, FJilPl1:RAJ,.

vol. 48.

NA.TIONAL BANK OF, COMMERC!i: V.TOWNOFGRANADA..
(O/,rC1,f,tt OOUrt, D, OoZo'l'/ld().

Deoember 9,1891.)

L

MUNICIPAL BONDS-VALIDITY-FAILURE TO PullLISH ORDINANCII.

Under Laws Colo, 1887, p,445, § 1, proV'idiIig that all municipal ordinances ot a shall be published in the manner there prescribed, and not, tlj,lce efl'ect untiLfl.ve days after,such ,publication, a failure to the issuance of municipal bPI1Q!l.l'l'lllders the bonds

2.

SUI:B-iNNOCENT PI:'RCHASER-NoTICIl.

the ,ot the ponds that they were issued under ,an ordinance of the municipality does ndt\'ender them valid in the hands of 'an Int:111cent purchaser llinCll :such a purohaller 18 chargeable with notlela of theltatutory provistpe b()nd,8 were iBSUed.

'.A.ctiop by the National Bank of Comn:;1erce against the town interest coupons of mUllicipal,Jmllds. Tried by the Judgment for defendant. 'or former reports, 8,ee4l Fed. 81, and 44, Fed. Rep. 262,. , ,S. for ,'. .', ' Alvin J·. l1;.!Jeljord, fO'i ·

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'.l'his on coupons funding, bon.dsissued hythe defendant, in The bonds at New York, 15 years after date, tqtl, of city; jnterest at 8. Per cent., evi,coupons similar to, tq.pl!e upon which ,this suit was , ..A.,jury )vas waived., . qause WJlS subplittedto the court

Granada .b()nds, thecotlpons of which are the ,basispf the suit in. this case. ,;"Tpelilta.tuteof .thestate, as found in section 1 Sess. Laws 1887, p. 445, t'ollows:
"All spun 8S may be, after th,eir passage,berecordf'd hi R book kept for that and be ,autheuticated by tbe i\ljgnature of the presiding officer of the council board of'tl'listees and the clerk; and all bylaws of a general or permanent nature, and those imposing any fine. penalty, or forfeiture, shall be publish p d in some newspaper puLJJished within the limits of the corporation, or, if there be none Stich, thf'n ill sOllie newspaper of j1;eneral circulation in the municipal corporation; and it shall be ueemf'd a sufficient defense to any suit or prosecution for such fine, ppnalty, or forfeiture to show that no such publil:ation was made: provided, however, that if there is no newspaper published within or which has no general circulation within the l,mits of the ('orpol'ation, thlln, anu in that case, upon a resolution being passed by such council 01' board of trustees to that effpct, such by-laws and 'ordinances may be published by posting copies thereof in the pUiJlic places to Ioe designated by the board of trustees, within the limits of the corporation; and such by-laws and ordinances shall not take effect and be in force until the expiration of five days after they have been so published or postt'd. But the book of ordinances herein provided for shall be taken and ('onsidered in all courts of tilis state as prima facie evidence that such ord!nanres have been published as provided by law."

is""

or

NATIONAL BANK OF COMMERCEV. TOWN,bF GRANADA,.

279

By the terms of this section of the statutelaWbf the state, when the 'llame is given a reasol)able construction, all by-laws ·of a general or permanent nature must be published as required by the above-named se<:!:ti.on. This ordinance Qf the. town of Granada by its coupcil, purporting to authorize the issue of the bonds to which the coupons in :suit were attached, is of a nature, and all by-laws or ordinances of a general or permanent nature. do not take effect and be in force until the expiration6ffive days after'they have been pubHspe(i It appears from the agreed statenlcn,t of facts in case that there was never any publication of the ordinance in a new&: paper, or in any manner orfoi'rii'W'hatever.' The statute requiring the 'of'the ordinanoe iamandatory,and:theordinance, with<HIt the requisitepublicatiotl, isanullity,and conseq\iently of no force or Yalidity. There is,then, no authority/or the issue 9f the bonds,to ;.. r ..... :. .' .;;,: The reCltallll the bond that it was ISSUed under an orduiance of the dty:'of Granada the ebhncil :01' will not make' the bonds valid in the hands of plaintiff as an innocent holder. if it,utlder thelllwpwasbound to tlike' notice of the]egal authority of the town'of .Gra,liMl.·,to issue theboJ.td,;..· The'legal atithority'ofthe officers 09;the this J;}iqst.be them ontb(lfaC(l, the bond ,an ordinancereferrecJ: purQbll.88r, to the law thepubllcl,i.tiqq of the ordinance.' j The ordinance conferred no town 'officers to execute and issue the bonde until· the expiration oCtive d,ay.safter :it liad'been published. The corporation of Granada'roast nave·1iltd legisla:tive a.uthoi'ity to iSsue the bonds by the plaintiff is a holder for value and before maturity, it must; 'lit 1til peril, 'take noticebftbe an.d .terms of 'the law: by-which it is Claimed·the power to iSBuesuchbcmdeis The hollfur:o£'.. mUriicipal·. bond 'is ichargeaole ,with ·noticeo! underwhieh it·,was: issued; Bankv. 0itfJ of- St. J08eph. 31 Fed.' 216;A7I.thO'fiy 101 U.S. 693; Ogden v.'DatJie8s U. S. 634; Bank v. Porter Tp., 110 U. S. 608. 4 Sup. Ct. Rep. 254';¥calure v. Tawnship of Oxfo'rd. 94 U. S. 429. The last-named case I regard as especially relevant to the present one. In that case the statute under which the bonds were issued was referred to on the face of the bonds, and, although passed and approved at a certain date, was not by its terms to go into effect until after its publication in the Kansas Weekly Commonwealth. Chief Justice WAITE said in that case that-

of

.. Every dealer in municipal bonds, which upon their face refer to the statute under which they were issued, is bonnd to take notice of the statute andall its requirements. Every man is chargeable with notice of that which the law requires him to know, and of that which, after haVing been put upon inquiry, he might have ascertained by the exercise of reasonable diligence."

An'd further:

"A municipality must have legislative anthority to subscribe to the capital politic to the stock of a bridge company before its officers can bind the

280

vol. 48.

pa)'D)ent of bonds purporthlg to be issued on that account. Municipal offi-' cers c/lonnot rightfully dispense;with any of the essential forms of proceeding w.hibh the legislature bas prescri1:)ed for the purpose of 'investIng them with power to in the matter of such asubscription. If they do. the bonds they issue will be invalid in the hands of all that cannot claim protection as bona Jfdeholders. " , , -

Ogden v. Daviess 00., court of the United States said: ,,"We have always holder of a municipal bond is chargeable wit\l notice of the provisloDs law by which the issue of his bond was authorized. If there was .... no'l'aw for the issue, there, can be no valid bond." In"Antlumy v. Jawpel' Gl?, court said: ,"Dealers in municipal bonds m-e:chargedwith nQticeof the laws of the state to make· the they find on the market. This we have If, the municipality, the bona ftde holder is protected agaInst mere irregularities in the manner of its eXecution, but if there is a want of power, no iegalliability can be created." ,
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Sup. Ct. Rep. the su,OQu,rt declared: ll: "\Cheadjudged cases·.examlnlld,Jb the light of show"thaHhefacts whicq a corporation, iSSUing bonds in the aid the ,of a 'Wf!.!l,npt permJtted a Jtolder ,1;0 Jaceof arec,lt.at bonds of thelreXIStellce. were those con!iecfed\vltti:orgrowing otit',Mthe discharge of the ordinary duties of such uf invested.with authority to execute them. andwbich the the powerni'ade it tbeir duty to ascertain and determine 1:'6statute fore the: DOl'ldltwel'e issued; not JiD('rely for themselves. as tlJ.e ground oftheir OWD;&(ltioll in:is!3uing the, bond$. Qut equallYl\8 authentic anjl evidence fOl' the ,. inform,ation and action of all otbers dealing with of ' them in respect to it. " , " . The agr.eecl facts in this case .how, in effect, there was no ,law authorizing :thedesMof the bonds to.: which the coupons in suit belong. The plaintitfwaa,' bound to take, notice of that fact. It ,cannot, therefore, under :the law,\be entitled to rec.over. Judgment should therefore go for, the defendant, and it is ordered that judgment b,e ingly. '
'

,In

.porter 7P."Jl0"U.S.

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IN RE CHICHESTER.

281

In fe CHIcHEsTER.

(Circu,t Oourt, W. D. Texas. November 19,'1891.)
CI1STOMS DUTIEs-BoARD OF GENERAL

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as to the rate and amount of duties on imported merchandise, extends only to merinvoiced aJ;ld. appraised; and they hElve chandise lawfully entered and no jurisdiction, in the case of goods seized lind libeled for forfeiture in the fedElr'al courts. to review the collector's determinEltion of duty to be paid thereon, aa joe-' quired by Rev, St. § 988, in order to l!ecure delivery of such goods to the Claimant.

10, '1890, relating to the collection of revenue, to review the decision of the collector

Tbe jurisdiction conferred on the boal,"d of general appraisers by Act Cong. June

At Law.

On appeal from the decision of the Qoard of general .'i::' . On January 13, 1891. the collector of customs for the collection dIStrict of Saluria seized at Eagle Pass, in the state of Texas, certain,five car-Ioada of lead and silver ores, consigned to ]J. H. Chichester, asforfeited to the United States, by reason of certain alleged attempted false and fraudulent entries of said ores as imported goods. Thereaffur,'on the 31st of January following, the district attorney for the western district of Texas libeled the said ores in the district court for the western dishirit of Texas,claiming their condemnation and forfeiture to the use of ,the United States by reason of alleged attempted false entry and invoices; . to-wit: "Fil'st. He did attempt to make, and did make, a false and fraudulent try of said imported goods, wares, and merchaIidlS'e'under a certain false invoice, then and there and failing to comply with theinstructiollS of the secretary of the treasury of the United States of America of date July 17. 1889,inthis, to-wit: He failed to make a declaration that the said goods, wares, and merchandise embraced no mixture of ores or from mines·. and thereby was guilty of a 'Yillful act of omissiOIl, by means whereof the United States shall.be deprived of the lawful duties'then and there accruing upon. the imported goods, wares. and merchan!lise afote.. said, and portions therepf; and all this he. the said E. H. Chichester, illegally did, with the intent to defraud the revenUe of the United States of ,AJ;Derlca. Second.· He. tile said E. II. Chichester, did then and there make, andattemot to make, a false and fraudulent entry of the goods, wares. and IiJer<lhandise aforesaid, haVing first willfully and intentionally commingled the aforesaid ores, the same then lind there being taken from different mines. so that said ores so commingled would ,assay in such a manner as to avo¥rthe force and effect of the Jaws of the United States in such cases made and provided for the collection of her duties. in this, to-wit: Had said received as a just lind proper entry by tbesaid collector of customs, then the United States would have been deprived of the lawful duties on said aforesaid ores, and a portion thereof, embraced and referred to in said invoice." Warrant being issued, and the said car-loads of lead and silver ores being taken. into the possession of the marshal,Chichester, consignee, applied to the court for leave to bond the said ores under section 938 of the ReviSed Statutes ofthe United Sbltes, and, asa prerequisit¢ to. bonding, applied to the collector of customs of the district to pay duties on .thesaid ores in like mannel'as if the same had been legaUq