HOPPER
v.
COVINGTON

U.S. | 1886-05-10
118 U.S. 148 Supreme Court of the United States (1886) Positive Treatment
Also reported at: 30 L. Ed. 190 · 6 S. Ct. 1025 · SCDB 1885-249 · 1886 U.S. LEXIS 1914
Cited by 5 cases

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Synopsis

The town of Covington issued negotiable bonds without stating the purpose for which they were issued, and Indiana law limited municipal bond issuance to specific purposes such as schools. The Supreme Court held that when a municipality has only limited statutory authority to issue bonds for particular purposes, a bondholder cannot rely on a presumption that bonds were validly issued but must instead prove the specific facts showing the bonds fell within the municipality's authorized purposes. The Court affirmed that a plaintiff's general allegation of municipal authority to issue commercial paper was insufficient where the declaration failed to identify the purpose of the bonds and thus did not establish compliance with state law limits on such issuance.

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Opinion of the Court
Mr. Justice G-ray,

Mr. Justice G-ray,

after stating the case as above reported, delivered the opinion of the court.

The town of Covington had no general power to issue negótiable bonds. If the general statute of Indiana of June 11, 1852, under which it was incorporated, conferred'any power upon towns to issue bonds, it was only for certain municipal purposes therein specified; and the general statute of May 15, 1869, authorized towns to issue bonds for the purchase and erection of lands and buildings for school purposes only. 1 Gavin & Hord’s Stat. 623-626 ; Davis’s Supplt. 116.

The bonds in suit containing no statement of the purpose for which they were issued, and no recital which can bind the town by way of estoppel, any one suing upon the bonds is bound to allege and prove the authority of the town to issue them.

The plaintiff relies on the statement of Mr. Justice Swayne in Gelpcke v. Dubuque, 1 Wall. 175, 203, repeated by him and by Mr. Justice Clifford in later cases, that “ 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,” Supervisors v. Schenck, 5 Wall. 772, 784; Lexington v. Butler, 14 Wall. 282, 296; San Antonio v. Mehaffy, 96 U. S. 312, 314; Macon County v. Shores, 97 U. S. 272, 279.

But the circumstances thus spoken of were the preliminary facts requisite to the exercise of the power, not the limits, fixed by law, of the objects and purposes for which the power could be exercised at all. In each of the cases cited, the defects suggested were in the requisite preliminary proceedings, and the bonds sued on appeared by recitals on their face to have been issued according to law. "When the law confers no authority to issue the bonds in question, the mere fact of their issue cannot bind the town to pay them, even to a purchaser before maturity and for value. Marsh v. Fulton County, 10 Wall. 676; East Oakland v. Skinner, 94 U. S. 255; Buchanan v. Litchfield, 102 U. S. 278; Dixon County v. Field, 111 U. S. 83; Hayes v. Holly Springs, 114 U. S. 120; Daviess County v. Dickinson, 117 U. S. 657.

A demurrer admits only facts,' and facts well pleaded. The town having but a limited authority to issue bonds for certain purposes, it is not enough for the plaintiff to aver in general terms that the town, was authorized to issue the bonds in suit; but he must state the facts which bring the case within the special authority. There is nothing in this declaration, or in the copies of instruments annexed to and made part of it, which shows, or has any tendency to show, for what purpose the bonds were made. The averment, that the defendant is a municipal corporation under the laws of Indiana, “ with full power and authority, pursuant to the laws of said State, to execute negotiable commercial paper,” if understood as alleging a general power to execute negotiable commercial paper, is inconsistent with the public laws of the State, of which the courts of the United States take judicial notice. The averment, that the bonds held by the plaintiff were executed pursuant to the laws of the State, is but a statement of a conclusion of law, which is not admitted by demurrer. The declaration is fatally defective for not stating the facts necessary to enable the court to judge for itself whether that conclusion of law has any foundation in fact. Pumpelly v. Green Bay Co., 13 Wall. 166, 175; Cragin v. Lovell, 109 U. S. 194; Kennard v. Cass County, 3 Dillon, 147; Broome v. Taylor, 76 N. Y. 564; Cotton v. New Providence, 18 Vroom, 401.

Judgment affirmed.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By

  • Brenham v. German Am. Bank, 144 U.S. 173 (U.S. 1892)
    …upon them or their coupons. Marsh v. Fulton Country, 10 Wall. 676; East Oakland v. Skinner, 94 U. S. 255; Buchanan v. Litchfield, 102 U. S. 278; Hayes v. Holly Springs, 114 U. S. 120; Daviess County v. Dickinson, 117 U. S. 657; Hopper v. Covington, 118 U. S. 148, 151; Merrill v. Monticello, 138 U. S. 673, 681, 682. As the action here is directly upon, the coupons, and there is no right of recovery upon them, the judgment must be [*189] Reversed, and the case remanded to the Circuit Court, with a direction…
  • Quinlan v. Green Cnty., 205 U.S. 410 (U.S. 1907)
  • Merrill v. Monticello, 138 U.S. 673 (U.S. 1891)
    …ed objects and purposes of the corporation — not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.” In Hopper v. Covington, 118 U. S. 148, 151, this court, in passing upon the power of incorporated towns in Indiana, under laws which we will have to consider and pass upon in this case, said, Mr. Justice Gray delivering the opinion : “ Whqn [*682] the law confers no authority to issue t…

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