Lead Opinion
Section 3275 of the Nevision, as amended by chapter 174, Laws of 1872, provides: “In case no property of a municipal corporation, against which an execution has issued, is found upon which to levy, or if the judgment creditor elect not to issue execution against such corporation, he is entitled to demand and receive of such debtor corporation the amount of his judgment and costs, either in the ordinary evidences of indebtedness issued by such corporation, or in bonds of such corporation of such character as the parties may agree upon.”
Eursuant to this provision the bonds in question were issued. The question now submitted for our determination is the following: Can the validity of negotiable bonds of a county, issued in satisfaction of a judgment, in the hands of innocent holders for value, without notice of any claim that they are illegal for any cause, be questioned by showing that
Upon mature consideration we are of opinion that bonds so issued cannot be assailed in the hands of innocent holders for value. There is a presumption that those charged with public trusts act honestly and in good faith. The whole theory of the law rests upon this assumption. In the absence of anything to put a • party upon inquiry, he has a right to presume that everything has been fairly and honestly done. It is not incumbent upon him to institute an inquiry for the purpose of ascertaining whether some one. may not have violated a trust or committed a fraud. It is the duty of the board of supervisors to appear and defend all suits instituted against their respective counties. Every principle of honesty requires, and every consideration of interest stimulates them to interpose all proper and available defenses. "When a bond issued in discharge of a judgment is placed upon the market, a purchaser who has no intimation of anything affecting its validity has a right to presume that the board of supervisors have been mindful of their interest and their duty, and that all available defenses have been presented and passed upon. No one is called upon to presume or suspect that anything has occurred which is unusual, unnatural, and not in harmony with man’s mental constitution. It is not usual, natural, nor in harmony with, the laws of mind, that a board of supervisors, charged with the duty of protecting the interests of the county, should fraudulently conspire to saddle upon the county an unjust judgment, to the payment of which they must themselves contribute. No one, therefore, is required to presume that such a thing has occurred, or should be expected to deal upon the theory that the board have so acted. A vast majority of reasonably careful and prudent business men, when offered a negotiable bond issued in discharge of a judg
If it be said that this construction nullifies the constitution and places it in the power of u, dishonest and corrupt board of supervisors to burden the county with a debt in excess of the constitutional limitation, the answer is, that in the nature of things the instances in which a board of supervisors will undertake to do such a thing must be exceedingly rare. When such an instance occurs, and bonds issued upon a judgment so recovered have passed into the hands of innocent holders, loss must fall either upon such innocent holders or upon the county. It is more consonant with notions of right that the .loss should be borne by the county, whose officials have acted corruptly and dishonestly, than upon the third party who has been innocent of all wrong.
Besides, it can rarely occur that a suit against a county can be instituted and prosecuted without coming to the knowledge of at least a considerable number of the citizens of the county. If the board of supervisors corruptly neglect or refuse to defend, a citizen taxpayer of the- county may intervene and do so. Greeley v. The County of Lyon, 40 Iowa, 72. When no defense has been made, either by the board of supervisors, or a taxpayer, a third party,' acting in good faith in the purchase of negotiable bonds issued to discharge the judgment, may presume that there was no valid defense to be interposed.
Aeeirmed.
Dissenting Opinion
dissentvng. — I. Upon the point involving the validity of the taxes levied to pay the bonds, I am unable to concur in the conclusions of the foregoing opinion. In my judgment the constitutional prohibition against county indebtness operates upon the debt attempted to be contracted whatever shape it may assume, or whatever evidence of its existence is created. It matters not whether the prohibited debt is evidenced by bond or judgment, it is utterly void — a nullity wherever, whenever, however it makes its appearance as a claim upon the county. The prohibition operates upon the creditor, the people of the county, the officers of the county, the county as a corporation, and upon all who become in any way interested in the matter; it operates, too, upon the courts and judgments rendered by the courts attempting to enforce the unconstitutional debts. These are all subordinate to the constitution.
’'When the supreme law of the State' declares that the debt cannot be contracted, it means that it cannot exist. This law cannot be defeated by the people of the county, willing to contract the debt, by county officers consenting to a judgment, by judgment of a court, nor by any means to which violators of the constitution and law may resort.
It surely is inconsistent with the dignity and power of the State to hold that the people, county officers and courts of the State, may defeat the express provision of the supreme law— may render valid and enforce a debt which the constitution declares cannot be contracted and shall not exist.
The whole world must take notice of the provisions of the constitution. No one can claim to be a bona fide holder without notice of a bond issued for a debt forbidden by that instrument. No holder of such a bond can have any equity that will defeat the constitution.
These views and the conclusion I reach, in my opinion, are
II. I assent to the conclusions of the opinion of the majority of the court upon the questions involving the validity of the road taxes, and concur in the opinion to that extent, but no farther.