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Vol. II.)

Milner'S ADMINISTRATOR v. CITY OF PENSACOLA.

(No. 4.

and that it described an organization military in its form, but unlawful and hostile to the government in its character and purpose.

Again, it is a familiar rule in the construction of provisos and exceptions of this sort, made in qualification of the general positive agreement, that words susceptible of either construction should be taken most strongly against the speaker or party whose language is to be interpreted ; and that the general and positive agreement should have effect unless the exception clearly withdraws the case from its operation. This has especial force when the other considerations pertaining to the subject tend to the same result.

To this should be added, that it is the duty of an insurance company seeking to limit the operation of its contract of insurance by special provisos or exceptions, to make such limitations in clear terms, and not leave the insured in a condition to be misled. The uncertainties arising from provisos, exceptions, qualifications, and special conditions, in or indorsed upon policies, have been often condemned, and such special modifications are justly characterized as traps to deceive and catch the anwary. An insured may reasonably be held entitled to rely on a construction favorable to himself where the terms will rationally permit it. Where, as in this case, such construction gives a signification to a word ejusdem generis with all those with which it is found associated and in harmony with the general character and purpose of the provision in which they are found, he is clearly entitled to insist upon such construction.

Our conclusion is, that the plaintiffs are entitled to judgment for the amount of the insurance, with interest thereon from the expiration of sixty days from the 2d day of May, 1865, on which day it is admitted the preliminary proofs of loss were furnished to the defendant, and with costs.

NORTHERN

CIRCUIT COURT OF THE UNITED STATES.

DISTRICT OF FLORIDA.

[MARCH, 1875.]

MUNICIPAL BONDS. SUBSCRIPTION. ELECTION. - REPEAL OF CHAR

TER OF MUNICIPAL CORPORATION.

MILNER'S ADM'R v. CITY OF PENSACOLA.

1. Where an act of the legislature authorized the mayor and aldermen of a city,

" with the consent of a majority of the corporation comprising said city," to subscribe money to any railroad leading from the city, and to borrow money to pay the same, held, that there was thus conferred upon the municipal officers power to issue bonds

to pay the subscription. 2. Under authority of such a law, the mayor and aldermen of the city of Pensacola

subscribed a large sum to aid in the construction of a railroad from the city of Pensacola, and, in payment thereof, issued negotiable bonds payable to bearer in twenty years, which, on their face, stated that they were issued in conformity with law. In

Vol. II.)

MilNER'S ADMINISTRATOR ». City OF PENSACOLA.

(No. 4.

a suit brought by an innocent holder for value on the coupons belonging to said bonds, it was held to be no defence to the action, that at the election to obtain the “ consent of a majority of the corporation comprising said city" to such subscription, only a minority of the citizens voted ; nor that the question submitted to the citizens was whether the subscription should be made to construct a railroad from Pensacola to Montgomery, and the subscription was actually made to construct a railroad from

Pensacola to the state line. 3. A construction of a law which would impute to the legislature a design to perpetrate

an unconscionable and barefaced fraud ought to be avoided, if it can be fairly and

reasonably done. 4. This rule applied to the acts of the Legislature of Florida providing for the incor

poration of cities and towns, approved August 6, 1868, and February 4, 1869. 5. It is not within the power of a legislature, by a repeal of the charter of a municipal

corporation, to invade the rights of its creditors, and cancel its indebtedness. Such legislation impairs the obligation of contracts and is unconstitutional.

THIS cause was heard

upon

demurrer to the pleas. The action was brought to recover the amount due on a large number of interest coupons, attached to bonds issued by the city of Pensacola. The following is a copy of one of the bonds :

“Issued in conformity with the 2d section of an act, amendatory of an act to amend the act incorporating the city of Pensacola, passed by the Legislature of the State, December 29th, 1852, and approved by the governor, January 30, 1853.

CITY OF PENSACOLA: STATE OF FLORIDA. Know all men by these presents, that the city of Pensacola is indebted to the Alabama and Florida Railroad Company of Florida, or bearer, in the sum of Five Hundred Dollars, which sum the said city engages to pay

in current money of the United States at the office of the City Treasurer to the said Alabama and Florida Railroad Company of Florida, or bearer, in twenty years from the date hereof, with interest at the rate of seven per cent. per annum, payable semi-annually on the first day of July and the first day of January in each year, on the delivery of the Interest Coupons attached, in the city of New York, at such bank as the Treasurer of the city of Pensacola shall direct. “PENSACOLA, January 1, 1858. FRANCIS B. BOBÉ, Mayor.

“F. E. DE LA Rua, Treasurer." The following is a copy of one of the coupons sued on: “ $17.50. CITY OF PENSACOLA.

$17.50. City Bond No. 38, for $500. “ Interest Coupon for Seventeen % Dollars, due in New York July 1st, 1872. 6 No. 29.

F. E. DE LA RUA, Treasurer." The other bonds are of the same tenor save as to letter and number, and the coupons, save as to number and date of payment.

The plaintiff averred that as the administrator of Willis J. Milner, he was the owner and bearer of 108 of these bonds, and of interest coupons cut therefrom and past maturity, which amount to $36,662.50, and for this amount he asked judgment.

The second section of the act approved January 3, 1853, referred to upon the face of the bonds as the authority for their issue, is as follows:

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Vol. II.)

MILNER'S ADMINISTRATOR v. CITY OF PENSACOLA.

[No. 4.

“ Sec. 2. Be it further enacted, That the mayor and board of aldermen of the city of Pensacola, with the consent of a majority of the corporation composing said city, be and they are hereby authorized to subscribe in the name of the city of Pensacola any amount of money which they may deem necessary to any plank-road or railroad leading from the city of Pensacola ; and for the purpose of procuring the amount of subscription, the said city of Pensacola shall have power to borrow the same, and shall have power to impose a tax on real estate in said city at a rate not exceeding two per centum on the assessed value of such property.”

Pensacola was incorporated as a town by a special but public act of the legislature passed in 1839. By another special act passed in 1856, it was incorporated as the city of Pensacola. Prior to the adoption of the Constitution of 1868, all the cities and towns of the state were incorporated by special act.

The Constitution of 1868 provided (article 4, section 21) that “ The legislature shall establish a uniform system of county, township, and municipal government.”

To carry out, as it is presumed, this provision of the Constitution, an act was passed by the legislature and approved August 6, 1868, entitled “ An act to provide for the incorporation of cities and towns, and to establish a uniform system of municipal government in this state."

This act provided that the male inhabitants of any hamlet, village, or town in the state, not less than one hundred in number, might establish for themselves a municipal government, with corporate powers and privileges under the provisions of the act.

It then proceeded to declare how such municipal governments might be organized, and what should be their powers and liabilities; in short, to provide for a general system of municipal government.

Section 30 of the act was as follows : “ That all the powers and privileges conferred in and by this act may be exercised by any city or town within the limits of this state heretofore incorporated ; and it shall be lawful for any previously incorporated city or town to reorganize their municipal government under the provisions thereof by a voluntary surrender of their charters and privileges, and by an organization under this act; and upon a failure upon the part of any incorporated town or city to accept the provisions of this act within six months after its approval, all the acts vesting such city or town with power are hereby repealed.”

Afterwards the legislature passed an act which was approved February 4, 1869, having the same title as the act just referred to, and having in view the same general purpose. The 30th section of this act is identical with the 30th section of the act of August 6, 1868, save that nine months instead of six months was prescribed as the time within which cities and towns were to accept the provisions of the act, and in default of which all acts vesting such city or town with corporate power were repealed.

The act approved February 4, 1869, repealed the act of August 6, 1868.

It appears from the pleas that the city of Pensacola, within six months after the passage of the act of 1868, surrendered its original charter and privileges, and reorganized its municipal government under that act.

Vol. II.)

MILNER'S ADMINISTRATOR v. City of PENSACOLA.

(No. 4.

a

a

But that the city failed to surrender its charter and privileges within nine months after the approval of the act of 1869, and to reorganize under that act, but that the same city of Pensacola with the same territorial limits, immediately after the expiration of said nine months, organized under the provisions of the first six sections of the act of 1869, which prescribe how the inhabitants of any hamlet, village, or town in the state, not less than fifty in number, may establish for themselves a municipal government.

On the 3d of February, 1870, the following act of the legislature was approved and became a law :

"AN ACT RELATING TO CITIES. — Whereas, the legislature of this

“ state, by the passage of an act entitled an act to provide for the incorporation of cities and towns, and to establish a uniform system of municipal government in this state, approved February 4, 1869, did not intend said act to affect the organization of any city or town made under or by virtue of an act entitled an act to provide for the incorporation of cities and towns, and to establish a uniform system of municipal government in this state, approved August 4, 1868; therefore

The People of the state of Florida, represented in Senate and Assembly, do enact as follows :

“Section 1. That all acts, doings, and proceedings made and had, or hereafter to be made and had, by any mayor, board of councilmen, or any other city officer in any city of this state, organized in pursuance of an act entitled an act to provide for the incorporation of cities and towns, and to establish a uniform system of municipal government in this state, approved August 4, 1868, and while in the performance of their duties under said organization, are hereby declared legal and valid.”

Messrs. H. A. Herbert f A. P. Perry, for plaintiff.
Messrs. A. E. Maxwell f G. A. Stanley, contra.

Woods, C. J. The defendant pleads the general issue and six special pleas, which, however, set up but two substantive defences to the action.

The first of these special defences is in effect as follows : That the authority to incur the indebtedness for which the bonds were issued was dependent upon the consent of a majority of the corporation composing said city, and that at the election held to decide whether the city would incur said indebtedness only ninety-five votes were cast, which was not a majority of said corporation; and the question submitted to the voters was whether the city should subscribe to the stock of a railroad leading from Pensacola to Montgomery, in the State of Alabama, and not to a railroad leading from Pensacola to the Alabama state line.

The plea which sets up this defence fails to present one of the questions which the pleader intended to present, by neglecting to aver that the subscription of stock was actually made in a company which was only authorized to build, and only did build a railroad from Pensacola to the Alabama state line. We will, however, consider the plea as if such averment were made.

The evident meaning of the second section of the act approved January 3, 1853, above quoted, is that the city of Pensacola may, upon a condition therein named, subscribe to the capital stock of any plank-road or railroad leading from the city of Pensacola, and may borrow the money

Vol. II.)

MILNER'S ADMINISTRATOR v. CITY OF PENSACOLA.

(No. 4.

to pay the amount of its subscription, and may levy a tax on the real estate of the city to pay the sum so borrowed, principal and interest.

The authority given by this enactment is ample to cover the acts done by the mayor and aldermen of the city. They subscribed the stock in a railroad leading from Pensacola, and, to raise the money to pay for it, issued the bonds, a portion of which are in controversy in this action.

The power to borrow money conferred upon a municipal corporation implies the power to issue bonds and interest coupons on which to negotiate the loan. Rogers v.

Rogers v. Burlington, 3 Wall. 654. But the defendant insists that a majority of the voters of the city did not vote for the subscription of money to the railroad, and that the railroad in behalf of which the vote was taken was a road leading from Pensacola to Montgomery, and not a road from Pensacola to the Alabama state line.

Do these facts constitute a defence to these bonds and coupons in the hands of a bona fide holder ?

The authorities are adverse.

" When a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume that 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.” See Gelpcke v. Dubuque, 1 Wall.

203, and numerous cases there cited. See also Moran v. Miami Co. 2 Black, 722; Mercer Co. v. Hacket, 1 Wall. 83; Van Hostrup v. Madison City, Ib. 291 ; Meyer v. Muscatine, Ib. 384 ; Mygatt v. City of Green Bay, 8 Am. L. R. 271; Sealing v. City of Racine, Ib. 603 ; Supervisors v. Schenck, 5 Wall. 772.

In the case of Commissioners of Knox Co. v. Aspinwall, 21 How. 545, it was held that when the bonds on their face import a compliance with the law under which they were issued, the purchaser is not bound to look further. The decision of the board of commissioners may not be conclusive in a direct proceeding to inquire into the facts before the rights and interests of other parties had attached ; but after the authority has been executed, the stock subscribed, and the bonds issued and in the hands of innocent holders, it would be too late, even in a direct proceeding,

a to call it in question.

The case of Marsh v. Fulton Co. 10 Wall. 676, is relied on to support the defence under consideration.

All that was decided in that case was, that where the commissioners of a county are authorized to subscribe to the capital stock of a particular corporate body, that does not authorize a subscription to the stock of another corporation, and that the bonds issued to pay for such stock are issued without authority, and are therefore void. That is not this case.

, Here the city was authorized to subscribe to any plank-road or railroad leading from the city of Pensacola. The pleas show that the subscription was made to such a railroad. The subscription was therefore covered by the authority of the law. If there was any informality in the election by which the consent of the citizens of Pensacola was to be obtained to the subscription, that brings the case precisely within the authorities above cited.

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