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conclusions are founded. We have carefully read and considered all the testimony on both sides, and have stated what we consider its preponderating weight to be, in view of all the facts touching the experience, opportunities of observation, and general intelligence and bias of witnesses, as disclosed by the record. We are of opinion, therefore, that the libel was properly dismissed by the court below, and the decree to that effect is affirmed.

(100 Fed. 337.)

LYON COUNTY, IOWA, v. KEENE FIVE-CENT SAV. BANK, OF KEENE, N. H. et al.

(Circuit Court of Appeals, Eighth Circuit. February 13, 1900.)

No. 1,252.

1. JURISDICTION OF FEDERAL COURTS-SUIT BY ASSIGNEE-BONDS PAYABLE TO BEARER.

Municipal bonds payable to "

or order" are, in legal effect, paya

ble to bearer, and a transferee who is a citizen of another state, and to whom they were transferred in the same condition by delivery, may maintain an action thereon in a federal court, whether the original holder could have done so or not.1

2. MUNICIPAL BONDS-VALIDITY-LIMIT OF INDEbtedness.

Negotiable refunding bonds of a county issued under proper legislative enactments, which authorized their issuance in exchange for valid outstanding evidences of indebtedness, in the hands of purchasers for value, before maturity, will be presumed to have been so issued, and not to have increased the indebtedness of the county.

In Error to the Circuit Court of the United States for the Northern District of Iowa.

For opinion below, see 90 Fed. 523.

E. C. Roach (E. Y. Greenleaf and Simon Fisher, on the brief), for plaintiff in error.

J. M. Parsons, for defendants in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN, Circuit Judge. These were two separate actions brought by the defendants in error, respectively, against the county of Lyon, in the state of Iowa, the plaintiff in error, upon refunding bonds issued by that county, and dated, respectively, June 1, 1880, September 6, 1881, June 13, 1882, September 1, 1884, and March 1, 1885. The two cases were consolidated, and tried together by the court without a jury, and the complaint here is that the special finding of facts, upon which the court below rendered judgments against the county, does not sustain those judgments, but entitles the plaintiff in error to judgments in its favor. Two grounds for this contention are urged upon our consideration.

1. Some of the bonds upon which the judgments were founded

1 As to diverse citizenship as a ground of federal jurisdiction, see note to Shipp v. Williams, 10 C. C. A. 249, and, supplementary thereto, note to Mason v. Dullagham, 27 C. C. A. 298.

were issued by the county to citizens of Iowa, and were by them sold and delivered to citizens of other states, while they read in this way, "The county of Lyon, in the state of Iowa, for value received promises to pay or order" the amount named in the bond; and it is said that the court below had no jurisdiction of the causes of action based upon these bonds, because the act of congress of August 13, 1888 (25 Stat. 434), reads:

"Nor shall any circuit or district court have cognizance of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee, or of any subsequent holder, if such instrument be payable to bearer, and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made."

Under this act an action cannot be maintained in the circuit court upon an instrument made by a corporation which is not payable to bearer, unless such an action could have been maintained by the assignor of the plaintiff. But, if such an instrument is payable to the bearer, its holder may recover upon it in the federal court, whether his assignor could have done so or not. Newgass v. City of New Orleans (C. C.) 33 Fed. 196; Rollins v. Chaffee Co. (C. C.) 34 Fed. 91; Wilson v. Knox Co. (C. C.) 43 Fed. 481; Cloud v. City of Sumas (C. C.) 52 Fed. 177; Benjamin v. City of New Orleans (C. C.) 71 Fed. 758. The purpose of this provision of the act of congress unquestionably was to give better credit to negotiable instruments issued by corporations, which pass from hand to hand by mere delivery without formal assignments, by giving their holders the right to enforce them in the federal courts. The bonds in hand fall within the object and the legal intendment of the act. They were payable to " or order" when they were issued, and they remained in that condition until they had been bought by nonresidents of the state of Iowa. While they were in that condition the title to them passed from vendor to purchaser by mere delivery. Possession of them was evidence of title to them, and their form was an assurance to every holder that their maker intended to make them negotiable, to make them payable to the holder as bearer, and to authorize the holder to keep them payable to bearer, or to fill the blank with his own name, and make them payable to himself or order, as he chose. In other words, a bond or note of a corporation payable to "- or order" is, in legal effect, payable to the holder or bearer. It has every attribute of that class of commercial paper which the bearer may enforce in the federal courts without proof that his assignor could have done so, and he may maintain an action upon it whether his assignor could have done so or not. White v. Railroad Co., 21 How. 575, 577, 16 L. Ed. 221, and cases there cited.

2. The second reason why it is claimed that these judgments are erroneous is that it is contended that these bonds created an indebtedness in excess of the limitation of 5 per centum of the value of the taxable property within the county prescribed by section 3, art. 11, of the constitution of Iowa. It is conceded that all the bonds involved in this action, except those dated on June 13, 1882, fell within the limitation prescribed by the constitution, unless the

bonds to the amount of $100,000, familiarly known as the "Shade Bonds," constituted an indebtedness of the county. These Shade bonds were issued and sold, and their proceeds were used, according to the finding of the court below, to pay prior indebtedness of the county in the year 1879, when the debt of the county was more than $100,000, and the limit of its indebtedness was $45,756.66. They were issued under a single resolution, which authorized Shade to receive and sell them, and to apply the proceeds for the county. They were not exchanged for prior bonds, but were sold, and the resolution authorizing them disclosed an amount in excess of the limitation, and we adhere to the conclusion which we reached in Lyon Co. v. Ashuelot Nat. Bank, 30 C. C. A. 582, 87 Fed. 137, that they did not create a debt of the county which it can use to defeat the valid indebtedness it subsequently incurred. Doon Tp. v. Cummins, 142 U. S. 366, 12 Sup. Ct. 220, 35 L. Ed. 1044; Dixon Co. v. Field, 111 U. S. 83, 4 Sup. Ct. 315, 28 L. Ed. 360. When the Shade bonds are laid aside no question remains of the validity of any of the bonds in suit, except those dated on June 13, 1882. The amount of bonds dated on that day was $9,000. The indebtedness of the county at that time was $46,225. A question arose in the court below whether or not the exemptions from taxation allowed by sections 1271 and 1272 of McClain's Code of Iowa for planting and cultivating fruit trees and forest trees should be reckoned as a part of the taxable property of the county in determining the limit of its indebtedness, but it is unnecessary to consider that question in this court, in view of the findings of the trial court and the legal presumption of validity which accompanies the bonds. Conceding that these exemptions should not be regarded as a part of the taxable property of the county, the limit of its indebtedness was $48,912.95 on June 13, 1882.

These were refunding bonds, and the court has found that they were issued for the purpose of taking up outstanding floating warrants against the county, and that there were such warrants to the amount of $15,225 outstanding at the time these bonds were issued, and it has not found that any of these bonds were sold, or that' they were issued in any other manner than by the legal method of the exchange of the bonds for the warrants, dollar for dollar, pointed out in Doon Tp. v. Cummins, 142 U. S. 366, 378, 12 Sup. Ct. 220, 35 L. Ed. 1044. The court below has found that these bonds are the negotiable refunding bonds of the county, signed by its officers, and issued under the authority of proper legislative enactments, and that they were purchased by the defendants in error for value before maturity. They were therefore presumptively valid. If they created a debt in excess of the constitutional limitation, that was an affirmative defense, and the burden was on the county to plead and prove it. It assumed the burden, but it failed to bear it. It pleaded this defense, but it failed to prove it. It only established that when these $9,000 of bonds were issued the limit of the county indebtedness was $48.912.95, and its actual indebtedness was $46,225. Obviously, if the county officers violated the constitution and issued and sold these bonds while the prior debt of $46,225 re

mained outstanding, they increased the debt above the limit. there is no presumption that they violated the law, and no finding that they did so. There was a legal method-the method of exchange by which they could have issued the bonds without increasing the debt a mill, and the legal presumption is that they pursued this method, and that the issue of these bonds neither created nor increased the debt of the county, but simply changed its form. City of Huron v. Second Ward Sav. Bank, 86 Fed. 272, 279, 30 C. C. A. 38, 57 U. S. App. 593; E. H. Rollins & Sons v. Board of Com'rs of Gunnison Co., 80 Fed. 692, 699, 26 C. C. A. 91, 98, 49 U. S. App. 399; Evansville v. Dennett, 161 U. S. 434, 443, 446, 16 Sup. Ct. 613, 40 L. Ed. 760; Chaffee Co. v. Potter, 142 U. S. 355, 363, 364, 12 Sup. Ct. 216, 35 L. Ed. 1040. The judgment below is affirmed.

(100 Fed. 344. )

TRUST

MILLS, Sheriff, et al. v. PROVIDENT LIFE & TRUST CO. OF

PHILADELPHIA,

(Circuit Court of Appeals, Ninth Circuit. February 5, 1900.)

1. APPEAL-PARTIES.

No. 540.

Defendants below not interested in the appeal are not necessary parties

thereto.

2. INJUNCTION-PROCEEDING IN STATE COURT.

Levy and sale under an execution is a "proceeding" within Rev. St. U. S. § 720, declaring that writ of injunction shall not be granted by a federal court to stay "proceedings in any court of a state." 1

3. SAME.

Rev. St. U. S. § 720, declaring that writ of injunction shall not be granted by a federal court to stay proceedings in any court of a state, applies where levy and sale under execution on a judgment of a state court is sought to be enjoined, though the writ is asked by one not a party to the action in the state court in which the judgment was obtained, who claims that he is sole owner of the land sought to be sold.

4. APPEAL-REVIEW.

The court below having maintained its jurisdiction and decided the cause on its merits, defendant may appeal on the whole case, including the question of jurisdiction.

Appeal from the Circuit Court of the United States for the Western Division of the District of Washington.

John A. Parker, John C. Stallcup, and J. W. A. Nichols, for appellants.

P. Tillinghast, for appellee.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

ROSS, Circuit Judge. The record shows that neither the Tacoma National Bank nor Otis Sprague is interested in the appeal, and therefore they were not necessary parties to it. Mercantile Trust

1 As to enjoining proceedings in state court, see notes to Garner v. Second Nat. Bank, 16 C. C. A. 90, and Central Trust Co. v. Grantham, 27 C. C. A. 575.

Co. v. Kanawha & O. Ry. Co., 7 C. C. A. 3, 58 Fed. 6; Railway Co. v. Pope, 20 C. C. A. 253, 74 Fed. 1. We are also of opinion that the record as printed is sufficient to present the question as to the jurisdiction of the court below, which question is decisive of the appeal. The motion to dismiss the appeal is therefore denied.

The jurisdictional question appears from the pleadings. The suit was one in equity, brought in the court below by the Provident Life & Trust Company of Philadelphia, as complainant, against A. U. Mills, as sheriff of Pierce county, state of Washington, the Tacoma National Bank, C. Anderson, as its assignee, and Otis Sprague. The bill alleges that the complainant is the owner in fee and in the actual possession of certain described lands situated in the city of Tacoma, state of Washington; that the defendants Tacoma National Bank and its assignee, Anderson, claim that the defendant Otis Sprague is the owner of an undivided one-fourth of the premises; that, in an action brought by the Tacoma National Bank against Sprague and others in the superior court of the state of Washington, a judgment was entered in favor of the bank on the 24th day of January, 1894, for the sum of $4,370, and costs of suit, taxed at $28.80, which judgment the defendants claim was thereafter sold and assigned by the bank to the defendant Anderson, on which the assignee, on January 17, 1898, caused to be issued out of the superior court of the state of Washington an execution, which he caused to be placed in the hands of the defendant Mills, as sheriff of the county in which the lands are situated, and by him levied upon the property described as the property of the defendant Sprague; that the defendant Mills, as such sheriff, under and pursuant to the writ of execution, issued and caused to be published a notice that on a certain stated day and hour, and at a certain designated place, in the county of Pierce, he will offer for sale and proceed to sell, at public auction, to the highest bidder for cash, all of the said property, or so much thereof as may be neces sary to satisfy the said judgment, besides all costs, interest, and accruing costs thereon. The bill alleges that, although the defendants Tacoma National Bank and its assignee, Anderson, claim that the judgment is a lien upon the right, title, and interest of Otis Sprague in the lands, the said Sprague, at the time of the entry of the judgment, had no legal or equitable interest therein, nor has he at any time since had any legal or equitable interest therein, but that at all of the said times the said lands were the property of the complainant, and those through whom it acquired and now holds the title and possession thereof; that the defendant Mills, as sheriff of Pierce county, is now threatening and proceeding to sell, and will, unless restrained by order of the circuit court, proceed to sell, all of the described property, under and pursuant to the said writ and notice, to satisfy the said judgment, interest, costs, and accruing costs, and is further threatening to and will, unless so restrained, proceed to execute and deliver to the purchaser of the property at said sale a certificate of sale therefor, under which the holder thereof will be entitled to be placed by the sheriff in the possession of the property; that the claims of the defend

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