Board of Com'rs of Lake County v. Platt

• Citation: 79 F. 567
• Decision Date: 22 March 1897
• Docket Number: 803.
• Parties: BOARD OF COM'RS OF LAKE COUNTY v. PLATT.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

79 F. 567

BOARD OF COM'RS OF LAKE COUNTY v. PLATT.

No. 803.

United States Court of Appeals, Eighth Circuit.

March 22, 1897

This writ of error was sued out to reverse a judgment in favor of George W. Platt, the defendant in error, and against the board of county commissioners of the county of Lake, the plaintiff in error, upon certain coupons cut from judgment bonds issued by that corporation. The complaint contained allegations that on April 16, 1891, a judgment for $60,000 was rendered against the plaintiff in error in favor of Daniel E. Parks, in the district court of Arapahoe county, in the state of Colorado; that the plaintiff in error, in pursuance of an act of the legislature of Colorado, approved April 17, 1889, which provided that 'the board of county commissioners of any county in this state, against which a judgment has been or may be rendered in any of the courts of record in this state, may issue its bonds in satisfaction of such judgment and accrued interest thereon, dollar for dollar; such bonds to draw interest at not to exceed eight per centum per annum' (Sess. Laws Colo. 1889, pp. 31, 32 Sec. 2), issued certain bonds and coupons in satisfaction of this judgment; that the defendant in error was the owner of certain of these coupons, and that they were past due, and unpaid. The plaintiff in error, by its answer, disclosed the facts that the judgment was rendered in favor of Parks and against the plaintiff in error in the district court of Arapahoe county on account of services, which he alleged in his complaint in that action he had rendered to the board of county commissioners of Lake county at various times between May 18, 1883, and March 28, 1890; that the summons in that action had been served, and that the board had duly appeared in it by the county attorney of the county of Lake before the judgment was rendered, but that it had not answered the complaint, and that the judgment had been taken by default. It alleged that it did not in fact owe Parks anything on account of services, or on any account, when that judgment was rendered; that the judgment was rendered, and the bonds were issued to pay it, in pursuance of a fraudulent and collusive agreement between Parks and the board that the latter should permit the judgment to be entered by default and should issue its bonds, and that its members should receive a part of these bonds as compensation for permitting the judgment to be rendered. The answer contained the further plea that the original debt evidenced by the judgment, the judgment itself, and the bonds issued to pay it were all void, because they created an indebtedness in excess of that authorized by section 6, art. 11, of the constitution of Colorado, which reads: '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 or 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 proceeding 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 any county in this state which has an indebtedness outstanding, either in the form of warrants issued for purposes provided by law prior to December 31, A.D. 1886, or in the form of funding bonds issued prior to such date for such warrants previously outstanding, or in the form of public building, road or bridge bonds outstanding at such date, may contract a debt by loan by the issuance of bonds for the purpose of liquidating such indebtedness, providing the question of issuing said bonds shall, at a general or special election called for that purpose, be submitted to the vote of such of the duly qualified electors of such county as in the year last preceding such election shall have paid a tax upon property assessed in such county, and the majority of those voting thereon shall vote in favor of issuing the bonds. Such election shall be held in the manner prescribed by the laws of this state for the issuance of road, bridge and public building bonds, and the bonds authorized at such election shall be issued and provision made for their redemption in the same manner as provided in said law. ' The court below sustained a demurrer to this answer, and rendered a judgment against the county.

(Syllabus by the Court.)

The issue of municipal bonds in satisfaction of a valid judgment against a municipality does not create a debt; it merely extends the time for its payment.

The holder of coupons cut from county bonds issued in satisfaction of a judgment is the owner of a part of the same debt evidenced by the judgment itself, and is in privity with the judgment creditor. In an action upon the coupons he may invoke every presumption and estoppel in support of his claim which the judgment creditor could call to his aid in an action upon the judgment.

The judgment of a court which had jurisdiction of the subject-matter and of the parties to the action is not void, nor can it be successfully attacked collaterally, either because it was erroneous, or because it was obtained by fraud and collusion.

The test of the jurisdiction of a court is whether or not it had power to enter upon the inquiry; not whether its conclusion in the course of it was right or wrong.

In an action between the same parties, or those in privity with them, upon the same claim or demand, the prior judgment upon the merits is conclusive, not only as to every matter offered, but as to every admissible matter which might have been offered to sustain or defeat the claim or demand.

A judgment by default is as conclusive an estoppel upon all questions, the decision of which was necessary to the rendition of the judgment, as a judgment after contest and trial.

In the rendition of every judgment against a corporation upon a contract, the court necessarily determines the question whether or not the corporation had power to make the contract.

In an action to enforce the collection of bonds or coupons issued in payment of a judgment entered by default against a municipal or quasi municipal corporation, the judgment conclusively estops the corporation from making the defense that the indebtedness evidenced by the judgment was in excess of the amount which the corporation had the power to create under the limitations of the constitution of the state in which it was incorporated.

George R. Elder, for plaintiff in error.

H. B. Johnson, for defendant in error.

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

SANBORN Circuit Judge, after stating the case as above, .

The prohibition of the constitution of Colorado is against the creation of a debt in excess of the limit there prescribed. If the Parks judgment against the board of county commissioners of Lake county on April 16, 1891, evidenced a valid indebtedness of that county, the issue of the bonds from which the coupons in suit were cut in payment of that judgment was not the creation of a debt, and did not fall under the ban of the constitution. It was but the extension of the time of payment of a debt already existing and due pursuant to plenary authority given to the board of county commissioners by the legislature of Colorado. Sess. Laws Colo. 1889, pp. 31, 32. Nor could the validity of the bonds be affected by any fraudulent agreement as to their issue, if the judgment evidences a valid debt, because the judgment was satisfied by the delivery of the bonds. There is no claim that the county sustained any loss or injury by the mere extension of the time of payment of the debt, and fraud without damage constitutes no cause of action, and no defense to a legal claim. Counsel for the plaintiff in error is thus driven to maintain the position that the judgment in favor of Parks was void, as a basis for his contention that the bonds created a debt. His complaint of the court below is accordingly that it should have held that the judgment in favor of Parks was void, because the debt evidenced by it was in excess of the limit prescribed by the constitution, and because it was procured by collusion and fraud. Let us consider the grounds of this complaint in their order. The first contention is that the fact that the amount of the debt evidenced by the Parks judgment was in excess of the constitutional limitation rendered that judgment void, because the board had no power to incur such a debt, and the district court of Arapahoe county had no power to hold that such a debt did exist. The soundness of this position depends upon the jurisdiction of that court to hear and determine the question whether or not the board of county commissioners of Lake county had authority to create a debt to Parks for $60,000 for his services during the series of...