Board County Com Rs or Chaffee County v. Potter

• Decision Date: 04 January 1892
• Parties: BOARD COUNTY COM'RS OR CHAFFEE COUNTY v. POTTER
• Court: U.S. Supreme Court

142 U.S. 355

12 S.Ct. 216

35 L.Ed. 1040

BOARD COUNTY COM'RS OR CHAFFEE COUNTY v. POTTER.

January 4, 1892.

Thomas Macon, for plaintiff in error.

Willard Teller, for defendant in crror.

Mr. Justice LAMAR delivered the opinion of the court.

This was an action by Andrew Potter, a citizen of Massachusetts, against the board of county commissioners of Chaffee county, Colo., on a large number of interest-bearing coupons attached to certain bonds issued by that county, in 1882, for the purpose of funding its floating indebtedness.

The following is a copy of one of the bonds and coupons:

'No. ___. $1,000. United States of America, County of Chaffee, State of Colorado. Funding Bond. (Series A.) The county of Chaffee, in the state of Colorado, acknowledges itself indebted and promises to pay to _____ or bearer one thousand dollars, lawful money of the United States, for value received, redeemable at the pleasure of said county after ten years, and absolutely due and payable twenty years from the date hereof, at the office of the treasurer of said county, in the town of Buena Vista, with interest thereon at the rate of eight per cent. per annum, payable semi-annually on the first day of March and the first day of September in each year, at the office of the county treasurer aforesaid, or at the banking-house of Kountz Brothers, in the city of New York, at the option of the holder, upon the presentation and surrender of the annexed coupons as they severally become due. This bond is issued by the board of county commissioners of said Chaffee county, in exchange at par for valid floating indebtedness of the said county, outstanding prior to August 31, 1882, under and by virtue of, and in full conformity with, the provisions of an act of the general assembly of the state of Colorado entitled 'An act to enable the several counties of the state to fund their floating indebtedness,' approved February 21, 1881, and it is hereby certified that all the requirements of law have been fully complied with by the proper officers in the issuing of this bond. It is further certified that the total amount of this issue does not exceed the limit prescribed by the constitution of the state of Colorado, and that this issue of bonds has been authorized by a vote of a majority of the dulyqualified electors of the said county of Chaffee voting on the question at a general election duly held in said county on the seventh day of November, A. D. 1882. The bonds of this issue are comprised in three series, designated 'A,' 'B,' and 'C,' respectively; the bonds of series A being for the sum of one thousand dollars each, those of series B for the sum of five hundred dollars each, and those of series C for the sum of one hundred dollars each. This bond is one of series A. The faith and credit of the county of Chaffee are hereby pledged for the punctual payment of the principal and interest of this bond. In testimony whereof the board of county commissioners of the said county of Chaffee have caused this bond to be signed by their chairman, countersigned by the county treasurer, and attested by the county clerk under the seal of the county, this first day of December, A. D. 1882. _____, Chairman Board of County Commissioners. Attest: _____, County Clerk, [County Seal.] Countersigned: _____, County Treasurer.'

'$_____. (Coupon.) $_____.

'The county of Chaffee, in the state of Colorado, will pay the bearer _____ dollars at the office of the county treasurer, in the town of Buena Vista, or at the banking-house of Kountz Brothers, in the city of New York, on the first day of ___, being six months' interest on funding bond. No. ___, Series ___. E. B. JONES, County Treasurer.'

The plaintiff, as the holder of a large number of the coupons of each series, alleged in his declaration that all the proceedings required by the statutes of the state to be taken in the matter of the issue and registration of the bonds had been taken before the bonds were put on the market, that the bonds were therefore legal in all respects as valid obligations of the county, and that, as the bona fide holder for value of the interest coupons, he had presented them for payment at the place required, and payment had been refused. Wherefore he prayed judgment for the amount of said coupons, with interest; in all, $9,648.

The defenses set up in the answer were that the bonds had not been authorized by a vote of the qualified voters of the county, and no bonds had been authorized to be exchanged for the warrants of the county, and the board, therefore, never had any jurisdiction to issue them; that the bonds, and each of them, were issued in violation of section 6, art. 11, of the constitution of the state, and the debt which they assumed to fund was contracted in violation of said provision of the constitution; and that the bonds were issued by the board of county commissioners without any consideration valid in law, as plaintiff well knew when he received the coupons sued on.

A demurrer to the answer, on the ground that it was not a sufficient defense to the action, was sustained by the circuit court, and, the defendants electing to stand by their pleading, judgment was entered in favor of the plaintiff for the full amount of his claim, with interest. 33 Fed. Rep. 614. This writ of error is prosecuted to review that judgment.

The ground upon which the circuit court based its decision and judgment was that the county should be estopped, by the recitals in the bonds, from pleading the defenses set up in the answer.

The act of the legislature under the authority of which the bonds were issued is set out in the margin.¹ It is the same act under which certain bonds were issued by Lake county, Colo., which bonds were under consideration in Lake Co. v. Graham, 130 U. S. 674, 9 Sup. Ct. Rep. 654. The bonds in that case were quite similar to those now under consideration, differing only, as regards their recitals, in this: that the bonds here contain the additional recital that 'the total amount of this issue does not exceed the limit prescribed by the constitution of the state of Colorado,' and do not show upon their face, as did those in that case, how many bonds were issued, or how large each series was.

The provision of the constitution of 1876, referred to, both in this case and in that, (article 11, § 6,) is as follows:

'No county shall contract any debt by loan in any form, except for the purpose of erecting necessary public buildings, making or repairing public roads and bridges; and such indebtedness contracted in any one year shall not exceed the rates upon the taxable property in such county, following, to-wit: Counties in which the assessed valuation of taxable property shall exceed five millions of dollars, one dollar and fifty cents on each thousand dollars thereof; counties in which such valuation shall be less than five millions of dollars, three dollars on each thousand dollars thereof; and the aggregate amount of indebtedness of any county, for all purposes, exclusive of debts contracted before the adoption of this constitution, shall not at any time exceed twice the amount above herein limited, unless when, in manner provided by law, the question of incurring such debt shall, at a general election, be submitted to such of the qualified electors of such county as in the year last preceding such election shall have paid a tax upon property assessed to them in such county, and a majority of those voting thereon shall vote in favor of incurring the debt; but the bonds, if any be issued therefor, shall not run less than ten years; and the aggregate amount of debt so contracted shall not at any time exceed twice the rate upon the valuation last herein mentioned: provided, that this section shall not apply to counties having a valuation of less than one million of dollars.'

We held in that case that the county was not estopped from pleading the constitutional limitation, because there was no recital in the bonds in regard to it, and because, also, the bonds showing upon their face that they were issued to the amount of $500,000, the purchaser, having that data before him, was bound to ascertain from the records the total assessed valuation of the taxable property of the county, and determine for himself, by a simple arithmetical calenlation, whether the issue was in harmony with the constitution; and that the bonds, having been issued in violation of that provision of the constitution, were not valid obligations of the county. Our decision was based largely upon the ruling of this court in Dixon Co. v. Field, 111 U. S. 83, 4 Sup. Ct. Rep. 315. To the views expressed in that case we still adhere; and the only question for us now to consider, therefore, is: Do the additional recitals in these bonds, above set out, and the absence from their face of anything showing the total number issued of each series, and the total amount in all, estop the county...