to
subscribe $75,000 to the stock of the Memphis, Carthage, and
Northwestern Railroad Company upon certain conditions, and on the
28th of March following, the county court made the subscription on
the terms and subject to the conditions specified.
On the 30th of March in that year, an act was passed by the
General Assembly of Missouri entitled "An Act to provide for the
registration of bonds issued by counties, cities, and incorporated
towns, and to limit the issue thereof." Sec. 4 of that act is as
follows:
"Before any bond hereafter issued by any county, city, or
incorporated town, for any purpose whatever, shall obtain validity
or be negotiated, such bond shall first be presented to the state
auditor, who shall register the same in a book or books provided
for that purpose in the same manner as the state bonds are now
registered and who shall certify by endorsement on such bond that
all the conditions of the laws have been complied with in its
issue, if that be the case, and also that the conditions of the
contract under which they were ordered to be issued have also been
complied with, and the evidence of that fact shall be filed and
preserved by the auditor. But such certificate shall be
prima
facie evidence only of the facts therein stated, and shall not
preclude or prohibit any person from showing or proving the
contrary in any suit or proceedings to test or determine the
validity of such bonds or the power of any county court, city, or
town council, or board of trustees, or other authority to issue
such bonds, and the remedy by injunction shall also lie at the
instance of any taxpayer of the respective county, city, or
incorporated town to prevent the registration of any bonds alleged
to be illegally issued or founded under any provision of this
act."
On the 4th of June, 1872, the county court ordered that $50,000
of the bonds which had been voted should be issued, that the clerk
have them registered according to law, and, when registered, that
they be deposited in escrow with some responsible banker in St.
Louis.
John Purcell was the presiding justice of the court in March. He
continued in office until September, 1872, when he resigned, and R.
S. Merwin was appointed in his place Oct. 21, 1872. The bonds now
in question were sealed with the seal of the court, affixed by the
clerk, and signed by Merwin as presiding
Page 101 U. S. 695
justice and by the clerk in October, 1872, but antedated as of
March 28. Merwin delivered them during the same month, with the
first two coupons cut off, to the Union Savings Bank of St. Louis
for the use of Edward Burgess, a contractor for building the road.
In November, Burgess sold them to one Wilson at fifty-five cents on
the dollar, and the bank gave them up to the purchaser on his
order. Neither the other justice of the county court nor the court
as a court consented to what was done by Merwin, and the railroad
company has never fully complied with the conditions of the vote
authorizing the issue of the bonds. No registry of the bonds was
ever made as required by the Act of March 30, 1872, and they did
not have upon them the certificate of registration. Anthony, the
plaintiff below, was a purchaser for value of the bonds from which
the coupons sued on were cut, and without any notice that they had
been antedated or were in any respect irregular or invalid.
The circuit court, on this state of facts, gave judgment against
Anthony, and he brought this writ of error.
All the questions presented in the argument of this case were
disposed of in
Douglass v. County of Pike, supra, p.
101 U. S. 677,
except such as arise under the Act of March 30, 1872. That act, it
is claimed, renders the bonds invalid because they were not
registered and had no certificate of registry on them. Against this
it is urged:
1. That the act does not apply to bonds issued under the
township aid law; and,
2. That if it does, the county is estopped from denying that
these bonds were actually issued on the day they bear date.
The first objection is, as we think, untenable. It does not
appear to have been taken or considered below. While the bonds are
township bonds in the sense that they are payable out of taxes
levied on the property in the township which voted them, they were
issued by the county. The county court, which represented the
county in its corporate capacity, made the subscription voted by
the township, and issued the bonds in the name of the county. Under
the same authority, the necessary taxes are to be levied on the
property in the township, and from moneys obtained in this way, the
county
Page 101 U. S. 696
treasurer is to pay the bonds and coupons as they mature. The
bonds on their face acknowledge an indebtedness of the county "for
and on account of" the township. Since townships have no corporate
organization of their own, they act through the county, which, for
this purpose, represents them as, under other circumstances, it
does the people of the whole county.
The act in question is not confined to the bonds of counties,
but embraces all issued by counties. As there can be no township
bonds except they are issued by counties, it seems to us that they
come within the descriptive words used in the fourth section, and
we have been unable to find anything in the other parts of the act
manifesting an intention to give these words any other than their
usual and ordinary signification. The object of the new legislation
undoubtedly was to guard against unauthorized issues of this class
of public securities. For this purpose, a new policy was adopted by
the state. The evil which the general assembly had in view affected
township bonds as well as those of counties, cities, or towns. In
fact, as ordinarily the same officers put out the township bonds
that did those of the county, it is impossible to discover any good
reason for guarding one against frauds and mistakes rather than the
other. The records of the county court should contain an account of
all that has been done in this way by that body for the townships,
and the chief financial officer of the county can as easily furnish
the state auditor with a statement of these obligations as he can
of those of the county at large. When the state auditor certifies
to the county court the amount required during the next year to
meet maturing coupons and costs and expenses, the special tax can
be levied by the county court, under the township aid law, as
amended in 1871, Wagner's Stat. 331, sec. 52, on the real estate
and personal property in the township for whose account the bonds
were issued. No embarrassment can possibly arise in this
particular, for there is no such conflict between the two statutes
as to produce a repeal by implication. The registration statute is
supplementary only to that under which the bonds were originally
issued.
This brings us to consider the question of estoppel. There
Page 101 U. S. 697
can be no doubt that it is within the power of a state to
prescribe the form in which municipal bonds shall be executed in
order to bind the public for their payment. If not so executed,
they create no legal liability. Other circumstances may exist which
will give the holder of them an equitable right to recover from the
municipality the money which they represent, but he cannot enforce
the payment or put them on the market as commercial paper. The act
now in question is, we think, of this character. It in effect
provides that no bond issued by counties, cities, or incorporated
towns shall be valid -- that is to say completely executed -- until
it has been countersigned or certified in a particular way by the
state auditor. For this purpose, after being executed by the
corporate authorities, it must be presented to that officer, and he
must inquire and determine whether all the requirements of the law
authorizing its issue have been observed and whether all the
conditions of the contract in consideration of which it was to be
put out have been complied with. To enable him to do this, evidence
must be submitted which he is required to file and preserve. If he
is satisfied, the registry is made and the requisite certificate
endorsed on the bonds. This being done, the execution of the bond
is complete, and, under the law, it may then be negotiated -- that
is to say, put on the market as valid commercial paper. When the
certificate is found on the bond, the purchaser need not inquire
whether what has been certified to is true. As against a
bona
fide holder, the public is bound by what its authorized agents
have done and stated in the prescribed form.
Dealers in municipal bonds are charged with notice of the laws
of the state granting power to make the bonds they find on the
market. This we have always held. If the power exists in the
municipality, the
bona fide holder is protected against
mere irregularities in the manner of its execution, but if there is
a want of power, no legal liability can be created. When the bonds
now in question were put out, the law required that to be valid
they must be certified to by the auditor of state. In other words,
that officer was to certify them before their execution was
complete, so as to bind the public for their payment. We had
occasion to consider in
McGarrahan
Page 101 U. S. 698
v. Mining Company, 96 U. S. 316, the
effect of statutory requirements as to the form of the execution of
patents to pass the title of lands out of the United states, and
there say:
"Each and every one of the integral parts of the execution is
essential to the validity of a patent. They are of equal importance
under the law, and one cannot be dispensed with more than another.
Neither is directory, but all are mandatory. The question is not
what, in the absence of statutory regulations, would constitute a
valid grant, but what the statute requires."
The same rule applies here. The object to be accomplished is the
complete execution of a valid instrument, such as the law
authorizes public officers to put out and bind for the payment of
money the public organization they represent. For this purpose the
law has provided that the instrument must not only be signed and
sealed on behalf of the county court of the county, but it must be
certified to or countersigned by the auditor of state. Of this law
all who deal in the bonds are bound to take notice.
In order to recover in this case, it became necessary for the
plaintiff to prove that the bonds from which the coupons sued on
were cut had been executed according to law. He did prove that they
were signed by the presiding justice and clerk of the court, and
were sealed with the seal of the court. This, before the Act of
March 30, 1872, would have been enough, but after that more was
necessary. The public can act only through its authorized agents,
and it is not bound until all who are to participate in what is to
be done have performed their respective duties. The authority of a
public agent depends on the law as it is when he acts. He has only
such powers as are specifically granted, and he cannot bind his
principal under powers that have been taken away, by simply
antedating his contracts. Under such circumstances, a false date is
equivalent to a false signature, and the public, in the absence of
any ratification of its own, is no more estopped by the one than it
would be by the other. After the power of an agent of a private
person has been revoked, he cannot bind his principal by simply
dating back what he does. A retiring partner, after due notice of
dissolution, cannot charge his firm for the payment of a negotiable
promissory note, even in the hands of
Page 101 U. S. 699
an innocent holder, by giving it a date within the period of the
existence of the partnership. Antedating under such circumstances
partakes of the character of a forgery, and is always open to
inquiry, no matter who relies on it. The question is one of the
authority of him who attempts to bind another. Every person who
deals with or through an agent assumes all the risks of a lack of
authority in the agent to do what he does. Negotiable paper is no
more protected against this inquiry than any other. In
Bayley
v. Taber, 5 Mass. 285, it was held that when a statute
provided that promissory notes of a certain kind, made or issued
after a certain day, should be utterly void, evidence was
admissible on behalf of the makers to prove that the notes were
issued after that day, although they bore a previous date.
It matters not that when the bonds were voted the registration
law was not in force. Before they were issued it had gone into
effect. It did not change in any way the contract with the railroad
company. The company was just as much entitled to its bonds when it
complied with the conditions under which they were voted after the
law as it could have been before. All the legislature attempted to
do was to provide what should be a good bond when issued. There was
nothing changed but the form of the execution.
Purchasers of municipal securities must always take the risk of
the genuineness of the official signatures of those who execute the
paper they buy. This includes not only the genuineness of the
signature itself, but the official character of him who makes it.
This plaintiff is charged with notice of the fact that Merwin was
not the presiding justice of the county court until October, 1872,
and that he could not have signed the bonds in his official
capacity until that time. Had he signed them in March, he could not
have bound the township for their payment. This is equivalent to
notice that they were not in fact issued before March 30, and that
consequently they were not valid because not certified by the
auditor of state.
This case is entirely different from Town of
Weyauwega v.
Ayling, 99 U. S. 112, where
we held the town was estopped from proving that the bonds were
actually signed by a former
Page 101 U. S. 700
clerk after he went out of office; because the clerk in office
adopted that signature as his own when he united with the chairman
in delivering the bonds to the railroad company, pursuant to the
vote of the town. There the bonds were not only complete in form at
the time they bore date, but when they were actually issued as
genuine by the proper agents, one of whom was the clerk who should
have signed them. Here they were not actually complete in form when
they were issued, and it was only by a false date inserted by one
of the two agents required by law to unite in their execution, and
without the knowledge or consent of the other, who never acted at
all, that they were apparently so. They were never in a condition
to be issued, and were never in fact issued by the proper
authorities. They were in legal effect forged.
It follows that the judgment of the circuit court was right, and
it is consequently
Affirmed.
MR. JUSTICE CLIFFORD, MR. JUSTICE SWAYNE, and MR. JUSTICE STRONG
dissented.