Independentofrock, Hardin County, Iowa v. Stone

• Decision Date: 06 November 1882
• Docket Number: STEAM-BOAT,SCHOOL-DIST
• Citation: 106 U.S. 183,27 L.Ed. 90,1 S.Ct. 84
• Parties: INDEPENDENTOFROCK, HARDIN COUNTY, IOWA, v. STONE
• Court: U.S. Supreme Court

106 U.S. 183

1 S.Ct. 84

27 L.Ed. 90

INDEPENDENT SCHOOL-DIST. OF STEAM-BOAT ROCK, HARDIN COUNTY, IOWA, v. STONE.

November 6, 1882.

Geo. G. Wright, for plaintiff in error.

C. C. Nourse and B. F. Kauffman, for defendant in error.

HARLAN, J.

On the first day of July, 1880, the board of school directors of Independent School-district of Steam-boat Rock, Hardin county, Iowa, issued in its name 30 bonds, each for $500, and bearing interest at the rate of 10 per cent. per annum. Each bond recited that it 'is issued by the board of school directors by authority of an election of the voters of said school-district held on the thirty-first day of July, 1869, in conformity with the provisions of chapter 98 of Acts Twelfth General Assembly of the state of Iowa.' The statute, referred to in the bonds, authorized independent school-districts to borrow money, within a prescribed limited as to amount, for the purpose of erecting and completing school-houses, by issuing negotiable bonds, provided the loan was previously sanctioned by a majority of all the votes cast at an annual or special meeting of the electors, of which meeting the same notice should be given as required by law in case of the election of officers of such districts, and which notice should state the amount proposed to be raised by a sale of bonds.

When the bonds were issued the assessed value of the property of the district, as shown by the last assessment immediately preceding the issue of the bonds, was $47,986, and the indebtedness of the district was $425, with no money in its treasury.

The constitution of Iowa declares 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 5 per centum on the value of the taxable property within such county or corporation, to be as- certained by the last state and county tax lists, previous to the incurring of such indebtedness.' The largest indebtedness, therefore, which the plaintiff in error, consistently with the fundamental law of the state, could have had, when these bonds were issued, was 5 per cent. on $47,986. Consequently, the bonds now in suit, constituting one issue, and aggregating $15,000, must be held to have been made without authority of law, and, upon well-established principles, are not enforceable obligations against the district, unless it is estopped by recitals in the bonds from showing, as against a bona fide purchaser, the value of its taxable property as disclosed by the last state and county tax lists previous to the creation of the debt.

The argument on behalf of defendants in error, briefly stated, is this: That the law invested the school board with authority to execute bonds for the purposes for which those in suit were issued, within the limit, as to amount, prescribed by the constitution and the statute passed in conformity therewith; that that board, when issuing the bonds, were under a duty to determine, and necessarily did determine, whether the aggregate indebtedness of the district, thus increased, was in excess of 5 per centum upon the value of the taxable property of the district, as shown by the last state and county tax lists; consequently, it is contended, the recitals in the bonds should be regarded as a declaration by the board, upon which bona fide purchasers could rely, of its determination that the taxable property of the district, as thus ascertained, was of value sufficient to justify the proposed indebtedness of $15,000.

Waiving any discussion of the question, whether the constitutional provision that the amount of the taxable property...