111 F. 453 | U.S. Circuit Court for the District of Northern Iowa | 1901
(after stating the facts). When this case was first submitted to the court it was held that it would be necessary to proceed in equity, in that it did not appear that there had been a division or apportionment of the indebtedness of the original
On part of plaintiff it is contended 'that the defense relied on is not available to the defendant districts, by reason of the re'cital found in the bonds to the effect that “this bond is issued in strict compliance with the laws of the state of Iowa, and is within the constitutional limit of indebtedness fixed by sec. three (3), art. 11 (eleven), o‘f the state constitution”; it being claimed that this recital brings the case within the rule announced by the supreme court in Chaffee Co. v. Potter, 142. U. S. 355, 12 Sup. Ct. 216, 35 L. Ed. 1040, and
“The whole amount of bonds issued under this act shall not exceed the sum of the county indebtedness at the date of the first publication of the aforementioned notice, and Hie amount shall be determined by the county commissioners, and a certificate made of the same, and made part of the records of the comity; and any bond issued in excess of said sum shall be null and void; and all bonds issued under the provisions of this act shall be registered in the office of the state auditor, to whom a fee of ten cents shall lie paid for recording each bond.” Sess. Laws Colo. 1881, p. 87.
In construing this statute the supreme court, in Chaffee Co. v. Potter, supra, held that:
"The statute, In terms, gave to the commissioners the determinaiion of a fact,—Unit is. whether the issue of bonds was in accordance with the constitution of the state and the statute under which they were issued,--and required them to spread a certificate of that determination upon the records of the county. The recital in the bond to the effect, that such determina (ion has been made, and that the constitutional limitation had not been exceeded in tiu> issue of the bonds, taken in connection with till' fact fhai the bonds themselves did not show such recital to he untrue, under the law, estops the county from saying it is untrue.”
The bonds sued on were issued under the authority conferred upon school districts to issue refunding bonds by chapter 132, Acts. 18th Gen. Assem. Iowa, which enacts—
“That any independent school district or district township, now or hereafter haying a bonded indebtedness outstanding, is hereby authorized to issue negotiable bonds at any rale of interest not exceeding seven per cent, per annum, payable semiannually, for the purpose of funding said indebtedness; said bonds to be issued upon a resolution of the hoard of directors of said district: provided, that said resolution shall not be valid unless adopted by a two thirds vote of said directors.”
In the second section of the ad. it is provided that the treasurer of the district is authorized to sell the bonds at not less than par, and to apply the proceeds to the payment of outstanding bonds, or he may exchange such bonds for outstanding bonds, par for par. The facts stipulated by the parties show that the bonds of the date of June 2i, 1881,
“The scope and meaning of this provision of the fundamental and paramount law of the state are clear and unmistakable. No municipal corporation ‘shall be allowed’ to contract debts beyond the constitutional limit. When that limit has been reached, no debt can be contracted ‘in any manner or for any purpose.’ * * * The prohibition is addressed to the legis- ’ lature, as well as to all municipal boards and officers, and to the people, and forbids any and all of them to create or to give binding force to any debts of the corporation in excess of the limit prescribed. * * * The power of the legislature in. this respect being restricted and controlled by the constitution, any statute which purports to authorize a municipal corporation to contract debts in any manner or for any purpose whatever in excess of that limit is to that extent unconstitutional and void.”
Under this construction of the constitutional provision, it cannot be held that it is within the power of the legislature of Iowa to de'clare that the inhibition of the constitution cannot be availed of to defeat bonds issued by school districts which contain the recital that
The conclusion reached is that the plaintiff, when she bought the bonds in suit, was bound to take notice of the provisions of chapter 132, Acts 18th Gen. Assem., and of the resolution of the board of directors adopted June 21, 1881, both of which are cited and referred to on the face of the bonds as the sources of authority for the issuance thereof; that the resolution thus'brought to the notice of the plaintiff charged her with knowledge of' the fact that the series of bonds of which those purchased formed part, and which were directed to be issued by the resolution of June 21, 1881, amounting' to- $23,700, were so issued for the' purpose of "being exchanged for
Judgment will therefore be entered for the defendants.