1. Thompson v. Perrine, 103 U.
, cited and reaffirmed.
2. Overdue coupons detached from a municipal bond which has not
matured are negotiable by the law merchant.
3. Where coupons are payable to bearer, the right of the holder
thereof to sue thereon in a court of the United States does not
depend upon the citizenship of any previous holder. He is not an
assignee within the meaning of the Act of March 3, 1876, c.
The facts are stated in the opinion of the Court.
MR. JUSTICE HARLAN delivered the opinion of the Court.
In Thompson v. Perrine, 103 U.
, we affirmed a judgment of the Circuit Court of
the United States for the Southern District of New York against the
Town of Thompson in that state for the amount of certain coupons of
bonds executed in behalf of that town by virtue of the provisions
of an act passed May 4, 1868, and amended April 1, 1869. Those
Page 106 U. S. 590
acts, as will be seen from the statement of the former case,
authorized the Town of Thompson, in aid of the construction of a
railroad from Monticello, New York, to Port Jervis in the same
state -- a majority of its taxpayers, appearing upon the last
assessment roll, and representing a majority of the taxable
property, not including lands of nonresidents, having first
consented to the debt being contracted -- to issue bonds, and to
invest the proceeds,
when disposed of, in the capital
stock of the railroad company organized to construct the proposed
road. Bonds were issued, and instead of selling them and investing
the proceeds in the company's stock, the local authorities
exchanged them directly with the railroad company for stock. This,
according to certain decisions of the highest court of New York,
was in violation of the act giving authority to issue the bonds.
But by an act passed April 28, 1871 -- previous to which time the
bonds had been issued and delivered -- that exchange for stock was
in express terms ratified and confirmed. And the controlling
question in the former case was as to the constitutional validity
of the latter statute. In Horton v. Town of Thompson,
N.Y. 513, decided January, 1878, the Court of Appeals of New York
held that as the taxpayers had only consented to an issue of bonds
the proceeds of the sale of which should be invested in stock, it
was beyond the power of the legislature to validate bonds which, in
violation of the act under which they were issued, were not sold
but were directly exchanged for stock, of which fact all purchasers
had notice from the recitals of the bonds themselves. That
adjudication, it was contended, was binding upon this Court. But to
that proposition we declined to give our assent, and stated with
some fullness the reasons why this Court could not give to the
decision in the case just cited the effect claimed for it by the
We held, for reasons which need not be repeated, that it was
within the constitutional power of the Legislature of New York to
pass the curative statute of April 28, 1871, and that from the
moment it was enacted (if not before) the bonds, by whomsoever
held, whether by the railroad company or others, became binding
obligations upon the town, as much so as if they had originally
been sold and the proceeds invested in
Page 106 U. S. 591
stock of the railroad company, as required by the acts under
which they were issued.
That decision controls the present case, for the latter, in its
essential features, differs from the former only in the
circumstance of the time when Perrine acquired title to the coupons
in suit. Those heretofore sued on were purchased by him in 1875,
while those now in suit were purchased by him in 1878, when they
were overdue and after the decision in 71 N.Y. was announced.
Counsel for the town now insist that this Court should follow the
ruling in that case at least as to holders of coupons or bonds who
purchased after Horton v. Town of Thompson
and they suppose that this Court placed its former decision upon
the ground mainly that Perrine purchased the bonds there in suit
before the Court of Appeals declared the act to be
unconstitutional. But in this view we do not concur. The reference
in the former case to the date when Perrine purchased was to
illustrate the injustice which would be done were we, in opposition
to our own view of the law, to follow the ruling of the state court
made after he purchased -- a decision which, with entire respect
for the state court, was held not to be in harmony with its former
decisions. What we decided was that the curative statute was within
the limits of legislative power, and that at least from its
passage, the bonds, by whomsoever held, whether by the railroad
company or others, became enforceable obligations of the town.
Ohio Life Insurance &
Trust Co. v. Debolt,
16 How. 416; Mitchell
4 Wall. 270; Taylor v.
Ypsilanti, 105 U. S. 60
There is, however, one point made in this case not made in the
former one, and which it is our duty to notice. It is that this
action is excluded by statute from the jurisdiction of a circuit
court of the United States.
The eleventh section of the Act of Sept. 24, 1789, c. 20,
declares that no district or circuit court shall
"have cognizance of any suit to recover the contents of any
promissory note or other chose in action in favor of an assignee
unless a suit might have been prosecuted in such court to recover
the said contents if no assignment had been made, except in cases
of foreign bills of exchange."
The provision in the Act of
Page 106 U. S. 592
March 3, 1875, is:
"Nor shall any circuit or district court have cognizance of any
suit founded on contract in favor of an assignee unless a suit
might have been prosecuted in such court to recover thereon if no
assignment had been made, except in cases of promissory notes
negotiable by the law merchant and bills of exchange."
It is not claimed that the words "assignee" and "assignment," as
found in the act of 1875, have any meaning different from that
attached to the same words in the act of 1789, or in sec. 629 of
the Revised Statutes. But the contention of counsel is that the
coupons in suit, being detached from the bonds and overdue when
Perrine purchased them, were dishonored, and therefore not
negotiable by the law merchant; consequently it is claimed they are
not within the exception of promissory notes negotiable by the law
merchant, but are embraced by the general inhibition upon suits
founded on contract where the assignor himself could not have sued
in the circuit court. This position cannot be sustained. It is an
immaterial circumstance that the coupons, when purchased by
Perrine, were detached from the bonds. And the bonds not having
then matured, the coupons, though overdue, had not lost the quality
of negotiability by the law merchant. This result must follow from
the principles announced in Cromwell v. County of Sac,
96 U. S. 51
Further, and apart from any consideration of the question as to the
negotiability according to the law merchant of these coupons,
Perrine is not an assignee within the meaning of the act of 1875 or
of the previous statutes relating to the same subject. Giving the
words "assignee" and "assignment" their broadest signification and
conceding that in some cases the holder of a promissory note may
become such in virtue alone of an assignment, yet according to the
established construction of the Judiciary Act of 1789, the right of
the holder of a promissory note or bond, payable to a particular
person or bearer, to sue in his own name did not depend upon the
citizenship of the named payee or of the first or any previous
holder -- this because in all such cases the title passed by
delivery and not in virtue of any assignment. In Bullard v.
1 Mason 251, Mr. Justice Story said that to bring a
Page 106 U. S. 593
within the exception contained in the eleventh section of the
act of 1789, "the action must not only be founded on a chose in
action, but it must be assignable, and the plaintiff must sue in
virtue of an assignment." "A note," said he,
"payable to bearer is often said to be assignable by delivery;
but in correct language, there is no assignment in the case. It
passes by mere delivery, and the holder never makes any title by or
through any assignment, but claims merely as bearer. The note is an
original promise by the maker to pay any person who shall become
the bearer; it is therefore payable to any person who successively
holds the note bona fide
not by virtue of any assignment
of the promise, but by an original and direct promise, moving from
the maker to the bearer."
In Bank of Kentucky v.
2 Pet. 318, 27 U. S. 326
this Court said that it had "uniformly held that a note payable to
bearer is payable to anybody, and is not affected by the
disabilities [to sue] of the nominal payee." Thompson
v. Lee County,
3 Wall. 327; Bushnell
9 Wall. 387; City of
Lexington v. Butler,
14 Wall. 282; Cooper v.
Town of Thompson,
13 Blatchford 434; Coe v. Cayuga Lake
19 Blatchford 522.
The coupons here in suit are payable to the holder thereof, and
upon the authority of the adjudged cases, Perrine is not an
assignee within the meaning of the act of 1875. He is entitled to
sue without reference to the citizenship of any previous
We perceive no error in the record.