in action in favor of any assignee, or of any had been made, except in cases of promis-
subsequent holder if such instrument be pay-sory notes negotiable by the law merchant
able to bearer and be not made by any cor- and bills of exchange.” 18 Stat. at L. 470,
poration, unless such suit might have been chap. 137, § 1.
prosecuted in such court to recover the said
contents if no assignment or transfer had
been made." The provision on the same sub-
ject in the act of March 3d, 1875, but which
was, of course, displaced by the clause on
the same subject in the act of 1888, was as
follows: "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

Without stopping to consider the full scope and effect of the above provision in the act of 1888, it is only necessary to say that the instruments sued on, being payable to bearer and having been made by a corpo ration, are expressly excepted by the statute from the general rule prescribed that an assignee or subsequent holder of a promissory note or chose in action could not sue in a circuit or district court of the United States unless his assignor or transferrer when the bill of sale was drawn? A. No, sir. Q. When did you first know that there was such a bill of sale? A. As soon as I received it, in the year 1894. Q. In the event of a recovery in this case, are not the amounts of the coupons belonging to the said bonds to be paid over to the Nashua Savings Bank, less their proportion of the expense of this litigation? A. I do not know how much will be paid them. Q. Do you know anything about it? A. Indirectly, yes. IQ. Do you mean by that you have some hearsay evidence upon it? A. Yes; I have an impression from hearsay that the bank would have some equivalent for these bonds if suit was won. Q. You say here that you own bonds of Lake county by virtue of a bill of sale from the Union Five Cent Savings Bank of Exeter, numbered 112-129, inclusive, together with all coupons, the first being No. 4, and the subsequent ones being consecutive up to and including No. 21. What is the date of that bill of sale? A. I think it was dated March 25th, 1885. Q. Were you present when it was made? A. No, gir. Q. When did you first know of its existence? 4. In the year 1894. Q. At the time that you were informed of the existence of the others? A. Nearly at the same time, I should say. Q. Did you pay the bank of Exeter $10,695, or any other sum for the bonds mentioned in that bill of sale? A. No, sir. Q. You also say in the same answer to the same interrogatory in your former deposition that you hold a bill of sale and assignment from Susan F. Jones for coupons Nos. 55 to 64 and Nos. 65 to 66 for the years 1886, '7, '8, 1891, also coupons amounting to $600 from bonds 55-6-7-8-9-60 falling due in the year 1894. What is the date of that bill of sale and assignment? A. I could not tell. Q. When did you first know of its existence? A. I should say in 1894. Q. Did you pay anything for it? A. No, sir. Q. Did you ever have in your possession any of the coupons or any of the bonds to which this examination has thus far been directed? A. Strictly speaking, I don't think I ever had them in my own possession. I have seen some of the bonds and handled them, had them in a safe. Q. Where? A. In Boston. Q. When? A. Well, I should say in the year 1893. Q. But that was before you knew they had been assigned to you by bill of sale, was it not? A. I was really handling them as agent for other parties. Q. Who were the other parties you were handling them as agent for? A. I don't know as I was exactly an agent. I was an officer of another company. They came into our hands. Q. What was that company? A. E. H. Rollins & Sons. 9. Were you a stockholder of that company? A. Yes. Q. Are you now? A. Yes, sir. Q. Is not that the only interest which you have in these bonds or any of them-your interest as a stockholder in the firm of E. H. Rollins & Sons? A. Yes, probably it is.

would be, Joseph Stanley would have a certain
amount of money if the suit was won. Q. Was
not the bill of sale drawn in Denver,-the Stan-
ley bill of sale? A. I have no actual knowledge
where it was drawn. Q. Do you know who had
the bill of sale before it was sent on to you in
1894? A. I do not think I have any actual
knowledge. Q. Did you have any sort of knowl-
edge? A. Yes. I imagined it came from Roll-
ins & Son. Q. By letter? A. It came through
the mail. Q. Have you the letter now? A.
do not think that I have; no, sir. Q. What did
you do with it? A. I could not swear that it
was. Q. It came in December of 1894, did it
not? A. I should say it did.

As to the bonds referred to in the bill of sale
by Susan F. Jones, executrix, the witness testi-
fied:

Q. What did you pay for that bill of sale, Mr. Dudley? A. For consideration not named in the bill of sale. Q. That does not answer my question. What did you pay for it? A. I do not remember as I paid anything. Q. Do you remember that you did not pay anything? A. It is my impression that I did not. Q. Were you present when it was drawn? A. No, sir. Q. In the event you recover a judgment in this case, are not the amounts of the coupons belongIng to the bonds mentioned in the bill of sale from Mrs. Jones to be paid to Mrs. Jones, less her proportion of [the expenses of] the case? A. I could not state definitely about that. Q. Why? A. For the reason that I answered similar questions above. Q. Going back to the bonds of Mr. Stanley, I will ask you one or two other questions. Is Mr. Stanley a citizen of Colorado? A. I think he is. Q. Now, why did you not include in this case the coupons belonging to the Stanley bonds for 84, 85, and 86, and the coupons to bonds 68 to 72, included in the Stanley bill of sale of 1888, and the coupons on 67, 87-91 for 1884-'5? A. If they were not included I do not know why they were not. Q. Is Mrs. Jones a citizen of the state of Colorado? A. I think she is. Q. Were not those bonds of Stanley and Jones assigned to you in order that you might as a citizen of another state bring suit upon them and upon the coupons belonging to them in the Federal court in Colorado? A. I should answer that by referring to my answer in former deposition to interrogatory 9.

In reference to the other bills of sale and the bonds mentioned in them, the witness testified: Q. In your answer to interrogatory 4 of your former deposition you also say that you own bonds of Lake county by the written bill of sale from the Nashua Savings Bank, numbered 92111, both inclusive, together with all coupons originally attached and unpaid. You also say that the consideration for the said bill of sale is $11,689.45. Did you pay any part of that, Mr. Dudley? A. No, sir. Q. Were you present

sachusetts against a municipal corporation of never requested the execution of the preMaine, and in which one of the questions was tended bills of sale referred to, nor did he as to the real ownership of the coupons, this hear of their being made until more than court said: "It is a suit for the benefit of nine years after they were signed. And, notthe owners of the bonds. They are to receive withstanding the evasive character of his anfrom the plaintiff one half of the net pro-swers to questions, it is clear that his transceeds of the case they have created by their ferrers are the only real parties in interest, transfer of the coupons gathered together and his name is used for their benefit. The for that purpose. The suit is their own in transfer was collusive and simulated for the reality, though they have agreed that the purpose of committing a fraud upon the juplaintiff may retain one half of what he col- risdiction of the circuit court in respect at lects for the use of his name and his trouble least of part of the causes of action that in collecting. It is true the transaction is make the case before the court. called a purchase in the papers that were executed, and that the plaintiff gave his note for $500, but the time for payment was put off for two years, when it was, no doubt, supposed the result of the suit would be known. No money was paid, and as the note was not negotiable, it is clear the parties intended to keep the control of the whole matter in their own hands, so that if the plaintiff failed to recover the money he could be released from his promise to pay." It was consequently held that the transfer of the coupons was "a mere contrivance, a pretense, the result of a collusive arrangement to create a fictitious ground of Federal jurisdiction."

In Little v. Giles, 118 U. S. 596, 603 [30: 269, 271], reference was made to the act of 1875, and the court said that where the interest of the nominal party was "simulated and collusive, and created for the very pur[254]pose of giving jurisdiction, the courts should not hesitate to apply the wholesome provisions of the law.

For the reasons stated the trial court,, when the evidence was concluded, should on[255] its own motion have dismissed the suit. The judgment of the Circuit Court and the judgment of the Circuit Court of Appeals must both be reversed, and the cause remanded for a new trial and for further proceedings consistent with this opinion. It is so ordered.

BOARD OF COUNTY COMMISSIONERS
OF THE COUNTY OF GUNNISON,
STATE OF COLORADO, Petitioner,

v.

E. H. ROLLINS & SONS.

(See S. C. Reporter's ed. 255-276.)

When bill of exceptions may be taken as containing all the evidence-when recital in county bonds estops the county—when indorsee of commercial paper can recover upon the title of the indorser-innocent holder.

We have held that if, for the purpose of placing himself in a position to sue in a circuit court of the United States, a citizen of one state acquires a domicil in another state without a present intention to remain in the latter state permanently or for an indefinite time, but with the present intention to return to the former state as soon as he can do so without defeating the jurisdiction | 2. of the Federal court to determine his suit, the duty of the circuit court is on its own motion to dismiss such suit as a collusive one under the act of 1875. Morris v. Gilmer, 129 U. S. 315 [32: 690]. The same principle applies where there has been a simulated transfer of a cause of action in order to make a case cognizable under the act.

The cases cited are decisive of the present
one. As the coupons in suit were payable
to bearer and were made by a corporation,
Dudley, being a citizen of New Hampshire,
could have sued the defendant, a Colorado
corporation, in the circuit court of the Unit-
ed States without reference to the citizenship
of his transferrers, or the motive that may
have induced the transfer of the coupons to
him, or the motive that may have induced Argued
him to buy them, provided he had really pur-
chased them. But he did not buy the cou-

pons at all. He is not the owner of any of
them. He is put forward as owner for the
purpose of making a case cognizable by the
Federal court as to all the causes of action
embraced in it. The apparent title was put
in him without his knowledge and without
his request, and only that he might repre-
sent the interests of the real owners. He
173 U. S.
U. S.. Book 43.

44

1.

Although a bill of exceptions does not state, In words, that it contains all the evidence, yet It may be taken as containing all where the entries sufficiently show that fact.

A recital in county bonds that the debt thereby created does not exceed the limit prescribed by the state Constitution estops the county from asserting, as against a bona fide holder for value, that the contrary is the fact.

3.

A bona fide holder of commercial paper is entitled to transfer to a third party all the rights with which he is vested, and the title so acquired by his indorsee cannot be affected by proof that the indorsee was acquainted with defenses existing against the paper.

4.

One who surrenders county warrants for county bonds is as much an innocent holder of the bonds as if he had bought them in open market, and is entitled to the benefit of the rule above stated as to the conclusiveness of the recital in the bonds.

[No. 178.]

December 15, 16, 1898. Decided
February 20, 1899.

OF CERTIORARI to the United

States Circuit Court of Appeals for the Eighth Circuit to review a judgment of that court reversing the judgment of the Circuit Court of the United States for the District of Colorado in favor of defendant in an action brought by E. H. Rollins & Sons, a corporation of New Hampshire, against the 689

Spangler v. Green, 21 Colo. 505.

County Commissioners of the County of Gun- | the evidence need not be shown in any par nison for the amount of certain coupons of ticular or technical form. bonds. The Circuit Court of Appeals gave judgment for only a portion of the amount claimed. Judgment of the Circuit Court and of the Circuit Court of Appeals reversed, and cause remanded for further proceedings.

See same case below, 49 U. S. App. 399. The facts are stated in the opinion. Messrs. Thomas C. Brown, C. S. Thomas, W. H. Bryant, and H. H. Lee, for petitioner:

The court errs in reversing the judgment on errors committed in the admission or exclusion of testimony, when the record shows that all the testimony was not contained in the bill of exceptions, and the court below directed a verdict for the defendant. Where a court takes a case away from a jury and directs a verdict, the same rules apply as though the court had tried the case alone without a jury.

Robbins v. Potter, 98 Mass. 532; Daly v. Wise, 132 N. Y. 306, 16 L. R. A. 236; Maier v. Davis, 57 Wis. 212.

Every presumption will be indulged in to sustain the judgment of a trial court; and although improper evidence may have been admitted, it will be presumed that in arriving at a conclusion only proper evidence was considered, and that the judgment of the court below is correct.

Hinckley v. Pittsburgh Bessemer Steel Co. 121 U. S. 264, 30 L. ed. 967; Mammoth Mining Co. v. Salt Lake Foundry & Mach. Co. 151 U. S. 447, 38 L. ed. 229; Parker v. Van Buren, 20 Colo. 217; White v. White, 82 Cal. 427, 7 L. R. A. 799; Smith v. Long, 106 Ill. 485; Tower v. Fetz, 26 Neb. 706; Kirkland v. Telling, 49 Wis. 634; Minton v. Pickens, 24 S. C. 592; State v. Seabright, 15 W. Va. 590.

Dixon County v. Field, 111 U. S. 83, 28 L. ed. 360; Lake County v. Graham, 130 U. S. 674, 32 L. ed. 1065; Hedges v. Dixon County, 150 U. S. 182, 37 L. ed. 1044; Lake County Comrs. v. Standley, 24 Colo. 1.

The court erred in holding that the citals contained in the bonds estopped the county from proving against an innocent purchaser that the bonds had been issued in excess of the limit of indebtedness authorized by the Constitution of Colorado.

The instructions to the jury, duly excepted to, were reviewable by the circuit court of appeals, and are open to consideration in this court.

Pennock v. Dialogue, 2 Pet. 1; Worthington v. Mason, 101 U. S. 149, 25 L. ed. 848; United States v. Rindskopf, 105 U. S. 418, 26 L. ed. 1131; Ward v. Cochran, 150 C. S. 597, 37 L. ed. 1195.

Though he may have notice of infirmities in its origin, a purchaser of a municipal bond from a bona fide holder before matu

The court below erred in holding that it was error in the trial court to admit in evi-rity takes it as free from such infirmities as dence the financial statements of Gunnison it was in the hands of such holder. county for the six months ending respectively on December 31, 1881, June 30, 1882, and December 30, 1882.

The rulings of the court, which were duly objected and excepted to at the time, were reviewable by the circuit court of appeals.

Vicksburg & M. R. Co. v. O'Brien, 119 U. S. 99, 30 L. ed. 299; Mexia v. Oliver, 148 U. S. 664, 37 L. ed. 602; Lincoln v. Claflin, 7 Wall. 132, 19 L. ed. 106; Lees v. United States, 150 U. S. 476, 37 L. ed. 1150; Hickman v. Jones, 9 Wall. 197, 19 L. ed. 551; Michigan Ins. Bank v. Eldred, 143 U. S. 293, 36 L. ed. 162.

Plaintiff was a bona fide holder of the coupons in question.

San Antonio v. Mehaffy, 96 U. S. 312, 24 L. ed. 816; Lexington v. Butler, 14 Wall. 282, 20 L. ed. 809; Macon County v. Shores, 97 U. S. 272, 24 L. ed. 889.

A bona fide holder is a purchaser for value without notice, or the successor of one who was such a purchaser.

McClure v. Oxford Twp. 94 U. S. 429, 24 L. ed. 129.

|

If any previous holder of the bonds in suit was a bona fide holder for value, the plaintiff can avail himself of such previous holder's position without showing that he himself has paid value.

Montclair v. Ramsdell, 107 U. S. 147, 27 L. ed. 431.

|

Lake County v. Graham, 130 U. S. 674, 32 L. ed. 1060; Graves v. Saline County, 161 U. S. 359, 40 L. ed. 732; Sutliff v. Lake County Comrs. 147 U. S. 230, 37 L. ed. 145.

Messrs. John F. Dillon, Edmund F. Richardson, Harry Hubbard, and John M. Dillon, for respondent:

Moral justice and equity and fair dealing equally entitle the plaintiff to a recovery. Jasper County v. Ballou, 103 U. S. 745, 26 L. ed. 422; Graves v. Saline County, 161 U. S. 359, 40 L. ed. 732.

That the bill of exceptions contains all of

The plaintiff Standley was a bona fide holder of the $5,000 of bonds received by him in exchange for warrants which he surrenre-dered to Gunnison county.

Cromwell v. Sac County, 96 U. S. 51, 24 L. ed. 681; Douglas County Comrs. v. Bolles, 94 U. S. 104, 24 L. ed. 46; Marion County Comrs. v. Clark, 94 U. S. 278, 24 L. ed. 59; Nauvoo v. Ritter, 97 U. S. 389, 24 L. ed. 1050.

Douglas County Comrs. v. Bolles, 94 U. S. 104, 24 L. ed. 46; Montclair v. Ramsdell, 107 U. S. 147, 27 L. ed. 431.

The recital in the bonds, "that the total amount of this issue does not exceed the limit prescribed by the Constitution of the state of Colorado," is conclusive as an estoppel in favor of a bona fide holder of the bonds in question.

Chaffee County v. Potter, 142 U.S. 355,35 L. ed. 1040; Buchanan v. Litchfield, 102 U. S. 278, 26 L. ed. 138; Independent School Dist. v. Stone, 106 U. S. 183, 27 L. ed. 90; Sherman County v. Simons, 109 U. S. 735, 27 L. ed. 1093; Dallas County v. McKenzie, 110 U. S. 686, 28 L. ed. 285; Dixon County v. Field, 111 U. S. 83, 28 L. ed. 360.

The recital in the bond in question, that

it is issued "for valid floating indebtedness of the said county," creates an estoppel which is conclusive in favor of the bona fide holder of such bonds.

Jasper County v. Ballou, 103 U. S. 745, 26 L. ed. 422; Graves v. Saline County, 161 U. S. 359, 40 L. ed. 732; Huron v. Second Ward Sav. Bank, 57 U. S. App. 593, 86 Fed. Rep. 272, 30 C. C.A. 38; West Plains Twp. v. Sage, 32 Ú. S. App. 725, 69 Fed. Rep. 943, 16 C. C. A. 553; Kiowa County Comrs. v. Howard, 49 U. S. App. 642, 83 Fed. Rep. 296, 27 C. C. A. 531; Cadillac v. Woonsocket Inst. for Sav. 16 U. S. App. 546, 58 Fed. Rep. 935, 7 C. C. A. 574; National L. Ins. Co. v. Huron Bd. of Edu. 27 U. S. App. 244, 62 Fed. Rep. 778, 10 C. C. A. 637.

The issue of bonds to pay off or refund an existing indebtedness does not increase the debt or create a new debt. It merely changes the form of the old debt.

Powell v. Madison, 107 Ind. 106; Blanton v. McDowell County Comrs. 101 N. C. 532; Los Angeles v. Tweed, 112 Cal. 319; Sioux City v. Weare, 59 Iowa, 95; Opinion of the Justices in 81 Me. 602, Appx.

The so-called "financial statements" cannot be introduced in evidence as against a bona fide holder of the bonds in question containing such recitals as these bonds con

tain.

Sutliff v. Lake County Comrs. 147 U. S. 230, 37 L. ed. 145; Chaffee County v. Potter, 142 U. S. 355, 35 L. ed. 1040; Evansville v. Dennett, 161 U. S. 434, 40 L. ed. 760.

No record is constructive notice as to any negotiable paper unless a statute expressly so provides.

Burck v. Taylor, 152 U. S. 634, 38 L. ed.

578.

The purchaser of negotiable paper does not have constructive notice of any litigation pending, or any judgments which may have been previously rendered, regarding such paper.

This action was brought by E. H. Rollins & Sons, a corporation of New Hampshire, to obtain a judgment against the board of commissioners of Gunnison county, Colorado, a municipal corporation of that state, for the amount of certain coupons of bonds issued by the defendant in 1882. At the close of the evidence the defendant requested a peremptory instruction in its behalf. The circuit court charged the jury at some length, but concluded with a direction to find a verdict for the defendant, which was done, and a judgment in its favor was entered. That judgment was reversed in the circuit court of appeals, and the case is here upon writ of certiorari. 49 U. S. App. 399.

The case made by the complaint is as follows:

Where it is sought to affect a bona fide purchaser for value of commercial paper with constructive notice, the question is not whether he had the means of obtaining, or might have obtained by prudent caution, the knowledge in question, but whether not obtaining was an act of gross or culpable negligence.

Wilson v. Wall, 6 Wall. 83, 18 L. ed. 727; Ware v. Egmont, 4 DeG. M. & G. 460; Goetz v. Bank of Kansas City, 119 U. S. 551, 30 L.

ed. 515.

Lexington v. Butler, 14 Wall. 282, 20 L. ed. 809; Macon County v. Shores, 97 U. S. 272, 24 L. ed. 889; Cromwell v. Sac County, 96 U. S. 51, 24 L. ed. 681; Montclair v. Ramsdell, 107 U. S. 147, 27 L. ed. 431.

A person may estop himself from relying upon the constructive notice which records furnish.

*Mr. Justice Harlan delivered the opin-[256] ion of the court:

Warren County v. Marcy, 97 U. S. 96, 24 L. ed. 977; Carroll County v. Smith, 111 U. S. 556, 28 L. ed. 517; Orleans v. Platt, 99 U. S. 676, 25 L. ed. 404; Cass County v. Gil-*per annum, payable semi-annually on the[257] lett, 100 U. S. 585, 25 L. ed. 585; Thompson first days of March and September in each v. Perrine, 103 U. S. 806, 26 L. ed. 612. year at the county treasurer's office, or at the Chase National Bank in the city of New York, at the option of the holder, upon the presentation and surrender of the annexed coupons as they severally became due.

Each bond contained this recital: "This bond is issued by the board of county commissioners of said Gunnison county in exchange, at par, for valid floating indebtedness of the said county outstanding prior to September 2d, 1882, under and by virtue of and in full conformity with the provisions of an act of the general assembly of the state of Colorado, entitled 'An Act to Enable the Several Counties of the State to Fund Their Floating Indebtedness,' approved February 21st, 1881; and it is hereby certified that all the requirements of law have been fully complied with by the proper officers in the issuing of this bond. It is further certified that the total amount of this issue does not exceed the limit prescribed by the Constitu tion of the state of Colorado, aud that this

Brookhaven v. Smith, 118 N. Y. 634, 7 L. R. A. 755; Wilde v. Gibson, 1 H. L. Cas. 605; Stone v. Covell, 29 Mich. 359.

If the plaintiff proves the payment of value, then the burden is on the defendant to show that the plaintiff had notice of the illegality or fraud.

By the laws of Colorado, boards of county commissioners were authorized to examine, allow, and settle all accounts against their respective counties, and to issue county waṛrants therefor; to build and keep in repair the county buildings, to insure the same, and to provide suitable rooms for county purposes, and to represent the county, and have the care of county property and the management of the business and concerns of the county in all cases where the law did not otherwise provide.

On the 1st day of December, 1882, the de-
fendant board caused to be made and execut-
ed certain bonds acknowledging the county
of Gunnison to be indebted and promising
to pay to
or bearer the sum there-
in named, for value received, redeemable at
the pleasure of the county after ten years,
and absolutely due and payable twenty
years after date, at the office of the county
treasurer, with interest at eight per cent