Sutliff v. Lake County Commissioners, 147 U.S. 230 (1893)
U.S. Supreme CourtSutliff v. Lake County Commissioners, 147 U.S. 230 (1893)
Sutliff v. Lake County Commissioners
Submitted December 12, 1892
Decided January 9, 1893
147 U.S. 230
Where the constitution and a statute of a state forbid any county to issue bonds to such an amount as will make its aggregate indebtedness exceed a certain proportion of the assessed valuation of taxable property in the county, and the statute requires the county commissioners to publish, and to enter on the public records of the county, semi-annual statements showing the whole amount of the county debt, a purchaser for valve and before maturity of a bond issued in excess of the constitutional and statutory limit is charged with the duty of examining the record of indebtedness, and the county is not estopped, by a recital in the bond that all the provisions of the statute have been complied with, to prove by the record of the assessment and the indebtedness that the bonds were issued in violation of the Constitution.
This was an action brought in the Circuit Court of the United States for the District of Colorado by a citizen of
Connecticut against the County of Lake, a municipal corporation of Colorado, upon coupons for interest of six bonds for $500 each, part of a series of ten bonds issued by the county on July 1, 1881, payable to bearer in twenty years, and redeemable at the pleasure of the county after ten years, and containing this recital:
"This bond is one of a series of five thousand dollars which the board of county commissioners of said county have issued for the purpose of constructing roads and bridges 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 government, and repealing laws on these subjects,' approved March 24, 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."
One defense was that the bonds were illegal and void because they increased the indebtedness of the county to an amount in excess of the limit prescribed by article 11, sect. 6, of the Constitution of Colorado, which is copied in the margin. [Footnote 1]
On March 24, 1877, the Legislature of Colorado passed an act entitled "An act concerning counties, county officers, and county government, and repealing laws on these subjects,"
Gen.Laws 1877, p. 218, the material provisions of which are also copied in the margin. [Footnote 2]
The circuit court gave judgment for the defendant, 47 F. 106, and the plaintiff took the case by writ of error to the Circuit Court of Appeals for the Eighth Circuit, before which the following facts were made to appear: at and before the issue and sale of said bonds, the county was in fact indebted to an amount greater than that permitted by the limitation contained in the constitution
Upon the case as above stated, the circuit court of appeals certified to this Court the following questions and propositions of law:
"1. In view of the provisions of the Act of the Legislature of Colorado approved March 24, 1877, providing for the making of a public record, of the indebtedness and financial condition of the several counties in said state, was the said John Sutliff, plaintiff herein, when about to purchase the bonds sued on, and issued under the provisions of said Act of March 24, 1877, charged with the duty of examining the record of indebtedness provided for in said act, in order to ascertain whether the bonds he proposed to purchase were lawfully issued, or whether the
issuance thereof did not increase the indebtedness of the county beyond the constitutional limit?"
"2. Do the recitals found in said bonds estop the County of Lake, as against a purchaser thereof, for value, before maturity, from proving as a defense thereto that, when said series of bonds were issued, the indebtedness of the county already equaled or exceeded the amount of indebtedness which the county could legally incur, under the provisions of the constitutional limitation already cited?"