Board of Com'rs of Haskell County, Kan., v. National Life Ins. Co. of Montpelier, Vt., 1,055.

• Decision Date: 24 October 1898
• Docket Number: 1,055.
• Citation: 90 F. 228
• Parties: BOARD OF COM'RS OF HASKELL COUNTY, KAN., v. NATIONAL LIFE INS. CO. OF MONTPELIER, VT.
• Court: U.S. Court of Appeals — Eighth Circuit

90 F. 228

BOARD OF COM'RS OF HASKELL COUNTY, KAN., v. NATIONAL LIFE INS. CO. OF MONTPELIER, VT.

No. 1,055.

United States Court of Appeals, Eighth Circuit.

October 24, 1898

S. S Ashbaugh, for plaintiff in error.

O. H Bentley and Rudolph Hatfield, for defendant in error.

Before SANBORN and THAYER, Circuit Judges, and SHIRAS, District Judge.

SANBORN Circuit Judge.

This is an action upon coupons cut from refunding bonds issued by the county of Haskell, in the state of Kansas, under chapter 50 of the Laws of that state of 1879 (Gen. St. Kan. 1889, par 464). The court below sustained a demurrer to the answer of the a plaintiff in error, and rendered a judgment against the county. The answer contains the same defenses interposed to the bonds issued under chapter 50 of the Laws of 1879, in the case of Board of Com'rs of Seward Co. v. AEtna Life Ins. Co., 90 F. 222. An attempt is made to distinguish from the defenses in that case one which is interposed in this case to the coupons cut from 10 of the bonds here in question. This defense is that these 10 bonds, which will fall due in 1918, and which were issued to refund bonds due in 1909, which had been executed, but never delivered by the board of county commissioners of Haskell county, pursuant to a vote of the electors of the county under an unconstitutional law, were void, because the original bonds were so, and because the issue of the refunding bonds, with different terms and times of payment from those contained in the original bonds, impaired the obligations of the contracts which the electors had assumed by their vote in favor of the latter. Among the many interesting acts passed by the legislature of Kansas to authorize the issue of bonds was one entitled 'An act authorizing a bounty for breaking sod in Haskell county, Kansas, and to issue the bonds of said county to provide funds therefor. ' This act provided that, upon a favorable vote of the electors of that county, the board of county commissioners might issue 10 bonds of the county, of the denomination of $1,000 each, due January 1, 1909, and might use the proceeds thereof to pay the residents and freeholders of the county a bounty of one dollar per acre for breaking sod. Laws Kan. 1889, c. 154. The people voted, as usual, to issue the bonds; and in April, 1889, the board executed them, and placed them in the hands of its agent to sell, but he never found a purchaser. At a regular meeting of the board held on June 4, 1889, it made a record of an offer from W. W. Hetherington, of Atchison, Kan., to refund the bonds of the county, numbered from 1 to 10, inclusive, for the sum of $1,000 each, dated April 13, 1889, and payable January 1, 1909, upon the delivery to him of the refunding bonds of the county of like denominations, and of a resolution of the board 'that the present ten thousand dollars outstanding bonds of Haskell county, issued April 13, 1889, under the provisions of the Laws of Kansas, interest payable semiannually, and due January 1, 1909, the same now being the valid bonded obligation of this county, be refunded by the issuance of ten bonds of $1,000 each, numbered from 1 to 10 inclusive; to be dated June 4, 1889, and mature fully July 1, 1918, with coupons attached for semiannual payments of interest at 6 per cent. per annum. ' It is conceded that the invalidity of the original bonds would be no defense to the refunding bonds were it not for this record of June 4, 1889; but it is contended that this was sufficient to put every purchaser upon inquiry, and to charge him with notice that the original bonds represented no debt.

There are at least two reasons why this position is untenable. In the first place, each of the refunding bonds contains this recital:

'This bond is issued in accordance with the provisions of an act of the legislature of the state of Kansas approved March 8, A.D. 1879, entitled 'An act to enable counties, municipal corporations, the board of education of any city, and school districts to refund their indebtedness.' We hereby certify that all and singular the provisions of the above law have been fully complied with in issuing this bond, and all preliminary steps therein required have been taken, and all conditions precedent and subsequent there provided for have been fully met and complied with.'

It is true that in National Bank of Commerce v. Town of Granada, 54 F. 100, 4 C.C.A. 212, and 10 U.S.App. 692, and in Hinkley v. City of Arkansas City, 69 F. 768, 773, 16 C.C.A. 395, 400, and 32 U.S.App. 640, 650, this court expressed the view that such a recital would not estop a municipality from showing that no proper ordinance had been passed or proceedings taken by the legislative body of the municipality authorizing the issue of the bonds; but, since those decisions were rendered, the exact question whether or not the recital in a series of bonds that they were issued 'in pursuance of an act of the legislature of the state of Indiana and ordinances of the city council of said city, passed in pursuance thereof,' put a purchaser upon inquiry as to the terms of the ordinances under which the bonds were issued, was certified to the supreme court by the circuit court of appeals of the Seventh circuit, and that court answered that it did not. In concluding the discussion of that question, the supreme court said:

'As, therefore, the recitals in the bonds import compliance with the city's charter,

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