Board of Com'rs of Lake County v. Linn

• Decision Date: 07 April 1902
• Parties: BOARD OF LAKE COUNTY COM'RS v. LINN.
• Court: Colorado Supreme Court

68 P. 839

29 Colo. 446

BOARD OF LAKE COUNTY COM'RS v. LINN.

Supreme Court of Colorado

April 7, 1902

Appeal from district court, Fremont county.

Suit by William R. Linn against the board of county commissioners of Lake county. From a judgment for plaintiff, defendant appeals. Affirmed.

This is an action to recover on coupons of municipal bonds issued by Lake county, Colo., on January 2, 1882, under authority confered by an act of the general assembly entitled 'An act to enable the several counties of the state to fund their floating indebtedness,' approved February 21, 1881. 1 Mills' Ann. St. §§ 939-944. The bonds recite upon their face that they are part of an issue of funding bonds aggregating $500,000, and were made payable to different persons. Plaintiff did not receive them direct from the county, but bought them in the open market, and is a bona fide purchaser, before maturity, for value, without notice of defects therein, if any, other than that furnished to the public by the constitution and laws of the state. There is no specific recital that the board of county commissioners, in issuing them, complied with section 6, art. 11, of the state constitution, prescribing the limitation of county indebtedness, in which there is a proviso to the effect that this limitation shall not apply to counties having a valuation of less than $1,000,000. There is a recital however, that they were issued 'under and by virtue of and in full compliance with,' the act of the general assembly mentioned, and that their issuance was authorized by vote of a majority of the duly-qualified electors of the county voting on the question at the general election held on November 8, 1881, and that 'all the provisions and requirements of said act have been fully complied with by the proper officers in the issuing of this bond.' The defense set up in the answer is that these bonds were issued in exchange for county warrants which evidenced debts incurred after Lake county had reached the limit of indebtedness allowed by the foregoing provision of the constitution. It is conceded that the assessed valuation of the taxable property of the county did not reach the sum of $1,000,000 until the 1st day of September, 1879, and it is also conceded that at no time after that date was it sufficient to authorize the creation of an indebtedness of $500,000. The funding bonds amounting to $500,000, were exchanged for county warrants some of which evidenced debts of the county created before, and some debts created after, September 1, 1879. It is, then, admitted that some of the original indebtedness now funded and merged in this issue of bonds constituted a valid debt of the county, and that the bonds in suit are a part of an issue of $50,000 emitted on one and the same day. As to the foregoing facts there is substantially no controversy. After appellee introduced in evidence the coupons and the bonds from which they were taken, the appellant undertook to discharge the burden of proving that these bonds were issued in exchange for county warrants into which had been merged certain alleged indebtedness of the county contracted subsequent to the time when its debt exceeded the constitutional limitation, and which, for that reason, were void. To sustain the defense, the county offered in evidence the certificate of the county treasurer that the assessed valuation of Lake county in the year 1879 was $3,485,628, and a similar certificate of the clerk and recorder that for the year 1880 the assessed valuation was $11,025,793, and for 1881, $16,423,463, subsequently abated, in accordance with the decision of the supreme court, to the amount of $5,017,000. The bond register of the county was then offered in evidence, which showed that prior to July 31, 1880, the county of Lake had issued $50,000 in public building bonds, such issue being authorized by a vote of the people. The county also offered certain semiannual statements, certified by the county clerk, showing the indebtedness of Lake county on the 1st of January, 1880, and for the six months immediately preceding that date, and similar certified statements for the periods ending July 1, 1880, January 1, 1881, July 1, 1881, and December 31, 1881, and affidavits of newspaper proprietors that such statements had been published as the law required. This was followed by a statement of the receipts and expenditures of the county from its organization to January 1, 1880, showing a warrant indebtedness outstanding on the latter date amounting to $84,296.28. Similar certified statements of receipts and expenditures and indebtedness were introduced, declaring that on July 1, 1880, the indebtedness amounted to $198,394.57; on January 1, 1881, $293,063.20; on July 1, 1881, $436,099.95; and on December 31, 1881, $536,806.70. There was offered in evidence a list of every warrant issued by Lake county, beginning with warrant No. 1, of date March 1, 1879, and ending with No. 7,663, bearing date September 5, 1881, which included, as was claimed, all of the warrants that were merged in the bonds involved in this action, and in connection therewith all the vouchers that remained in the archives of the county for which such warrants were issued, and the records of the meetings of the boards of county commissioners at which the bills were presented and allowed, and warrants therefor drawn. According to the list it appears that the total outstanding warrants issued by Lake county, and purporting to represent its indebtedness, consisted of the following sums on the following dates (which, it will be observed, do not exactly harmonize with the amounts on the corresponding dates as exhibited by the semiannual statements heretofore referred to): June 30, 1879, $33,432.98; October 9, 1879, $58,382.46; December 31, 1879, $86,146.81; June 30, 1880, $209,897.55; December 31, 1880, $362,683.23. According to this statement the actual indebtedness incurred by the county prior to September 1, 1879, was less than $50,000. The amount of warrants outstanding October 9, 1879, and the amount of warrants issued during that year, were nearly all for bills presented prior to September, 1879. The date and amount of the allowance of the various bills partially, but not wholly, correspond to the date and amount of the warrants introduced in evidence. There was also introduced a copy of the register of road warrants similar to the ordinary warrants already referred to. By the testimony of Joseph Pearce, who was a member of the board of county commissioners during the times of these various transactions, it was sought to show that the practice of the board was at each meeting to issue warrants for the current approved bills of the preceding month; this, for the purpose of showing approximately the date of incurring the indebtedness for which the various warrants herein involved were drawn. He testified that his refreshed recollection is that it was the custom to allow bills monthly, generally at the last meeting of the month, when they were presented, covering the period of time since the last preceding meeting of the board. But he says that he has no independent recollection whatever about the matter; that he cannot tell the time when such indebtedness accrued; that he does not know anything about the date when the work or services were performed for which the warrants were drawn. With respect to some of the items it would seem that they were for services performed or articles furnished since the last preceding meeting of the board; but an examination of the list produced clearly shows that such was not always the case, and the witness himself testifies that sometimes the work for which the bill was presented was done 'quite a while' before its presentation. Upon the foregoing testimony, covering substantially everything that was before the court, the findings were in favor of the plaintiff, and a judgment was rendered in his favor for the sum of $18,984.60, of which sum $11,760 was for the principal, and $7,224.60 the accrued interest upon the same.

Steele J., dissenting.

Charles Cavender and Thomas, Bryant & Lee, for appellant.

Rogers, Cuthbert & Ellis and Pierpont Fuller, for appellee.

CAMPBELL, C.J. (after stating the facts).

Two assignments of error are relied upon and argued by counsel for appellant: First, as to the correctness of the findings upon the evidence; second, the right to enter judgment for overdue interest on coupons attached to county bonds.

1. A number of actions upon this same series of bonds have heretofore been brought and determined in the state and federal courts. In Board v. Standley, 24 Colo. 1, 49 P. 23 this court, in an able opinion by Mr. Justice Goddard, in an action upon coupons of the same series of bonds, has declared the substantive law and established the principles by which this case is controlled. It was there said that an issue of county bonds based upon an indivisible contract, and in excess of the amount of indebtedness which may be incurred under the constitution, is void as to the whole issue; but the validity of any particular bond issued in compliance with the funding act of 1881 in exchange for outstanding valid county warrants is not affected by the fact that other bonds of the same series were issued in exchange for invalid warrants; that is to say, although a part of the series of funding bonds issued in exchange for an outstanding indebtedness may be invalid, others of the same series may be valid. It was also decided that an issue of funding bonds by a county in exchange for outstanding warrants is not a creation of a new debt, and that, when a county seeks to evade liability on the ground that its issue of funding bonds is in excess of the constitutional limit, it must assume the burden of facts...