Town of Clifton Forge v. Brush Electric Co.

Harrison, J., delivered the opinion of the court. The questions arising in this case are similar to those pre-* sented in the case of The Town of Clifton Forge v. The Alleghany Bank, decided at the present term of this court. In this case, as in that, the chief point relied on is that a certain contract dated November 26,1892, by which the town of Clifton Forge became the owner of a controlling interest in the stock of the Electric Light and Power Company, is ultra vires on the part of the town, and that the bonds issued by the town to pay for its interest in that company are null and void. The Brush Electric Company, of Cleveland, Ohio, held a mortgage on the plant of the Clifton Forge Electric Light Company, to secure a certain debt for machinery furnished by it to the Clifton Forge Electric Light Company, and was threatening to foreclose the mortgage unless paid. A correspondence ensued between the president of the Electric Light Company, who was also the town treasurer, and the Brush Electric Company, in which the latter company was informed that the Electric Light Company had $2,500 of town bonds, which they had been trying to sell, in order to apply the proceeds to the debt of the Brush Electric Company. The result of this correspondence was an agreement on the part of the Brush Electric Company to take the $2,500 of bonds as collateral security, and endeavor to sell them at par, and apply the proceeds to their debt, and in consideration to give the Electric Light Company six months’ further time on the amount due, and to extend it further credit for articles then needed. In pursuance of this agreement the $2,500 of town bonds were delivered to the Brush Electric Company. It is unnecessary to decide whether the contract now sought to be repudiated by the town is ultra vires or not, for if it were the appellant would not be entitled to the relief sought. The contract was completely executed by the'Electric Light [291] Company, and the town accepted it, and under it took possession of the electric light plant, paid a large part of the amount due in money, and delivered $2,500 of its bonds to the Electric Light Company in payment of the balance. These bonds were, for value received, delivered by the Electric Light Company to the Brush Electric Company, of Cleveland, Ohio, the appellee here. The bonds are free from conditions of every kind, exhibiting all the requirements of negotiability, and are negotiable instruments, with all of the incidents attaching to such paper. The evidence shows that the Electric Company was the bona fide holder of the bonds, for value, before maturity, and without any knowledge of the contract between the town and the Electric Light Company, and without any notice of the objections now made to their validity. Under these circumstances, the town, having full power to issue the bonds, and having exercised that right in a lawful manner, cannot now question the title of the appellee to the $2,500 of bonds held by it. It is insisted that the contract being for the payment of $5,000 in money to the Electric Light Company, the town treasurer had no right to deliver the bonds, but could only sell the bonds and pay the money. If the town treasurer had the authority to sell the bonds and pay the proceeds to the company, he had the power to deliver the bonds, if the company was willing to accept them. For the foregoing reasons we are of opinion that the decree complained of is right, and must be affirmed. Affirmed.