US SUPREME COURT DECISIONS

Bonds issued by a city to complete a local improvement, which did not pledge the city's general credit but were expressly payable only out of certain special assessments on land of the improvement district and were therefore nonnegotiable, were bought by the plaintiff from a prior purchaser, in reliance on advice of his attorneys, on recitals in the bonds giving assurance of their validity and soundness and on a certificate issued by the mayor, clerk, and treasurer of the city representing that no legislation was pending in respect of the creation of the improvement district, the construction of the improvement, or the issue of bonds, which was false. In making the purchase, the attorneys had before them a transcript of the proceedings showing that the assessments were in excess of the original estimate of cost -- a fact which rendered the assessments void under the state law, as was subsequently adjudged chanrobles.com-red

Page 276 U. S. 537

by the state courts in a suit by a landowner against the city, pending when the certificate was issued. The bonds were therefore worthless.

Held:

1. That plaintiff had no cause of action against the city for negligence or misrepresentation. P. 276 U. S. 542.

2. He was charged through the transcript when he bought the bonds with notice of the invalidating facts, and must be held to have known the law. P. 276 U. S. 541.

3. His position was not strengthened by the fact that the city's officials also misunderstood the law, nor by the recitals reflecting their opinion as to the legal effect of the bonds. Id.

4. Actionable negligence cannot be predicated on the failure of the city's officer properly to exert their power and perform their duties in respect of the estimate, assessment, and contract for construction of the improvement. Such failure was not a breach of any duty owed by the city to plaintiff. Id.

5. The certificate was issued without legal authority by officers not empowered to define the improvement district, make the assessment, issue or sell the bonds, or bind the city to pay for such improvements, nor authorized to make any statement or give any assurance in respect of such matters. Id.

18 F.2d 860 affirmed.

Certiorari, 275 U.S. 515, to a judgment of the circuit court of appeals which affirmed the district court in dismissing an action against the city for negligence and false representations. chanrobles.com-red

Page 276 U. S. 538