Dudley v. Board of Com'rs of Lake County, Colo., 821.

• Decision Date: 12 April 1897
• Docket Number: 821.
• Citation: 80 F. 672
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: DUDLEY v. BOARD OF COM'RS OF LAKE COUNTY, COLO. [1]

80 F. 672

DUDLEY v. BOARD OF COM'RS OF LAKE COUNTY, COLO. ^[1]

No. 821.

United States Court of Appeals, Eighth Circuit.

April 12, 1897

This action was brought to recover the amount of a large number of coupons, aggregating $26,500, exclusive of interest, which had formed part of and been attached to bonds of said county of Lake, in the state of Colorado, which had been issued to the amount of $50,000 on or after September 6, 1880, but bearing date July 31, 1880, for the purpose of erecting necessary public buildings for said county. Said bonds bore interest at the rate of 10 per cent. per annum, payable annually on the 1st day of April of each year at the office of the county treasurer of said county, upon delivery of the attached interest coupons. The bonds were redeemable at the pleasure of the county after 10 years, and were due and payable at the office of the county treasurer 20 years from the date thereof. The coupons maturing upon these bonds before April 1, 1884, were all paid, as they matured, at the office of said county treasurer; but no coupons maturing at or after that date have been paid, the coupons sued on being among those unpaid. The answer of the defendant denied knowledge, or information sufficient to form a belief, as to whether plaintiff was the owner and holder of any of the coupons, or had become the purchaser of them for a valuable consideration, without notice of any claim affecting their validity. But the principal defense, variously stated in the answer, was, in substance, that under the constitution and laws of the state of Colorado the board of county commissioners of said county of Lake had not, when they issued said bonds, any power or lawful authority to issue the same, for the alleged reason that by the issue of such bonds a debt of said county was contracted, or the prior debt of said county increased, to an amount prohibited by the constitution of said state, and that, from the existing facts and circumstances shown by the records of said county, all purchasers of said bonds were bound to take notice of their invalidity. Section 6 of article 11 of the constitution of Colorado, as it stood prior to the year 1888, was 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, $1.50 on each thousand thereof; counties in which such valuation shall be less than five millions of dollars, $3.00 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 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. ' The said bonds contained a recital upon the face of each bond, as follows: 'This bond is one of a series of fifty thousand dollars, which the board of county commissioners of said county have issued for the purpose of erecting necessary public buildings, by virtue of and in compliance with a vote of a majority of the qualified voters of said county at an election duly held on the 7th day of October, A.D. 1879, and under and by virtue of and in compliance with an act of the general assembly of the state of Colorado entitled 'An act concerning counties, county officers and county governments, and repealing laws on those subjects,' approved March 24th, A.D. 1877; and it is hereby certified that all the provisions of said act have been fully complied with by the proper officers in the issuing of this bond ' Sections 20-25, inclusive, of said act relative to the action of the board of county commissioners in determining upon the necessity of creating an indebtedness for the purpose of erecting necessary public buildings, making or repairing roads and bridges, and by order specifying the amount required, and submitting the question of incurring the debt to a vote of the qualified electors at a general election, by posting of notices; also, prescribing the form of ballots and manner of voting and canvassing the vote, and the authority of the county commissioners in case the vote should be carried to contract the indebtedness, and the limitations upon such authority, and the form and purport of the bonds to be issued, and provision to be made for the payment of the interest and principal of the bonds, and a provision that they should not be sold at a discount of more than 15 per cent. of their par value. Section 21 of said act contained a provision, as follows: 'Provided, that the aggregate amount of indebtedness of any county valuation of property shall exceed one million of dollars, for all purposes, shall not be in excess of the following ratio, to wit: Counties in which the assessed valuation of property shall exceed five million of dollars, $6.00 on each thousand dollars thereof; counties in which the assessed valuation of property shall be less than five millions, and exceed one million of dollars, $12.00 on each thousand dollars thereof.'

The action of the board of county commissioners preliminary to and in submitting to vote of the qualified electors of said county at the general election held October 7, 1879, the question of creating an indebtedness of $50,000, for the purpose of erecting necessary public buildings, and $5,000 for the building and construction of public roads and bridges, was strictly in conformity with said act. The election was duly held, and the vote on that question duly had and canvassed, and found and declared to be carried. And all the acts and doings were properly recorded, and the bonds prepared, executed, and issued in strict accordance with the provisions of said act. And the bonds were sold for 95 cents on the dollar of their par value, and have, since within one year of their issue, been held and owned by purchasers for full value, without actual notice of any illegality or infirmity in said bonds. The plaintiff is the holder of the coupons sued upon, by delivery of the same with properly executed written assignments thereof to him, by the former owners of such coupons, but without payment by him of any money therefor. The assessed valuation of taxable property in said county of Lake for the year 1879 was $3,485,628, and for the year 1880 was $11,124,489, and such assessment was completed on the 1st day of September in each of said years, by the action of the board of equalization. Section 30 of the act above referred to made it the duty of the board of county commissioners of each county to make out semiannual statements at the regular sessions in January and July, and publish them in some weekly newspaper published in the county, or, if no such newspaper be so published, to cause such statements to be posted in three conspicuous places in the county, one being the courthouse door, showing the amount of debt owing by the county, in what it consists, what payments have been made thereon, the rate of interest, and a detailed account of receipts and expenditures for the preceding months, and striking a balance showing the deficit or the balance in the treasury. 'And the statement thus made, in addition to being published as before specified, shall also be entered of record by the clerk of the board of county commissioners, in a book to be kept by him for that purpose only, which was no evidence in the case that any such semiannual statement made by the board of county commissioners for said county of Lake at the January or July sessions of said board in the year 1880 had ever been entered of record in any book kept for that purpose only, as required by said act. The fair inference from the testimony is that no such record was ever made. Upon the trial the defendant, to prove its allegation that on July 31, 1880, the date of said bonds, and also at the time they were issued, the aggregate outstanding indebtedness of said county of Lake was largely in excess of the amount of the extreme limitation fixed by the constitution of said state and the act aforesaid, offered in evidence a book kept in the years 1880 and 1881 by the county clerk of said Lake county, called the 'County Clerk's Account Book,' and purporting to contain, among other things, detailed statements of the financial condition of said county on January 1, 1880, July 1, 1880, and January 1, 1881; and the same was admitted in evidence by the court, over the objection and exception of plaintiff that it was not the record provided for by said act, nor the semiannual statement of the board required by said act. Much other evidence tending to show the existence of outstanding warrants and indebtedness of said county at the time of issuing said bonds to an amount largely in excess of the aggregate amount of indebtedness which the county could, under said constitutional limitations, lawfully incur, was offered by defendant, and admitted by the court, over the objections of the...