81 F. 127 | U.S. Circuit Court for the District of Northern Iowa | 1897
(after stating the facts as above). From the foregoing findings of fact it appears that' the only question for •determination is whether on the 12th day of November, 1880, when the bonds how sued on were issued, the defendant county was indebted in any form or for any purpose in an aggregate amount so large that, if added to the amount of the bonds then issued, it would cause the indebtedness of tiie county to exceed 5 per cent, of the then taxable property of the county; that being the limit fixed by the constitution of the state of Iowa upon the debt-creating power of the county. If tiie issuance of the bonds caused tbe indebtedness of the county to exceed the constitutional limit, then, the bonds are void, and cannot be made tbe basis of a recovery against: the defendant county. Doon Tp. v. Cummins, 142 U. S. 366, 12 Sup. Ct. 220. Tiie facts show that on the 12th day of November, 1880, the total indebtedness which could be lawfully created by the county could not exceed the sum of §33,335, and the question .is whether the facts show that the issuance of the $2,400 of bonds now sued on was illegal because the county was then liable to an indebtedness which reached or exceeded the legal limit, or approached it so nearly that the issuance of the bonds caused the; total indebtedness to exceed the linrit. According to the evidence, there was on the 12ÍU of November, 1880, valid indebtedness existing against the county as follows: For bonds, $27,000; on judgments, $15,772,88; and on warrants, §2,400; or, in the aggregate, a total of $45,172.88. In addition to this sum, there was in existence the series of bonds issued under date of July 1, 1879, known as the “Shade Bonds,” amounting to the sum of $100,000, and the crucial point in this case is whether these bonds can be held to be a liability of the county, which must be considered in determining the amount of indebtedness existing against the county on the 12th of November, 1880.
The constitutional limiiation which is relied on as defense in this case is intended to prevent the overburdening of property within the municipalities of the state by debts created by the corporate authorities, and the prohibition of the constitution extends to all 'forms of indebtedness, and the true inquiry in each case is whether, at the given date, there exists indebtedness in any form up to the limit for which the municipality can be held liable at law or in equity. Whatever'the form of the indebtedness may be, if it can be enforced by a court of law or equity, it certainly comes within the eonsiitutionni provision; but, on the other hand, claims which cannot be thus enforced, and which are not binding upon the mu- '
To maintain the defense pleaded in this case, it must be made to appear that when the bonds sued on were issued and sold the indebtedness existing against tbe county equaled or exceeded the sum
In the equity case of Aetna Ins. Co. v. Lyon Co., now pending in this court, a recovery is sought on behalf of the purchasers of the $120,000 of bonds issued in 1885 upon the, grounds that the money was paid for the bonds in reliance upon the promise of the county to give valid bonds therefor; that the bonds issued are void because in excess of the 5 per cent, limitation; that the duty rests upon the county of repaying the money received by it upon sale of the void bonds; that this duty can be enforced subject to the constitutional limitation that the county indebtedness cannot exceed 5 per cent, of the taxable valuation of the property in the county; that in ascertaining the amount for which the county can be lawfully held, the court can ascertain what sum of pre-existing valid indebtedness was paid off by the money received from the sale of the invalid bonds, and this sum will not be counted as an existing indebtedness when ascertaining the sum for which the county can be held liable. The defendant county in that case is resisting the claim thus asserted, but in this case it takes the position that in 1880 the purchasers of the Shade bonds might have asserted a similar claim, and, therefore, the amount received from the sale of the Shade bonds must be held to be an indebtedness against the county in 1880, and therefore is to be computed in determining the amount of existing indebtedness due and owing by the county when the bonds now sued on were issued and sold. The difficulty with this position is that, so far as this case is concerned, it is based upon mere possibilities and surmises. No claim of the kind has been asserted on behalf of the holders of the Shade bonds. If it had been, it cannot be known whether the claim would have been sustained, nor for what amount.
It never was asserted in any form, and therefore, in fact, no enforceable burden of indebtedness has resulted therefrom upon the property of the county. It cannot be the law that a claim which never was asserted, which cannot now be asserted, and which has cast no burden upon the property of the county, can be held to be an indebtedness within the meaning of the constitutional provision.
The purpose of the constitutional limitation is to prevent the property of the municipality from being burdened at any one time with an indebtedness exceeding 5 per cent, upon the taxable valuation thereof, and therefore that which results in fastening upon the property of the county a claim which can he enforced must be held to he an indebtedness within the meaning of the constitution, while, on the other hand, that which cannot be enforced at law or in equity against the county, and which has not been so treated or dealt with by the county, as to subject the property thereof to the burden of payment cannot be held to be indebtedness within the constitutional provision. The evidence in the case shows that the Shade bonds were invalid and void when issued in 1879, and therefore, when the bonds now sued on were issued in November, 1880, the Shade bonds, being void, created no indebtedness on part of the county, and therefore cannot be computed as an indebtedness in determining what amount the county then owed; and the fact that subsequently these void bonds were paid off by money obtained from the sale of another series of void bonds which the county has since repudiated cannot he availed of as a defense to the bonds now sued on, for the reason that such inode of payment did not create a valid indebtedness against the county, nor fasten upon the property of the county any burden or liability whatever. Under these circumstances it must tie held that the county has failed to show that on ^November '12, 1880, when ihe bonds sued on were issued, it was then indebted in a sum which prohibited it incurring a further indebtedness to the amount of $2,400, and has, therefore, failed in showing a good defense to the action. Judgment will therefore he entered for the plaintiff for the sum due upon the bonds sued on.