issue of bonds has been authorized by a vote September, 1886, and made like default of a majority of the duly qualified electors thereafter up to and including Septenber of the said county of Gunnison, voting on 1st, 1892. the question at a general election duly held The plaintiff was the holder and owner of in said county on the seventh day of No- coupons formerly attached to and belonging vember, A. D. 1882. The bonds of this issue to certain bonds of the above issue. It asked are comprised in three series, designated judgment for the aggregate aniount of the 'A,' 'B' and 'C' respectively, the bonds of se. principal *of the coupons, with interest on the[ 259) ries ‘A’ being for the sum of one thousand amount of each coupon as it became due. dollars each, those of series 'B' for the sum The answer of the county contained a genof five hundred dollars each, and those oferal denial of all the allegations of the comseries 'C' for the sum of one hundred dollars plaint, and in addition set out elever affirmaeach. This bond is one of series 'A. The iive defenses, which were chiefly based upon faith and credit of the county of Gunnison the alleged fact that the county in issuing are hereby pledged for the punctual payment the bonds set forth in the complaint had atof the principal and interest of this bond.” tempted to incur an indebtedness not author To each bond were attached coupons for ized by the Constitution of Colorado, or by the semi-annual interest, signed by the the statute referred to in the bonds. county treasurer. The provision of the Constitution of ColoOn the first day of December, 1882, for rado prescribing the extent to which counties the bonds of the county with coupons at may become indebted, and to which the bonds tached as above specified, the defendant referred, is as follows: board made an exchange with the parties “No county shall contract any debt by loan then holding county warrants, which before in any form, except for the purpose of crect. that time, in accordance with the statutes ing necessary public buildings, making or in such case made and provided, had been repairing public roads and bridges; and issued to them in settlement of claims pre- such indebtedness contracted in any one year [268]sented by them against the county. *In every shall not exceed the rates upon taxable prop case when warrants were presented they erty in such county, following, to wit: Coun. were exchanged for the bonds of the county ties in which the assessed valuation of taxaat par for their face and interest. In each ble property shall exceed five millions of dolcase the blanks were filled out with the name lars, one dollar and fifty cents on each thousof the party receiving the bonds or exchanging and dollars thereof. Counties in which such the warrants, and the blank for the place of valuation shall be less than five nillions of payment filled in as the banking house of dollars, three dollars on each thousand dolthe Chase National Bank in the city of New lars thereof. And the aggregate amount of York. Thereupon the bonds were signed by indebtedness of any county for all purposes, the chairman of the board of county commis- exclusive of debts contracted before the adopsioners, countersigned by the county treas- tion of the Constitution, shall not at any time urer, and attested by the county clerk with exceed twice the amount above herein limthe seal of the county, and the coupons at-ired, unless when, in manner provided by tached were also filled out, stating the place law, the question of incurring debt shall, at of payment to be in the city of New York, at a general election, be submitted to such of the banking house of the Chase National the qualified electors of such county as in Bank, and stating also the number of the the year last preceding such election shall funding bond and the series to which it was have paid a tax upon property assessed to attached. them in such county, and a majority of The issue of bonds as above set forth was those voting thereon shall vote in favor of authorized by a vote of the qualified electors incurring the debt; but the bonds, if any to be exchanged for warrants, and the be issued therefor, shall not run less than amount thereof was spread upon the records ten years, and the aggregate amount of debt of the county as provided for hy the act of so contracted shall not at any time exceed February 21st, 1881, entitled "An Act to En- twice the rate upon the valuation last herein able the Several Counties of the State to mentioned; provided that this section shall Fund Their Floating Indebtedness.” In all not apply to counties having a valuation of other respects the terms and conditions of less than one million of dollars." Laws of the act were fully complied with. The bonds Col. 1877, p. 62. were duly registered in the office of the au- *The act of February 21st, 1881, referred[ 260) ditor of the state. to in the bonds in question, contains among In every case where bonds were issued and other provisions the following: delivered to the payee or to any person for "$1. It shall be the duty of the county him, the parties received them in exchange commissioners of any county having a float. for warrants, the amount of the bonds being indebtedness exceeding ten thousan i dol. ing the same as the amount of the warrants lars, upon the petition of fifty of the electors and interest thereon that haul theretofore of said counties (county) who shall have paid been issued by the county. taxes upon property assessed to them in said From the 1st day of December, 1882, and county in the preceding year, to publish for up until the 1st day of March, 1886, the the period of thirty days in a newspaper pubcounty paid the interest on the bonds semi: lished within said county, a notice request annually in accordance with their terms and ing the holders of the warrants of such coun. of the coupons attached to them. ty tu submit in writing to the board of counThe defendant board made default in the ty commissioners, within thirty days from payment of interest due on the first day of the date of the first publication of such no tice, a statement of the amount of the war. | the aforementioned notice, and the amount treasurer of such county shall make out and Immediately following is this entry: "Wed. [261]cause to be delivered to the judges *of elec-nesday, May 20th, at 10 o'clock, the further tion in each election precinct in the county, trial of this cause was continued as follows." 9 eral election duly held in the county on the 7th day of November, 1882. Do such recitals estop the county from asserting against a bona fide holder for value that the bonds so issued created an indebtedness in excess of the limit prescribed by the Constitution of Colorado? An answer to this question can be found in former decisions of this court. It is necessary to advert to those decisions, particularly those in which the court considered the effect of recitals importing compliance with constitutional provisions. In Buchanan v. Litchfield, 102 U. S. 278, 290, 292 [26: 138, 140, 141], which was a suit on interest coupons of municipal bonds, the defense was made that the bonds were issued in violation of that clause of the Constitution of the state providing that "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." This court said: "As, therefore, neither the Constitution nor the statute prescribed any rule or test by which persons contracting with municipal corporations should ascertain the extent of their 'existing indebtedness,' it would seem that if the bonds in question had contained recitals which, upon any fair construction, amounted to a representation upon the part of the constituted authorities of the city that the requirements of the Constitution were met,—that is, that the city's indebtedness, increased by the amount of the bonds in question, was within the constitutional limit, then the city, under the decisions of this court, might have been estopped from disputing the truth of such representations as against a bona fide holder of its bonds. The case might then, perhaps, have been brought within the rule announced by his court in Town of Coloma v. Eaves, 92 U. S. 484 [23: 579], in which case we said, and now repeat, that 'where legislative authority has been given to a municipality, or to [264]its officers, to subscribe for the stock of a railroad company, and to issue municipal bonds in payment, but only on some precedent condition, such as a popular vote favor ing the subscription, and where it may be gathered from the legislative enactment that the officers of the municipality were invested with power to decide whether the condition precedent has been complied with, their recital that it has been, made on the bonds issued by them and held by a bona fide purchaser, is conclusive of the fact and binding upon the municipality; for the recital is itself a decision of the fact by the appointed tribunal.' So, in the more recent case of Orleans v. Platt, 99 U. S. 676 [25: 404] it was said that 'where the bonds on their face recite the circumstances which bring them within the power the corporation is estopped to deny the truth of the recital.'" Again: "A recital that the bonds were issued under the authority of the statute and in pursu ance of the city ordinance did not necessarily import a compliance with the Constitution. Had the bonds made the additional recital that they were issued in accordance with the Constitution, or had the ordinance stated in any form that the proposed indebtedness was within the constitutional limit, or had the statute restricted the exercise of the authori ty therein conferred to those municipal corporations whose indebtedness did not at the time exceed the constitutional limit, there would have been ground for holding that the city could not, as against the plaintiff, dispute the fair inference to be drawn from such recital or statement as to the extent of its existing indebtedness." In Northern Bank v. Porter Township, 110 U. S. 608, 616, 619 [28: 258, 261, 262], which was an action on municipal bonds, and involved a question respecting the conclusiveness, as between the municipality and a bona fide holder for value, of recitals in the bonds that they had been issued in conformity to law, the court referred to the above rule established in Town of Coloma v. Eaves, and said: "We are of opinion that the rule as thus stated does not support the position which counsel for plaintiff in error take in the present case. The adjudged cases, examined in the light of their special circumstances, show that the facts which a municipal corporation issuing bonds in aid of the construction of a railroad was not permitted, against a bona fide holder, to[265] question in face of a recital in the bonds of their existence, were those connected with or growing out of the discharge of the ordinary duties of such of its officers as were invested with authority to execute them, and which the statute conferring the power made it their duty to ascertain and determine before the bonds were issued; not merely for themselves. as the ground of their own action, but, equally, as authentic and final evidence of their existence, for the information and action of all others dealing with them in reference to it. .. The question of legisla tive authority in a municipal corporation to issue bonds in aid of a railroad company cannot be concluded by mere recitals; but, the power existing, the municipality may be estopped by recitals to prove irregularities in the exercise of that power; or, when the law prescribes conditions upon the exercise of the power granted, and commits to the officers of such municipality the determination of the question whether those conditions have been performed, the corporation will also be estopped by recitals which import such performance." A leading case on this subject is Dixon County v. Field, 111 U. S. 83, 92-94 [28: 360, 363, 364], which involved the validity of bonds issued in the name of Dixon county, Nebraska, the Constitution of which state prescribed conditions upon which donations could be made to a railroad or other work of internal improvement by cities, towns, precincts, municipalities, or other subdivisions of the state, and imposed limitations upon the amount thereof and upon the mode of creating municipality debts of that kind. The principal question was as to the conclu siveness of certain recitals in the bonds sued | sue bonds upon a condition are not the apon in that case. This court said: “The es- pointed tribunals to decide the fact which toppel does not arise, except upon matters of constitutes the condition, their recital will fact which the corporate officers had autaor: not be accepted as a substitute for proof. In ity by law to determine and to certify. It other words, where the validity of the bonds is not necessary, it is true, that the recital depends upon an estoppel claimed to arise should enumerate each particular fact essen. upon the recitals of the instrument, the tial to the existence of the obligation. A question being as to the existence of power general statement that the bonds have been to issue them, it is necessary to establish issued in conformity with the law will suf. that the officers executing the bonds had law. fice, so as to embrace every fact which the ful authority to make the recitals and to officers making the statement are authorized make them conclusive. The very ground of to determine and certify. A determination the estoppel is that the recitals are the offi. and statement as to the whole series, where cial statements of those to whom the law re (266)more than one is *involved, is a determina- fers the public for authentic and final infor tion and certificate as to each essential par- mation on the subject.” No one held by a bona fide purchaser, is conclusive fer that board, for the elements of its com(267)* of the fact, and binding upon the municipal. putation, to the Constitution or to the stan ity; for the recital is itself a decision of the dards prescribed by the Constitution, but case recitals of the bonds were merely to the ef- of each series, and the total amount in all, fect that the issue was ‘under and by vir. estop the county from pleading the constitutue of and in full compliance with the stat- tional limitation? In our opinion these two ute; that all the provisions and require features are of vital importance in distin. ments of said act have been fully complied guishing this from Lake County with by the proper officers in the issuing of v. Graham and Dixon County v. Field, this bond;' and that the issuing was au- and are sufficient to operate as an thorized by a vote of a majority of the duly toppel against the county. Of course the qualified electors,' etc.; no express reference purchaser of bonds in open market was being made to the Constitution, nor any bound to take notice of the constitutional[ 270) statement made that the constitutional re- limitation on the county with respect to in. quirements had been observed. There is, debtedness which might incur. But when, therefore, no estoppel as to the constitution upon the face of the bonds, there was any al question, because there is no recital in re express recital that the limitation had not gard to it. Curroll County v. Smith, 111 U. been passed, and the bonds themselves did S. 556" [28: 517). In disposing of the con- not show that it had, he was bound to look tention that, under the doctrines of certain no further. An examination of any par. adjudged cases, the county was estopped to ticular bond would not disclose, as it would deny that the bonds were issued in conform in the Lake County Case and in Dizon Counity to the Constitution, the court said: "The ty v. Field, that, as a matter of fact, the conquestion here is distinguishable from that in stitutional limitation had been exceeded in the cases relied on by counsel for defendant the issue of the series of bonds. The purin error. In this case the standard of va. chaser might even know, indeed it may be lidity is created by the Constitution. In that admitted that he would be required to know, standard two factors are to be considered; the assessed valuation of the taxable propone, the amount of assessed value, and the erty of the county, and yet he could not asother the ratio between that assessed value certain by reference to one of the bonds and and the debt proposed. These being exac- the assessment roll whether the county had [269]tions of the Constitution itself, "it is not exceeded its power, under the Constitution, within the power of a legislature to dispense in the premises. True, if a purchaser had with them, either directly or indirectly, by seen the whole issue of each series of bonds the creation of a ministerial commission and then compared it with he assessinent whose finding shall be taken in lieu of the roll, he might have been able to disi-over facts. In the case of Sherman County v. whether the issue exceeded the amount of in. Simons, 109 U. S. 735 [27: 1093), and oth- debtedness limited by the Constitution. But ers like it, the question was one of estoppel that is not the test to apply to a transaction as against an exaction imposed by the legis- of this nature. It is not supposed that any lature; and the holding was that the legis- one person would purchase all of the bonds lature, being the source of exaction, had at one time, as that is not the usual course created a board authorized to determine of business of this kind. The test is, What whether its action had been complied with, does each individual bond disclosc? If the and that its finding was conclusive to a bona face of one of the bonds had disclosed that, fide purchaser. So also in Oregon v. Jen- as a matter of fact, the recital in it, with re nings, 119 U. 8. 74 (30: 323), the condition spect to the constitutional limitation, was violated was not one imposed by the Consti- false, of course the county would not be tution, but one fixed by the subscription-con- bound by that recital, and would not be estract of the people.” topped from pleading the invalidity of the This brings us in our reference to the au- bonds in this particular. Such was the case thorities to the important case of Chaffee in Lake County v. Graham and Diron CounCounty v. Potter, 142 U. S. 355, 363, 364, ty v. Field. But that is not this case. 366 [35: 1040, 1043, 1044]. That was an Here, by virtue of the statute under which action upon coupons of bonds issued by the bonds were issued, the county commis. Chaffee county, Colorado, under the act of sioners were to determine the amount to be February 21st, 1881, under which the bonds issued, which was not to exceed the total here in suit were issued. The bonds and amount of the indebtedness at the date of the coupons were in the same form and contained first publication of the notice requesting the the same recitals as the above bonds issued holders of county warrants to exchange their by Gunnison county, and were of like date. warrants for bonds, at par. The statute, in The defense in part in the Chaffee county case terms, gave to the commissioners the deterwas that the bonds, and each of them, were mination of a fact, that is, whether the is. issued in violation of the Constitution of the sue of bonds was in accordance with the Constate. After referring to the decision in stitution of the state and the statute under Lake County v. Graham (the bonds in which which they *were issued, and required them(271) did not contain any express recitals as to to spread a certificate of that determination the constitutional limit of indebtedness), and upon the records of the county. The recital stating that it was based largely on the rul- in the bond to the effect that such determiing in Dixon County v. Field, this court nation has been made, and that the constisaid: “To the views expressed in that case tutional limitation had not been acceedrd in we still adhere; and the only question for us the issue of the bonds, taken in connertion now to consider, therefore, is: Do the ad. with the fact that the bonds themselves did ditional recitals in these bonds, above set not show such recital to be untrue, under out, and in the absence from their face of the law, estops the county from saying that anything showing the total number issued it is untrue. Town of Coloma v. Eaves, 92 |
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