Parsons v. Jackson

APPEAL from the Circuit Court of the United States for the District of Louisiana.

This is an appeal by Edwin Parsons, George Parsons, E. G. Pearl, Charles Parsons, and Scott, Zerega, & Co., from the decree of the court below, confirming the report of the master disallowing as a charge on the mortgage executed by the Vicksburg, Shreveport, and Texas Railroad Company certain bonds held by the appellants and purporting to have been issued by that company.

The bonds, which are mentioned by the master as forming a part of schedule BB, are ninety-seven in number, and each for $1,000.

The remaining facts are stated in the opinion of the court.

Mr. N. A. Cowdrey for the appellants.

The instruments, although under seal, were negotiable instruments. Mercer County v. Hacket, 1 Wall. 83; Marion County v. Clark, 94 U.S. 278. If any one must suffer, it should be the railroad company, and not the bona fide purchaser of them without notice. Murray v. Lardner, 2 Wall. 110.

The record shows that the appellants are the lawful holders for value of the bonds, and that they purchased them in open market, without actual notice or knowledge of any defects or irregularities in their issue. This gives to them a good title to the bonds. Murray v. Lardner, supra; County of Ray v. Vansycle, 96 U.S. 675; Goodman v. Simonds, 20 How. 343; Galveston Railroad v. Cowdrey, 11 Wall. 459; Hotchkiss v. National Bank, 21 id. 354; Cromwell v. County of Sac, 96 U.S. 51; San Antonio v. Mehaffy, id. 312.

One who has given a note currency cannot impeach its legality. In this case the makers do not attempt so to do. Henderson v. Anderson, 3 How. 73; Morgan v. Railroad Company, 96 U.S. 716.

Other bondholders cannot make a defence that the maker of the obligation is precluded from making.

The validity of the bonds is not impaired by the fact that their place of payment was left blank. Any holder was authorized to fill the blank. The president of the company had signed it in blank for that purpose. McGrath v. Clark, 56 N. Y. 34; Chitty, Bills (9th ed.), 151.

It is the practice of railroad companies in Louisiana to leave the place of payment blank, so that the holder may insert it.

Where a party to a negotiable instrument intrusts it to another for use as such, with blanks not filled, it carries on its face an implied authority to complete it by filling the blanks. Angle v. Northwestern Life Insurance Co., 92 U.S. 330; Bank of Pittsburg v. Neal, 22 How. 96; Redlich v. Doll, 54 N. Y. 235, and cases there cited; Garrard v. Haddan, 67 Pa. 82; Montague v. Perkins, 22 Eng. L. & E. 516; Fleckner v. United States Bank, 8 Wheat. 338.

Mr. John A. Campbell, contra.

A negotiable instrument is a writing containing a promise to pay, unconditionally, a certain sum of money to a person determined by the instrument.

These bonds show an obligation to pay a certain number of pounds sterling, or a certain number of American dollars, whether the one or the other, or any, according to the terms of the bonds, was to be declared by the indorsement of the president of the railroad company. No such declaration is to be found. He did not negotiate these bonds, nor intrust them to another for negotiation. They were carried away from the custody of the company amid tumult and violence, without its consent or privity, and without its fault or neglect. The absence of a negotiable quality-for a floating contingent promise is not negotiable-and the fact that they were never negotiated disprove the validity of the appellants' title to them. Story, Prom. Notes, sects. 19, 20, 22; Chitty, Bills, 152; Floyd's Acceptances, 7 Wall. 666.

On the face of the bonds an act is imposed upon the president of the corporation, without which the bonds as negotiable securities are incomplete. The absence of his indorsement indicated to the holders and buyers that he had a duty to perform, and that the bonds in their then condition had not the constituents of negotiable paper. Goodman v. Simonds, supra; Chitty, Bills, 206, 225.

There was no trust or confidence on the part of the corporation or of its president reposed in any other party whereby these bonds reached the New York market.

The corporation not being blameworthy for the circulation of the bonds is not responsible thereon. Foster v. McKennon, Law Rep. 4 C. P. 704; Nance v. Lary, 5 Ala. 37; McGrath v. Clarke, 56 N. Y. 34; Angle v. Northwestern Life Insurance Co., 92 U.S. 330; Tayler v. The Great Indian Peninsula Railway Co., 4 De G. & J. 558; Michigan Bank v. Eldred, 9 Wall. 544.

MR. JUSTICE BRADLEY delivered the opinion of the court.