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siveness of certain recitals in the bonds sued | sue bonds upon a condition are not the apon in that case. This court said: "The es- pointed tribunals to decide the fact which toppel does not arise, except upon matters of constitutes the condition, their recital will fact which the corporate officers had autaor- not be accepted as a substitute for proof. In ity by law to determine and to certify. It other words, where the validity of the bonds is not necessary, it is true, that the recital depends upon an estoppel claimed to arise should enumerate each particular fact essen- upon the recitals of the instrument, the tial to the existence of the obligation. A question being as to the existence of power general statement that the bonds have been to issue them, it is necessary to establish issued in conformity with the law will suf- that the officers executing the bonds had lawfice, so as to embrace every fact which the fu! authority to make the recitals and to officers making the statement are authorized make them conclusive. The very ground of to determine and certify. A determination the estoppel is that the recitals are the offiand statement as to the whole series, where cial statements of those to whom the law re[266]more than one is *involved, is a determina- fers the public for authentic and final infortion and certificate as to each essential par- mation on the subject." ticular. But it still remains that there must In Lake County v. Graham, 130 U. S. 674, be authority vested in the officers, by law, as 680, 683, 684 [32: 1065, 1067, 1068], the to each necessary fact, whether enumerated, question was as to the validity of certain or nonenumerated, to ascertain and determine bonds issued by Lake county, Colorado, units existence, and to guarantee to those dealing der the very statute of that state referred to with them the truth and conclusiveness of in the bonds the coupons of which are here their admissions. In such a case the mean- in suit, namely, the above act of February ing of the law granting power to issue bonds 21st, 1881, authorizing the several counties is that they may be issued, not upon the ex- of the state to fund their floating indebtedistence of certain facts, to be ascertained and ness. It was recited in each of the bonds determined whenever disputed, but upon the sued on in that case that they were issued ascertainment and determination of their ex- under and by virtue of and in full comistence by the officers or body designated by pliance with that act, and that "all the prolaw to issue the bonds upon such a contingen- visions and requirements of said act have cy. This becomes very plain when we suppose been fully complied with by the proper offithe case of such a power granted to issue bonds cers in the issuing of this bond." No one upon the existence of a state of facts to be of the bonds, let it be observed, contained ascertained and determined by some persons any recital that it was issued in conformity or tribunal other than those authorized to to the provisions of the state Constitution. issue the bonds. In that case it would not be This court said: "Nothing is better settled contended that a recital of the facts in the than this rule that the purchaser of bonds, instrument itself, contrary to the finding of such as these, is held to know the constituthose charged by law with that duty, would tional provisions and the statutory restrichave any legal effect. So, if the fact neces- tions bearing on the question of the authority sary to the existence of the authority was to issue them; also the recitals of the bonds by law to be ascertained, not officially by the he buys; while, on the other hand, if he act officers charged with the execution of the in good faith and pay value, he is entitled to power, but by reference to some express and the protection of such recitals of facts as definite record of a public character, then the bonds may contain. In this case the the true meaning of the law would be that Constitution charges each purchaser with the authority to act at all depended upon knowledge of the fact that, as to all counties the actual objective existence of the requisite whose assessed valuation equals one million fact, as shown by the record, and not upon of dollars, there is a *maximum limit beyond [268] its ascertainment and determination by any- which those counties can incur no further one; and the consequence would necessarily indebtedness under any possible conditions, follow that all persons claiming under the provided that in calculating that limit debts excrcise of such a power might be put to contracted before the adoption of the Constiproof of the fact made a condition of its law-tution are not to be counted. The statute, fulness, notwithstanding any recitals in on the other hand, charges the purchaser that instrument This principle is the es- with knowledge of the fact that the county sence of the rule declared upon this point, commissioners were to issue bonds, at par, by this court, in the well-considered words in exchange for such warrants of the county of Mr. Justice Strong, in Town of Coloma v. as were themselves issued prior to the date Eaves, 92 U. S. 484 [23: 579], where he of the first publication of the notice provided states (p. 491 [23: 582]) that it is 'where it for; that the only limitation on the issue of may be gathered from the legislative enact- bonds in the statute was that the bonds ment that the officers of the municipality should not exceed in amount the sum of the were invested with the power to decide county indebtedness on the day of notice whether the condition precedent has been aforesaid; that while the commissioners complied with,' that 'their recital that it has were empowered to determine the amount of been, made in the bonds issued by them and such indebtedness yet the statute does not reheld by a bona fide purchaser, is conclusive fer that board, for the elements of its com[267]*of the fact, and binding upon the municipal- putation, to the Constitution or to the stanity; for the recital is itself a decision of the dards prescribed by the Constitution, but fact by the appointed tribunal.' The con- leaves it open to them, without departing verse is embraced in the proposition, and is from any direction of the statute, to adopt equally true. If the officers authorized to is-solely the basis of the county warrants. The

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recitals of the bonds were merely to the ef- of each series, and the total amount in all, fect that the issue was 'under and by vir- estop the county from pleading the constitutue of and in full compliance with' the stat- tional limitation? In our opinion these two ute; 'that all the provisions and require- features are of vital importance in distinments of said act have been fully complied guishing this case from Lake County with by the proper officers in the issuing of v. Graham and Dixon County v. Field, this bond;' and that the issuing was au- and are sufficient to operate as an thorized by a vote of a majority of the duly toppel against the county. Of course the qualified electors,' etc.; no express reference purchaser of bonds in open market was being made to the Constitution, nor any bound to take notice of the constitutional[270] statement made that the constitutional re- limitation on the county with respect to inquirements had been observed. There is, debtedness which might incur. But when, therefore, no estoppel as to the constitution upon the face of the bonds, there was any al question, because there is no recital in re-express recital that the limitation had not gard to it. Carroll County v. Smith, 111 U. been passed, and the bonds themselves did S. 556" [28: 517]. In disposing of the con- not show that it had, he was bound to look tention that, under the doctrines of certain no further. An examination of any paradjudged cases, the county was estopped to ticular bond would not disclose, as it would deny that the bonds were issued in conform- in the Lake County Case and in Dixon Counity to the Constitution, the court said: "The tu v. Field, that, as a matter of fact, the conquestion here is distinguishable from that in stitutional limitation had been exceeded in the cases relied on by counsel for defendant the issue of the series of bonds. The purin error. In this case the standard of va- chaser might even know, indeed it may be lidity is created by the Constitution. In that admitted that he would be required to know, standard two factors are to be considered; the assessed valuation of the taxable propone, the amount of assessed value, and the erty of the county, and yet he could not asother the ratio between that assessed value certain by reference to one of the bonds and and the debt proposed. These being exac- the assessment roll whether the county had [269]tions of the Constitution itself, it is not exceeded its power, under the Constitution, within the power of a legislature to dispense in the premises. True, if a purchaser had with them, either directly or indirectly, by seen the whole issue of each series of bonds the creation of a ministerial commission and then compared it with the assessment whose finding shall be taken in lieu of the roll, he might have been able to discover facts. In the case of Sherman County v. whether the issue exceeded the amount of inSimons, 109 U. S. 735 [27: 1093], and oth- debtedness limited by the Constitution. But ers like it, the question was one of estoppel that is not the test to apply to a transaction as against an exaction imposed by the legis- of this nature. It is not supposed that any lature; and the holding was that the legis- one person would purchase all of the bonds lature, being the source of exaction, had at one time, as that is not the usual course created a board authorized to determine of business of this kind. The test is, What whether its action had been complied with, does each individual bond disclose? If the and that its finding was conclusive to a bona face of one of the bonds had disclosed that, fide purchaser. So also in Oregon v. Jen- as a matter of fact, the recital in it, with renings, 119 U. S. 74 [30: 323], the condition spect to the constitutional limitation, was violated was not one imposed by the Consti- false, of course the county would not be tution, but one fixed by the subscription con- bound by that recital, and would not be estract of the people." topped from pleading the invalidity of the bonds in this particular. Such was the case in Lake County v. Graham and Dixon County v. Field. But that is not this case. Here, by virtue of the statute under which the bonds were issued, the county commissioners were to determine the amount to be issued, which was not to exceed the total amount of the indebtedness at the date of the first publication of the notice requesting the holders of county warrants to exchange their warrants for bonds, at par. The statute, in terms, gave to the commissioners the determination of a fact, that is, whether the issue of bonds was in accordance with the Constitution of the state and the statute under which they were issued, and required them[271] to spread a certificate of that determination upon the records of the county. The recital in the bond to the effect that such determination has been made, and that the constitutional limitation had not been exceeded in the issue of the bonds, taken in connection with the fact that the bonds themselves did not show such recital to be untrue, under the law, estops the county from saying that it is untrue. Town of Coloma v. Eaves, 92

This brings us in our reference to the authorities to the important case of Chaffee County v. Potter, 142 U. S. 355, 363, 364, 366 [35: 1040, 1043, 1044]. That was an action upon coupons of bonds issued by Chaffee county, Colorado, under the act of February 21st, 1881, under which the bonds here in suit were issued. The bonds and coupons were in the same form and contained the same recitals as the above bonds issued by Gunnison county, and were of like date. The defense in part in the Chaffee county case was that the bonds, and each of them, were issued in violation of the Constitution of the state. After referring to the decision in Lake County v. Graham (the bonds in which did not contain any express recitals as to the constitutional limit of indebtedness), and stating that it was based largely on the ruling in Dixon County v. Field, this court said: "To the views expressed in that case we still adhere; and the only question for us now to consider, therefore, is: Do the additional recitals in these bonds, above set out, and in the absence from their face of anything showing the total number issued

U. S. 484 [23: 579]; Town of Venice v. Murdock, 92 U. S. 494 [23: 583]; Marcy v. Township of Oswego, 92 U. S. 637 [23: 748]; Wilson v. Salamanca, 99 U. S. 499 [25: 830]; Buchanan v. Litchfield, 102 U. S. 278 [26: 138]; Northern Bank v. Porter Township, 110 U. S. 608 [28: 258]." After referring to what was said in Town of Coloma v. Eaves and Buchanan v. Litchfield, the court thus concludes its opinion: "We think this case comes fairly within the principles of those just cited; and that it is not governed by Dixon County v. Field and Lake County v. Graham, but is distinguishable from them in the essential particulars above noted."

It is contended that the present case is controlled by Sutliff v. Lake County Commissioners, 147 U. S. 230, 235, 237-8 [37: 145, 149], rather than by Chaffee County v. Potter. The action in the Sutliff Case was upon coupons of bonds issued by a county of Colorado, each bond reciting that it was issued under and by virtue of and in compliance with the act of Assembly entitled "An Act Concerning Counties, County Officers, and County Government, and Repealing Laws on These Subjects," approved March 24th, 1877, and it was certified in each bond that "all the provisions of said act have been fully complied with by the proper officers in the issuing of this bond." It was a vital fact in that case that there was no recital in the bonds that the indebtedness thus created was not in excess of the constitutional limit. Still, the defense was that the bonds in fact increased the indebtedness of the county to an amount in excess of the limit prescribed by the State Constitution, and therefore were illegal and void. The court, upon the facts certified and in the light of previous decisions, held it to be clear that "the plaintiff, although a purchaser for value and before maturity of the bonds, was charged with the [272]duty of examining the records of indebted ness provided for in the statute of Colorado, in order to ascertain whether the bonds increased the indebtedness of the county beyond the constitutional limit; and that the recitals in the bonds did not estop the county to prove by the records of the assessment and the indebtedness that the bonds were issued in violation of the Constitution. "In those cases," it continued, "in which this court has held a municipal corporation to be estopped by recitals in its bonds to assert that they were issued in excess of the limit imposed by the Constitution or statutes of the state, the statutes, as construed by the court, left it to the officers issuing the bonds to determine whether the facts existed which constituted the statutory or constitutional condition precedent, and did not require those facts to be made a matter of public record. Marcy v. Oswego Twp. 92 U. S. 637 [23: 748]; Humboldt Twp. v. Long, 92 U. S. 642 [23: 752]; Dixon County v. Field, 111 U. S. 83 [28: 360]; Lake County v. Graham, 130 U. S. 674, 682 [32: 1065, 1068]; Chaffee County v. Potter, 142 U. S. 355, 363 [35: 1040, 1043]. But if the statute expressly requires those facts to be made a matter of public record, open to the inspection of everyone, there can be no implication that

it was intended to leave that matter to be determined and concluded, contrary to the facts so recorded, by the officers charged with the duty of issuing the bonds." After referring to Dixon County v. Field, above cited, the court proceeded to show the precise grounds upon which the decisions in Lake County v. Graham and Chaffee County v. Potter were rested: "That decision [Dixon County v. Field] and the ground upon which it rests were approved and affirmed in Lake County v. Graham and Chaffee County v. Potter, above cited, each of which arose under the article of the Constitution of Colorado now in question, but under a different statute, which did not require the amount of indebtedness of the county to be stated on its records. In Lake County v. Graham each bond showed on its face the whole amount of bonds issued, and the recorded valuation of property showed that amount to be in excess of the constitutional limit; and for this reason, as well as because the bonds contained no recital upon that point, the county was held not to be estopped to[273} plead that limit. 130 U. S. 682, 683 [32: 1068]. In Chaffee County v. Potter, on the other hand, the bonds contained an express recital that the total amount of the is sue did not exceed the constitutional limit, and did not show on their face the amount of the issue, and the county records showed only the valuation of property, so that, as observed by Mr. Justice Lamar in delivering judgment: "The purchaser might even know, indeed it may be admitted that he would be required to know, the assessed valuation of the taxable property of the county, and yet he could not ascertain by reference to one of the bonds and the assessment roll whether the county had exceeded its power, under the Constitution, in the premises." 142 U. S. 363 [35: 1043]. The case at bar does not fall within Chaffee County v. Potter, and cannot be distinguished in principle from Dixon County v. Field or from Lake County v. Graham. The only difference worthy of notice is that in each of these cases the single fact required to be shown by the public record was the valuation of the property of the county, whereas here two facts are to be so shown, the valuation of the property, and the amount of the county debt. But, as both these facts are equally required by the statute to be entered on the public records of the county, they are both facts of which all the world is bound to take notice, and as to which, therefore, the county cannot be concluded by any recitals in the bonds."

It thus appears that in the Sutliff Case the court neither modified nor intended to modify, but distinctly recognized, the principle announced in Chaffee County v. Potter, namely, that the recital in the bonds that the debt thereby created did not exceed the limit prescribed by the Constitution estopped the county from asserting, as against a bona fide holder for value, that the contrary was the fact.

We have made this extended reference to adjudged cases because of the wide difference among learned counsel as to the effect

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of our former decisions. This course has also been pursued in order to bring out clearly the fact that the present case is controlled by the judgment in Chaffee County v. Potter. The views of the circuit court, as expressed [274]in its charge in this case and as enforced by its peremptory instruction to find for the defendant, cannot be approved without overruling that case. It was expressly decided in the Chaffee county case that the statute under which the bonds there in suit (the bonds here in suit being of the same class) authorized the county commissioners to determine whether the proposed issue of bonds would in fact exceed the limit prescribed by the Constitution and the statute; and that the recital in the bond to the effect that such determination had been made and that the constitutional limitation had not been exceeded, taken in connection with the fact that the bonds themselves did not show such recital to be untrue, estopped the county, un-missioners, proceeding under the act of 1881, der the law, from saying that the recital was offered to exchange county bonds for the not true. We decline to overrule Chaffee warrants held by him, he was entitled under County v. Potter, and upon the authority of the circumstances disclosed to assume it to that case, and without re-examining or en- be true, as recited in the bonds, that the conlarging upon the grounds upon which the stitutional limit was not being exceeded. decision therein proceeded, we adjudge that as against the plaintiff the county of Gunnison is estopped to question the recital in the bonds in question, to the effect that they did not create a debt in excess of the constitutional limit, and were issued by virtue of and in conformity with the statute of 1881, and in full compliance with the requirements of law.

The remaining five bonds owned by the plaintiff corporation were also purchased from Stanley, who received them directly from the county in exchange for warrants that he owned and held. There is no reason why upon the surrender of county warrants for county bonds he was not entitled to the benefit of the rule above declared as to the conclusiveness of the recital in the bonds, or why he may not be regarded as much an innocent holder of the bonds exchanged for county warrants as of the other bonds purchased by him in open market. There is no proof that at the time of such exchange he had or was chargeable with knowledge or notice that the debt created by the bonds exceeded the constitutional limit; consequently, in taking the bonds in exchange he was entitled, for the reasons heretofore given, to rely upon the truth of the recitals contained in them. When the board of county com

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It is insisted with much earnestness that the principles we have announced render it impossible for a state by a constitutional provision to guard against excessive municipal indebtedness. By no means. If a state Constitution, in fixing a limit for indebtedness of that character, should prescribe a definite rule or test for determining whether that limit has already been exceeded, or is We have assumed thus far that the plain- being exceeded by any particular issue of tiff corporation was a bona fide purchaser or bonds, all who purchase such bends would holder of the bonds to which the coupons in do so subject to that rule or test, whatever suit were attached. Upon this question we might be the hardship in the case of those concur in the views expressed by the circuit who purchased them in the open market *in[276] court of appeals. Speaking by Judge Thayer, good faith. Indeed, it is entirely competent that court said: "The testimony contained for a state to provide by statute that all obin the present record shows, we think, with- ligations, in whatever form executed by a out contradiction, that the plaintiff was a municipality existing under its laws, shall bona fide holder when the suit was brought be subject to any defense that would be alof at least five of the bonds which are in-lowed in cases of non-negotiable instruments. volved in the present controversy, because it But for reasons that everyone understands holds the title of Joseph Stanley, who was no such statutes have been passed. Munichimself an innocent purchaser of said bonds ipal obligations executed under such a statbefore maturity, for the price of ninety-ute could not be readily disposed of to those eight cents on the dollar. The rights which who invest in such securities. Stanley acquired by virtue of such purchase inure to the plaintiff, by virtue of its purchase of the bonds from Stanley in June, 1892, and this without reference to any knowledge which the plaintiff may have had at the latter date affecting the validity of [275]the securities. 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 the defenses existing against the paper. Commissioners of Marion County v. Clark, 94 U. S. 278, 286 [24: 59, 62]; Hill v. Scotland County, 34 Fed. Rep. 208; Dan. Neg. Inst. 4th ed.) § 803, and cases there cited." 49 U. S. App.

399, 413.
698

It follows that the circuit court erred in directing the jury to return a verdict for the defendant.

What has been said renders it unnecessary to consider various questions arising upon exceptions to specific rulings in the circuit court as to the admission and exclusion of evidence, and as to those parts of the charge to which objections were made. Those rulings were inconsistent with the principles herein announced.

As neither the circuit court nor the circuit court of appeals proceeded in accordance with the principles herein announced, the judgment of each court is reversed, and the cause is remanded for further proceedings consistent with this opinion. It is so ordered.

173 U. S.

STATE OF OHIO, Appt.,

บ.

J. B. THOMAS.

(See S. C. Reporter's ed. 276-285.)

Governor of soldiers' home not subject to state law as to use of oleomargarine.

A governor of a soldiers' home which is under the sole jurisdiction of Congress is not subject to the state law concerning the use of oleomargarine, when he furnishes that article to the inmates of the home as part of the rations furnished for them under appropria

tions made by Congress therefor.

[No. 353.]

"3. Said eating house is used by said J.
B. Thomas for serving and furnishing to the
inmates of said Central Branch of the Na-
tional Home for Disabled Volunteer Soldiers
their daily *food or rations, and is the only[278]
place so provided at said National Home, and
is known as the mess room of the said Cen-
tral Branch of the National Home for Dis-
abled Volunteer Soldiers, situate on the
grounds purchased, held and used by the
United States therefor, and the acts com-
plained of herein consisted in causing oleo-
margarine to be served and furnished, on the
2d day of March, 1897, as food and as part of
the rations furnished to the inmates thereof,
under appropriations made by the Congress
of the United States for the support of said
inmates; and that no placard in size not less

Argued and Submitted January 10, 1899. than 10 x 14 inches, having printed thereon
Decided February 27, 1899.

in black letters not less in size than 1%
inches square, the words 'oleomargarine

APPEAL from an order of the United sold and used here,' was displayed in said

States Circuit Court of Appeals for the Sixth Circuit affirming the order of the Circuit Court of the United States for the Southern District of Ohio, Western Division, discharging the appellee, J. B. Thomas, governor of the soldiers' home in the county of Montgomery, Ohio, from the custody of a constable under a mittimus from the justice of the peace before whom he was tried and by whom he was convicted and sentenced to pay a fine of $50 and to be imprisoned until such fine was paid, for a violation of the Ohio act of 1895 (92 Ohio State Laws, 23) in relation to the use of oleomargarine. Affirmed.

See same case below, 82 Fed. Rep. 304, and 58 U. S. App. 431, 87 Fed. Rep. 453.

eating house.

"4. The affidavit in the cause is made in conformity with an act of the general assembly of the state of Ohio (Ohio Laws, vol. 92, page 23), passed in 1895, and entitled 'An Act to Amend Section 3 of an Act Entitled "An Act to Prevent Fraud and Deception in the Manufacture and Sale of Oleomargarine and Promote Public Health in the State of Ohio," passed May 16, 1894.”

Section 3 of the act, as so amended, reads as follows:

"Sec. 3. Every proprietor, keeper, manager, or person in charge of any hotel, boat, railroad car, boarding house, restaurant, eating house, lunch counter, or lunch room, who therein sells, uses, serves, furnishes, or disposes of or uses in cooking, any oleomargarine, shall display and keep a white placard in a conspicuous place, where the same may be easily seen and read, in the dining room, eating house, restaurant, lunch room, or place where such substance is furnished, served, sold, or disposed of, which placard shall be in size not less than ten by fourteen inches, upon which shall be printed in black letters, not less in size than one and a half inches square, the words 'oleomargarine sold and used here,' and said card shall not contain any other words than the ones above described; and such proprietor, keeper, manager, or person in charge shall not sell, serve, or dispose of such substance as or for but ter, when butter is asked for or purported to be furnished or served."

Statement by Mr. Justice Peckham: 77] In this case complaint was made by affidavit by the dairy commissioner of Ohio against the appellee, alleging that on March 2, 1897, he violated the act of the legislature of the state of Ohio, passed in 1895 (92 Ohio State Laws, 23), in relation to the use of oleomarga-rine. Appellee was arrested and brought before a justice of the peace, and declined to plead to the charge on the ground that the act complained of in the affidavit of the complainant was performed by him as governor of the soldiers' home, located in the county of Montgomery and state of Ohio, and what he did was done by the authority of the board of managers of the home. He therefore moved to dismiss the complaint for want of jurisdiction in the magistrate. This motion was denied. He then consented In addition to the above statement, referto be tried without a jury upon the follow-ence was made to the following acts of Con [279] ing agreed statement of facts:

1. That on the 2d day of March, 1897, Joseph E. Blackburn was and now is the food and dairy commissioner of the state of Ohio.

"2. That on the 2d day of March, 1897, J. B. Thomas was and now is the duly chosen and acting governor of the Central Branch of the National Home for Disabled Volunteer Soldiers, located in the county of Montgomery, state of Ohio, and as said governor was in charge of the eating house at the said Central Branch of the National Home for Disabled Volunteer Soldiers.

gress providing for the creation and govern-
ment of the National Homes for Disabled
Volunteer Soldiers, viz.: Act of March 3,
1865, chap. 91 (13 Stat. at L. 509); act of
March 21, 1866, chap. 21 (14 Stat. at L. 10);
act of March 3, 1875, chap. 129 (18 Stat. at
L. 343, at 359). By the last-cited statute,
on page 359, it is made the duty of the man-
agers of the home, on or before the first day
of August in each year, "to furnish to the
Secretary of War estimates, in detail, for
the support of said home for the fiscal year
commencing on the first day of July there
after; and the Secretary of War shall an-

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