City of Litchfield v. Ballou

• Decision Date: 06 April 1885
• Citation: 114 U.S. 190,5 S.Ct. 820,29 L.Ed. 132
• Parties: CITY OF LITCHFIELD v. BALLOU and others
• Court: U.S. Supreme Court

114 U.S. 190

5 S.Ct. 820

29 L.Ed. 132

CITY OF LITCHFIELD v. BALLOU and others.

April 6, 1885.

John M. Palmer, for appellant.

D. T. Littler, for appellees.

MILLER, J.

This is an appeal from a decree in chancery of the circuit court for the Southern district of Illinois. The suit was commenced by a bill brought by Ballou against the city of Litchfield. Complainant alleges that he is the owner of bonds, issued by the city of Litchfield, to a very considerable amount. That the money received by the city for the sale to him of these bonds was used in the construction of a system of water-works for the city, of which the city is now the owner. He alleges that one Buchanan, who was the owner of some of these bonds, brought suit on them in the same court, and was defeated in his action in the circuit court and in the supreme court of the United States, both of which courts held the bonds void. He now alleges that, though the bonds are void, the city is liable to him for the money it received of him, and as by the use of that money the water-works were constructed, he prays for a decree against the city for the amount, and if it is not paid within a reasonable time, to be fixed by the court, that the water-works of the city be sold to satisfy the decree. The bill also charges that he was misled to purchase the bonds by the false statements of the officers, agents, and attorneys of the city, that the bonds were valid. Other parties came into the litigation, and answers were filed. The answer of the city denies any false representations as to the character of the bonds; denies that all the money received for them went into the water-works, but part of it was used for other purposes, and avers that a larger part of the sum paid for the water-works came from other sources than the sale of these bonds, and it cannot now be ascertained how much of that money went into the works. The case came to issue, and some testimony was taken, the substance of which is that much the larger part of the money for which the bonds were sold, was used to pay the contractors who built the water-works, while a very considerable proportion of the cost of these works was paid for out of taxation and other resources than the bonds. There is no evidence of any false or fraudulent representations by the authorized agents of the city. The bonds were held void in the case of Buchanan v. Litchfield, 102 U. S. 278, because they were issued in violation of the following provision of the constitution of Illinois:

'ARTICLE IX.

'Sec. 12. No county, city, township school-district, or other municipal corporation, shall be allowed to become indebted in any manner, or for any purpose, to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness.'

It was made to appear as a fact in that case that at the time the bonds were issued the city had a pre-existing indebtedness exceeding 5 per cent. of the value of its taxable property, as ascertained by its last assessment for state and county taxes. The bill in this case is based upon the fact that the bonds are for that reason void, and it makes the record of the proceedings in that suit an exhibit in this. But the complainant insists that, though the bonds are void, the city is bound, ex oequo et bono, to return the money it received for them. It therefore prays for a decree against the city for the amount of the money so received. There are two objections to this proposition: (1) If the city is liable for this money, an action at law is the appropriate remedy. The action for money had and received to plaintiff's use is the usual and adequate remedy in such cases where the claim is well founded, and the judgment at law would be the exact equivalent of what is prayed for in this bill, namely, a decree for the amount against the city, to be paid within the time fixed by it for ulterior proceedings. In this view the present bill fails for want of equitable jurisdiction. (2) But there is no more reason for a recovery on the implied contract to repay the money than on the express contract found in the bonds.

The language of the constitution is that no city, etc., 'shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of its taxable property.' It shall not become indebted. Shall not incur any pecuniary liability. It shall not do this in any manner; neither by bonds, nor notes, nor by express or implied promises. Nor shall...