State ex rel. Stow v. City Council of Montgomery

STONE, J. — We have not been able to find any order of the court, by which the amended bill found in the record was allowed to be filed; but in what we have to say, we will treat the case as if the amended bill were a part of the record. In the amended bill it is averred, “ that a majority of the votes cast in said election, by those qualified to vote thereat, was not, in point of fact, cast in favor of the proposition to aid in building and equipping the said South and North Alabama railroad from Montgomery to Limekiln.” In another place it is averred, that in the negotiations between the city council of Montgomery and the authorities of the railroad company, the former disregarded the agreement previously made, and secured' to the city a smaller amount of the capital stock in the railroad company, than it was entitled to. If these facts exist, and had been shown at the proper time, they would have furnished a sufficient reason for enjoining the city authorities from issuing; [231] and negotiating the city’s bonds.- — -2 Daniel on Neg. Insts., §§ 1535-6. The act of Dec. 7th, 1866 (Sess. Acts, 144), authorized the mayor of Montgomery to appoint commissioners to hold an election, and thus ascertain the sense of the qualified voters within the city, in the matter of rendering aid in the construction of the South and North Alabama railroad from Montgomery to Limekiln. The conduct of the election was confided to the commissioners thus to be appointed. When the favorable result of the election should be made known to the city council, then, that body, and the board of directors of the South and North Alabama railroad, were authorized and empowered to carry into effect the provisions of said act, and of the propositions which preceded it. And in the event the election resulted in favor of aid to the railroad, then the city council of Montgomery were authorized to issue bonds of the city to carry it into effect. The bonds were issued, the railroad built, and those bonds, according to the averments of the bill, have passed into the hand of outside holders. Now all these steps — the proposition, the election, the agreement with the railroad company, and the issue of the bonds — were confided to the city council of Montgomery; and, as we have said above, if that-body were' taking any step in violation or disregard of the provisions of the statute, then the tax-payers of the city, at any time before the bonds passed into the hands of bona fide holders, could have intervened, and, by injunction, arrested such illegal act before its consummation. The question, however, becomes a very different one, when the bonds have passed into the hands of bona fide holders, or purchasers. As to them, these irregularities stand for nothing. Such purchasers are regarded as innocent holders, when without collusion, and without knowledge to the contrary, they purchase negotiable bonds put on the market, issued by the proper authority, and having on -their face the marks of regularity. They are not required to institute an inquiry, whether the trusted officers have done their duty, or have conformed to the requirements, made, by the law, conditions precedent to the execution of the power. The presumption is in favor of official propriety. “When a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority; and they are no more liable to be impeached for any infirmity, in the hands of such a holder, than any other commercial paper.” — 2 Danl. Neg. Instr. § 1537; Comm’rs of Knox Co. v. Aspinwall, 21 How. U. S. 539; Moran v. Comm’rs, 2 Black, 722; Gelpche v. Dubuque, 1 Wall. 175; Supervisors v. Schenck, 5 Wall. 772; [232] Mayor v. Lord, 9 Wall. 409; Merchants' Bank v. State Bank, 10 Wall. 604. This principle is decisive of the two questions stated above, if the alleged bonds have passed into the hands of tona fide holders. This rests on the self-evident proposition, that if the city is liable for the bonds, then it has the authority to raise the means for their payment by taxation. The present bill does not, in terms, show that the bonds are in the hands of innocent, tona fide holders. It does show, however, that they have passed into third hands, and it does not, in any manner, deny that such third persons are tona fide holders for full value. It simply states the fact, without note or comment. Now, if such holders acquired the bonds by fair, legal purchase, without notice, or something to put them on inquiry as to such alleged irregularities, then their rights are not impaired thereby. Pleadings arc to be construed most strongly against the pleader, and material averments omitted are thereby admitted. ' The averment under discussion is negative in its character; and, therefore, if the bill had averred that the present holders of the bonds were not purchasers for value, the onus of proving such negative averment would not, under our .rulings, have rested with the complainants. Still the averment was necessary. Without it, the complainants showed no right to relief. — Sto. Eq. Pl. § 263; Carroll v. Malone, 28 Ala. 521. Alll the other questions raised by this record are settled adversely to appellants, in Winter v. City Council, 65 Ala. 403. There can be no judgment, however, against the sureties on the appeal bond. Being made expressly payable to the register, it is not a statutory bond; and, hence, if there be any recourse against the sureties, it must be sought in an action on the bond. Brown v. Levins, 6 Por. 414; Curry v. Barclay, 3 Ala. 484; Tarver v. Nance, 5 Ala. 712; Hinson v. Preslar, 27 Ala. 643. This suit was brought in the interest, and for the benefit of the relators. Let the costs of appeal be taxed against them. The decree of the chancellor is affirmed.