No exception or bill of exception is necessary to open a
question of law apparent on the record where the record shows no
waiver of rights of plaintiffs in error. Nalle v. Oyster,
230 U. S. 165
When a municipality is authorized to raise money by sale of
bonds this Court will take it that the authority extends to putting
the bonds in the form that would be necessary to obtain a
purchaser, and this applies also to certificate of
There is no essential difference between bonds of a municipality
and its certificates of indebtedness, and in this case
that the purchasers for value before maturity and in
good faith of negotiable certificates of indebtedness of the City
of Denver were entitled to recover, and the defense that the
authority to issue certificates did not authorize making them
negotiable could not be maintained.
200 F. 28 affirmed.
The facts, which involve the validity of certificates of
indebtedness issued by the City and County of Denver in payment for
voting machines, are stated in the opinion.
Page 236 U. S. 103
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is an action brought by the respondent upon a certificate
of indebtedness and an interest coupon attached to the same,
against the petitioner. There was a verdict and judgment for the
plaintiff, and the circuit court of appeals affirmed the judgment.
200 F. 28. The plaintiff held the instrument by indorsement, and
was found to have purchased it in good faith before maturity, but
the defendant denied the authority to issue the certificate in
negotiable form, and sought to raise the question by its third
defense, which set up failure of consideration. There was a
demurrer to this defense, which was sustained by the circuit court,
and the trial took place upon the other issues. The circuit court
of appeals declined to consider the correctness of this ruling
because no exception was taken to it. But
Page 236 U. S. 104
no exception or bill of exceptions is necessary to open a
question of law already apparent on the record, and there is
nothing in the record that indicates a waiver of the defendant's
rights. Therefore we must consider the merits of the defense.
Nalle v. Oyster, 230 U. S. 165
The certificate recites the allowance of a claim for ballot
machines by the Board of County Commissioners of the City and
County of Denver, and goes on,
"the Board of County Commissioners being authorized thereto by
the laws of the State of Colorado, Act of 1905, hereby issues its
certificate of indebtedness for the said sum, and will in one (1)
year pay to the order of the federal Ballot Machine Company the sum
of $11,250, with interest on this sum, from the date hereof at the
rate of five percent per annum, the said interest payable
semiannually, as per two (2) coupons, hereto attached."
This certificate was one of ten issued to provide for the
payment for ballot machines, and the Constitution of the state
authorized provision for payment in such case
"by the issuance of interest-bearing bonds, certificates of
indebtedness, or other obligations, which shall be a charge upon
such city, city and county, or town; such bonds, certificates, or
other obligations may be made payable at such time or times, not
exceeding ten years from the date of issue, as may be determined,
but shall not be issued or sold at less than par."
Art. VII, § 8, as amended November 6, 1906. A statute in like
words previously had been passed, to be effective if the amendment
to the Constitution should be adopted, as it was.Laws of 1905, c.
101, § 6. See
Rev.Stat. 1908, § 2342. The defense that we
are considering is that the foregoing words did not warrant making
the certificates of indebtedness negotiable, relying especially
upon Brenham v. German-American Bank, 144 U.
. But the argument seems to us to need no extended
answer. The power to issue certificates of indebtedness or bonds is
given in terms, and
Page 236 U. S. 105
it is contemplated that these instruments may be sold to raise
money for the purpose named. But, however narrowly we may construe
the power of municipal corporations in this respect, when they are
authorized to raise money by the sale of bonds, we must take it
that they are authorized to put the bonds in the form that would be
almost a necessary condition to obtaining a purchaser -- the usual
form in which municipal bonds are put upon the market. Gunnison
County Commissioners v. Rollins, 173 U.
, 173 U. S. 276
What is true about bonds is true about certificates of
indebtedness. Indeed, it is difficult to see any distinction
between the two as they are commonly known to the business world.
The essence of each is that they contain a promise under the seal
of the corporation to pay a certain sum to order or to bearer. We
are of opinion that the Board of County Commissioners was
authorized to issue certificates in the negotiable form. Carter
County v. Sinton, 120 U. S. 517
120 U. S. 525
1 Wall. 175, 68 U. S. 203
Cadillac v. Woonsocket Savings Institution,
58 F. 935,
937; Ashley v. Board of Supervisors,
60 F. 55, 67;
D'Esterre v. Brooklyn,
90 F. 586, 590; Dillon,
Munic.Corp., 5th ed. § 882.