# District Township of Doon Lyon County Iowa v. Cummins

* related portals: Supreme Court of the United States.
* sister projects: Wikidata item.

## Dissenting Opinion

    Brown
United States Supreme Court
142 U.S. 366
District Township of Doon Lyon County Iowa v. Cummins
STATEMENT BY MR. JUSTICE GRAY.
The original action was brought by Theron Cummins, a citizen of Illinois, on coupons attached to negotiable bonds issued by the defendant, a district township of Iowa, under the statute of Iowa of 1880, c. 132, the material provisions of which are copied in the margin.
The defendant denied the validity of the bonds, on the ground that they were issued in violation of the constitution of Iowa of 1857, art. 11, § 3, likewise copied in the margin.
A jury was duly waived, and the case was submitted to the circuit court, which found the following facts:
The defendant is a school-district in Lyon county, Iowa, having power to contract in its corporate name, and to issue negotiable bonds. From the date of its organization its affairs have been badly managed, and, through fraud and incompetency on the part of the officers of the district, indebtedness to a very large extent has been created against the district, part of which was evidenced by bonds of the district, part by judgments against it, and part by warrants or orders drawn on its different funds.
On July 9, 1881, the board of directors of the district unanimously adopted a resolution to issue, 'for the purpose of funding the outstanding bonded indebtedness of the district,' bonds to an amount not exceeding $25,000, in accordance with the statute aforesaid, to run for 10 years and payable after 5 years, at the pleasure of the district, and bearing interest at the annual rate of 7 per cent., with interest coupons attached; and appointing one Richards 'refunding agent to negotiate said bonds,' to take up the aforesaid indebtedness, and to report his doings to the district.
In pursuance of this resolution, 25 bonds were prepared and signed by the proper officers of the district, dated July 11, 1881, for the sum of $1,000 each, having the statute aforesaid printed upon them, and containing the following recital: 'This bond is executed and issued by the board of directors of said school-district in pursuance of and in accordance with chapter 132, Laws 18th Gen. Assem. Iowa, is in accordance with the laws and constitution of the state of Iowa, and in conformity with a resolution of said board of directors passed in accordance with said chapter 132 at a meeting thereof held 9th day of July, 1881.'
Ten of these bonds were sold on July 25, 1881, and ten others on August 11, 1881, for their par value in cash, by Richards to the plaintiff, who, at the time of his first purchase, knew that it was the defendant's purpose to issue bonds to the amount of $20,000 at least, or $25,000 if necessary. The remaining five bonds were sold by Richards on December 20, 1881, to another party.
At the time of issuing the bonds in question, the total valuation of the taxable property within the district, as shown by the next preceding state and county tax-lists, was $131,038. The evidence failed to show the exact amount of bonds of the defendant outstanding on July 11, 1881, but the amount of such bonds, with interest, exceeded $20,000. Large amounts of warrants had been issued by the district from time to time for various purposes, a portion, at least, of which was fraudulent; and there were outstanding unsatisfied judgments against it for $11,700. Many frauds had been perpetrated by the officers of the district, and thereby the amount of indebtedness evidenced by its bonds and by judgments against it had been fraudulently increased. But the evidence failed to show that any of those bonds had been issued in violation of the above provision of the constitution of Iowa, or that a successful defense could have been interposed by the defendant against the holders of any of them.
Of the proceeds of the sale of the new bonds, the sum of $19,174 was paid out by Richards at various times from July 30, 1881, to March 4, 1882, in discharging bonds, coupons, judgments, warrants, and orders drawn on the teachers', contingent, and school-house funds, and the balance of $6,485.79 was paid to the defendant's treasurer. His report, which was made part of the findings of fact, showed that, of the sum of $19,174, less than $6,000 was applied to the payment of outstanding bonds and coupons, $875 in paying interest on the new bonds, and the rest to the other purposes above mentioned.
The defendant regularly paid interest on the new bonds until and including July, 1885, and this action was brought on the coupons falling due in 1886, 1887, 1888, and 1889.
On these facts the court gave judgment for the plaintiff for $6,462.40, being the amount of the coupons sued on, with interest. 42 Fed. Rep. 644. The defendant sued out this writ of error.
B. F. Kauffman, for plaintiff in error.
J. H. Swan, for defendant in error.
[Argument of Counsel from pages 369-370 intentionally omitted]
Mr. Justice GRAY, after stating the case as above, delivered the opinion of the court.

## Notes

* ↑ Section 1. Any independent school-district or district township now or hereafter having a bonded indebtedness outstanding is hereby authorized to issue negotiable bonds, at any rate of interest not exceeding seven per cent. per annum, payable semi-annually, for the purpose of funding said indebtedness, said bonds to be issued upon a resolution of the board of directors of said district: provided, that said resolution shall not be valid unless adopted by a two-thirds vote of said directors.
* ↑ No county, or other political or municipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount in the aggregate exceeding five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax-lists previous to the incurring of such indebtedness. 1 Charters & Consts. 565.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
Public domainPublic domainfalsefalse