Sch. Dist. v. Stone, 106 U.S. 183

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 five per centum on the value of the taxable property within such county or corporation, to be p. 185ascertained by the last State and county tax lists, previous to the incurring of such indebtedness.” The largest indebtedness, therefore, which the district, consistently with the fundamental law of the State, could have contracted, when these bonds were issued, was five per cent on 847,986. Consequently, those here in suit, constituting one issue, and aggregating 815,000, 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 their recitals from showing, 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.

Waiving any discussion of the question, whether the constitutional requirement that the amount of the taxable property should be “ascertained by the last State and county tax lists,” did not compel every purchaser, at his peril, to obtain from that source the necessary information, and did not preclude him from relying upon the representations of district officers as to what those lists disclosed, we are of opinion that the recitals in the bonds do not, necessarily nor distinctly, import any determination of that question by the district officers invested with authority, under certain circumstances, to issue them. Had the bonds recited that they were issued by authority of the election of July 31, 1869, and in conformity with the provisions of the p. 186statute referred to, there would, in view of the decisions of this court, be more force in the argument in behalf of the defendant in error. Town of Coloma v. Eaves, 92 U. S. 484; Town of Venice v. Murdock, id. 494; Converse n . City of Fort Scott, id. 503; Marcy v. Township of Oswego, id. 637; Commissioners of Douglass County v. Bolles, 94 id. 104; Commissioners of Johnson County v. January, id. 202; Buchanan v. Litchfield, 102 id. 278. And we should, then, be obliged to decide whether, in view of the constitutional provision, a false recital by the school board as to the value of the taxable property, would conclude the district as between it and a bona fide purchaser for value; for, in such case, since the statute itself contains, substantially, the same limitation upon indebtedness by independent school districts as is prescribed by the State Constitution for county, or other political or municipal corporations, a distinct recital that the bonds were issued, in conformity with the statute, would fairly import a compliance with the Constitution. But the recitals do not, as we have said, necessarily import a compliance with the statute or the fundamental law of the State upon that subject. They necessarily imply nothing more than that the bonds were issued by authority of the electors, and that the election was held in conformity with the statute. The statute may have been pursued as to the notice required to be given of the time and place of the election, and as to the manner in which the will of the voters was to be ascertained, and yet it may have been disregarded in respect of the limit it imposed upon district indebtedness. The declaration, therefore, that the election was held in conformity with the statute does not, with sufficient distinctness, imply that the indebtedness voted was less than five per cent on the value of the taxable property of the district, as shown by the State and county tax lists.

This construction of the words employed in the bonds is characterized by counsel for the defendant in error as too narrow and technical. It may be a strict construction, and such, it seems to the court, ought to be the rule when it is proposed, by mere recitals upon the part of the officers of a municipal corporation, to exclude inquiry as to whether bonds, issued in its name, were made in violation of the Constitution and of the p. 187statute, of the provisions of which all must take notice. Numerous cases have been determined in this court, in which we have said that where a statute confers power upon a municipal corporation, upon the performance of certain precedent conditions, to execute bonds in aid of the construction of a railroad, or for other like purposes, and imposes upon certain officers — invested with authority to determine whether such conditions have been performed — the responsibility of issuing them when such conditions have been complied with, recitals, by such officers, that the bonds have been issued “ in pursuance of,” or “ in conformity with,” or “ by virtue of,” or “ by authority of,” the statute, have been held, in favor of bona fide purchasers of value, to import full compliance with the statute, and to preclude inquiry as to whether the precedent conditions had been performed before the bonds were issued. But in all such cases, as a careful examination will show, the recitals fairly imported a compliance, in all substantial respects, with the statute giving authority to issue the bonds. We are unwilling to enlarge or extend the rule, now established by numerous decisions. Sound public policy forbids it. Where the holder relies for protection upon mere recitals, they should, at least, be clear and unambiguous, in order to estop a municipal corporation, in whose name such bonds have been made, from showing that they were issued in violation, or without authority, of law.

On the 12th of February, 1880, William Smith & Co. had a suit pending in the same court, in their favor, against Schwed & Newhouse for the recovery of $3,829.71, and William C. Greene & Co. another suit for the recovery of $1,012.93. In both the suits attachments were issued and levied on the same goods taken under the execution in favor of Heller, and then in the hands of the sheriff. Smith & Co. and Greene & Co. thereupon brought suit in the same court against Schwed, Newhouse, Heller, and the sheriff, to set aside the judgment in favor of Heller on the ground that it was confessed without any consideration, and for the purpose of covering up the property of Schwed & Newhouse, and hindering and delaying creditors in the collection of their debts. This suit was afterwards removed to the Circuit Court of the United States for the Western Division of the Western District of Missouri. Afterwards judgments were rendered in the attachment suits; that in favor of Smith & Co. being for $4,174.38, and that in favor of Greene & Co. for $1,104.09. In the mean time other creditors of Schwed & Newhouse sued out attachments against p. 189them and recovered judgments; to wit, The Seth Thomas Clock Company for $1,518.49, The E. N. Welch Manufacturing Company for $455.58, and F. Quayle for $356. The attachments in these cases were also levied on the goods in the hands of the sheriff. All the later attaching creditors were admitted as parties to the original suit begun by Smith & Co. and Greene & Co. to set aside the judgment in favor of Heller, and in proper time a supplemental bill was filed in which all the attaching creditors appeared as complainants, setting up the recovery of their respective judgments. Pending the suit the property levied upon was sold, and the proceeds, being $7,405.55, paid into the registry of the court. At the final hearing a decree was rendered declaring the judgment confessed in favor of Heller void as against the attaching creditors. From this decree Schwed, Newhouse, Heller, and Bailey, the sheriff, took an appeal, which the appellees now move to dismiss on the ground that the value of the matter in dispute between the appellants and the several appellees is not greater than $5,000.

It is impossible to distinguish this case in principle from Seaver v. Bigelows, 5 Wall. 208, where an appeal by creditors who had joined in a suit to set aside a fraudulent conveyance by their debtor was dismissed because the amounts found due the appellants, respectively, were less than our jurisdictional limit. In delivering the opinion of the court, Mr. Justice Nelson said : “The judgment creditors who have joined in this bill have separate and distinct interests, depending upon separate and distinct judgments. In no event could the sum in dispute of either party exceed the amount of their judgment. . . . The bill being dismissed, each fails in obtaining payment of his demands. If it had been sustained, and a decree rendered in their favor, it would only have been for the amount of the judgment of each.” In the present case, the judgment creditors p. 190did succeed, and, in effect, each recovered a decree against Heller, setting aside his judgment so far as it affected them individually. Had they been defeated they could not have appealed, because, although allowed in equity to join in their suit, they had “ separate and distinct interests depending on separate and distinct judgments,” as well as separate and distinct attachments. But if the decree is several as to the creditors, it is difficult to see why it is not as to their adversaries. The theory is, that, although the proceeding is in form but x one suit, its legal effect is the same as though separate suits had been begun on each of the separate causes of action.