The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1893-11-15
COUNTY BOND CASES.
Decision of Interest to Municipal
Authorities and Lawyers.

AultlDEItlCS III
Special 10 the indianapolis Journal.
WASHINGTON, Nov. IA decision has
just been made by the Supreme Court of
the United States which is of great impor-
lance to county and municipal authorities
and investors in Indiana, and the grounds
upon which it is based will be perused with
interest by all lawyers. The decision was
rendered by Associate Justice Jackson, and
represents the position of the entire bench.
1t is the bono case Of Daniel T.. Hedges ct
al, appellants, versus the County of Dixon,
Nebraska, and was on appeal from the
United States Circuit Court of that State.
The question presented to the court here
was whether parties holding the greater
part of a series of bonds issued by a county
in excess of the limit fixed by the Constitu-
ton of the State, and which for that reason
are not enforcible at law, can invoke the
aid OF a court of equity to afford them re-
lief by first ascertaining the extent Of such
excess or settling the amount of bonds
which the county could lawfully have issued,
and then proceeding to scale down the issue
10 the limit thus ascertained, and to de-
clare such excess only TO be void, and there
upon decree the residue of such bonds good
and valid, and enforce payment of such res
idue, with interest, against the county. Or,
in other words, can the holders of bonds
issued by a county in excess of its authority
by an offer TO surrender and cancel so much
or such bonds as may upon inquiry be fouNj
to exceed the limit authorized by law invest
a court of equity with jurisdiction not only
to ascertain the amount of such excess, but
to declare the residue of such bonds valid
and enforce the payment thereof against the
county?
The appellants held an issue of nearly
$4,000 of the Dixon county bonds, issued for
donation to the CovingtOn, Columbus &
Black Hills Railroad Company, on Jan. 1,
1876. The bonds issued were authorized by
an election at the hands of the voters of
the county. subsequently it was found that
the issue vas in excess of the legal issue
to the extent of 10 per cent. on the as
sessed valuation of property. The com-
p!ainants offered to surrender for cancel
county refused, and complainant then held
that the refusal had cured any infirmity
in the bonds. and that the county was in
equity bound TO recognize as valid the res
idue. The county dernurred, and the lower
court sustained the demurrer.
The Supreme Court here decides that If
any equitable claim arises in favor of the
holders of the bonds issued under such cir
cumstances it must be against the railroad
chased. as the company was the recipient
of the legal consideration realized upon
negotiation Of the bonds. 1t holds further
that the Constitution OF the State having
prescribed the amount which the county
might donate, that provision operated as
an absolute limitation upon the power of
the county to exceed that amount, and that
1t is we'll settled that no ~recitals in the
bonds or Endorsements thereon could estop
the county from setting up their invalidity,
based upOn a want of constitutional au-
thority to issue the same. Still further
the court holds that recitalS in bonds is
sued under legislative authority may eStop
the municipality from disputing their au-
thority against a bona fide holder for value,
but when the municipal bonds are issued
in violation of a constitutional provision
no such estoppel can arise by reason of any
recital contained in the bonds. Therefore,
the decision of the lower court against the
ckGBn OF. the bondholders is affirmed, with
costs upon the appellant.