Stimson v. Alessandro Irr. Dist. , 135 Cal. 389 ( 1902 )

I dissent from the order denying a rehearing — not because I think the judgment of the superior court should be reversed, but because the particular ground upon which it has been affirmed is, in my opinion, untenable.

One of the propositions contended for by appellant is, that notwithstanding the illegality of the transaction by which the bonds of the irrigation district were issued to the Bear Valley Irrigation Company, they, being negotiable instruments, became valid and binding as soon as they passed into the hands of bonafide purchasers, such as he claims his assignors to have been. The question of law involved in this proposition is left undecided in the opinion of the court, and the whole contention disposed of by the declaration that the evidence in the record sustains the finding of the trial judge, to the effect that the assignors of plaintiff — the real plaintiffs — took the bonds from the Bear Valley Irrigation Company with notice (meaning actual notice) of the facts affecting their validity. I am satisfied that the judge of the superior court did not intend to find actual notice, because there is no evidence in the record to sustain such a finding, except, possibly, as to one of plaintiff's assignors. And there is not even a claim by counsel for respondent that the evidence supports a finding of actual notice as to the other two purchasers of the bonds. What they rely upon, and all they rely upon, is constructive or imputed notice, and this presents a question which has been left undecided, although it is manifestly by far the most important question in the case.

I concur in the conclusion that the irrigation district is not bound by the decree of confirmation, and this upon the ground that the act of March 16, 1889, supplemental to the Wright Act, was never designed to cover a case in which after the bonds of a district have been exchanged for property, and no possible benefit can accrue to the district from a decree of confirmation, it is sought solely in the interest of the holders of the bonds to estop the district by a proceeding which will not estop them.

I am also of opinion that the legislature in enacting the supplemental act above cited not only intended to provide a means of establishing the regularity and validity of the issue of this particular class of bonds, in order to make them marketable, but also intended that in the absence of a resort to that particular method of establishing their validity, they should remain subject, in the hands of any holder, to all defenses to which they would be subject in a suit by the original purchaser.

Upon these grounds I should have concurred in the judgment of affirmance.