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Statement of the Case.

road Company, of the value.of $200,000, and in making such purchase, and as part of the consideration therefor, assumed all claims, demands and rights of action against the Plainview Railroad Company, as provided in the act, including the claim, demand and right of action set forth in the complaint, and agreed to pay the same. The complaint demanded judgment against the Winona and Saint Peter Railroad Company for $50,000, with interest from January 1, 1879, at seven per cent per annum.

The record shows that on the 11th of May, 1881, the Plainview Railroad Company conveyed, by an instrument in writing, to the Winona and Saint Peter Railroad Company all its railroad, about sixteen miles in length, and all its franchises and property, for the consideration of $225,000 paid, “ and by virtue of the power and authority conferred upon the parties” by the act of March 3, 1881.

The defendant put in an answer to the complaint, denying its liability, to which answer the plaintiff replied. Evidence was given as to the suit of Harrington and the suits of Marshall and Ilsley against the town, and the case was tried in June, 1885, before the District Court for Wabasha County, which made findings of fact and conclusions of law, on December 26, 1885, and entered a judgment for the plaintiff for $74,451.31, being $50,000 with interest from January 1, 1879, at seven per cent per annum.

The defendant moved for a new trial, which was denied in May, 1886, and it then appealed to the Supreme Court of Minnesota from the order denying the motion. The case was decided by that court April 28, 1887, (36 Minnesota, 505,) and it affirmed the order denying the motion for a new trial, and adjudged that the plaintiff have judgment accordingly. On the mandate of the Supreme Court, the District Court gave judgment for the plaintiff for $80,031.86 damages and $257.09 costs and disbursements, being in all $80,288.95. From that judgment the defendant took a further appeal to the Supreme Court of the State, which court affirmed the judgment below, for the reasons given in the opinion of the court, reported in 36 Minnesota, 505, and directed judgment accordingly, which

Statement of the Case.

was entered in the Supreme Court. To review that judgment, a writ of error was sued out from this court on the allowance of the chief justice of the Supreme Court of Minnesota.

The writ of error in the case of Winona and Saint Peter Railroad Company v. Town of Elgin, (No. 172,) is presented for consideration at the same time with the case of the town of Plainview, and was argued at the same time on the same briefs. The two cases have gone along together pari passu in the lower courts, and the proceedings in them have been alike, mutatis mutandis. The bonds in the case of the town of Elgin were for $40,000, being eighty in number, of $500 each, bearing date January 1, 1879, and containing the same recital as in the case of the town of Plainview. The judg.

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. ments in favor of Marshall and Ilsley against the town of Elgin were five in number, being respectively for $1696.85, $1443.91, $2852.85, $2745.12, and $3175.82, all recovered upon coupons. The judgment of the Supreme Court of Minnesota against the plaintiff in error here in the suit brought against it by the town of Elgin was rendered July 30, 1887, for $64,245.77. In 36 Minnesota, 517, the Supreme Court says that the case of the town of Elgin against the railroad company was argued and submitted with the case of the town of Plainview against the same defendant, and involved the same questions; and that court affirmed the order of the lower court.

In the decision reported in 36 Minnesota, 505, the first opinion was given by Judge Vanderburgh and concurred in by Judge Berry. A second opinion was given by Chief Justice Gilfillan and Judge Dickinson. Judge Mitchell dissented. In the first opinion, it was said that the question of the validity of the bonds was considered and determined in Harrington v. Town of Plainview, 27 Minnesota, 224; that the bonds were not issued on the vote of the electors of the town, in pursuance of section 5 of chapter 106 of the Laws of 1877, but in pursuance of section 7 of that statute, on the petition of a majority of the resident taxpayers; that the proceedings to procure the bonds were initiated and prosecuted by the railroad company under the act, by filing with the town clerk its

Statement of the Case.

proposition in writing, as provided by section 4 of the act, for the issue to it of the bonds of the town, and thereafter by securing and filing the petition of the taxpayers, as directed by section 7; and that the evidence in the case was sufficient to uphold the finding of the trial court that the bonds in controversy were issued to the Plainview Railroad Company, and by its agents transferred to the Chicago and Northwestern Railroad Company, at their par value, in consideration of the amount due to the latter company, which it had previously advanced in aid of the construction of the other company's railroad. The first opinion then proceeded as follows: “Before the issuance of the bonds, the action above referred to was commenced to enjoin the same, and, while the case was pending in this court, the bonds were issued and transferred. The evidence, however, does not warrant the conclusion that there was any actual fraud in the procurement or transfer of the bonds. Both railway companies were cognizant of the pendency of the action, and of the grounds of the alleged invalidity of the bonds; but the legal questions involved were still open and in dispute, and they were advised and believed them to be legal and valid. It is affirmed by the trial court, upon sufficient evidence, that, except as appears upon the face of the bonds, Marshall and Ilsley, and others, to whom they were subsequently transferred, had no notice of the suit, and were bona fide purchasers and holders for value. The Chicago and Northwestern Railway Company was a foreign corporation, and the subsequent purchasers of the bonds were and are citizens of other States. The bonds all recite on their face that they were issued in pursuance of the authority given for that purpose by the laws of the State of Minnesota, and in compliance with a resolution of the board of supervisors of the town, and also ‘in pursuance of a mutual agreement, between the said town and the said railroad company, which agreement was made in accordance with the laws of the State of Minne sota, and through and by a proposition made by said railroad company and duly accepted by said town, upon petition therefor signed by a majority of the resident taxpayers of said town, said agreement having been duly performed by said railroad

Statement of the Case.

company on its part.' This court held in the Harrington Case that an agreement, consummated by proceedings under the provisions of the statute referred to, between the railway company and the majority of the taxpayers, could not, under the Constitution, be considered as the lawful agreement of the town, nor be of any binding obligation as such, and that bonds issued in pursuance thereof would be void, except in the hands of bona fide purchasers.”

The first opinion then said, that the bonds were invalid in che hands of the Plainview company, and could not have been enforced by it; that although that company had built its road, there was no agreement made with the town; that the town, in its corporate capacity, had received nothing, been guilty of no laches, and waived nothing, and there was no estoppel ; and that it was entitled to be protected against the unauthorized acts of its own officers, when that could be done without injury to third parties, citing Thomas v. City of Richmond, 12 Wall. 349, 356, and Town of South Ottawa v. Perkins, 94 U. S. 260. The first opinion also said, that, while the recitals in the bonds were sufficient to put the purchasers upon inquiry as to the authority for the issue of the bonds and the manner in which they were in fact issued, and by the recitals all purchasers were chargeable with notice of the invalidity of the bonds, Marshall and Ilsley had brought suit upon the coupons in the Circuit Court of the United States for the District of Minnesota, and the bonds had been duly adjudged and determined, in a trial upon the merits in that court, to be valid in their hands, and the result of that judgment was to make the bonds valid negotiable securities, held by them as bona fide purchasers; that, as the Plainview company and the Winona and Saint Peter company were not parties to that action, the town was not estopped from litigating in the state courts the questions involved in the case; that the judgment of the Circuit Court of the United States could not be reviewed or modified by the state courts; that the result of its decision and judgment was to fix irrevocably the liability of the town for the whole amount of the indebtedness evidenced by the bonds; and that it must be deemed, therefore, to have been settled

Statement of the Case.

conclusively that the bonds had been transferred to parties in whose hands they had become valid and legal obligations against the town.

It was further said, that it was determined conclusively, by the judgment in Harrington v. Town of Plainview, that the bonds were void in the hands of the Plainview company, that company having had its day in court in that case; that the issuing and disposition of the bonds must be treated by the state courts as unlawful and wrongful; that, as the bonds, when once placed on the market, were liable to pass into the hands of purchasers who would be entitled to enforce the same as valid negotiable securities in the United States courts, it followed that the town had a cause of action for damages; that the Plainview company transferred the bonds for full value, in payment of moneys advanced for building its road, and Marshall and Ilsley paid nearly par for them; that they were treated by all parties as valuable commercial securities, placed on the market and sold, and enforced as such against the town; and that, as the bonds were invalid and the Plainview company acquired no title to them as obligations of the town, it could not claim to be entitled to the proceeds of them as its property.

It was further said that, as the Plainview company received the full face value of the bonds, the amount of the recovery would be the same whether the suit was one for money had and received or one for a conversion; that the allegations of the complaint and the findings of fact were sufficient to support the action in either form ; that the title to the bonds had been confirmed in the present holders of them, who had recovered, or would recover, the full amount thereof; that the liability of the town had been fixed through the acts of the Plainview company in procuring and negotiating the bonds, which acts were unauthorized and wrongful; that such proceedings as would result in the enforcement of the bonds must be presumed to have been intended and contemplated by the Plainview company, either in its own hands or by purchasers who might occupy a more advantageous position, and it could not be permitted to object that the bonds were of no value, or

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VOL. CXLIII-25

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