First Nat. Bank of Decorah v. Dist. Tp. of Doon

• Decision Date: 15 October 1892
• Citation: 86 Iowa 330,53 N.W. 301
• Parties: FIRST NAT. BANK OF DECORAH v. DISTRICT TP. OF DOON.
• Court: Iowa Supreme Court

86 Iowa 330

53 N.W. 301

FIRST NAT. BANK OF DECORAH

v.DISTRICT TP. OF DOON.

Supreme Court of Iowa.

Oct. 15, 1892.

Appeal from district court, Lyon county; GEORGE W. WAKEFIELD, Judge.

Action at law to recover the amount alleged to be due on bonds issued by defendant. There was a trial by the court without the aid of a jury, and a judgment rendered in favor of defendant. The plaintiff appeals.Wright & Hubbard, for appellant.

A. Van Wagenen and H. G. McMillan, for appellee.

ROBINSON, C. J.

The following is a copy of one of the bonds in suit: “No. 5. $500. United States of America, State of Iowa, Lyon County. The district township of Doon, for value received, promises to pay to James H. Wagner or order, at treasurer's office in Doon, on the first day of March, 1890, or at any time, after five years, before that date, at the pleasure of the district township, the sum of five hundred dollars, with interest at the rate of ten per cent. per annum, payable at the treasurer's office in Doon, semiannually, on the first days of March and September in each year, on presentation and surrender of the interest coupons hereto attached. This bond is issued by the board of directors of said district township for the purpose of paying off judgments and funding judgment indebtedness, under the provisions of chapter 132, Laws of the Seventeenth General Assembly, and in conformity with a resolution of said board, dated the first day of March, 1880. In witness whereof, the said district, by its board of directors, has caused this bond to be signed by the president of the board, and attested by the secretary, this first day of March, 1880. J. SHOTSWELL, President. T. E. CONVERS, Secretary.” To the bond are attached coupons, of one of which the following is a copy: “$25. (No. 20.) $25. The treasurer of the district township of Doon, Iowa, will pay to the bearer hereof, on the first day of March, 1890, at treasurer's office, twenty-five dollars for interest on bond No. 5, issued under provisions of chapter 132, Laws of the Seventeenth General Assembly. J. SHOTSWELI, President. T. E. CONVERS, Secretary.” A certificate attached to the bond is as follows: “State of Iowa, Lyon county--ss.: I, J. M. Webb, auditor of said county, do hereby certify that the annexed bond has been duly registered in my office this 7th day of March, 1880. J. M. WEBB, County Auditor.” On the back of the bond was printed a copy of chapter 132, Acts 17th Gen. Assem., as follows: “Be it enacted by the general assembly of the state of Iowa: Section 1. That any school districts against which judgments have been rendered prior to the passage of this act, and which judgments remain unsatisfied, may, for the purpose of paying off such judgments and funding such judgment indebtedness, issue, upon the resolution of the board of directors of the district, the negotiable bonds of such district running not more than ten years, and bearing a rate of interest not exceeding ten per centum per annum, payable semiannually, which bonds shall be signed by the president of the district and countersigned by the secretary, and shall not be disposed of for less than their par value, nor for any other purpose than that provided for by this act; and such bonds shall be binding and obligatory upon the district. Sec. 2. It shall be the duty of the board of directors of any district which shall issue bonds under this act to provide for the payment of the same by the levy of tax therefor, in addition to the other taxes provided by law, and they are hereby required to levy such amount each year as shall be sufficient to meet the interest on such bonds promptly as it accrues. Sec. 3. The bonds issued under this act shall be in the name of the district, and substantially the same form as by law provided for county bonds; shall be payable at the pleasure of the district; shall be registered in the office of the county auditor; shall be numbered consecutively, and redeemed in the order of their issuance. Approved March 25, 1878.” The bond is indorsed in blank by the payee. The other bonds, nine in number, are in all respects like the one set out, excepting that three of them are for but $100 each. The plaintiff claims to have purchased the bonds in good faith, for a valuable consideration, before they were due, and without knowledge or notice of any matter affecting their validity.

The defendant claims that the bonds are fraudulent and void; that they were issued without consideration; that the judgment for the payment of which they purport to have been issued was paid and canceled before they were issued; that they were issued in violation of section 3 of article 11 of the constitution of Iowa, which provides that “no county or other political or municipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount in the aggregate exceeding five per centum on the value of the taxable property within such county or corporation.” The plaintiff, in reply to the claim of defendant, alleges that the bonds were ordered to be issued by the board of directors of defendant; that, after the bonds were issued, defendant levied taxes for their payment, and paid the interest which fell due thereon for three years from their date, and recognized them as its valid obligations; that plaintiff relied upon the action of defendant and its officers, referred to in purchasing the bonds; and that defendant is now estopped to question their validity. The district court found that the judgment on account of which the bonds in suit were issued was paid before they were issued; that they were issued fraudulently, and in violation of the provision of the constitution quoted; and that they are void in the hands of plaintiff.

1. The judgment which the bonds in suit were issued to satisfy was rendered on the 22d day of July, 1873, by the district court of Plymouth county, in favor of James H. Wagner, for the sum of $2,267.61. A transcript of the judgment was filed in Lyon county on the 22d day of July, 1873. The docket containing this transcript shows entries as follows: “Received the amount of this judgment in full by issuing the judgment bonds of said district. JAMES H. WAGNER.” “This judgment was canceled by error, it being assigned to C. A. Greely in September, 1875, and the said Greely now holds the assignment of said judgment. JAMES H. WAGNER.” “Assigned to C. A. Greely, September 18, 1875. JAMES H. WAGNER.” It is claimed by appellee that this judgment was satisfied with judgment bonds issued in August, 1873, and that the second and third entries were fraudulent,...