Source: http://openjurist.org/50/f1d/44
Timestamp: 2017-04-26 04:36:46
Document Index: 776502888

Matched Legal Cases: ['§ 1', '§ 2', 'art. 8', 'art. 8', 'art. 8', 'art. 8', 'art. 8', '§ 3', 'art. 8', 'art. 8', 'art. 8']

50 F1d 44 | OpenJurist
50 F. 44 - HomeFederal Reporter, First Series 50 F.
50 F1d 44 class="ad-unit">
submit it to the counsel foJ' defendants;,and. in case of disagreement as to terms, it must be summitted to me with the suggestions of the parties, and no entry of record will be made till I have approved it. I have purposely directed a decree which shall be final in character in order that an appeal may be taken, and the rights of the parties fully stlttled, before the labor and ex. pense of accounting shall, if finally ordered, be undertaken.
FRANCIS 'lJ. HOWARD COUNTY.
(Circuit Court, W. D. Texas, El Paso Division. April 9, 1892.) 1.
Under Gen. Laws Tex. 1881, pp. 5, 6. authorizing counties to issue bonds for the erectiollof court-houses, Hpward county issued bonds in May, 1883. which. on account of an error, were recalled and canceled, and a new series issued in November, 1883. Between these dates an amendment to the constitution was adopted, redu<;ing the rate of taxation allowed to be levied by countiell for the erection of public buildings. The plaintiff bought in open market some of the bonds issued in November, 1883, and sucs for the interest due upon them. Beld, that he was a. · purchaser with notice of the constitution as amended, and that; as he claimed no interest under the contract for the erection of the court-house, the amendment applied to the bonds in his hands.
SAME-AUTHORITY TO ISSUE BONDS-STATE LAWS. COUNTIES-BoNDS-ExOESSIVE ISSUE-INNOOENT PUROHASERS.
While counties generally have no power to issue negotiable securities unless specially authorized by law, this is a question of state policy, and should be governed by the decisions of the state courts.
OF TEXAS·
4, .SAME-INNOOENT
. 1n ,Texas, the counties, in the absence of legislative authority, have no power to issue negotiable securities. Nolan Co. v. State, (Tex. Sup.) 17 S. W. Rep. 826; Robertson v. Breedlove, 61 Tex. 316, followed.
PUROHASERS-BoNDS PARTLY INVALID.
The bonds issued by a county in excess of the amount allowed by law are void, · and their collection cannot be enforced even by a bonafide, purchaser !oJ'value; and when a number of bonds, partly invalid on this account, are issued and delivered at the same time, or at different times as part of one transaction. the invalid portion should be equally distributed among all. and none should have priority.
Gen. Laws Tex.iSSI, pp. 5, 6, § 1, confers authority upon counties "to issue bonds in such amount as may be necessary to erect a suitable building for a court-house;" but section 3 of the same act declares that the county shall not issue a larger num· bel' of bonds than can be liqUidated in 10 years by an annual tax of one-fourth of ! 1 per cent. upon the property in the county. Held, that the latter section must be construed as a limitation upon the former. Russell v. CaGe, 1 S. W. Rep. 270, 66 Tex. 432, and Nolan Co. v. State, (Tex. Sup.) 17 S. W. Rep. 826, followed.
SAME"';"NOTIdE.
SAME-AMOUNT ISSUABLE.
. ,,' . '. . .. '
:, In· ascertaining the taxable vlllue liS a basis for determining the amount of bonds · which mllY be issued, the official IIssessment rolls are the only evidence, and, these '. being, public records, thEi purchasers of the bonds, notwithstanding any recitals ,'. therein, are chargeable with notice of them. and cannot claim to be innocent purchasers.
SA'ME-'-ApPLIOATION Oli' PROOEEDS-ESTOPPEL.
.' iIf II county bas authority to issue bonds for one purpose, and uses the proceeds of lI.uch bondslor. a different pur.pose, they are not thereby invalidated in the hands of an inhocent plirchllser, and the county is estopped from denying that they were issued for the purpose for which they purported to be issued.
S. SAMll-:-ENFOROEMENT OF
. w'hill! aBult in equity iB ordinarily required to settle the equities and rights of bdndli'olders against a county and among themselves, yet a court of law will give .. ju.qgment in such ca!les when warranted by the plelldings and proofs.
u'p,on 90upons of county bonds.
Action by David R. Francis against Howard county, Tex., .
i'kANCIB
t. BOWARD OOUNn.
Statement by MAXEY, District Judge: This suit is brought by plaintiff to recover of defendant upon 136 interest coupons for $80 each, originally attached to certain negotiable nourt-house bonds, issued by defendant on the 12th day of November, A. D. 1883. It is alleged in the petition that said bonds were duly signed, sealed, countersigned, and registered as required by law; that by the terms of each of said bonds the county promised to pay to J. H. Milliken & Co. or bearer the sum of $1,000 at the banking-house of Donnell, Lawson & Simpson, in the city and state of New York, 15 years from the date thereof, with interest at the rate of 8 per cent. per annum, payable annually, in installments of $80 each, on the 10th day of April in each year, at said banking-house, on presentation and surrender of the proper interest coupons annexed to the bonds. The petition further alleges that said bonds, numbered 2 to 40, inclusive, were issued by the defendant county under authority of an act of the legislature of the state of Texas entitled "An act authorizing the county commissioners' court of the several counties of this state to issue bonds for the erection of a court-house, and to levy a tax for the same," approved February 11, A. D. 1881, and in pursuance of an order of the county commissioners' court of said county for the purpose of a suitable building fora court-house. Recovery is sought upon four sets of interest coupons, as follows: (1) 39 coupons, numbered 5, detached from bonds numbered 2 to 40, due April 10, 1888; (2) 39 coupons, numbered 6, detached from bonds numbered 2 to 40, due April 10, 1889; (3) 29 coupons, numbered 7, detached from bonds numbered 2 to 30, due April 10, 1890; (4) 29 coupons, numbered 8, detached from bOnds numbered 2 to 30. due April 10, 1891. The following averments of the defendant's answer present, substantially, the defenses relied upon to defeat a recovery upon the coupons: "That defendant did not at any time execute and deliver, or authorize the execution and delivery of, more than 35 coupon bonds of the denomination of $1,000 each, and numbered 1 to 35, inclusive, and of the aggregate amount of $35,000, for tbe purpose of erecting a court-house. The defendant further says tbat if it ever issued, or ever authorized the execution and deliveryof. any of said bonds, that the same were executed and delivered for the purpose of erecting a courl-house and jail, and for the purpose of sinking an arteSian well. and not for tbe sole purpose of erecting a court.house for the defendant'. · · · And for further plea herein the defendant says that plaintiff ought not to have and recover jUdgment berein against this defendant!for the f,ol> ,lowing reasons, to-wit: First. Because defendant says that if anyis8uance, execution, registration, or delivery of said bonds, or their attached coupons, sued on by,plaintiff, was ever authorized by the commissioners' oonrtof said defendant, Howard Coullty,-and which fact defendant speciallyde'il.ies,that the samEl was ultra ",ires, ,coutrary to .law. and above and; beyond the powers conferred upon said board of commissioners" officers, and agents' by law, for the following reasons, to-wit: Because at tbe time of the pretended issuance, execution, and delivery of said bonds and. attached couponssulld, on ;byplaintiff. and 'at the time of tbe creation of said pretended indebtedness, the total value of alltbe t3'xable property, in Howard county amounted .only to the euUl ofeight'h,w1!iredaud.aixty.threethousand and !Jleven
ftDEllA.L REPORTER ,voL. 50.
dollars; and. that said board of commissioners, officers, and agents had no power or authority of law whatever to bind this in a bonded inplaintiff's petition, except in such an amount lis a tax of one-fourth of one per cent.· on Sllid taxable wealth of defendant at that time might" COilld, or would liquidate, payoff, and discharge, after bliing levied, collected, and applied thereon· for a period of ten years. Which said amount of said bonded it,debtedness defendant alleges could not have laWfully eltcef'ded the sum of fifteen thousand dollars, bearing interest at the of8 per cent. per annum; lind that the issuance. execution, and delivery of $39,000 in bonds, wit h coupons atta"hed thereto, apd of which those BU ed on by plai nti ff lire alleged to be a part, was so far in excess of the IIlllount authorized to be issued by the said officers lind agents of this defendant that this defendant Is, 'and has al ways been. wholly unable to meet, payoff, diSCharge,. 01' liquidate the annual Interest accrumg and accrued then'on by the levy and, application of a tax of one-fourth of onl' per cent. on the taxablll value of defeudant annually, and that for these rellsuns the honds and all COil pons att'lched thereto. and those sued on by plaintiff. are wholly invalid. and no legal indebtellnl'ss againRt this dl'fendant. second. Because lIefl.'n?apt 'f"rth!'r alll'ges' that it, thi'ough its officers and agents, the commissionerll'·court, on the 21:1th day of May. 1883. entered into an agrt'ement with J. H. Mllllkpl1& Co. to build and erect for it a courthouse and jail in considel'lltionof $33, 700 of Howard county bonds. bearing interest .at the rate of l:l ppr ct.jnt. per..annum, and May 14, 1l:ll:l3; thllt. in pU!'llllance of said agreement. thl' said .J. H. MWiken & Co. erected Rnd completed a court-house and jail for defendant; that said bondS of date May 14. Un:!3. were executed and deli vered to said Milliken & Co., and accepted by them. in payment for ert·clingS<lid court-house and jail; that, if defendant execut.ed and dl·llvered or authorized the execution anddeliverv of the bonds and coupons by plaintiff,.....Whlch is not admittl'd. butdenied.-that $=35,000 of the same-that is, =35 of ,Said boncls-were IS8ul'.d for lhe purpose of IiIJU dating. paying off. and discharging said bonus of date May 14, 18l:l3, and not for lhe purposp of erecting for defendant a suitable court-house. as claimed byplainlil'f; that at the t.ime of lhe execution of said bondS of date May 14. 18l:l=3, defenllant, its officers and agents. made no pmvision for the levy and collectio!l of a sUtIlclent tax to pay the Intert'st thpreon. or to provide a sinking fund for the thereof; that at the lime of the Illaking of aaidcontnl£.t with J. II. Milliken & Co. the defendant. its officers and agents, made no provision fol' t.he levy and collection of a tax for tile payment cf said deht. or anypal't thereof. * .. *"
A jury Was waived by the parties by written stipulation, and the case submitted to the court. From the eviuence before the court the following findings of' fact are made: 1. The defendant. county of Howard, is a municipal corporation of Texas, organized undprits laws in tlte year 1l:lS2. 2. On April 10. 1l:lt:l3.---the date of the OI·cler of commissioners' court of Howard county, awarding the cOlllrac·t touuild a court·house and jail to J. H. (M,iIliken &, Co··-Hllwal'll county had ueither conrt-house nllr jail. 3. The following ordprs were duly m·ade uy the commissioners' court of ·Howllrdcounh' lit the date therein namell. in rplatllln til the construction of a court-house and jail. and the boringofanarttsian well, and t.he issuance of . 'bonds fOr court-house Plll'POStlS: (1) "April 16lh, 1883. "Ordered by tne cllmmissioners' court that the contract for the erpctlon of a court-house lind jail therein, in· Big Springs, Howard county. Texas, 'be. and is hereby, awardtld toJ. H.:Mill1ken & Co., of Weatherford, Texas,
i'RA.NCIS 'II. HOWARD COUNTY.
for the sum of thirty-three thousand seven hundred payable in ard county bonds. (2) "April 16th, 1883. "Ordered by the court that the county attorney, assisted by T. W.WampIer. draw up a contract according to the bid, plans. and specifications submitted by J. H. Milliken & Co., stipulating in said contract that J. H. ken & Co. give bond in the SUlu of fifty thousand dollars for the faithful performance· of said contract according to the time agreed upon by and between the commissioners, and embodied in said conti'act, as follows, to-wit: · To the Honurable County JUdge and County (Jommissione1's qf Howa1'd County. Tero.-GENTLEMEN: We propose to build the court-house and jail combined. as shown by plans, and defined by the accompanying specifications, in the town of Big Springs; Howard Co., Texas, for the sum of thirty-three thousand seven hundred dollars, payable in the court-house bonds of Howard Co., Texas, and we agree to complete said building and deliver same to county commissioners' court within eight months from date of this bid. RespectfUlly submitted. J. H. MILLIKEN &; Co. April 16th, 1883.' . (3) ., May 14th, 1883. . "It is ordered by the court that so much of the county funds created by the issuance of county bonds, and known as' Court-House Bonds,' be. and the same is hereby, appropriated fdrgrading the court-house square. (4) "May 14th, 1883. "Ordered by thl' court that the sum of three thousand ($3.000.00) dollars, or so much thereof as may be necessary,be, and the same is hereby, appropriated out of the funds created by the issuance of county bonds, and known as · Court-House Bonds; be, and tbe same is hereby, appropriated for the purposes of sinking an artesian well on the north-west corner of the court· house square: (5) "May 14th, 1883. "In accordance with a previous order of,thls court, made at its regular February teJ;m, 1883, it is hereby ordered, adjudlZed, and dl'creed that Howardcounty bonds, to be known and designated as' Court-House Bonds,' amounting to thirty-eight thousand ($38,000.00) dollars, bearing interest at t.he rate of l:l per cent. per annum, be issued for court-house purposes, and held SUbject to the disposition of this court.. (6) "May 29th, 1883. "It is further orl!ered by the court that court-hollse bonds to the I\mount of two thousand ($2,000.00) dollars be issued in addition to the $3l:l,000.OO {thirty-eight tllousand dollars) ordered issued heretofore, making a total up to this date of $40,000.00, (forty thousand dollars,) ordered issued by commissioners' court of Howard county, Texas. (7) "June 18th, 1883. "It was ordered by the 'court that the }'irst National Bank of Weatherford be, and is hereby, ordered and required to deliver to J. H. Milliken & Co. the sum of thirty-five thousand dollars ($35.000.00).in Howard county courthouse bonds. (l:l) "June 18th, 1883. "Ordered by the court that the First National Bank of Weatherford be, and it is hereby, authorized to dispose of Lhe remaining five thousanddollllrs of court-house bonds of Howard county, Texas, now on deposit in said bank, at their face value, and credit Howard county with the proceeds, less 21 per cent. commission. (9) "NovemiJer 12th, 1883. "Ordered by the court that, whereas, there is an error in the bonds heretofore issued by the county of Howard, state of Texas, bearing date May 14th, 1883, for the purpose of erecting a court-house for HOward county. which'er-
ror consists in this: The date of the approval of the act of the legIslature of the of Texas authorizing the issuance of said bonds is on the face of the bonds recited to be Feby. 21st, 1879, when it should have been Feby. 11th, 1881, the said bonds having in fact been issued under the last-named act, in lieu of said bonds: 'rherefore ordered by the court that there be issued for the purpose of erecting a suitable building for a court-house for said county of Howard, in the state of Texas, thirty-five coupon bonds of the said county of the denomination of o,ne thousand dollars each, payable to J. H. Milliken & Co. or bearer fifteen years after the date. thereof, and redeemable at the pleasure of the said county. The said bonds shall bear interest at the rate of eight per cent. per annum. The principal and interest of the said bonds shall be payable at the banking·house of Donnell, Lawson & Simpson, in the city of New York. The interest on the said bonds shall be payable on the lath day of April annually. (10) "NQvember 12th, 1883. "It·. is ordered by the court that the bonds to be issued as heretofore at this time be delivered to J. H. Milliken & Co. on the cancellation and surrender by them of thirty-five thousand dollars' worth of the bondS. referred to in said order as baving been issued . before that date, with an erroneous reference to the act of the legislature of the state of Texas under which they were issued. The corrected bonds are. to be delivered to J. H. Milliken & Co., in lieu of the erroneous bonds, upon the cancellation and surrender of the erroneous bonds, and in an amounttiorresponding with the amount of the erroneous bonds canceled and surrehdered. It is further ordered by the court that on the surrender of the bonds heretofore issued as herein provided for, a draft shall be issl1l'd in favor of J. H. Milliken & Co. I;\gainst the court-house funds of this county for all interest that has accrued on the first bonds issued up to the date of issuing the new or substituted bonds herein provided for. (lOt) "November 12th, 1883, '''Ordered 'by the court that an annual ad valo1'em tax of one-fourth of one per cent. on the taxable .property of Howard county, Texas, be, and the same is hereby. levied, to pay the interest and create a sinking fund for the redemption of bonds of said county, necessary to erect a suitable building for a court-house, as autli0rized by an act of the legislature of the state of Texas, approved February 11th, 18tH. (11) "February 14th, 1884. "Ordered by the court that the balance of fivethousalld dollars court·house bonds may issue, in accordance with law, to anyone WhO may agree to take at their face Qr par value, and may be subject to the disposition of Geo. Hogg, county judge. or his successors in office. (12) "March 24th, 1884. "Ordered by the court that the forty thousand dollars In Howard county court-house bonds, erroneOUSly issued on the 14th day of May, 1883, be, and they are hereby, ordered canceled and dl'stroyed, and that the county treas.urer be reqUired to drop said amount from his register. (13) "August 19th, 1884. "It is further ordered that county court·house bond for $1,000,00. No. 36, be, and the same is herebY, turned over to R. R. Elder, artesian well contractor, as collateral for the payment of the sum of $l,OJO.OO, part of balance due him, the said contractor, on the closing of said contract. (14) "March 1st, 1886. "n was ordered by the court that all coupons on Howard county court_ house bonds Nos. 37, 38, 39. and 40, for $1,000.00 each, up to April 10th, 1886, be detached, and destroyed by the county treasurer. (15) "March 1st. 1886. "It was ordered by thecoul·t..that A. D.Walker deposit said bonds Nos. 37,
I'BANCIS fl. HOWARD COUNTY.
88,89. and 40 In Colorado National Bank, in accordance with the terms of aforesaid contract. (16) "August 11th, 1886. "We. the commissioners of Howard county, hereby declare that F. H. James & Co. have failed to comply with their contract in reference to the boring an artesian well upon the court-house square in said Co.· and, as the said F. H. James & Co., through their agent, desires to surrender said contract, we accept their proposition, and declare the contract null and void upon the surrender of the bonds aud contract now deposited at the Colorado National Bank, in Mitchell county, Texas; and we further authorize J. C. Smith to demand and receive said four bonds of the denomination of $1,000 each, with said contract, and the obligation the citizens of Howard county signed, deposited together. (17) "September 13th, 1886. " We, the commission ers' court of Howard county, Texas, authorize I. S. Thurmond,countyjudge of said county, to go to St. and Chicaj{o, and purchase a complete outfit for boring an artesian well on the court·house square in said county for the court-house and county purposes. He is authorize(l tQ take the remainder of the court-house bonds, amounting to $4,000.00, Nos. 37, 38,89, and 40. He is further authorized to negotiate aaid or so much of them as is necessary to pay for said outfit, and cash the remainder of them, or cash the entire $4,000.00 bonds, and purchase the !iame with cash, and pay J. W. Hykes' expenses to go along with him. (18) "October 4th, 1886. "Ordered, that of, the bonds heretofore issued by the commissioners' court of Howard county for court·house purposes, that bonds Nos. 40, 89, 38, and 37 be paidflrst in order named, and that at least one bond and interest in fuU be paid out of the court-house funds in April, 1887, and at least two of said bondS and interest in full in April, 1888. (19) "February 13th, 1888. "It was ordered by the court that the treasurer of Howard Co. be instructed bot to pay any interest on court-house and jail bonds till further orders from this court." 4. A contract, of which the following is a copy, was entered into May 29, 1883, between J. H. Milliken &. Co. and Howard county, for the construction of a court-house and jail: "This agreement, made the 29th day of May, one thousand hundred and eighty-three, between J. H. Yillikenand James Lee, operating and doing business under the firm name and style of J. H. Milliken & Co., party of the first part, and George Hogg, county jUdge of Howard county, Texas, and G. A. Torbe.t, Frank Boze, R. M. Bressie, and W. T. Boze, county commissioners of Howard county, Texas, and their successors in office, party of the second part, witnesseth, that the said J. H. Milliken & Co., party of the first part, for considerations hereinafter named, contracts and agrees with the said George Hogg, county judge of Howard county, Texas, and G. A. Torbett, Frank Boze, R. Y. Bressie, and W. T. Boze, county commissioners of How· ard county, Texas, and their successors in office, that the sllid J. H. Milliken & Co. will, within eight months next following this date, in a good and workman-like manner, and according to his best skill, well and sublltantially erect and complete a court-house and jail in the town of Big Springs, Howard county, Texas, on block No. 21, as laid down and described in the plat of the town of Big Springs, situated in the county of Howard and state of Texas. In consideration of which the said George Hogg, county judge of Howard county, and G. A.Torbett, Frank Boze, R. M. Bressie, and W.T. Boze. county commissioners of Howard county, Teus, party of the second part, do f01' the county of Howard and their successors in office promiae to
v.50F.no.l--4
thel!aJd"J.:If. MillikE'n & Co.· tl1eir heirs or legal cause to be issued to the said J. H. Milliken & Co., or their legal representatives, bonds drawn on Howard county in the sum of thirty-three thousand seven hundred dollars, ($33.700.00,) with interest thereon at the rate of eight per centum.per annum, at.tbeir next regular meeting next after thetirst day of May, A.. D. :1883, and wbic;hsaid bonds are to be deposited in the First National Bank of Weatherford. Parker countv, Texas, to the credit of Howard county. Texas; and to be subject to the order of the commissioners' court of Howard county, Texas, for tbe benefit of J. H. Milliken &:; Co. "J. H. MILLIKEN.
"JAMES LEE.
"Witness to attached 'signatul'es:
"D. C. KYLE. .. AccepLedMay 29th, 1883. "GEO. HOGG, County .Judge Howard County, Texas. "J.M. ANDERSON, Clk. County Ct. Howard Co." 5. In obedience to the orders of the commissioners' court of May 14. 1883, and May 29, 1883, the bonds of Howard county were issued amounting to forty thousand dollars. to be known and designated as "Court-House Bonds." Of these. the First National Bank of Weatherford, as per the order of the commissioners' court of .June 18. 1883. delivered to J.'H. Milliken &. Co. bonds amonnting to the sum of tbirty-fl ve thousand dollars. The remaining five thousand doUars of that i'lsue of the bonds. although authorized to be sold by the Weatherford bank, iwere not negotiated. but were. with those of Milliken & Co. for thirty-five thousand dollars, returned to the defendant, and destroyed. 6. The issue of forty thousand dollars of bonds was canceled and destroyed because of a misrecital in the bonds as to the date of the approval of the act which authorized their issuance. The date recited was February 21, 1879, when it should have been February 11, 1881. 7. On the 12th day of November. 188i:J, the defendant. In conformity with the two orders of the commissioners' court of the same date,-November 12. 1883·..-executt>d 85 coupon bonds, for court-house purposes. of one thousand dollars each, payable to J. H. Milliken & Co. or bearer fifteen years after the date thereof, and redeemable at the pleasure of the county. This second issue of 35 bonds was given to Milliken &:; Co. in lieu of the erroneous first issue of thirty-fi 'oe thousand dollars lIeld by them, the second issue haVing been delivered after November 22, 1883, and before the destruction of the t1rst. Of the second issue of 35 bonds No.1. was redeemed in April or May, 1886, and the remainder, from 2 to 35, inclusive, are represented by coupons in suit. 8. The first and only tax to pay the interest and create a sinking fund for tbe redemption of.the bondS was levied November 12, 1883. 9. In compliance with tbeorder of the commissioners' court of February 14. 1884. five otller bonds of $1,000 each, nnmbered. respectiv('ly, 36,87.38. 39, and 40. were Issued.. One of these. No. 36 was. after August 19, 1884. delivered to R. R. Eldllr, artesian well contractor,.as collateral secul'ity to secure the payment to him of balance due on his contract. Nos. 37.38. 39, and 40 were signed after February 14, 1884. and were delivered to the Colorado National Bank; presumably as collateral security to secure F. H. James & Co. against loss under their contract to bore an artesian well. Subsequently, conformably to the order of the commissioner$' court dated
"A. N.GRAOT. "W. B.JOHNSON·
"H. M. LASSATER. "JOE SIMPER. C. H. MILLIKEN.
"J. W. HEDRICK. "A. L. SIMMONS. "H. E. SWAIN.
FRANCIS '1. BOWARD
AUgl1st 11, 1886. the 4 last-named bonds were restored to the custody of' defendant'streasurer; and under the oreler of the commissioners' court of September 13, 1886,Cpunty JUdge Thurmond went to St. Louis to sell said 4 bonds, fort he purpose of purchasing with the proceeds "a complete outfit for boring an artesian well on the c0urt-hpuse square in said county for the court-hollse and county purposes." A part of the coupons in suit represent bonds numlJert'd 06 to 40. inclusive. 10. The bonds admitted in evidence, from which the coupons in suit are detached are in the following form, pretermitting the numbers: UNITED STATES OF AMERICA. Dollars 1,000. "CoURT·HoUSE COUPON BOND. "Howar(l County. State of Texas. "Know all men hy these prest'nts, that the connty of Howard, in the state of Texlls, 31'knowledges itself indebted unto J. H. Mil1iken & Co. or bearer in the sum of one thousand dollars, lawful money of the United ::;tates of Amt'rka, which sum the said county promises to pay for value receivt:'d, at the banking.house of Donnell, Lawson & Simpson, iu the city of New York, fifteen years from the date hereof, hut redeemable at any time at the of said county, togo-ther with inter.·st thereon from date at the rate of per centulll pt'r annum, payablt' an nually on the lOth day of April in each year 011 the presentation and surrender of coupons hereto attached, as they severally become due alld payalJlfI, This bond is issued in accordance with the of an act of ihe legislature of the statl' of Texas entitlell ' An act to 3uthol'ize the county commissioner's court of the several counties uf t1lis slatt' to issue bonds f';,r the en'ction of a comt-housl', and to levv a tax: to pay for the same,' approved February 11th, 18tH. In testimony whereof the county commissioner's court of Howard county have caused to be hereto; aOixeol t.he seal and the signature of the pl'Oper officers of said court at Big Springs, Texas, this 12th day of Nuvember, A. D. "GEO. HOGG, Couuty Judge, Howard County, Texas. "Countersigned; "J. M. WALKER, Clerk County Court, Howard Couuty. Texas. j Spal of Commissioners' Court I of Howard County, Texas. f "Hegisterl'd 22nd day of November, A. D. 188't uF. W. HI£YN, County Treasurer, Howard County, Texas." "No.
. 11. The coupons in evidence, except as to numlJers and dates of maturity, are similar in form, and are as follows: . "No. $80.00. THE COUNTY OF HOWARD, STATE OF TEXAS. "Promisf'sto pay bearer flighty dollars at the banking-house ot Donnell, Lawslln & l::iimpson, in the city of New York, beil"g intt!rest fur one yeal' on Bond No. ---. GEO. H06G, County J ullge. "J.M. WALKER, Clerk County Conrt." 12. The 4,0 bonds of the second issue were, pursnant to the fifth section of the act of 1881, signed hy the county judl!e and cuuntersigneJ by the cuunty clerk, amI registered by the couuty tn'Murer. . 13. Milliken & Co. procured frum B, G, llillwell, ESIJ', attomey at law, his written opinion touching ihe validity of the lJunlls, of which Lile following is .8 copy: "WEATHERFORD, TEXAS. Dec. 4th, 1883· .. Mr. Sam H.Milliken-DEAlt Rm: I have examined the court-hollse bonds L!llu&l by Howard county. Tex., the orders of the court, anu the ,act of
the legfstatu'te state of Texas, appr'd Uth, 1881, (chap. 9 of Acts of 1881.) I find that the orders of.the county comrs.' court are regular, and in conformity with our law. The bonds, on theil' face, are regular. and conform to the orders of the court. These bonds are issued under an act of the legislature of Tex., entitled' A.n act authorizing the county commissioners' court of the several counties in this state to issue bonds for the erection of a court-house, and to levy a tax to pay for the same,' approved Feby. lIth, 1881. This is the last act upon this subject, and is still in force. It provides as follows: 'That the county commissioners' court of any county which has no court-house at the county-seat is hereby authorized and empowered to issue the bonds of the said county. with interest coupons attached in such amollnt as may be necessary to erect a suitable building for a court·house; said bonds running not exceeding fifteen(l5) years, and redeemable at the pleasure of the county, and beariug interpst at a rate not exceeding eight per cent. pet annnm.' The act authorized the levy of a tax: to meet the interest and create a sinking fund to pay the bonds. After carefully examining the constitution of Texas, thestatlltes thereof, the law, and the whole facts in reference to the issuance of the bonds, I gave it as Illy professional opinion that the said bonds are regularly and properly issued; they are in all respects legal, binding on the said county. I gIVe you this opinion after carefully valid, exallliningthe whole question. l-igned] . "B. G. BIDWELL." 14. Bonds numbered 1 to 30, inclusive, with coupons attached, of the sec· ond ·issue, passed, by sale in due course of trade, to Nelson & Noel, bankers and bl'okei"S of St. Louis, and were by Nelson & Noel in open market sold to March 12,1884, at the rate of 101 and interest; or, in the aggregate, for $31,100. 15; At the time of his purchase plaintiff knew nothing concerning the issuance of the bonds except what was disclosed upon their face. He was informed by Nelson & Noel that the bonds were "court-house bonds," and that they were good. Plaintiff knew of no defect in the bonds; knew nothing in regard to the assessed wealth of Howard eounty, and had no examination made of the Howard county records. When Nelson & Noel bought the bonds they had before them the opinion of B. G. Bid well, but it is not shown that plaintiff ever S;lW it. 16. After plaintiff's purchase of the 30 bonds, coupons falling due April, 1884, April, 1885, April, 1886, April. 1887, were paid by defendant. Bnt 'default was made as to the coupons of 181:)8, 1889, 1890, and 1891. .As befox:e stated, bond No.1 was redeemed in 1886. .,. 17. The following admission, in reference to bonds numbered 31 to 40, inclusive, is inserted as a part of the finding' of facts: "It is admitted by deJendant that bonds 31 to 35, both inclusive. were purchased by a citizen' of the state of Missouri, under the samecirculDstances, and at the same time, that the bonds were purchased by Gov. ]'rancis, and with only such knowledge as he had as to the validity or invalidity of the honds pUrchased, by him. ,.The bonds.llumbered 36 to 40, both inclusive, were purchased by that.citizen of Missouri at II later date, but under similar circumstances, and with only imch knowledge liS Gov. }'rancis had at the time he purchased the bonds bought by him. It is further agreed thlitcoupons ill this suit detached· ftorn Ibonds Nos. 31 to40, both inclusive, were transferred toGov. Fran·Ols before Ithe'bringingof this suit." '. ,: '. ,. : .. ' 17,. It is a just inference arising from t.he evidence, and is so found 'as a fact, that the court-house was constructed. by Milliken & Co. in accorda.nce 'with tbe terms of their con t r a c t . ; . " ' ) . , .. . 18. The tax-rolls of Ho ward county, "approved by county'eomnlis$iOUel"s;
FRANCIS :II. HOWARDCOUNTY.
silti'ng as a board of equalization, July 5th, 1883," show that the property, real and personal, subject to taxation in Howard county in 1883, amounted to $863,011.38. The cprtificate of the comptroller of the state is to the same effect. A "recapitulation" of the tax.rolls of Howard county for the year 1883, shows the total value of property of the county subject to taxation for that year to be $863,011.38. The oath of the assessor and order of ap" proval of tax-rolls by the county commissioners are thus certified by the comptroller of the state: "The State of Texas, Oounty of Travis: I, John D. McCall, comptroller of flublic accounts in and for the state of Texas, do hereby certify that the above and foregoing recapitulation is a true and correct copy of the recapitulation the year 1883, as the same apof the tax-rolls of Howard county, Texas, pears in the rolls of said county for said year, which are on file in this office. 1 further certify that the oath of -the assessor, and order of approval of the commissioners' court are true and correct copies. Witness my hand and official seal at my office in the city of Austin, tbis 8th day of October, A. D. 1889. [Signed] "JNO. D. MCCALL, Comptroller." 19. There is nothing in the record showing the taxable value of property in Howard county for any year other than 1883. On November 12, 1883, the tax-rolls were on record in the proper offices, and subject tothe inspection of the public. ' 20. It is a proper inference, deducihle from the evidence, and it is therefore stated as a fact, that there were no tax-rolls of Howard county for the year 1882, nor was a tax levied for that year. 21. Howiird county regularly levied taxes to provide for the second issue of ·court-house bonds until ]891, and bas accumulated from that tax a sum apprOXimating $8,000. The interest which the county paid on the bonds up to 1888 was partially paid in funds transferred from the "road and bridge" funds, for which a tax of 15 cents on $100 was levied. The collection of taxes on account of the court-bollse and jail fund was insufficient to pay interest on tbe bonds, and nearly all the road and bridge fund was transferred for that purpose.
CONSTITUTIONAL PROVISIONS AND STATUTES.
The following constitutional provisions, together with the act of F.ebruary 11, 1881, were in force November 12, 1883, the date of the secseries of bonds issued by the defendant: "The construction of jails, court-houses, and bridges, and the establishment ·of county poor houses and farms, and the laying out, construction, and repairing of county roads, shall be provided for by general laws. " Article 11, § 2,Const. 1876.
Section 7 of the same article: "All counties and cities bordering on the coast of the GuIfof Mexico are hereby authorized, upon a vote of two· thirds of the tax-payers therein, (to be ascertained as may be providpd by law,) to levy and collect such tax for construction of sea-walls. breiik-waters, purposes as may be authorized by law, . and may create a debt for works, and issue honds in evidence thereof. But no . for any purpose shall ever be incurred in any manner by any city or county unless provision is made, at the time of .creating the same, for levying and collecting a sufficient tax to pay the interpst thereon, and provide at Jeast two per cent. as a:sinkillg furid; and the condemnation of the right of ·way for the erection of f;l,Uch work shall be fully pl"Ovidedfor."
Section 9, art. 8; of the constitution of 1876, as amended in 1883, is .
U The state tax, on property. exclusive of the tax necessary to pay the pUblic debt. and of the taxes provided fpr the benefit of public free schools. shall never exceed thirty-live cents on the one hundred dollars' valuation. and no county, city. or town shl\ll levy more t1).an twenty-five cents for city or county purposes, and not to exceed fifteen cents, for roads and bridges. on the one hundred dollars' valuation. except for the payment of debts incurred prior to the adoption of this amendment, and for the erection of public bUildings, street,' sewpr, and other permallent'improvements, not to exceed twenty-five cents on the one hundred dollars' val iJation in anyone year, and except as is iii this constitutioh otherwise provided."
The amended article Swas adopted by the people August 14, 1883, and proclamation duly made thereof by the governor, September 25, The original section 9 of article 8, relied on by the plaintiff, provides: "The st,ite tax on property, exclusive of the tax necessary to pay the pub. lic debt, shall never exceedlifty cents on the one hundred dollars' valuation, and no county, city, or town shall levy more than one-half of said state tax, except for the payment of debts alrl'ady incurred, and for the erection of pub. lic not to exceed fifty centl'l on the one hundred dollars in anyone year, and except llS in t;llisconstitutlon is otherwise provided." The 11,1881, is as follows: .. An act authorizing the county commissioners' court of the several countil'S of this state to issue bonds for the erection of a coul"t·huus... and to levy a tax to pay for,the same, Section 1. Be it enacted by the legislature of the state ;uf Texas, that the county commissioJlers' court of any county which has no court-house at the is hereby authurized ami empowel'ed to issue the ,bol.lds of said county" with interl'stcoupons attactlt'd, in such amount as may Le necessary to erect a suitable building" for a court-house; sait! bonds running nut excpeding fifteen years, and rl'deemable at the p!pasure of the county, and bearing interest at a rate not exce,'ding eight per cent. per an· nnm. 8..c.2. The court of the county shall levy an annual ad valorem tax 011 the property in said county, sufficient to pay the interest. an,1 create a sinking fund fur the redemption of said bunds. not to exceed one-fllnrth of one pel' cent. for any OIie )'ear. Sec. 3. The county shall not issue a larRf-r nUJUloel' of bunds than a tax of one-fourth of on" pel' cent. annually will liquidate in ,ten years, and such !Jonds shall be sold only at tIlPir fact' ur par value. Sec. 4. The inter..st on said !Jonds shall be paid annnally on the tenth day of April. and they shall be regislert·d, aud an acconnt kept by the county treasurer of the amuunt of prinCipal and intl:'rest paid on each. Sec. 5. ::laid bonds shall be signed by the county judge. and countersigned by the county clerk, and regil:ltered by the county treasurer, before th..y are delivered. 8ec.6. The security and the protectiun and safe-kepping of the public recurds Itnd archhes of ltobertson ct)unty make an imperative puillie necessity thaUbe rull' l'equiring the hill to be read onthl'ee several days be suspended, .and It is so enacted. and this HCt shall take efIl'ct from Illld after tbe day of Its passage. AppvovedFebruary 11, A. D. ItjSl. Takes effect from passage." Qen. Laws 18t!1, pp. 5, 6"
John H. Overall and J. E. Townsend, for plaintiff. G. W. Walthall and S.H. Cowan, fordefendaut.
, MAXEY, District. J vdge, (aftm- stating the facts as above.) 1. It is insisted by the plaintiff that the original section 9, art. 8, of the constitution of 1876, should apply to this case, upon the ground that the bonds of November 12, 1883, were issued in lieu of the bonds authorized by orders of the commissioners' court of May 14 and 29, 1883, which lat· ter were canceled and destroyed. B,ut it will be observed the plaintiff by his pleadings asserts no rights under the orders of the commissioners' court authorizing the first issue of bonds, and no reference is made in the petition to any contracts, tran,suctions, or bonds issued antecedent to November 12th. On the contrary, the suit is for recovery upon interest coupons detached from bonds bearing date November 12, 1883. These bonds were November 22, 1883, and could not have been delivered to Milliken & Co., in exchange for those first issued,until after that date. The order of the commissioners' court. providing for levy of a tax to pay interest on the bonds and create a fund, was passed November 12,1883, and the bonds on their face purport to have been on that day. Plaintiff purchased. March 12, 1884, 30 of the bonds delivered to Milliken & Co., (Nos. 1 to 30,) and a third party the remainder of the 35, (Nos. 31 to 35,) at the same The 5 left (Nos. 35 to 40) to complete the issue of 40 bonds were not actually issued by the county until a later period. The amendment of section 9, art. 8, of the constitution, WitS adopted by the people in August, 1883. The purchaser of the bonds therefore bought with notice that they were issued subsequent to the last-mentioned date, anel in obedience to constitutional provisions then in force. If Milliken & Co. were before the court asserting rights under their contract to construct the court-house, there would be force in the objection that subsequent amendments to the constitution could not be held to destroy or impair their rights under the pre-existing contract. But such is not the present case. The plaintiff is a mere purchaser of the bonds in open market, and for interest due upon the same. He claims no rights as assignee or otherwise under the contract with Milliken & Co., but merely as the holder of the bonds, and no reason is perceived why the amendment to section 9, art. 8, should not be applied as law in this case. The claims of Milliken & Co. growing out of their contract with the county cannot be here inquired into. See lnsnrance 00. v.Middleport, 124 U. S. 548, 8 Sup. Ct. Rep. 625; Norton v. Dyersburg, 127 U. S. 176, 8 Sup. Ct. Rep. 1111; Buchanan v. Litchjield, 102 U. S. 293. If plaintiff could rightfully claim the protection of the original section 9, art. 8, of the constitution, because it was in force June 18, 1883, when the commissioners' court ordered the delivery of $35,000 in bonds to Milliken & Co., then for a like reason he should he held to the situation in which Milliken & Co. were placed by the action of the court in other respects at that time. Going back to June 18th, we find no provision whatever was made for levying and collecting a tax to pay the interest on the bonds and pro.vide a sinking fUnd; and it admits of serious question. in view of the mandate of section 7 I art.l;l, of the constitution, whether the collection of bonds 1ssued 1i9 the. June order could, under any
E'EDERAL REPORT:ER,
W. Rep. 1003. W. Rep. 593.
circumstances, he enforced. Bank v. Oity of Terrell, 78 Tex. 450, 14 S. See, also, Oityof Terrell v. Dessaint, 71 Tex. 770, 9 S.
2. The defendant attacks the validity of the entire issue of 40 bonds, because they were issued partly for jail and artesian well purposes; the county being, it is contended, without power to execute its negotiable bonds for the purposes specified. Attention will be first directed to bonds numbered from 1 to 35, which it is claimed were issued partly to construct a jail, leaving bonds 36 to 40 for separate consideration. The county had, November 12, 1883, no express authority, granted by the coni:ltitution and laws of the state, to issue negotiable bonds to build a jail. And the question arises, did it possess implied power to issue bonds for such purpose? In Claiborne Co. v. Brooks, 111 U. S. 406, '407, 4 Sup. Ot. Rep. 489,it is said by the court: "Our opinion is that mere political bodies, constituted as counties are, for .the purposll of local police and administration, and haVing the power of levying taxes to defray all public charges created, whether they are or are not formally invested with corporate capacity, have no power 01' authority to make and utter commercial paper of any kind, unless such power is expressly conferred upon them by law, or clearly impli!ld,from some other'power expressly given, which cannot be fairly exercised without
Merrill v.Monticello, 138 U. S. 673, 11 Sup. Ot. Rep. 441; Concord v. Robinson, 121 U. S. 165, 7 Sup. Ot. Rep. 937. "Even where there is authority," says the court, "to aid a railroad, and incur a debt in extending such aid, it is also settled that such power does not carry with it any authority to issue negotiable bonds, except subject to the restrictions and directions of the enabling act." Youngv. Clarendon Tp., 132 U. S. 347, 10 Sup. Ot. Rep. 107; Merrill v. Monticello, supra; Daviess Co. v. Dickinson, 117 U. S. 657, 6 Sup. Ot. Rep. 897. The of the character and extent of the power possessed by a state political or municipal corporation is one of state policy, and the decisions of the supreme court of this state will be regarded as authoritative, touching the power of its counties to issue negotiable securities. Speaking for the supreme court, in Olaiborne 00. v. Brooks, supra, Mr. Justice BRADLEY employs this language: "It is undoubtedly a question of local policy with each state what shall be the extent and character of the powers which its various political and municipalorganizations shall possess; and the settled decisions of its highest courts on this subject will be regarded as authoritative by the courts of the United States, for it is a question that relates to the internal constitution of the body politic of the state."
In Merrill v. Monticello, supra, Mr. Justice LAMAR says: "In (}aus6 v. City of Clat'ksvill6,5 Dill. 165, in an able discussion of the inherent and incidental authority of municipal corporations, holds that corporation possesses the power to borrow money and whether the io issue negotiable secnrities therefor depends upon a true construction of its charter and the legislation of the state applicable to it."
"It may be considered," says the supreme court, "settled law in this state that one of its counties cannot issue bonds without an act of the legislature conferring that power." Nolan Co. v. State, (Tex. Sup. Ct.) 17 S. W. Rep. 826; Robert<Jon v. Breedlove, 61 Tex. 316. The case of Nolan Co. v. State is also authority for holding that counties in Texas were without power, under the act of February 11, 1881, to issue bonds for constructing jails. The plaintiff in this cause sues upon coupons detached from bonds issued under the same act, and pursuant to a contract executed by the county and the contractors, Milliken & Co., for the canstruction of a jail and a court-house. Both buildings were constructed by the contractors in consideration of the bonds. Hence, following the Nolan County Case, which is similar in all essential respects to the case now before the court, the bonds issued for the jail were unauthorized by law. But it does not result that they were void in the hands of innocent purchasers. Upon this point, the observations of the court in that case are especially pertinent and appropriate here: " Although we hold that the commissioners' court of Nolan county exceeded the construeits authority in issuing bonds to Martin, Burns & Johnson t;on of a jail, it does not follow that they may not be a valid indebtedness, in part, at least, against the county. They are payable to bearer, and in all other respects they are regular upon their face. They recite that they were issued for the purpose of erecting a court·house for Nolan county, and in pursuance of the authority conferred by the act of February 11, 1881. They also purport to have been registered by the treas11rerof the county. The state is admitted to be holder for value of the four bonds of this serieR, which are in part the foundation of this suit; and it is also admitted that at the time of their purchase its agents had no actual notice of any fact which impaired their validity. The county of Nolan had no court.house, and therefore the commissioners' court had power to issue bonds for the erection of such a structure, containing all the recitals necessary to show the authority fortbe creation of the debt. !fa purchaser were bound to inquire into the existence of the fact which empowered tbe court to issue bonds to build a court-house, and to know tbat the county had no court-house. in view of the recitals upon the face of the obligations he was bound to look no further. He had the right to rely upon the trutb of such recitals, and, having paid value for tbe bontjs without actual knOWledge of their illegality, the county would be estopped to set up that they were not issued for the purpose for which they purported ·16 be issued. Oha.mbel's 00. v. Olews, 21 Wall. 321; Wilson v. Salamanca, 99 U. S. 504; Ma1'cy v. Oswego, 92 U. S. 640; Humboldt Tp. v. Long, rd. 644; IJaviess 00. v. Huidekoper, 98 U. S. 100. We conclude,therefore, that the four bonds issued to Martin, Burns & Johnson, now held by the state, are valid obligations against the county, unless that entire issue was in excess of the amount of indebtedness which the court was authorized by law to create."
For like reasons, bonds numbered 2 to 35, inclusive, held as they are by innocent purchasers, are valid obligations against Howard county, "unless that entire issue was in excess of the amount of indebtedness which the court was authorized by law to create." 3. What amount of negotiable bondEl was Howard county authorized to issue on November 12, 1883, for the purpose of constructing a cour1ihouse? That it had power to issue bonds in some amount cannot be
q,uestS,orted, 'as the 'first sectioJl of 'the act expressly confers authority to issue Mnds, "with interest coupons attached, in such amount as may be to erect a suitable building for a But the third section; which must be construed with preceding sections of the act, contains a limitation upon the power of the county as to the amount which may be'issued. The act under discussion was construed by the supreme court of this state in Rtt88elt v. Cage, G6 Tex. 432, 433, 1 S. W. Rep. 270, and the court there says: . '
"The other queStion presented Is whether a tax of one-fourth of one per cent. levied annually for ten years npon $1,750.000 ofpl'Operty will liqUidate $27,OOO.ofbon.dsbearing interest at the rate of eight per cent. per annum. Act Feb.. 11, 1881, § 3. , ',rhe bonds may run for fifteen years, redeemable at tl\epl.easure of They are not required to be paid in ten years, ,1D0re shall be issued than will-c-that is, mayor can-be liqnidated by 'the given tax in s(atedperiod. The third section 'Of the act does not videfor1.he llaylllent of the'bonds, butlimits the amount of bonded edness authorized by the hiw. This cannot be Buchan amount as will be paid in ten, years, whentlle act expressly that the bonds may run for jeiltS. but the amoutltis such as IDay be paitl by thfl prescribed tax in The county is t() ¥certain the limit upon its power to issue bonds by s9lving the problem put 1'1 the third section. 'The result of that tion the time and manner of applying the proceeds of the tax, not actually iiI the future, but in the calculatiun. ... ... ... The object of the law waS to fix a uniform. and certain standard of authority, applicable to all counties. This standard isgaug(>d by the financial condition of the county. The interest it has to pay depends upon its credit. and the amount of the debt the county may incur depends directly on the interest borne by the bonds and its ta:xabll;l,W('alth. 'rhese are the given factors, from which to ascertain is no element of. uncertainty. The the extent of the county pOWel". snm for which may be issued is the sum which, together with interest at the given tate, could be liguidated by ten annual stated payments."
It is said by the court in the Nolan County Oaae that "the question of excess in, the amount of indebtedness depends upon the construction of the stlituie; b Atid"':''
"It in the light of the constitutional prOVisions Which relate to tbe'sl\me subject-matter. In Bank v. City ofJ,'errell, 78 '!'ex. 450, &p.lOOa. section 9 of article 8 of the constltuti()n, as amended in 14 S. 11:183, Was and it was held that the amount ,of indebtedness which counties. tOWIl8., and citieS wer!' authorized to create for the erection of pubwas limited to 25 upon $100 worth of property, as lic shown by the ,assestlment,r()lls of the municipality. The word · valuation,' as used in t1)e section, was held to mean the value as fixed by competent au,thority for lbeplJrposes of taxation. ,The result of that decision is that erning bodies of municipal corporations are not empowered. when ascertaining the amount of an indebtedness to be created, to determine for them· selvt's the a:ggregate value of the property therein subject to taxation, but are to theofflchllrolls made out by t1l,e tax assessor."
It will thus be, seen that section 9, art. 8, of the constitution, as amended, does limit thectelltion of indebtedness by'a,county, and is not intended, as plaintiff contends, "wholly to limit the amount of the assessment." See,also; Lake 00. v. RoUins, 130 U. S. 662, 9 Sup. Ct. The ttmouIitof bonds that thedefeudant could lawfully issue
was such an amount asa tax of 1 per cent. annually would The 35 bonds· issued to Milliken & Co. pursuant liquidate in 10 to the order of court of November 12, 1883, were delivered to them contemporaneously with theirrem,sttationNovember 22, 1883, or soon the last official assessment-that of 1883, thereafter, and at a titne and the only one then made the amountof taxable property in the county to be 8863,011.38. Adopting the rule scribed by the supreme court in Cage, and reaffirmed in Nolan 00. v. State, BUpra, a tax of one.-fourth of 1 per cent. upon this sum would pay in 10 years $14,982.77. To that extent the 35 bondg under consideration constituted an indebtedness which was within the power of the county to contract. The amount beyond $14,982.77, as measured by.the constitution and of this state. was in excess of the defendant's power to issue for the purpose of building a court-house·. 4. The question arises: Are those bonds, numbered 2 to 35, inclusive, void, as to the excess, in the hands of innocent purchasers for value, as the holders are clearly shown by the testimony to be? If tested by the ruling of the supreme court of this state in the two cases last cited, the conclusion is irrl;lsistible that, as to the excessive issue, the bonds are void,-void in their inception, and void in the hands of any subse.quent holder for value without notice. Thus it is said: .. As to the excess over Sl1m, thpy were void. * * * That the purchasers of the bonds of a city must look to the official assessment in order to ascertain the extent of the council's authority to create a municipal imlebtedness, and that as to an excessive issue they cannot claim to be innocent purchasers." It is insisted by the plaintiff-as it was contended in Rtt88ell v. Chge, and Nolan Co. v. State-that the recitals in the bonds estopped the county from contesting their validity. The bonds involved in the present controversy contain the following recital: .. This bond is issued in accordance with the provisions of an act of the legislature of the state of Texas · An act to authorize the county commissioners' court of the several counties of this state to issue bonds for the erection of a court-house, and to levy a tax to pay for the same,' approved February 11th, 18i$1." The recital is that the bond was issued in accordance with the act of , the legislature. It does Dot purport to be issued pursuant to, or in accordance with, the constitution; nor is there anything.in the recital showing that the taxable value of the property in Howard county, as shown by the assessment rolls, was sufficient to authorize the commissioners' court to issue the bonds which the county actually issued. Construing section 9, art. 8, of the constitution upon this point, the supreme court, in Bank v. City of Terrell, says: "No ad 'fJalorem tax has ever been collectl',d in this state otherwise than through carefully regu lated assessments. It is not practicable, if it can be said to be possible, to arrive at correct taxable values through any other means than an assessment. We would be compelled to ignore common sense and reject all experience before we could hold that when the constitution imposeu upon cities [and the same may be said of counties] the duty of ascertaining the val-
F4i:DERAL REPORTER,
vol.' 50·.
uation ot their taxableprpperty It cootentplated that tbeyshould look to any Qther source for the information than 'their own assessment rolls, taken for alone of furnishing such infprmation. We are qnahle to conclude that the constitution, .while intending to 8,0 strictly fimit the creation of a debt to a percentage on valuation, contemplates that. a city council may gard Q!fi'¢ial assessments, and adopt, ,according to their pleasure, any other means :or'homeans of ascertaining the reqilired fact. * * * It is firmly settled hy the higbestauthority that, when the law that limits the debt by valuation directs shallIJe ascertain<ld byanassessment, such ll,ssessm/lnt governs, and. cannot be overcome by any mere recitals that the is otherwise." That the same principle is applicable to counties will be readily tainedbyreference to the Nolan Co. OaBe. Section 9, art. 8, of the tution ofthis state, as amended, and also as the section originally stood, in effectcdmmands that a county shall, in order to create a debt for ing a take its latest assessment of property for taxes, and froin that ascertain, as heretofore shown, what amount of indebtedness it may lawfully contract. With this'understandingof the constitutional provision, itwill be readily seen that this case is not governed by the principles announced by the court in Marcy v. Owego, 92 U. S. 637; Humboldt Tp. v. Long; ld. 642; and others cited by counsel for plaintiff. But it is thought to be clearly controlled by the cases of Lake Co. v. Graham, 130 U. S. 675, 9 Sup. Ct. Rep. 654; Dixon 00. v. Field, 111 V. S.83,4"Sup. Ct. Rep. 315; and Buchanan v. Litchfield, 102 U. S. 278. 'See, also, 8utliffv. Lake 00.,47 Fed. Rep. 106; Insurance Co. v. Lyon 00., 44 Fed. Rep. 329. In the Lake Co. Case, where the recitals were much more comprehensive than in this case, Mr. Justice LAMAR, afpages 682, 683, 130 U. S., and pages 656, 657,9 Sup. Ct. Rep., quotes from Di.1;on Co. \1. Meld the folloWing language: "If the fact necessary to tbe existence of the authority was by law to be ascertained, not officially by the otlicers charged with the execution of the power. but by reference to some express and definite record Of a public acter, then the true meaning of the lliw .would be that the authority to act at all depends upon the actual objective of the requisite fact, as shown by the record, and not upon its ascertainment and determination by anyone; and the consequence would necessarily follow that all persons claiming under the exercise of/l.uch a power might be P\lt to proof of the fact madea tiun of its lawfulness, notwithstanding any reoltals in the instrument. The, amount of the bonds issued was known. It Is stated in the recital itself. It was $87.000. The holder of each bond wits apprised of that fact. The amount of the assessed value of the taxable property In the coilnty is not stated; but, ex'Di termini, it was ascertainable in one way only, and that was by ence tothe assllflsment itself,-a public record equally accessible to all intending ,purchaser.spf bonds, as well as to the county omcers. This being known, the ratio between the two amounts was fixed by an arithmetical calculation. No recital involving the amount of the assessed taxable valuation of the property to be taxed for the payment of the bonds can take the place of the assessment itself. for it is the amount as fixed by reference to that record that is made by theconstitutioD the standard measl,lringthe limit of the municipal power. Nothing in the way of inquiry. ascertainment, or determination as to that fact is submitted to the county officers. They are bound, it is true, 1;(, £'loQm the asSessment what the limit upon their authurity is, aR
l\ necessary preliminary hI the exercise of their functions and the performance
of their duty; but the information is for themselves alone. All the world beside& must have it from the same source. and for, themselves. The fact. as it is recorded in the assessment itself. is extrinsic. and proves itself by in. spection. and concludes all determinations that contradict it."
Proeeeding, the justice further says: "The question here is distinguishable from that in the cases relied on by counsel for defendant in error. In this case the standard of validity is created by the co'nstitution. In that standard two factors are to be considered. -one the amount of assessed value. and the other the ratio between that assessed value and the debt proposed. These being exactions of the constitution itself. it is not within the power of the legislature to dispense with them.eit1;ler directly or indirectly, by the creation of a ministerial commission whose finding shall be in lieu of the facts." Pages 683, 684. 130 U. S" and page 657. 9 Sup. Ct. Rep. Howard county assessment rolls of 1883 were public records, made in obedience to the cOl,stitution and laws of the state. They were open to the inspection of the public, and they contained the amount of the taxable property of the county. Purchasers of the bonds were chargeable with notice of these records, and, had they been consulted, the discov.. ery would have followed that a tax of one-fourth of 1 per cent., authorized by the constitution and the third section of the act of 1881, levied annually on property valued at $863,011.38, would liquidate in 10 years an indebtedness ofonly $14,982.77. The bonds in excess of that a1l10unt are voirl, and collection of the excess cannot be enforced against the coup.ty, even by a bona fide purchaser for value. 5. It remains to consider the validity of bonds numbered 36 to 40, indusive. These bonds, on their face, purport to be court-house bonds, and bear date November 12, 1883, the same date as the issue of 35 already, discussed. Defendant objects to these bonds because (1) they were issued to bore an artesian well, and (2) the county exhausted its authority to issue bonds when, by the order of commissioners' court of November 12, 1883, it authorized the issuance and delivery of 35 bonds to Milliken & Co. to erect a court-house; and hence the subsequent issue ,of 5 bonds was unlawful and void., If the county had authority to issue bonds 36 to 40, inclusive, at the time the order for their issuance was passed, the fact that they were sold and the proceeds used to sink an artesian well would not invalidate them in the hands of an innocent purchaser. That point has been already decided against defendant touching the bonds, which it maintains were issued to construct a jail, and requires .no further thought. The second objection, however, is more serious. The commissioners' court, November 12, 1883, ordered "that there be issued 101' the purpose of erecting a suitable building for a court-house for said county of Howard * * * thirty-five coupon bonds of the said county, of the denomination of one thousand dollars each, payable to J. H. Milliken & Co. 01' bearer," etc. No other bonds were then ordered to be issued, and Milliken & Co. were not entitled to any ot4ers, or anything else" under their construction contract. An ad,ord.er of November 12, 1883, was pasbro, authorizing the levy
of} pay and a S.Jti. .u.,n.d for the. rede.m ..·..Pt.lOnof .sa.l.d bO.nds ne.cOO5a..1"1. re.ct. for a authorized by of it was'not until Febr)1ary H, l884, the order W!tS passeq. "that ,the' ance of five thousand dollars court-house bonds mllyissue, in accordance w,ithlp.w. to who may agree to take sanieat their face or par 'vahui,"anlT may be subject to the dispt.isi'tion of Geo. Hogg, county jhdg,e,ol,'his omoc."·. August 19, 1884,-aQ'out five months the destr]lction and cancellation of the first and erroneous issue of 40 bonds,-an order was made by the commissioners' court that bond 86 be "turned over to R. R. Elder, artesian well cdntra<Jtol, as collateral security," etc. 'On March 1, 1886, it was ordered by the court CCthat A. D. Walker deposit said bonds Nos.. 87, 39, and 40 in Colorado National Bank, in accordance with terms of IIforesaid contract, "-presumably a contract with James & Co. for boring 811 iartesianwell. These four bonds were subsequently withdrawn from the;baiik, conformably to the order of August 11, 1886, and remained in the custody of the county treasurer until CountyJ9dge Thurmond negotiated them in St. Louis, pursuant to the order of September 13, Bonds numbered 37! 38, 39, and 40, together with bond 36, were purchased by a citizen of St. Louis, after March 12, 1884, for value, and with only such knowledge bf their validity or invalidity as plaintiff had at the time of his purchase of bonds numbered from 1 to 30. The court is of opinion that these 5 bonds are absolutely void, on the ground that the county had no power or authority to issue them. The power to issue bonds tor the erection of a court-house was exhausted when the 35 bonds were issued and delivered to Milliken & Co. j and thereafter the county was without lawful authority to issue additional bonds, apparently tor court-house purposes, but really and in lact intended and used for the purpose of boring an artesinn well. Davim Co. vi Dickin8O'n, 8upra. Granted the power, under such circumstances, to issue bonds, purporting on their face to be court-house bonds, the authority would be susceptible of indefinite expansion; and under the pretense of lawful right a county would be enabled to flood the country with negotiable securities, binding upon the people. Such a doctrine is inconsistent with reason, and, it is believed, finds no support in the principles asserted by, text-writers, or as enunciated by judicial tribunals. My conclusion, therefore. is that bonds numbered 36, 37, 38, 39, and 40 are void, and hence not enforceable. 6. It has been shown that bonds numbered 1 to 35, inclusive, are in part valid and partly void. 'fhe question now arises, is the county liable for the amount of indebtedness within the restricted limit? The supreme court of this state replies in the affirmative. Bank v. Ouyof TerreU, 8upra; Davie88 00. v. Dickinson, 8upra; In8urance 00. v. Lyon Co., 8Upra. The supreme court of Iowa holdS the same view, and, in McPher80n v. FoFJter, 43 Iowa, 72,·73, says: "As we have seen, the constitutional inhibition operates upon the indebtedness, not upon the form of the debt. The district may become indebted to
FRANCIS· "'.HOWARD COUN1:Y.
,the amount of $2.,057.50 by bond. If the debt exceeds tbatamoul'lt,it Is void as to the excess. because of the inhibition upon the power of the district .to exceed the Uniit; and the bonds as to the same excess are void because of the of a valid debt therefor. But this restriction does not extendto the som of $2.057,50 for which the district bad power to issue its bonds. That sum is a valid debt. The bonds. to that extent. are valid. It is no unusual thing ·for instruments of this character to be partly valid arid partly invalid. So far as. they secure a lawful debt. they are valid. So far as the debt is'unlawful, they are. invalid. * * * It appears that the bonds all bear . 8ame date. and were issued, though at diffel'ent times, as a part of one transaction. They were intended as security for a debt of $15.000, which was attempted to be contracted in building .the school-house. It can·not be said that in justice invalidity should attach to certain· particular bonds, while others. to the amount for which the district could lawfully contract in-debtedness. should be held valid. Each bond, being but a part of the whole ,debt. m.ust· partake alike of Invalidity and validity; 'it must be partly valid and partly in valid. Thf\ whole alleged debt is $15,000. Of this Stl m $2,057.50 is valid. Each bond will be valid to the extent it represents. portion of the debt laWfully contracted. Such a sum is the proportion of the amount of the bondas$2.p57.50 bears to $15,000; that is, of the principal of each bond is valid and collllctible..Tbe interest On each bond is det.ermined by the rule, or calculated upon the amount of each bond held to be valid." Howard county could lawfully issue, November 12, 1883, bonds to the amount of $14,982.77. It did in fact issue bonds, partly valid and partly invalid,. aggregating $35,000. Bonds to the extent of its power to issue--:-$14,982.77-becamea valid indebtedness against the county, and enforceable by suit. Bonds in excess of that limit or amount are invalid and uncollectible. The 35 bonds were all issued and delivered at the same time to Milliken & Co., and they were subsequently bought at the same time by plaintiff and another citizen of St. Louis. None, therefore, haVe priority over the others, and the amount of valid debt should be equally distributed among them all. According to the rule laid down by the supreme court of Iowa, each one of the 35 bonds of $1,000 issued represents a valid indebtedness of8428, and each coupon of $80 a valid debt of $34.24. The suit embraces of these coupons, partly valid and partly invalid, 34 due April 10, 1888; 34 due April 10, 1889; 29 due April 10, 1890; and 29 due April 10, 1891. There is then due the plaintiff on the coupons the following amounts: $1,164 16 (1) Coupons due 1888. principal, Interest to April 10, 1892, 372 53 - - - $1,536 69 (2) Coupons due 1889, principal, $1.164 16 Interel;lt .to April' 10. 1892, 279 39 1.443 55 (8) Coupons due 1890, principal, $992 96 Interest to Apri110, 1892, 158 87 1,151 83 (4) Coupon,; due 1891, principal, $992 96 Interest t.o April 10, 1892, 7943 1,072 89
--- ---15,20446
JI'lilDERAL REPORTER, vol. 50. Judgment should be rendered for the foregoing' amount, with 6 pel <lent. interest· thereon from date, (Gen. Laws 1891, p. 87; Const. Amend. adopted Aug., 1891,) if, indeed, it be proper to enter judgment in favor of plaintiff for any amount in this suit at law. This question presents a serious difficulty. The supreme court of Iowa, in McPherson v. Foster, Bupra, and Judge SHIRAS, in Insurance Co. v. Lyon Co., supra, declined to enter judgment; the latter basing his refusal on the ground that the rights and equities of the bondholders could only be adjusted by a proper proceeding in equity, with all the parties before the court. Discussing the question, he observes: "It is argued that the bonds would be valid until the amount needed to refund the enforceable debt hat! been reached, and that it will be presumed that the bonds were sold in the order of their number. Such a presumption cannot be indulged in under the facts of this case. To settle the equities and rights of the bondholders against the county, and their rights as between themselves, would seem to require the institution of a suit in equity. In this action at law between one owner of part of the bonds and the county, it is beyond the power of the court to hear and determine the question of the order in which the .series of bonds were sold. or the application of the proceeds realized from the sales thereof, and whether the facts are such that a certain number of the bonds can be held valid at law. or whether it should not be held that each owner of a bond is equitably entitled to demand his share of the total sum which may be adjudged to be collectible from the county." Touching this point, the supreme court of this state says: "Neither the pleadings nor the proof in the record before us present the case so as to authorize a judgment of the nature indicated by us as being proper. Strictly speaking, no judgment other than the OIle from which the appeal was taken could have been rendered. We think it right, however, to give the app.ellee 8n opportunity amend his pleadings, and have the issues so presented 88.tO show what proportion of the debts sued on .he may be entitled to recover, under the rules that we here announce." Bank v. CityofTerreZl. supra. See, also, Daviess Co. v. Dickinson, supra. This cour1i fully concurs in what is said in the cases cited. But the rulingsin those cases were predicated upon the particular facts of each <lase. While in this suit the court entertains serious doubts as to the propriety of entering judgment in behalf of plaintiff, yet, after giving the question careful consideration, I am impressed with the conviction that such a judgment would be warranted by both the pleadings and proofs; and perceiving no insuperable objection, in a case of this kind, to the rendition ofa judgment in a suit at law, my conclusion is that plaintiff should recover the amount found due, with legal interest and costs of suit. If he be not permitted to recover all he claims, he should at least have judgment for the amount to which he is lawfully entitled. Ordered accordingly.