MENASHA v. HAZARD.

1. A town in Wisconsin, being thereunto authorized by law, subscribed tor stock in a railroad company, and issued its bonds in payment therefor, each reciting that it "shall be valid only when it is thereon duly certified that the conditions upon which it was voted, issued, and deposited by said town have been performed." Suit was brought on the bonds by a party who in good faith purchased them before they matured. Held, that the certificate on the bonds (infra, p. 87) is in proper form, estopping the town from denying their validity, and placing them in a condition to be put on the market as commercial paper.

2. Where, before the subscription and bonds were voted, the company was authorized to consolidate with other companies constructing connecting lines, and such consolidation was effected, - Held, that the issue of the bonds to the consolidated company was lawful.

3. County of Scotland v. Thomas (94 U. S. 682) and Wilson v. Salamanca (99 id. 499) approved.

ERROR to the Circuit Court of the United States for the Eastern District of Wisconsin.

This was an action by Rowland G. Hazard against the town of Menasha and the city of Menasha, upon interest coupons. detached from bonds of the town of Menasha, payable to the Wisconsin Central Railroad Company or bearer. On the trial of the issues it appeared:

I. That the Portage, Winnebago, and Superior Railroad Company made to said town the following proposition:—

"The Portage, Winnebago, and Superior Railroad Company of the State of Wisconsin, a corporation of said State authorized to construct and operate a railroad with one or more tracks, from Doty's Island, situated in the towns of Neenah and Menasha, in the county of Winnebago, northwesterly, via the towns of Weyauwega, Waupaca, Amherst, and Stevens Point, to Bayfield, and thence to Superior on Lake Superior, and requiring the aid of the said towns of Menasha and Neenah, each in the sum of $50,000, in the construction of that portion of road which lies between said Doty's Island and the Wolf River, and being thereto authorized by chapter 126 of the General Laws of 1869, entitled An Act to authorize certain counties, towns, cities, and villages to aid in the construction of the land-grant railroad from Portage City and from Doty's Island to Lake Superior,' submits to the said town of Menasha the following proposition, to wit:

"First, That in consideration of the construction by said company of a single-track railroad from block 3 in Jones's Plat in the said town of Neenah, Doty's Island, to Wolf River, and of five hundred full paid shares of the capital stock of said company of $100 each, the said town of Menasha shall pay to said company or its assigns the sum of $50,000, at the time and in the manner hereinafter provided.

"Second, That said town of Menasha shall secure to this company the payment of the said sum of $50,000 in its corporate bonds to be issued in that amount, to run twenty years from the date of issue, with interest thereon at the rate of seven per cent, payable semi-annually, principal and interest payable in gold at the National Bank of Commerce of the city of New York; that the said bonds, besides the usual conditions, shall provide that the same and the coupons or interest warrants thereon shall, when due, be receivable for taxes to be collected in said town; and that there shall be annually levied upon the property in said town a tax sufficient to pay the interest upon said bonds, and to raise a sinking fund to pay the principal thereof when the same shall become due, and payable in the manner provided by said chapter 126 of the General Laws of 1869; and shall also further provide that said bonds shall be valid only when it is thereon duly certified that the conditions upon which they were voted, issued, and deposited by said town have been performed. The said bonds and coupon or interest warrants attached shall be engraved or printed in the usual form and style, and in such denominations (not less than one nor more than ten hundred dollars) as shall be approved by this company, and the cost thereof shall be paid by the treasurer, on the order of the chairman of said town.

"Third, That the proper officers of said town shall issue said bonds as required by law, and on notice being received by the chairman of the board of supervisors of said town from the said National Bank of Commerce of New York that this company has deposited therein to the credit of said town the said five hundred full paid shares of its capital stock, he shall deposit, or cause to be deposited, in said bank all of the said bonds, with instructions to said bank or its officers to hold the same on deposit in trust for said town, until such time as there shall be filed in said bank a properly authenticated certificate signed by the chief officer of this company and the chairman of the board of supervisors of said town, or the secretary of state of this State, that the iron has been laid upon the track of road, and cars have been run over the same

through from the depot on Doty's Island, or in said town, to Wolf River, when the said bonds shall become the absolute property of and be held by said bank, subject to the order of this company or its assigns, and which certificate shall authorize and require the president of said bank to certify upon the back of each of said bonds that the conditions upon which the said bonds were voted, issued, and deposited by said town have been performed; and in case this company fail to comply with the said conditions the said bonds shall be returned to said town on demand of the authorities thereof.

"Fourth, That, in consideration of the acceptance of this proposition and the fulfilment of the terms thereof by the said town, this company will, without unnecessary delay, issue for deposit to the credit of said town in the said National Bank of Commerce of New York five hundred full paid shares (of $100 each) of its capital stock, which is to be delivered to said town at the time of the delivery of said bonds to this company, and that on the acceptance of this proposition, and as soon as the right of way and depot grounds have been secured by this company, this company will commence the construction of the track of said portion of its road, and will have the same completed and the iron laid thereon and cars run over the same within one year from the time the bonds of said town have been issued and deposited in said bank as aforesaid: Provided, however, that the like propositions submitted by this company to the town of Neenah shall be accepted and its conditions fulfilled by said town.

"Fifth, In the event the said town of Neenah fail to accept and fulfil the terms of said proposition so as aforesaid, submitted to it, this company further proposes to said town of Menasha that if the required additional sum of $50,000 shall be furnished to this company by individual subscription to stock in like amount, and satisfactorily secured to be paid, the depot of this company shall be located and its road constructed therefrom at such place in said town and on such route as may be agreed upon between this company and the authorities of said town, and under the foregoing proposition as hereby qualified.

"In witness whereof, the Portage, Winnebago, and Superior Railroad Company has caused these presents to be signed by its president and sealed with its seal this tenth day of May, A.D. 1870.

“Geo. Reed,

"President P., W., & S. R. R. Co."

II. That on the 4th of June, 1870, an election was held in said town as provided in said act, and a majority of the votes cast in favor of the railroad proposition.

III. That said proposition was published and voted upon as required by said act, except the third paragraph, which was published in the words following: :

"Third, That the proper officers of said town shall issue said bonds as required by law, and, on notice being received by the chairman of the board of supervisors of said town from the said National Bank of Commerce of New York that this company has deposited therein to the credit of said town the said five hundred full paid shares of its capital stock, he shall deposit, or cause to be deposited, in said bank all of the said bonds, with instructions to said bank or its officers to hold the same on deposit in trust for said town until such time as there shall be filed in said bank a properly authenticated certificate signed by the chief officers of this company and the board of supervisors of said town, or the secretary of state of this State, that the iron has been laid upon the track of road and cars have been run over the same through from the depot, on Doty's Island, or in said town, to the Wolf River, when the said bonds shall become the absolute property of and be held by said bank, subject to the order of this company or its assigns, and which certificate shall authorize and require the president of said bank to certify upon the back of each of said bonds that the conditions upon which the said bonds were voted; issued, and deposited by said town have been performed; and in case this company fail to comply with the said conditions, the said bonds shall be returned to said town on demand of the authorities thereof."

IV. That the Wisconsin Central Railroad Company deposited with said bank for said town five hundred shares of its common capital stock.

V. That on or about the 1st of June, 1871, the chairman of the board of supervisors of said town, with the town clerk, made fifty coupon bonds of said town; that thereupon a suit was instituted in the Circuit Court of the county of Winnebago by one Lawson, a tax-payer in said town, on behalf of himself and all other tax-payers, to enjoin the issue of said bonds. An injunction was allowed, and served upon the officers of said town, restraining the issue of said particular fifty bonds, but no others under said act; which injunction is still

in force. Upon service of such injunction, such issue of bonds was burned.

VI. That on the twenty-fifth day of October, 1871, said chairman and said clerk executed and delivered to the National Bank of Commerce a series of fifty coupon bonds of said town, of which the following is a copy:

"$1,000.] "No. 16.]

TOWN OF MENASHA.

STATE OF WISCONSIN.

[$1,000.

[No. 16.

"The town of Menasha, in the county of Winnebago and State of Wisconsin, acknowledges itself indebted in the sum of $1,000 lawful coin of the United States of America, which sum the said town of Menasha promises to pay to the Wisconsin Central Railroad Company, or to the bearer hereof, at the National Bank of Commerce in the city of New York, in twenty years from the first day of June, 1871, with interest at the rate of seven per centum, payable semi-annually at said bank, upon the presentation and delivery of the several coupons hereto annexed as they respectively become due, the principal and interest payable in gold, and to the payment of which, in the manner aforesaid, the faith and revenues of said town are hereby irrevocably pledged.

"This bond and the coupons or interest warrants thereon shall, when due, be receivable for taxes to be collected in said town, and there shall be annually levied upon the property in said town a tax sufficient to pay the interest upon this bond and to raise a sinking fund to pay the principal when the same shall become due and payable in the manner provided by chapter 126 of the General Laws of 1869 of said State, and this bond shall be valid only when it is thereon duly certified that it has been duly certified that the conditions upon which it was voted, issued, and deposited by said town have been performed.

"This bond is one of a series amounting in the aggregate to $50,000, and is issued in pursuance of a vote of the legal voters of said town on the fourth day of June, 1870, under and by virtue of an act of the legislature of the State of Wisconsin, entitled 'An Act to authorize certain counties, towns, cities, and villages to aid in the construction of the land-grant railroad from Portage City and from Doty's Island to Lake Superior,' approved March 9, 1869, and in pursuance of an act of the legislature of said State, approved Feb. 4, A.D. 1871, entitled 'An Act to change the name of the Portage, Winnebago, and Superior Rail