Opinion of the Court.

statute, authorizing receivers to be sued and a trial before a jury had without the permission of court; but it does not go far enough to remedy all the evil, by requiring the receivers? court to submit all questions arising upon cross-complaints (such as appellant's) to a jury for determination. Jones v. East Tenn. Va. & Ga. Railroad, 128 U. S. 443.

Mr. A. W. Scott for appellee.

MR. JUSTICE BREWER delivered the opinion of the court.

As this intervening petition was filed nearly a year after the passage of the act of March 3, 1887, (24 Stat. 554,) authorizing suits against receivers without leave of the court appointing them, it is evident that the petitioner preferred to not exercise his right to a common law action and a trial by a jury, but rather to come into a court of equity and have his rights there determined according to the rules and practice of such courts. In view of such election, we fail to appreciate his counsel's complaint of the law in not driving him to a forum which he so carefully avoided.

The gist of this. controversy was the alleged negligence of the receiver in failing to maintain a reasonably safe crossing. This presented mainly a question of fact. Upon the testimony, both the master and the Circuit Court found that there was no negligence, and, while such determination is not conclusive, it is very persuasive in this court. In Crawford v. Neal, 144 U. S. 585, 596, it was said:

"The cause was referred to a master to take testimony therein, and to report to this court, his findings of fact and his conclusions of law thereon.' This he did, and the court, after a review of the evidence, concurred in his finding and conclusions. Clearly, then, they are to be taken as presumptively correct, and unless some obvious error has intervened in the application of the law, or some serious or important mistake has been made in the consideration of the evidence, the decree should be permitted to stand. Tilghman v. Proctor, 125 U. S. 136; Kimberly v. Arms, 129 U. S. 512; Evans v. State Bank, 141 U. S. 107."

Syllabus.

That rule compels an affirmance of the decree in this case. It appears that the railroad track was raised above the level of the highway; but the rise was slight, and the slope gradual. According to the testimony of the surveyor who measured the crossing, (and the other witnesses who simply gave estimates substantially corroborated him,) the rise on the one side was 1.4 feet in 30 feet, and on the other 1.3 in 15, and 1.9 in 30 feet a rise but a trifle greater than that from the gutter to the centre of the street in many cities. That certainly carries with it no evidence of negligence. It appears also that the receiver had ballasted the track at the crossing, and it was claimed that some of the stones within the rails, and on the highway just outside of the rails, were unreasonably large; but the master found that "the stones were broken to a fair size," and that although one or two pieces of unreasonable size were produced on the hearing, yet "the weight of the 'testimony was that the stones in the roadway were of fair size and not dangerous to travel." Photographs of the crossing were presented to the master, to the Circuit Court, and also to us. Those photographs make it clear that the ascent on either side was gradual; that the total rise was slight, and but a few stones on either side of the track in the roadway. They put an end to any suspicion of negligence in the crossing, unless it were in the size of the stones; and the testimony leaves that matter in such condition that we are not justified in disturbing the finding of the master, approved as it was by the Circuit Court.

The decree is therefore

Affirmed.

BARNETT v. DENISON.

ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF TEXAS.

No. 297. Submitted April 13, 1892. — Decided May 2, 1892.

When the charter of a municipal corporation requires that bonds issued by it shall specify for what purpose they are issued, a bond which purports

Statement of the Case.

on its face to be issued by virtue of an ordinance, the date of which is given, but not its title or its contents, does not so far satisfy the requirements of the charter as to protect an innocent holder for value from defences which might otherwise be made.

THE Court stated the case as follows:

This was an action to recover the amount of certain coupons cut from bonds issued by the city of Denison "for the reduction of and cancellation of the outstanding city scrip, and for the improvement of streets," etc.

The charter of the city, adopted March 7, 1873, conferred upon it power (sec. 27) " To borrow money on the credit of the city, and issue bonds therefor to an amount not to exceed $50,000. To make a loan exceeding $50,000 the question must be submitted to the qualified voters of the city, and if sustained by a majority of the votes polled, such loan shall be lawful. All bonds shall specify for what purpose they were issued, and not be invalid if sold for less than their par value. And when any bonds are issued by the city a fund shall be provided," etc. Sec. 28: To issue bonds in aid of any corporation or enterprise, either manufacturing, railroad, or for other purposes, calculated to advance the interests of the said city, and to borrow money for that purpose, and to take stock therein, or in any of them, provided,” etc.

Pursuant to this charter the city council, on August 9, 1873, adopted the following ordinance :

"Sec. 1. Be it ordained by the city council of the city of Denison, that there shall be issued by the city of Denison bonds to the extent of $20,000, and shall be known as 'Denison City Bonds.' Said bonds shall mature in ten years from the date of their issuance, and such bonds, or the proceeds thereof, shall be used for the purpose of redeeming the outstanding city scrip or other indebtedness, and the improvement of the streets, as may be directed by the city council; and said bonds shall bear an annual interest of ten per centum, payable semi-annually, expressed by coupons thereto attached, and shall be payable at the office of the Importers' and Traders' National Bank of New York City."

Argument for Plaintiff in Error.

No reference was made in the bonds to the purpose for which they were issued, but they contained the following paragraph: "These bonds are issued by virtue of an ordinance passed by the board of aldermen of said city, on the 9th day of August, and approved by the mayor on the 9th day of August, 1873."

It was stipulated upon the trial that "if the failure to state the purpose for which the bonds were issued more specifically than is contained in said bonds was such a defect as deprived them of the quality of negotiable paper and visited all purchasers for value with notice, then the city of Denison had a good defence to the suit; but if not such a defect, then plaintiff ought to recover as prayed for in his petition."

The court charged the jury that, by the charter, notice was imputed to all persons purchasing bonds that the purpose for which they were issued should be stated, and instructed them to return a verdict for the defendant, which was done. The plaintiff thereupon took out a writ of error from this court.

Mr. H. Chilton for plaintiff in error submitted on his brief.

I. When a municipal corporation has power under any circumstances to issue negotiable securities the bona fide purchaser has a right to presume that they were issued under circumstances and for a purpose which give the requisite. authority, and they are no more liable to be impeached for any infirmity in the hands of such a purchaser than any other commercial paper. Supervisors v. Schenck, 5 Wall. 772, 784; Merchants' Bank v. State Bank, 10 Wall. 604; St. Joseph Township v. Rogers, 16 Wall. 644; Chambers County v. Clews, 21 Wall. 317; San Antonio v. Lane, 32 Texas, 405.

II. Where, as in this case, the holder of municipal bonds purchased them before their maturity, and without notice of any defence, and they recite that they were issued under a certain ordinance, a reference to which shows a legal and proper purpose, for the use and benefit of the city, the purchaser is thereby assured of the validity of the bonds, and it would be

Argument for Plaintiff in Error.

tolerating a fraud to permit the city to show that the bonds were not in fact issued for such purpose. The city is estopped from denying the truth of the recitals in its bonds.

County of Moultrie v. Savings Bank, 92 U. S. 631; Town of Coloma v. Eaves, 92 U. S. 484; San Antonio v. Mehaffey, 96 U. S. 312; Nauvoo v. Ritter, 97 U. S. 389; Hackett v. Ottawa, 99 U. S. 86; Walnut v. Wade, 103 U. S. 683; County of Clay v. Society for Savings, 104 U. S. 579; Ottawa v. National Bank,

105 U. S. 342.

The bonds themselves on their face recited the ordinance by date under which they were issued. The ordinance recites that the bonds were authorized for the redemption of city scrip and other indebtedness, and for the improvement of the streets. Failure of consideration was the defence under which the court instructed the jury that the plaintiff could not recover. Which we submit was error.

The concession that plaintiff made out his case and was entitled to recover as an innocent holder for value before maturity, unless the failure to state the purpose for which the bonds were issued more particularly than is contained in the said bonds, deprived him of his right as an innocent holder, in effect concedes the correctness of the two foregoing propositions.

III. The material proposition in the case then is, that where, as in this case, a bond or other instrument has been issued by virtue of a certain ordinance referred to, but not copied or described, such recital is notice of the contents of the ordinance; and as such ordinance recites the purpose for which the bonds are authorized, the bonds thereby in effect specify the purpose for which they were issued. Kansas v. School District No. 3, 34 Kansas, 237; Lewis v. Bourbon County, 12 Kansas, 186; Hackett v. Ottawa, 99 U. S. 95; Ottawa v. National Bank, 105 U. S. 143.

IV. The provision of section 27 of the charter of the city of Denison prescribing that bonds issued under that section shall specify for what purpose they were issued, is merely directory, and the absence of such recital from the bonds will not affect the rights of a bona fide holder for value. Young v. Camden County, 19 Missouri, 309.