lETNA LIFE INS. CO. V. LYON COUNTY.
320
(Circuit Court, N. D. Iowa, W. D. December 15, 1890.) 1. COUNTIES-INDEBTEDNESS-REFUNDING BONDS·
. Refunding bonds issued by a county for the purpose of taking up a prior valid indebtedness of the county are not rendered invalid by the fact tbat they exceed the constitutional limitation on the indebtedness of counties and other municipalities.
2.
SAME-ACTION ON
Representations made by an agent appointed by a county board "for the purpose of funding and refunding the county indebtedness" tbat all the indebtedness proposed to be refunded by means of such bonds bas been reduced to judgment, and then bonded, thus rendering the new bonds valid, though they exceed tbe constitutional limitation, do not estop the county to sbow the c{)ntrary, and that the bonds are invalid as against a purchaser thereof from sucb agent, as tbe county records are tbe best evidence of the purpose in issuing tbe oonds, anci purchasers are bound.to take notice thereof.
8.
SAME.
Where a county, having power to fund its indebtedness, issues bonds in payment of judgments standing in full force against it, it cannot attack the validity of the bonds, in an action thereon, by that tbejudgments against it are invalid because in excess of the constitutional limitation of its indebtedness. In an action at law on county refunding bonds which are part of a particulal' series, where a portion only of the amount for which such series of bonds was issued constitutes a valid and enforceable indebtedness of the county by reason,of the constitutional limitation on its indebtedness, tbe court cannot determine the order in whicb the bonds were sold or tbe rights of the respective owners thereof, and judgment must be rendered for defendant witbout prejudice to plaintiff's right to establish its claim in some other proceeding.
4.
SAME-JUDGMENT WITHOUT PREJUDICE.
At Law. Action on interest coupons. By consent of parties, this easEl was tried to the court, and, from the evidence submitted, the court makes the following finding of facts: (1) Thie action is brought upon 410 interest coupons, for $30 each, originally attached to certain negotiable bonds, duly executed by the rlefendant, the county of Lyon, on the 1st day of May, 1885, and thereafter negotiated and delivered to the purchasers thereof, under the circumstances hereinafter to 047, inclusive; 05ti stated, the said bonds being numbered as follows: to 090, inclusive; 096 to 0120, inclusive. (2) The defendant, the county of Lyon, is a municipal corporation, organized under the laws of the state of Iowa, within the meaning of section 3, art. 11, of the constitution of the state of Iowa, and was so organized earl,}' in the year 1872. (3) The first state and county lists of the county were those for the year 1872, and the amount of taxable property within the defendant county, as shown by the state and county tax-lists for the various years since the organization of the county, is as follows:
For the year 1872 "" "1873... "" "1874............. "" .. 1875. ": .. 1876............. U;·77 ·..... 1878 $ 499,099 96 For the year 1879 $ 915,133 28 1,009,444 56 " " "1880........ 1,066,707 00 997,822 62 " " "1881. 978,259 00 1,061,HJ6 63 " . . "1882... 989,55000 1.081,356 09 : 1888............. 1,384,28900 885,262 80 , , " ,,1884........ 1,437,527 00 88 9,75785 .. 1885...... 1,558,0403 00
(4) The first bonds issued by the county were issued July 29, 1872. During the year commencing July 29, 1872, and ending July 28, 1873, the sum of $55,000 in bonds was issued by the defendant county, under chapter 174 of
FEDERAL REPORTER,
vol. 44.
the Acts of the 14th General Assembly of Iowa. upon the following judgments, in the following at the date given below: On Wilson & Joy judgment, dated July 18,1872,$6,018.00,8 bonds, dated July 29, 1872, amounting to... .. . ·.. .. .. .. .. .. .. .. .. .. $ 6,000 " Jas. H. Wagner judgment, dated July 18, 18!72, for $1,269.96, 3. bonds, dated JUly 29, 1872, amounting to... .· .. .... .. .. .. .. .... .. .. .· .. .... .··. . . .. ·· .. · 1,200 " John A. Schmidt judgment, dated Oct. 11, 1872, for $6,001.50, 10 bonds, dated Oct. 14, 187"2, amounting to 6,000 " 'J.P. Gilm'an judgment; dated Oot. 11, 1872, for $402.28. 4 bonds, dated Oot.
"
". A l 4,
" Wm.Larrabee jndgment, dated Oot. 11, 1872, for $1,840.34, 5 bonds, dated . Nov. 12, amounting to , ;. .. .. " Joy & Wright judgment, dated Oct. 11,1872, for $743.10, 8 bonds, dated Jan. amounting to ;.................................... . "Wm.·Layrabee judgment, dated Apr. 18,1873, for $2,286.74. 4 bonds, dated " ..i,'Apr. 19,1878. amountlngto ; ·· '................................ \.i. E. Gortz .. " Tho&. rrhorson judgment, dated Apr. 18, 1878, for $809.94 .················ I' J, P. QUtPan judgment, dated Apr. 18.1878,for $499.20, 1 bond, dated Apr. '.. il:; 1873; amounting to , Apr. 18,.1873, for $5,411.80, 7 bondll, dated 1 ··
" ,.," .···\.,IDIII9···
a
amounting to............... I"
ii',
.. "' " II
's
;......... , .
Odt.
1,500 1,800
.400
oi-:
I · · · · · · · 1 · ·' , _ ' 1 I
700
2.200 500 5,400 8,200 1,200
" "
.. ' " Va,n
..
to., Ero. Judgplent,
i'S.·IS73;f;;r'is:i97.70: '14' . for $1,268.70, 2 bonds, dated
18: i's'i2','ior $892:55:
... " E.
;futed' 'i8,'is7S; "juij/28;
ii:2ii>:24: 4' 7'
dated a;;ted Jui;
900
1,200 2.400
.. i
28, 1878, amounting to.......... ;. ..... .... .. .... .... ...... ..... .... .. .. .. . Goo, 'CW. :MCQueen judp;mentj dated 'Ju11'28\ 1873, for U,S28.95.7bonds, dated C. iSoil:37; i" '!loud',' ; · ; ;............. qatedJuly 24, 1873, for $6.754.66. 18 bquds, dated
8,000
" Ii"
4,800 500 6,800 f.55,OOO
·.· ···
··,.......... ·· .' ····· '· ··
Total. it:··
o' · ·
it,:":, ,' ························' . . . . . . . . . . . · i
The llisl;'abo'Ve jndgment, being against the defendant and in favor of C. A. Greeley for the sum of $6,754.66, rendered on Jllly24. Was rendered· the followingcircllmstances: C. A. Greeley .bQn(J.lId,an\:Lreversed .hrOl,l.ght .J\ lIuit til' c;l.lt«mdant county. in the district court of Plymouth fvr thesnm;,,! $6.754.66. In this suit one E., W. Allen, a citizen and tax-payer of Lyon county, appeared and filed his petition of intervention prior to the rendition of judgment against the county, claiming and 'alleging tHat he was a citizel1 'and tax-paiytir in the defendant cou nty; that a oHM warrantllsued onin the suit in which the pptition of ingreat tertention was filed were fraudulent, and without considel'ation; that at the time they wel'e issued the indebtedness of Lyon county exceeded the amount .of5 per <;entum of the taxable property of said county; and that the warrants : upon which the Sllit wall b8$ed were in excess of such limitation of indebtedvoid; , .The petition of intervention further allegelJ that the board of \:sulJervisors.oUhecounty well knew that there was agood.and valid defense the defendant county was not liable thereon, and that' the' Wllrl'ants were fraudulent; and that, knowing these facts, they corruptly and . fJrll,ud Jnto. an, arrangement assisting the pbintiff :in.pJlocuringa jUdgment against.thesaillcounty upon the said warrants, and ;el1tel'ed, COJlsp.4'a.,q .with the plaintiff: a jUdgment taken "lIon the
.£TNA. LIFE INS. CO.V. LYON COUNTY.
331
same, and to prevent a full and impartialdef-ense being made by the antcolmty. The plaintiff and deft'ndant county each moved to strike this petition of intervention from the liles, on the gl'Oundthat· the tax-payer 'had no right of intervention, or to defend for the county'. The court in Plymouth' county sustained these motions to strike, and at the same time entertd, judgment against the defendant county, in favor or the plaintiff, for the'\ftill amount claimed. From' this judgment and these orders the intervenor appealed, anti the supreme court of the state of Iowa, on December 9, '1874, reversed the jUdgment of the court beiow, rendered against the county, and remanded the same for further proceedings. Thereafter. and on the 5th dll'y,of February, 1875. the case was transferred to Lyon county, on motion o'f the' intervenor, where it was continued from term to term. and not disposed of,' and no entered therein. The judgment above referred and wbi'ch' was reversed by the snpreme court, was entered against the county on the 24th of July, 1873. On the 28th day of tbat month, a transcript of thE'! judgment was tiled in Lyon county, and on the same day bonds wateiasued thereon In the sum of $Il,80U. The total amount of bonds issued IIpon judgments, not including the last. judgment above referred to, was $48,200. and, the judgment above referred to, there were issued an aggregate of $55,000. (41) I further find that the board of supervisors of Lyon county, on the 16th. day of April, 1873. passed a resolution in the following form, to-wit: "Wherea.s, there is now considerable outstanding indebtedness Of the coull.ty of Lyon, in the shape of county warrants; and. . '. ." "Whereas, the time for putt.ing Into jUdgment, and bonding the Bame, as. provided by law, will expire on the 1st dllyof Sept·. 1873; and . .'. "Wherel!s, it is the opinion of the board of supervisors of Lyoncol!nty, Iowa. tbatthe best interest of said county be subsel'ved by said ness being llonded, in ·accordance with law: , "Now, therefore, be it resolved, and itis hereby .moved and carried. by a majoritY ()fsaid board, convened as by law provided, lhat the holderstberllof be; and hereby are. authorized and t'mpowered to bring suit upon the Same in any court in this jllllicial district, atld obtain jUdgment on the. same. foJ:.the· purpose of bonding: proviut'd, however, that J. F. Eccleson and H. B. Wilson are hereby employed as sole attorneys, to appe,arin any court of thisjuditial distrl(Jt, and defend said county against aU Buch warrants wJlerein the consideration' thereof had failed, 01' wherein there is no consideration.", (5) From July 28, 1873, date of the issuance of the last of the $55.000 of bondshfH'etoIOl:e l'efened to, up to July 1,1879, funding bonds were·.js$ul'd by the defendant. county, under the provisions of chapter I, tit. 4. of the Code of Iowa for Itl73. as amended by chapter 9 of the Acts of the 15th Gent'rlil Assembly, and chaptl'r 154 of the .Acts of the 17th General Assembly, at vari-' ous dates. and in various amouuts, as follows:
will
October 111,1874 December 1, 1874 February 16, 1875 September 18, 1875.......................... October 18,.1875 Novem1>er9.1875 September 6, 1876 JUly 7, 1877... .. .. February 7; 1878 June .4.1S7i , February. Ill. 1879 JllDe .4, """
,
,; " ..!··
·
$10;000 00 6,000 0() "I.!JOO 00 5,HJOOO 200 ()() ·...... 400()() 2O,O()0 00 .· · 3,600 00, ·· : 1,000.'00 ; .. 5,200'()() ; ;,.· ; 1,400, ()(). ' , , " ',"" ·.·····.
·.
OQ
Total
I55;SOO:OO .
332
All of the bonds were issued under resolutions of the board of supervisors, introduced in evidence, and which showed the purpose for which the bonds were issued; such purpose being to fund outstanding warrants and floating indebtedness. against the county. (6) I further find that on July 1, 1879, the defendant county issued $100,000 of 8 per cent. refunding bonds, under the provisions of chaptor 58 of the Acts of the. 17th General Assem bly of the state of Iowa, and upon the following resol1ltion of the board of supervisors of said county, of date April 3. 1878: .""Whereas, in accordance with an act of the seventeenth general assembly of the state of Iowa, authorizing counties, cities, and towns to refund outstanding bonded indebtedness at a lower rate of interest, and to provide for the payment thereof, theboarrl of supervisors of Lyon county, Iowa, in regular session assembled, deem it for the public interest to refund all indebtedness of said county, eviejenced by bonds thereof, heretofore issued and outstanding at the time of the passage of this act. "Therefore, be it resolved by said board of supervisors, that the chairman of said board and the auditor of said county are hereby authorized and empowered to issue the COUP0J;l Qonds of said county in sums not less than one hundred dollars, ($100.00,) nor more than one thousand dollars, ($1,000.00,) haVIng not more than tifteen years to run, redeemable in lawful money of the tJnited States of America, at tile pleasure of said county of Lyon, after five years from date of issue, and interest, payable semi-annually, at the rate of eight percentulll (8 per cent. )per annUl!!. which bonds shall be substantially in the form set fOJ'th in said bill, to-wit, frornlines eleven (11) to twenty':'nine, (29,) inclusive, and deliver. the same to J. Shade. the treasure.r of said Lyon county, Iowa, who is hereby authorized to sell and dispose of said bonds.so issued, in accordance with said act of the seventeenth general assemhlyof the state of Iowa, and for no other purpose, whatever. , "It is fu rther resolved by the board of superVisors of said Lyon county that two per centum (2 per cent.) be, and the same is hereby, apprQpriated of the bonds hereih a.uthorized to be issued, to pay the costs or expense of preparing, · fssuing,' advertising. and disposing of the same,and that J. Shade is hereby employed as financial agent the.refor, with power to employ an assistant, if he so desire, and that all matters herein set forth shall be done in strict conformity with this resolution, and the provisions of said act. . "The foregoing was approved by all the members of the board of superviSors of Lyon county." (7) The foregoing resolution was spread upon the records, and is upon page &a7 of Book A of the records of the proceedings of the board of supervisors of sllid county; and the proceeds of this issue of Shade refunding bonds, amounting to $100,000. were lIsed to pay the principal and interest of bonds issued prior then·to, as follows: The amount of $53.500 thereof was used to pay in filiI ail of the $55,000 of judgment bonds heretofore referred to, and which were issued in 1872 and 1873, and which were outstanding and unpaid, beiug in amouut $53,000 of principal and $500 of interest, including the whole $6,800 issned upon thejudgment in favor of C. A. Greeley, and which was reversed in the supreme court of Iowa, as hereinbefore found. The rell1ainder: of the proceeds arising from the sale of the issue of Shade refunding bonds of $100,000, issued July I, 1879, was used to pay said above-mentipned $47,300 offunding bonds, not issued upon, or to pay judgments with accrued interest thereon, amountinjl; to $1,085, hereinbefore referred to as being issued between October 19, 1874, and February 7, 187t:l, both dates incJusive·.
lETNA I.IFE INS. CO. V. LYON COUNTY.
333
James H. Wagner, Apri121, 1874........................... A. J. Harmon, April 21, 1874.. Perkins Bros., August 22, 1874...... .. .. .. .. .. .. .. .. Wilson & Van Saun & Co., May 5, 1875 Lyman J. Gage, Oct. 16. 1875 C. H. Smith, Nov. 15, 1876 , E. T. Drake, May 14. 1878............ Swan & Fawcet, May ]4,1878...... A. H. Andrews & Co., May 14, 1878....... .· .. .. ·. .. .. .. .. .. .. T. C. Thompson, May 14, 1878..... Chase & Taylor, May 14, 1878................... ..
(8) I further find that the fbllowing additional judgments were entered against the defendant Lyon county at the dates and in the amounts named, 00wit: E. T. Kirk, July 24, 1873 $2,204 23 ·. .. ·· .. .. .. . 672 06 381 42 815 05 3,85034 4,460 56 233 00 462 67 60300 .. 107 45 304 00 479 10
.. .. ..
(9) I further find tbat bonds had been issued to discharge these last-named judgments, which bonds in turn have been merged inor paid from the proceeds of later issues of bonds. (10) I find that there were no rendered against the defendant county after the 1st day of Jan., 1879, and that all judgments against the defendant county prior to that date, had been satisl1ed prior to that date, eitber by bonds as hereinbefore found, warrants, or cash. (11) I find that the next bonds issued by tbe defendant cou nty were issued on January 8, 1880, and that on said and at various dates SUbsequent thereto, upto ann including July 1, 1885, there were issued $60,600 of funding bonds, under the provisions of chapter 1, tit. 4, of the Code of 1873; chapter 9 of the Acts of.the 15th General Assembly; chapter 125 of the Acts of the 16th General Assembly; chapter 154 of tbe Acts of the 17th General Assembly; cbapter 183 of the Acts of tbe 18th General Assembly; chapter 147 of the Acts of the 19th General Assembly; chapter 80 of the Acts of the 20th General Assembly,-at dates and in amounts as follows: January 8,1880 May 12, 1880. · June 14,1880 November 12, 1880..... Septem1:ler 6, 1881. .. .. .. .. .. .. January 13, 1882... September 1, 1884 .. March 1, 1885............. . . .. .. .. .. July 1,1885 Total.
$ 600 00 11,600 00 6,800 00 2,400 00 .. .. .. .. .. .. .. .. ·· .. .. .. .. 4,000 00 9,00000 .. 3.100 00 ·. .. . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ·. 3,100 00 20,00000 "'co
$60,600 00.
(12) I find that the whole amount of said bonds was issued for the purpose of taking up outstanding floating warrants against said county, and; On the date of the issuance of the last $20.000 thereof, to-witl July 1, 1885; there was over $20,000 of warrants outstanding against said county, which had been outstanding and unpaid more than six months prior to July 1, 1885. said bonds bping issued to take up said warrants under a resolution; ,of the board of supervisors of said county, of date 1884, as follows: "Whereas, the county of Lyon, state of Iowa, has a Hoating indebtedness in warrants of the different funds of said county, and whereas, the' board of superVisors of said county deem it for the best interest of the county to bond the same, be it therefore resolved by the board of superVisors of Lyon county, Iowa, tha·t;the chairman, with the auditor, be authorized to issue bonds in amollnts sUfficit'nt to cover said indebtedness, and deliver the 6ame to the county. treasurer, and take his receipt therefor. "Adopted by a full of the board."
334
FEDERAL REP9RTER I
'(13) On Mayl.1885 l ·anissue ot of refu'ndingi,bon'C!llIwas made by provisions of chapter 58 of the Acts of the 17th Genel'al Assembly. and chapter 175 of the Acts of the 20th General Assembly of the state of Iowa. and under a resolution of the boa,r,d of supervisors of saidcourtty. of date4-prlll1, 1884, as follows: "Whereasdt is deemed ·to be for the public. interest to refuM the indebtednebs of the county of Lyon.. state of Iowa. evidenced by the bonds thereof, heretofore issu.e.d. and outstanding on the 1st day of Jan., 1884, and to issue the coupon boDdsof county. "It is therefore resolved by the board of supervisors of s!\idcounty in session assembled, to issue Mapan bonclsofthis county, in sums not less than one hundred nor. more t.hiuione thousand dollars, having not more than twenty years to run,redeemable in lawful money of the United of America, at the pleasure of the county, after five years frOID the date thel'eof, and bearing interest, 6 per perannuln. which bonds shall be subf>tantially in the form givpn in section 1, ch. 58. 17th General Assembly, and shall bear the date of July 1, 1884, or on the first day of any mon-thcalled for,rbyMHler & Thompson, and the chairliJllll of the board. a'od the auditor of, this board, and auditor of the county are hereby directed to isslle si'me in BcOOrdance with said statute and this resolution. "In testimony whereof' tile sRidcounty, by its board of supervisors. has caused this,.,boml to be by the chai!7man of the board, by the auditor. wit.h the couilty seal attached, this 1st day of May, 1885. [l:iea!.] ,. J. G. ANDF.RSON, ", "Chairman of the Board of Supervisors. " "County Auditor." The foregoing preamble -and resolution was passed the 11th day of April. 1884, by the-vote of alltbe of this board present, which was 4·5 of all the members. thereof. (14) That on the 9th day of January, 1885, the board of supervisors of the defendant, Lyoll'collnty, .ado[ltedthe fOllo\Ving resolutions: "On motion. the resolutioj) appoi.llting Miller & TJlompson as financial agents for funding and refunding county lndehtedness, and the contract en· tered Into in such resolutions; is hereby res<:!uueu. "On is heb:by resolved by the uoard of supervIsors that B. L. Richards is ,hereby appointed financial agent for Lynn ,county. for the purpose of fundin!l allll refunding county illdeutetlness. and that said B. L. Richards is required to give' bond covering amoullt called for at any time by said agent. ,This 'resolution is passed in accol'dance with the Laws of 1873, and the ame,ndment thereto." ,. Tbat under these r..solutions the defendant county, on the first dayof May, 1885, duly executed one hundred Rnd twenty refunding boods in the sum of ()De tho'usand dollars each.,numhered 01 t() 012U incluslve. 'That sail! bonds wereidenUcal in furm, a-ndare as follows; "UJutED STATES OF
",L. C.
1'1I0MPSON.
fOl06 '.
Iowa, L1Ion Count1/. '
Dollars
1UOO
Lyon, 'in ,the state of Jowa, . ipl'olllises tOVII)1,ito Con necticut GlmElra}' Li.fe, Insurot'. or.c3er, at,tbelufficeofthe;' treasu rer of said 'county of Rock· Hiapids. on the 1st day of May. 19M, or: at :any time befol't' thllit d<ty lifter the pil'ation of live years, at the pleasure of·the eOHnty.' the sum, o{,one thousand dollars. with intereat at the rate of six pllr cent. per annum, payable at the
lETNA. LIFE INS. CO. 11. LYON COUNTY·
335
.office of thesai'd treasurer semi-annually.,(jQ tbe 1st days of May arid 'November in each year, on presentation and surrender of'the interest'collpons hereto attached. This bond is issued by,the board of of said county, under the provisions of chapter 58 of Ute Session Laws or the General Assembly, chapter 175 of Public Laws,of the 20th General Assembly of the state of Iowa, and in conformity with a resolution of said board dated 10 dayAprH, 1884.." . Indorsed on the back of the bond: "CHAPTER LVIII. "An act to authorize counties, cities. or towns to refund outstanding bonded debt at a lower rate ofi n terest, and to pl"ovirle for the payment of tlie. same. "Section i. Be it enacted by the general of the state that CiUes. and towns are hereby authorized andempowered.if by a vote (I) of the boat.d of dr. city or town coullcil,as the case be. it be deemed for the pUblic interest to refund the illdebtednes8 of sl1chcorporation, evidenced by the. bonds thereof, heretofore issued and outstanding, at the time of'the passage ?ftbis act; and to Issue the coupon bonds of such corporatjon in sums not less than one hundred dotlars;($WO.OO.') nor more than one thousand dollars. ($1,000.00.) having DOt more thantwenty years to run,redeemablll in 'lawfnl money of the' United States of'America. at the pleasure of 'such corporation. after tiveyeliJ;8 from the date of their' and bearinK4t1terest payable semi-annually, at a rate not exceeding eight per cent. (8%)per annum, bonds shall be SUbstantially in the f()lluwlng form: " " ," . . "-No. --''-'-. II · The :,-'-.''. of -.--. in the state o,f10\\,a, for valtl,e to pay -,-'-'-'-, or office 'of the treasurer of said,-.---.-,',' in ---' on the first day of .-'' -'-"-,or at'-'-:'-.-- Hme after the expiratIon 'Of 'five years; at the pleasure' -,-.-, of-,-'-,dollars. W'ith'the'interest the rate of '-'-"- per annuJjl,payable at the office of said treasurer semi-annually, on the first days of -'-'-. and -in each, year,'OD presentation and surrender of the interest coupons' hereto attached . .. 'This bond is Issued by the - - - Of said -'--'-, under the provisions of chapter oithe Session Laws oUhe I;eventeenth Genera1Assembly 'of Iowa, and in conformity wIth aresolutioli of said -'-'- - , dated .-- day of - - '-,18...... , .. 1 In testimony whereof the said - 'has caused this bond to be [L.8.J signed by the -'--. and attested by the - - - , seal attached. this - ' - of _·_·-.'ll:)o....;· II And coupons shall be In the follOWing. form:
·· 1$__ .._._',":'
,.
.
.. · The treasurer of ---:-. Iowa. will pay tQ the holder hereof on the - - . - day of -'-.-,18-, at his office in - - , -'--'dollars, for. interest on bond No: -'.-.- . iss ued under the provisions of chapter ----,.,.. of the Session Laws qf the Seventeenth General Assembly;' . "Sec. 2. 'fhe ;treasurerof any such corporation is hereby authorized' to sell and dispose of the bonds issued under this act at not less than their par value. and to apply the proceeds thereof to the redemption of the'Outstatlaing bonded debt. or he m.ayexchange,saidbonds forontstanding bOndS. par; but the herellY be issued ·for ,no oth.er ,pqrpQSe ·. ):lllWElVer·. suchcorporation may appropriate. not to exceed Jrw,() percentum (2%) of the bonds herein authorized, to pay t4e
.336
ing, issuing, advertising, and disposition of the same, and may employ a finaneial agent therefor. "Sec. 8. The board of supervisors or common council of any city or town, as the casa may be. shall to be assessed and levied each year, upon the taxable property of the county, city, or town, as the case may be, in addition to the levy authorized for other purposes. a sufficient sum to pay the interest on ontstanding bonds. issued in conformity with the provisions of this act. accruing before the next annual levy, and such proportion of the principal that at the end of eight years the sum raised from such levies shall at least equal fifteen per cent. (15%) of the amount of bonds issued, at the end of ten years, at least thirty per cent. (30%) .of the amount, and at and before the date of maturity of the bonds shall be equal to the whole amount of the principal and interest; and the money arising from such levies shall be known as the' bond fund.' and shall be used 'for the payment of bonds and interest coupons, and for no other purpose whatever; and the treasurer of such county, city, or town shall open and keep in hisbooks a separate and special account thereof, which shall at all times show the exact condition of said bond fund. "Sec. 4: Wheneve.r the amount in the hands of the treasurer of any such county, city, or town, belonging to the bond fund, after setting aside the sum reqUired to pay the interest coupons maturing before the next levy, is suffiCient redeem one or more bonds, he may notify the owner of such bond or bonds :that be is prepared to pay the Ilame, with all the interest accrued thereon; and, if said bond or bpnds are not presented for payment or redempti,on within thirty (30) days after the date of such notice, the interest on sucb bonds shall cease, and the amount due thereon shall be set aside for its payment whenever presented: provided, however. that nothing herE'in shall be construed to mean that any such bond or bonds issued in accordance with this act shall be due or payable before the expiration. of five years after its date ()f issue. All redemption shall be made in the exact order of their iSBnance, beginning at the lowest or firllt number, and the herein required shall I)e directed to the pOflt-office address of the owner, as shown by the record kept in the treasurer'soffice. . "Sec. {j.If the board of supervisors of any county, or the oommon council of any city or town, which has issued bonds under the provisions of this shall fail to make the levy necpssary to pay such bonds or interest coupons at maturity, and the same shall be presentpd.to the treasurer of any county, city, or town, and payment thereof refused, the owner may file the bond, together with all unpaid coupons. with the auditor of the state, receipt theref.or, and the same shall be registered in the auditor's otlir:e. and the executivll council shall, at their next session as a board of .equalization , and at each annual equalization thereafter, add io the state tax to be levierl in said county, city, or town a sufficient rate to realize the amount of principal or interest past due, and to become due prior to the next levy; and the same shall be levied and collected as a part of the state tax, and paid treasury. and passed to the credit of such county, city, or town. as bond '1:l\x, and shall be paid by warrants. as the payments mature, to the obligations, as shown by the register iIi the office of the state auditor, until the same shall be fully satisfied and discharged: provided, that this act shall be construed to limit or postpone the right of any holder, ;of any such bonds to resort to any other remedy which such holder might otherwise have. "Sec. 6. This act, being deemed by the general assembly of immediate importance, shall take·effectfrom and after its publication in the Iowa State Register and Iowa Staie Leader, newspapers pubashed at Des Moines, Iowa. March 20, 1878.
lETNA LIFE INS. CO.
v.
LYON COUNTY.
337
"CHAPTER CLXXV.
",Acta TwenUeth General Assembly. An act to amen a chapter 58, Acta of the Seventeenth General Assembly. "Be it enacted by the General Assembly of the State of Iowa: "Section 1. That section one (1) of chapter 58, Acts of the Seyenteenth General Assembly of Iowa, be amended by striking out of the fifth and sixth lines the words' heretofore issued and outstanding at the time of the passage of this act,' and insert in lieu thereof the words · now outstanding,' and strike out the word ·eight,' in the twelfth line, and insert in lieu thereof the word · six.' "Sec. 2. This act, being deemed of immediate importance, shall take effect and be in force from the date of its publication in the Iowa State Register and Iowa State Leader, newspapers published in Des Moines." (15) I lind the proceeds arising from the sale of the $120.000 of "Richards" refunding bonds, issued May I, 1885, were used to take up the $100,000 of "Shade" refunding bonds, issued July 1,1879, and $16,900 of funding bonds, issued June 4, 1878, and subsequent thereto, as follows: Of Issue of June 4, 1878 ." " "·l1'eb. Ill, 1879.... " " "June 4, 1879............................. " " "May 12, 1880 All of issue of June 12, 1880............ .. .. .. .. .. · . .. .. $ 1,700 ()() 1,000 ()() 100 00 11,600' 00 2,500 00 $16,900 00
.. ..
-and also to pay the commission and expense of placing said bonds, amol1nting to $2,438.59; and the balance of the amount realized from the sale of said borids, amounting to $661.41, was applied on the payment of accrued interest on the bonds taken up. (16) I find that five per cent. (5 per cent.) of the value of the taxable property within the county of Lyon, defendant, as asct'rtained by the state and county tax·lists for the several years since the organization of the county up to 1885, is as follows: 1812.; 1873... 1874 1875............ 1876..... 1877............. 1878 · $24,954 00 50,472 22 ;. 49,89113 53,090 33 54,067 80 44,263 14 44,48789 1879 145,756 66 1880...................... · 58,335 85 18S1. 48,91295 1882.. . 49,477 50 1883....... 69,214 45 1884 _......... 71,876 85 1885 77,902 15
(17) Of the issue of $100,000, bearing date July 1,1879, there is no testimony as to the order in which the bonds were sold upon the market. Of the issue of $120,000, of date May I, 1885, the testimony tends to show that they were sold at the date, and in the amounts, and of the numbers, and to the persons or corporations, as follows, to-wit: June " " Aug. Sept. " " ..
4," 6," 28," 1,"
1, 18b5, Nos.
2," 8," 20,"
1,"
" " " " "
" " "
01 to 048" 053" 056" 091" 096 " 0106" 028" 0111"
027 to G. B. Provost. 1152" C; H. Eighmey. 055" Dubuque National Bank. 090" JEtna Life Ins. Co. 095" U. S. National Bank. 0105 " Orient Fire Ins. Co. 0110 " Conn. Gen. Life Insl Co. 047" Saving & Trust Co. of Cleveland, O. 0120 Bartford Steam Boiler Inspection and Insurance Company.
(18) I find further that the $20,000 of bonds issued July 1, 1885, were sold 3, 1885.
v.44F.no.5-22
338
voL 44.
(19) I further find that said B. L. as refunding and financial agent of the defendant county, lit the time he sold said bonds numbered 028 t() iQ(lJqsive, 056 to Q90, Inclusive, and 096 to submitted to the purchasers the following certificates, and affidavits asevidence of the validity of the bonds offered for sale. The statements contained in the affidavit of B. L. lUchards, sWb1"n to under date 1, 1885, were,madeora1lyiD the' first instance by him, when seeking to.make sale of the bonds.:arid subsequently reduced to the form of an affidavit. alid s.worn to under data of September 1, 1885: ".:
"Oe'rtijled copy Of the proceedings of Board of Supervisors 01 Lyon Oounty, '. . Iowa, ..4pr'l 10, I
... "Whereas the county of Lyons, stateotlowa, has's floating indebtedness in·w.al'rant1Jonthe dU'ferent funds ofsaid county; and whereM, .theboard of 8uperV1sW:/5 of:said county deem it for intel'estoUhe county to bond thftMrpe;:", i. "Be it therefore resolvildby this boa.rd :supel'visorsof Lyon:county, Iowa, that.the chairman, with the auditor. be authorized to issue bonas in· amounts sU,tllcient·to,cover said· indebtedness, and· deliver the same to· the county treasrir:er; ap.d·takebls receipt therefor. · ' .bY fitIl vpte of the. board." . our state law, the bonds authorized. to be Issued above resolu· percents.;, iears;with Interest, payable semiannually,)ltI)ffi'ceof county treasurer·. ' '.' . '. ..... " . . , " .. ' ... " .'. ,. "T.C. . .. . .. .
?
b,
Io\V8, has a bond.ed inllebtedness, board of Buperylsorsof said county of t!llI tbesaid Indebtedn.e!!f\.Oe.it then'fore resolved that said board of supervisors receiVe fllT and accept the best otIe,r mll,de. tor "Adopted.. .' . . . "On motio.n, the bid for bOndinj;t of anlf the ·county indebtedness was accepted." . . ' . .. . .. . 1885, Session, (January 9, 1885.) motioD; the resolntronappolilting' Miller &. Thompson flnancfalagents ·for funding and refunding the !countylndebted ness, and the contract entered under such ·resolution, Is hereby rescinded. , . ;.I':On motion, It is hereby resolved by the board of supervisors that B. L. Richards is hereby appointed as the financlal'agent for Lyon county, for. the purpose of funding and refunding the county indebtedness, and that said B. is required to a bond c6vering the amount for at any tIme by saId a g e n t . ' . . " "Tbls resolution Is passed accordance with the laws of [Code] 18.73., and amendment thereto. .' . l ..
"W1\ereaa, consist.jog of
in
"J hereby certify that the hboveand foregoing is a 'complete record of the "pr6Ceedlngsoflsidd board of supervisors of Lyoii county, Iowa, arid that said B. L. Richards is duly authorized financi'a,l agent of the county, with full 'authoritytouegotillte the bonds of the county·.. , . . [Seal.] [Signed] "T. C. THomSON, County Auditor.
JETNA LIFE INS. CO. V. I.YQN CO:UNTY.
339
flI,T. C. Thompson. auditor of Lyon county, Iowa. certify that the total bonded debt of Lyon county now outstanding is. $140,000, represented by bonds of folIowing dates. amounts, and ra.tes of interest: "Refunding bonds, July 10, 1879. optional after JUly 1, 1884,8 per cent 100,000 "F\lI!ding ,June 4, 1878 optional 10 years, Sper cent...... 2,400 ·Feb. 19, It.l79, 8 pet cent '" ; ; .. .. 1,000 June 4, 1878, 8 per cent........... 100 May 12, 1880, 7 per cent.......................... . 11,600 June 1.1880, 7 per cent...................................... 6,800 2,400 Nov. 12, 1880, 7 per cent........ Sept. 6, 1881. 7 per cent. 4,000 June 13, 1882, 6 per cent ;........... 9,000 Sept. 1, 1884, 6 per cent............ .. 3,100 140;400
-flTha.t there never has been default made in payment of any interest coupolls on HIlt' of above bouds since they were issued, and provision by levy for payment of interest has been made for 1885.. That,the total amount of floating debt now outstanding is about $25,000, ant! does not exceed that amount. That of the floating debt repl'esented by' county warrants there are"Contingent fund warrants .. "Bridge " "' .··..........····..·......·....···.·····.·······.··.· 15,692 8,191 1.016
"Poor
..·....··...··....··.....·.....·...·.···..····..·..·
24,899 '" Adding bonded. debt.... .· ·· . ·· ·· ... ·· .· ·· .· ·· .· ·· ·· .· .· ·. ·· ·· ·· ··· ····.··· ···· 140,400
"U!'kip.g total debt , 165,299 -"That th.e Msesed valuation of the property of Lyon county, as taken from the assessment rolls of 1884, is as follows: 4'857,021 acres,· at'I4.00 ,·············································. 1.428,084 "Town lots.···...···..····. .e · · '· · · · · · · · · · · · · · · · . · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 72,830 "Personalty ·.....·.·..·.···. ...·,·...·....··· U Itailroad.., . , , ·· , .·· , ··',', ··· ······ , ··· o · · · · · ·' · · · · · · · · · · · · 57,242 0'0 0 · · · · · · · · 0 · · · · · · · · · 0. , , ' . , ·· · '. 0 ····.···············
1,580,755
-"That the land is assessed not to exceed one-third of its value. Thattllwn lots, with .the thereon, are worth, at a mOllerate vahHltion. $500,000. That personal property is valued at not more than olle-tenthof its value. The real value of the property would be listed as follows: "857,021 uTOW'D
"Personalty
aC.re&, at $12 per A lots .. ,...... .
to 0" 0 ··· ,
4,234,252
······· 0 ······
"Railroad
500,000 'l'J3,aoo 57,242
"Totall'eal value.................
5.564,794
"Rock Rapids, Iowa, March 9, 1885. [Signed] "T. C. THOMPSON, Auditor. [Seal.] "I, John G.Watkins, treasurer of Lyon county, Iowa, hereby certify that the bonds as listed by the county auditor, amounting to $140,400,al'e corrpct. and that the cou oty IS not in detault in on lIny ofsaid lmnds, for payment of coupons has and tllatprovision for the year at Rock Rapid8, March Y. 1885. [Signed]' "JOHN G. WATKINS, "County Treasurer of Lyon Connty,Iowa. fI I, C. H. Smith, clerk of the, (fistrictand circuit courts of Lyon county. Iowa, hereby certify that I am acquainted with T. C. Thompson, county auWtol;,!,pd Jolm treasureJ:.andknow their signatures; t!IaUbeyare the present. oJ,lic.ersof jpaqditor's.an4
340
FEDERAL REPORTER, vol. 44.
offices, and that their signatures are attached to the foregoing certificates touching the debt of Lyon county, Iowa. [Seal.] "lJated Rock Rapids, Iowa, March 9, 1885. rSigned] "CHAN. H. SMITH, "Clerk of the District and Circuit Courts in and for Lyon Co., Iowa." Also Exhibit L, which is as follows, to-wit: "EXHIBIT L. "McOmey & O'lJonnell, Attorneys at Law. "DUBUQUE, IOWA. August 26, 1885. "We Rrlt.. asked our legal opinion as to the validity of the issue of $140,400 of refunding bOnds by the county of Lyon in this state. The certified copy of the record of"the proceedings of the board of supervisors is not sufficient for us to determine several questions necessarily involved, viz.: First. Whether the refunding resolution of April 10, 1884, was adopted ,by the required two-thirds vote of the board of superVisors. Second. Whether these bonds evidence an indebtedness which was passed in judgment against the county. Assuming, hOWever, from wl)at Mr. Hiehards states, that the abovenamed resolution was adopted by the same vote as the bonding resolution, and that the indebtedness of the county for which it is proposed to issue these bonds was merged in, and is now evidenced by, a jUdgment against Lyon county, then we say that, notwithstauding the fact that said amount of $140,· 4OQ'was evidently in excess of the constitutional limitation upon counties riot to contract an indebtedness in excess of 5 per centlnn of the assessed valuationof their pl'operty as shown by the last previous assessment, still the amount of the judgment or judgments, no matter If in excess of such 5 per centum",wollld be a valid obligation against the county, and the jUdgment would forever bar the county' from pleading the constitutional defenSll. The county haVing had its day in court, and full opportunity to plead the overissue of warrants, or whatever may have been on the evidence of its debt. cannot again, whether it did before or not, be heard to make that defense again dnany bond or other security given to pay such jUdgment. This is fully determined in the case of Raihoad Go. v. Oscllola Go., 45 Iowa, 168. In order to issue the bonds of a county to refund its bonded indebtedness under the authority'of law, all the action required is a vote by resolution, or otherwise, of the board of supervisors, by a two-thirds majority, declaring their intention so to do, as they deem it for the best interest of the county. Chapter 58. Acts 17th General Assembly. The two points above mentioned being conceded. viz., that the resol ution allthorizing the refunding was adopted by the required vote, (and the legal presumption is that it was,) and that the bonds are to refund Judgment bonds, we, gi ve it as our opinion that the $140,400 of bonds are legal and binding upon the county of Lyon, no matter who may be the purchaser. [Signed] "MCCENE,Y & O'DONNELL. "We mean to be understood by the above that the last jssue of bonds by Lyon county to refund therefunding bpnds which tp take up the judgment bonds are legal and binding upon the county. ""'" , [Signed] "MCCENEY & O'DONNELL." Also Exhibit M, which iSlLS follows: "ExumITM.
"AUGUST 29. 1885· .. To McGeney & 0' Donnell, lJubuque, Iowa: JUdgments were obtained against Lyon county, Iowa; and jUdgmerit bonds were issued to satisfy
341
Refunding bonds were issued to take up the judgment bonds. Refunding bonds upon which your opinion was given were issued to take up first-mentioned refunding bonds. Are last issue refunding bonds legal and binding obligations against the county? [Signed] .. B. L. RICHARDS." Also Exhibit N, which is as follows: "Dated DUBUQUE, IOWA, August 50, 1885. "To B. L. Richa1'ds: Yes. Last issue being authorized by law, and to pay jUdgments, is legal and binding. "MCCENEY & O'DONNELL." [Signed] Also Exhibit 0, which is as follows: "State of Connecticut, Hm·tford County-ss: I, B. L. Richards, of Lyon county, Iowa, being duly sworn, on oath depose and say that I was present at the meeting of the board of supervisors of Lyon county, Iowa, held April 10, U:l84, and that the said meeting was a regular one; that at said meeting the resolution set forth in copy of proceedings of said board on file with lEtna Life Insurance Company at Hartford was offered, and adopted by the full vote of the board. No negative vote was cast. "I further depose that the refunding bonds of Lyon county, Iowa, were issued July I, 1879, for the purpose of taking up the outstanding judgment bonded indebtedness of said eounty, and. the proceeds of said refunding' issue were used for that purpose, and that the refunding issqe of May I, 1885, $20,000, bonds Nos. 01 to 0120, inclusive, are issued to take refllnding bonds dated July I, '79. [Signed] "B. L. RICHARI>S, "Subscribed and sworn to by B. L. Richards before me this 1st day of Sept., 1885. "CHARLES J. COLE, Justice of the Peace. (20) I further find that the purchasers of the bonds, from which the coupons sued on were attached, at the time the sale thereof was negotiated, knew that the issue of which the bonds offered for sale formed part was in an 2.mount greater in the aggregate than 5 per cent. upon the total valuation of the taxable property of the county of Lyon, as shown by the state and connty tax-lists of that and all preceding years, but that the purchasers bought them in the belief that, being refunding bonds, they were valid and binding. and were so induced to believe by reason of the made to them by said B. L. Hichards, and the written documents submitted t.o them as set forth in the last preceding finding. (21) I further find lhaUhe amount due upon the coupons in suit is $12,300, with interest at 6 per cent. from the maturity of each coupon. (22) I find that the plaintiff is now, and has since the date of the sale of the bonds to it been, the full and beneficial owner of the coupons in suit which were detached from bonds Nos. 056 to 090, inclusive, and as to the remaining coupons in suit plaintiff is the holder thereof, the legal title thereto being vested in it. although plaintiff is liable to account, as agent or trustee, for the proceeds realized therefrom to the parties who originally bought the bonds, and who retain a beneficial in the proceeds realized.
. Cummin8&:Wright and Henderson, Hurd, Daniels & Kiesel, for plaintiff· . Kauffman.Oo. Guernsey and Van Wagenen & McMillan, for defendant.
342,
FEDEaAL aEPORTER,
stating questiobs'oflaw arisibgoil' fbreg(jing facts'bave been very fully and ably presented by the cUt1nselfdi' respective 'Partiell, and it is perhaps to say that there is a wiqe divergence in the views advanced touching tIle judgment that should' be 'rendered by the court. It clearly appears from the eviof the bonds issued by the dence that the plaintiff and other defendantcoql1ty of the resolution adopted by the board of supervisors"in April, 1884, bought the same, in good faith, and paid therefor the ftlllface value and a6crued interest; and the amount thus received was, applied by tllecounty, through its relunding agent, to the payment of bonds then outstanding against the county. It no le8s clearly appears that the issue of bonds negotiated by B. L. Richards on behalf of the county, ,being in amount $120,000, exceeded largely the constitutionalJimitatiQnof 5 per cent. upon the valuation of the taxable prop-' erty in:, the county, as shown, by ,the last preceding state and county If. this issue of 'bonds' had been negotiated in the purchase of prdperty then or for the erection of county buildings or other like purpose, 80 that thereby;a new or original indebtedness had been against thecpunty, theve pould then be no question that the bonds themselves would bli!,voidbyreason of the provision of the constitution of the 'state of Iowa,litniting the indebtedness of all municipaJand' politica1'l:orporations within the state to 5 per cent. upon the taxable valillltioti"of the property within 'the limits of the particular corporation, and thereon could not be had, even in favor of parties who had, paid full value therefor, in the belief that, the bonds were Bueoonan'v. Litchfield, 102 U. S. 278; Dixan 00. v. Field, 111 U. S. 83,4 Sup. Ct. Rep. 315; Lake Co. v. Rollin8, 130 U. S. 662; 9 Sup. Ct. Rep. 651j Lake Co. v. Graham, 130 U. S. 674, 9 Sup. Ct. Rep. 654. The bonds in queilticm Were 'Mt for any such purpose, bUt were issued for,the purpoBe,bf refundIng other outstanding bonds of the county; anll the issuance thereof did in tact increase the indebtedness of,tbecounty, but only chalJged' the form ,or evidence of indebtedness.Under these circumstances" it is broadly claimed on behalf of plaintiff that the bonds, being issued to refund or pay other bonds, are not,alfected by'the eonstitutionallimit1ltion. " To the extent of holtling that;asapplierlto a series of refunding bonds, the, mere fact that the amount thereof might exceed 5 per cent. of the thel'ftllxablevaluation of. the property within the county, as shown by the tax-lists, wo\l1d not necessarily shbw,that the bonus so issued were Jor plaintiff. If a county invalid, I ,can)igreein owell a valid aod enforceable, indebtedness, refunding bonds, issued under,authority of an act of the legislature for the purpose of taking up such enloroeable [indebtedness; ttre not! in,;alid because they may exceed thif5 per cent;lbnitation. ," In such ca'se, the refunding bonds are valid, beca.use .avaUd ,Railroad 00. v. (knmtyoj Osceola, 45 Iowa, 168; AUstin v.lJiBtiictTp. of Colony, 51 Iowa, 102. In suits:, there/ore, uponrefumding 'bondsr(lpresenting prior indebtedness, it is nootlSSaI'Y, in order to .!lustainthe defense ofinvalidity, to show that
JETNA .LIFE INS. CO. 1'. LYON COUNTY.
343
the indebtedness merged. in, and represented by the refunding was it,c;;elf invalid and non-enforceable, either in whole or in part, and, in the present case, both paI:ties pave introduced evidence on this issue. . . On behalf of plaintiff, it is claimed that the representations made by B. L. Richards, the accredited agent of the county, to the effect that all the indebtedness proposed to be refunded by means of the issuance of the series of bonds which were negotiated by him to plaintiff and others had been reduced to judgment, and then bonded, estops the county from Richards showing the contrary .. I do not think the statements come within the principle contended for. When these bonds were offered to the plaintiff, it was known to the parties acting for the plaintifi:' the series of bonds proposed to be negotiated exceeded in amount 5 per cent. of the taxable property in the county, and to authorize the issuance thereof, there must be then inexistence a valid to the amount of $120,000,which it was proposed to refund by thee ance of thebonds in question. The va).idity of the bonds upon the claim that the bopds to be refunded represented claims that had been reduced to judgment, and therefore were enforceable against the county. The puchasers. knew, and were bound to know, that,: this assertion was true, the bonds would be invalid, because in l;lxcella or' the constitutional limitation, and the purchasers were bound to ascertain what the fact in this particular was. The bonds no recital on the subject. The certified copy of the proceedings taken by the boar<lof supervisors in regard to the issuance of the bonds, andwhich copy was submitted to the purchasers, does nof contain any .statement ;mowing that the bonds proposed to refunded were basedwholfy u,pon prior judgments. The statement relied upon as an estoppel was made by.Richards first orally, and then in the form of an affidavit; but newas not then acting on behalf 6f the county in. ascertaitting or certifying to a law required to be then ascertained anQ determinedas.the fact which basis for. further action. He was the refunding agent of the county, but he did· not have the power to determine any question or matter pertaining to the right to issue the bonds. Dixun Co. v. ]J'idd, 111 U;iS. 83, 4 Sup. Ct.' Rep. 315; DaMS Co. v. Dickinson, 117 U. S. 657, 6. Sup. Ct. Rep. 897. The resolution of the board of supervisors appointing Richards declares the object· of the appointment to be "for the purpose of funding and refunding the county indebtedness," and the resolutions adopted by the board under date of April 10, 1884, show upon their face that it was the purpose of the board to l1ndertake the bonding of the floating indebtednElss, as well as the refunding the then outstanding bonded indebtedness. . Upon the questipn of what the bonds proposed tq be. were the representative, and whether the same were based upon judgments previously rend,ered against. the county, the records. of the county constitutedthe. primary and best evidence. Richards had no chargeov,er or these req9rds, npt' wasl,1e the one towhom application would naturally be made by .one to know the origin and .of tbe. outst$.n<:lingbonded iJ;ldebtednllSs of the. county.. If the, effect
344
FEDERAL REPORTER.
of an estoppel is given to statements of this character, the protection intended to be secured by the constitutional provision limiting the amount of indebtedness of counties and other municipal corporations would be wholly destroyed. In every instance it could be evaded by the simple device of appointing a refunding agent, and by his statements create an estoppel against the county or city, and thus validate any amount of bonds that might be issued. I hold, therefore, that the representations made by Richards do not operate as an estoppel against the county, but that it is open to the county to show that the bonds merged into the refunding bonds sold by Richards were in whole or in part invalid and non-enforceable. 011 behalf of the defendant, it is argued that, upon this issue of unconstit,utionality, it is Open in this proceeding to question the validity of jUdgments against the county, or of bonds issued to fund or pay judgmentsagainst the county. In this claim I cannot concur. The constitutional limitation is not self-acting. Tho protection of its provisions must be invoked at the proper time,and in the proper mode. If judgmentsareobtained against a county, and the same are not reversed, but remain in full fbrce, they are evidence of the highest nature that the Jounty owes the amonnts adjudged to be due; and if the county, having thepoVi'et to fund iie outstanding indebtedness, issues bonds in payment 'of such judgments, the validity of the bonds cannot be successfully at'tacked, when suit is brought thereon, by showing that, if the defense had been interposed in the original case, the elaim might have been deand that the judgment actually rendered might have been prevented. As is said by the supreme court in a'omwell v. Sac County, 94 U. S. 851: . for exan:'ple, a judgment rendered upon a promissory note is conclusive 8S to the validity of the instrument, and the amount due upon it. aithonghit be sUbsequently alleged that perfect defeuses actually existed. ot which 110 proof was offered, such as forgoery, want of consideration, or payment... Hsuch defenses were not presented in the action, and established by competent eVidence, the \'IulJsequeut allegation o.f their existence is of no gal consequence. The is as conclusive. so far as future proceedings. at law are concerned, as though the defenses never existed." The argument of counsel would- have weight if the constitutional provision was to the effect that no judgment could be rendered against a. county under any circumstances. In such case, even though a court should enter tip a judgment, its unco!istiiutionality and invalidity would be self-apparent, and could always be availed of when its enforcement. might be attempted, and this for the reason that upon its face the judgcourt was without jurisdiction. A defense ment would show that based upon the clause limiting the amount of municipal indebtedness to. 5 per cent. uporithe amount of taxable property is of a wholly different nature. It requires a proper pleading of the facts, and upon the trial proper evidence must be introduced, or else the defense fails. It makes no difference in the validity of the judgment whether the defendant failed to plead 'the defense based upon the constitutional limitation, or·
lETNA LIFE INS. CO. V. INON COUNTY.
345
failed to sustain the defense, if pleaded, by sufficient evidence. In either case the rendition of the judgment established the validity of the claim against the county, and the judgment, so long as it remains unreversed, cannot be questioned on the ground that the amount thereof exceeds 5 per cent. of the taxable property in the county. The evidence shows that, when the bonds owned by plaintiff were issued and sold, there was outstanding against the county bonds representing judgments, and possibly other enforceable debts, to an amount exceeding 5 per cent. of the taxable property in the It follows that, to the extent of this enforceable indebtedness, the county could have issued valid refunding bonds. The amount of bonds issued and sold exceeds the amount of this enforceable indebtedness, and it may be said, therefore, that part of the indebtedness represented by this series of bonds is valid and enforceable and part not. That the holders of these bonds have equities against the county, will not be questioned. The question is, whether effect can be given thereto in this action. It is argued that the bonds would be valid until the amount needed to refund the enforceable debt had been rea0hed, and that it will be presumed that the bonds were sold in the order of their number. Such a presumption cannot be indulged in under the facts of this case. To settle the equities and rights of the bondholders against the county, and their rights as between themselves, would seem to require the institution of a suit in equity. In this action at law between one owner of part of the bonds and the county, it is beyond the power of the court to hear and determine the question of the order in which the series of bonds was sold, or the application of the proceeds realized from the sales thereof, and whether the facts are such that a certain number of the bonds can· be held valid at law, or whether it should not be held that each owner of a bond is equitably entitled to demand his share of the total sum which may be adjudged to be collectible from the county. It seems to me that the only means of solving the difficulties of the situation is for the plaintiff and the other non-resident bondholders to unite in a proper proceeding in equity against the county and such other bondholders as may refuse to act as complainants, and in such suit it can finally be determined for what amount the county can be held liable, and the rights of the respective bondholders in and to this sum can be decreed. As the case now stands, I hold that the facts show that the series of bonds isued by the county , and negotiated by B. L. Richards, as agent of the county, represent, in part, bonds previously issued, and which were enforceable against the county, and, in part, bonds which were invalid and non-enforceable; but that in the present case at law, and in the absence of interested parties, it is impossible to determine what part or proportion of the coupons sued on belong to bonds that represent the valid indebtedness refunded therein. While the plaintiff has shown a right of recovery against the county for some amount, it has failed to show a legal right to recover on all the coupons sued on, or any particular number thereof, and hence there is no basis for rendering a judgment at law in the present cause. For this reason, judgplent
346
I'BDERAL REPORTER,
herein must, be in favor of defendant jsuch however, to without prejudice to the right of plaintiff to establish, in any other proper proceeding, its rights against the county growing out of the purchase by plaintiff of the bonds of the county.
MACK tI. SPENCERet I ,
al.
(CWouit oourt, B. D. 1!or e10 YOrk. December 11,1soo.)
P....'1'BNTB
A preliminary injunctioD should not illsue in a suit for infringement, where UpOD the issue of privity of invention the evidence is merely oath against oath.
FOR INVBNTIONs-INlIRINGEMENT-PRELIMINARY lNroNO!J,'ION.
In Equity. Motion for preliminary injunction. H. A.We8t, for complainant. 0haB. O. Gill, for defendants. Patent No. 268,112 was upheld by Judge (43 Fed. Rep. 69,) but not as a pioneer invention, the invention of the complainant being found to consist in the combination with a detachable opera-glass handle made in telescopic sections, of the fast. ening device, consisting of a piston, hook, and slot, or their equivalent. I am not satisfied that the fastening devices used by the defendant in the exhibits put in evidence are such an equivalent for that of the patent as will warrant the claim that they infringe. They seem to be a pretty plain infringement of' the devices described in the other patent sued upon, No. 399,543. Conceding that this latter patent was sustained by Judge as showing patentable invention, (and that is by no means clear,) the fact remains that his decision was rendered in a case where there was not before him the question of priority of invention as between complainant and this defendant, Here it is a distinct issuej and, as upon that issue there is merely oath against oath, a preliminary injunction should not issue. SHIPMAN,
LACOMBE, Circuit Judge.
MYERS
et at 'D.
CUNmNGHAl't1
et al.
(Olirouit 'PA'l'BltTB FOR
oqurt, N. D. OMo,W'. D.
June, Term, 1890.)
, ,: ,B.ev. St. U. S. §J919, p1'\>viges that damages for infringement of a patent may be recovered by an action on the case. Section 4920 prescribes tb:e nature of pleadings ,to be used in tbe acti<YLI; and was' passed in' 1874. SectiOn 914; which provides that 'the practice, plea(lings, etc., in the federalcourtB shall conform as near as may be to those "in like causes" in the state courtS of the state where Buch federal oourts ate held, was passed1n 1872. Held that,&s actions for infringements of patelltll
FOR 'INJI'ltINGBMENT-PLEADINGS,