This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The common form of estoppel in contracts of public corporations is found in cases of negotiable instruments in the hands of bona fide holders, where such instruments contain recitals of fact which, if true, make the instrument valid, and which are made by officers authorized to pass upon such facts. The public corporation in such case is estopped to deny the truth of such recitals as against a bona fide holder.1 Thus where the recital was that the instrument was issued pursuant to an election, the instrument is valid, though the vote was on a proposition making the bonds redeemable after ten years, which provision was not inserted in the bond.2 Where the recital is as to the amount of pre-existing indebtedness,3 or that the constitutional limit has not been exceeded where no record is to be inspected, by statute or constitution, at the peril of the purchaser,4 or where it shows the finding of a board authorized by law to take final action on the question whether the limit is exceeded,5 or where the recitals show that the bonds are issued to refund debts,0 or are issued in satisfaction of judgments,7 or where the recitals are as to the completion of a railroad by a certain date, which completion is a condition precedent to the validity of the bonds,8 or where the recitals are of specific facts showing compliance with formalities,9 or recite in general terms that the provisions of the statute,10 or all requirements of the constitution and statutes11 have been complied with, the corporation is estopped to deny the truthfulness of such recitals. So a recital in a bond that the seal of the city is attached estops the city to deny that the clerk's seal attached to the bond is the seal of the city.12 However, if the question of fact is one of which purchasers are bound to take notice at their peril,13 as where they must take notice of amount of indebtedness,14 or of the facts apparent on the assessment roll, which with the recitals in the bonds in question show that the limit is exceeded,15 or if the resolution under which the bonds were issued shows on its face that they exceed the constitutional limit of indebtedness,16 or if the bond shows on its face that the election was held so soon after the organization of the county that by law the township could not issue the bonds,17 or if the fact recited is one which under the law the officers are not authorized to decide,18 no estoppel arises. So a recital of full compliance does not estop the corporation from showing that no ordinance had been passed authorizing the issue of bonds, as required by statute.19 No recitals can prevent even a bona fide holder from being charged with notice of the statute and the construction thereof,20 or the validity of the ordinance21 by virtue of which the bonds are issued. Thus if the recital is of an election on a given day and the statute under which the bonds are issued shows that no legal election could then have been held, the bonds are invalid.22
1 Mercer Co. v. Hackett, 1 Wall. 83; Town of Coloma v. Eaves, 92 IT. S. 484; Commissioners, etc., of Douglas Co. v. Bolles, 94 U. S. 104; Commissioners v. January, 94 U. S. 202; San Antonio v. Mehaffy, 96 U. S. 312; Warren Co. v. Marcy, 97 U. S. 96; Hackett v. Ottawa. 99 U. S. 86; Wilson v. Salamanca Tp., 99 U. S. 499; Sherman Co. v. Simons. 109 U. S. 735; Andes v. Ely, 158 U. S. 312; Commissioners, etc.. of Gunnison Co. v. Rollins. 173 U. S. 255; Waite v. Santa Cruz, 184 U. S. 302; Fairfield v. School District, 116 Fed. 838; reversing, 111 Fed. 453; Clapp v. Marice City, 111 Fed. 103; 49 C. C. A. 251; Independent School District v. Rew. 1ll Fed. 1; 55 L. R. A. 364; 49 C. C. A. 198; Hardy Township v. Bank, 106 Fed. 986; 46 C. C. A. 66 (affirming without opinion, Brattleboro Savings Bank v. Hardy Tp., 98 Fed. 524). Clapp v. Otoe Co., 104 Fed. 473; 45 C. C. A. 579; Hughes Co. v. Livingston, 104 Fed. 306; 43 C. C. A. 541; Board, etc., of Barber Co. v. Society, 101 Fed. 767; 41 C. C. A. 667; Brown v. Ingalls Township,
81 Fed. 485; South Hutchinson v. Barnum, 63 Kan. 872; 66 Pac. 1035.
2 Board, etc., of Cowley Co. v. Heed, 101 Fed. 768; 41 C. C. A. 668; affirming, Heed v. Cowley Co.,
82 Fed. 716, which disapproved, Lewis v. Bourbon Co.. 12 Kan. 186.
3 Dallas Co. v. McKenzie, 110 U. S. 686; Buchanan v. Litchfield, 102 U. S. 278; Chaffee Co. v. Potter, 142 U. S. 355; Board, etc., of Gunnison Co. v. Rollins, 173 U. S. 255; E. H. Rollins & Sons v. Gunnison Co., 80 Fed. 692.
4 Board, etc., of Lake Co. v. Sut-liff, 97 Fed. 270; 38 C. C. A. 167.
5 Chilton v. Gratton, 82 Fed. 873.
6 Pierre v. Duscomb, 106 Fed. 611; 45 C. C. A. 499; Kiowa Co. v. Howard, 83 Fed. 296; 27 C. C. A. 531; Wesson v. Mt. Vernon, 98 Fed. 804; 39 C. C. A. 301; Waite v. Santa Cruz, 89 Fed. 619; Huron v. Bank, 86 Fed. 272; 49 L. R. A. 534; 30 C. C. A. 78; State v. Wichita County, 62 Kan. 494; 64 Pac. 45.
7 Geer v. Ouray, 97 Fed. 435; 38 C. C. A. 250.
8 Oregon v. Jennings, 119 U. S. 74.
9 Evansville v. Dennett, 161 U. S. 434; Town of Coloma v. Eaves, 92 U. S. 484; Wesson v. Saline Co., 73 Fed. 917; 20 C. C. A. 227; Ashman v. Pulaski Co., 73 Fed. 927; 20 C. C. A. 232; South St. Paul v. Lam-precht Bros., 88 Fed. 449.
10 Evansville v. Dennett, 161 U. S. 434; Village of Kent v. Dana, 100 Fed. 56; 40 C. C. A. 281; Pickens Township v. Post, 99 Fed. 659; 41 C. C. A. 1; Meade Co. v. Ins. Co., 90 Fed. 237; 32 C. C. A. 600;
Haskell Co. v. Ins. Co., 90 Fed. 228; 32 C. C. A. 591. Examples of recitals. "In pursuance of" the statute. Grattan Township v. Chilton, 97 Fed. 145; 38 C. C. A. 84; affirming, 82 Fed. 873; "full compliance with all requirements of" the statute. Miller v. Irrigation District, 99 Fed. 143.
11 St. Paul Gaslight Co. v. Sandstone, 73 Minn. 225; 75 N. W. 1050.
12 Schmidt v. Defiance, 117 Fed. 702.
13 Gunnison Co. v. Rollins, 173 U. S. 255.
14 State v. Helena, 24 Mont. 521; 63 Pac. 99.
15 Geer v. School District, 97 Fed. 732; 38 C. C. A. 392; Shaw v. Independent School District, 77 Fed. 277; 23 C. C. A. 169; National Life Ins. Co. v. Mead, 13 S. D. 37; 48 L. R. A. 785; 82 N. W. 78; affirmed on rehearing, 13 S. D. 342; 83 N. W. 335; Citizens' Bank v. Terrell, 78 Tex. 450; 14 S. W. 1003.
An erroneous recital of the statute authorizing the issue,23 or a recital of both a valid and an invalid act authorizing such issue,24 do not invalidate bonds. Purchasers are chargeable with notice of the original order of the commissioners' court as to the purpose for which the bonds are to be used, but not of a subsequent order;25 and with notice apparent on the face of the county records as to a bond election, as where the votes are canvassed by a board having no authority so to do,26 and as to the fact that the persons signing the bonds had ceased to be public officers and had antedated the bonds.27 A bond is valid if signed by a de facto officer,28 but invalid if signed by one who is not an officer at all.29 Where there is no recital of compliance with the statute, the registration and certification of bonds in compliance with statute does not effect an estoppel.30 Recitals do not work an estoppel as against one who acquires bonds from the municipality with knowledge of the facts making such bonds invalid. Thus if the bond issue exceeds the constitutional limits of indebtedness, and one purchaser buys them all, he is charged with notice of their invalidity.31 So if there are no recitals in an original issue of bonds, recitals in refunding bonds given to take up the original issue cannot work an estoppel in favor of holders of the original bonds who receive the new issue.32 Estoppel by recitals operates only in favor of the holder of the bonds. The holder of bonds may contradict recitals therein for the purpose of establishing the validity of the bonds.33
16 Fairfield v. School District, 111 Fed. 453 (even if they recite that they are within the limit of indebtedness and issued " in strict compliance with the laws of the State."
17 Sage v. Fargo Township. 107 Fed. 383; 46 C. C. A. 361.
18 Crow v. Oxford. 119 U. S. 215; Geer v. School District, 97 Fed. 732; 38 C. C. A. 392.
19 Swan v. Arkansas City, 61 Fed. 478.
20 Hill v. Memphis. 134 U. S. 198; Kelley v. Milan, 127 U. S. 139; Wells v. Supervisors of Pontotoc Co., 102 U. S. 625; Township of East Oakland v. Skinner, 94 U. S. 255; McClure v. Township of Oxford. 94 U. S. 429; Supervisors of Marshal Co. v. Cook, 38 111. 44; 87 Am. Dec. 282: Bissell v. Kankakee, 64 111. 249; 16 Am. Rep. 554;
Kirsch v. Braun, 153 Ind. 247; 53 N. E. 1082; Uncas National Bank v, Superior, 115 Wis. 340; 91 N. W. 1004.
21 Klamath Falls v. Sachs, 35 Or. 325; 76 Am. St. Rep. 501; 57 Pac. 329 (citing Barnett v. Denison, 145 U. S. 135; Hackett v. Ottawa, 99 U. S. 86; Risley v. Howell. 57 Fed. 544) ; Peck v. Hempstead, 27 Tex. Civ. App. 80; 65 S. W. 653.
22 Sage v. Fargo Township, 107 Fed. 383; 46 C. C. A. 361; Manhattan Co. v. Ironwood, 74 Fed. 535; 20 C. C. A. 642.
23 D'Esterre v. New York. 104 Fed. 605; 44 C. C. A. 75.
24 Evansville v. Dennett, 161 U. S. 434.
25 Mitchell Co. v. Bank, 91 Tex. 361; 43 S. W. 880; reversing. 15 Tex. Civ. App. 172; 39 S. W. 628.