Reynolds v. Lyon County

(after stating the facts). Tlie first five counts in plaintiffs petition are based upon interest coupons which were issued by the defendant county in connection with bonds numbering 27 to 31, both inclusive, bearing date June 1, 1880, and payable io Chase & Taylor, or order, the coupons being in form payable to bearer. On behalf of the county it is contended that the court cannot take jurisdiction of these coupons, because the bonds from which they have been detached are payable to the order of Citase & Taylor, who are citizens of Iowa, it being urged in argument that this court ought not to hear and determine, in a suit upon the coupons, the question of the validity of the bonds, which, being payable to citizens of Iowa, or order, could not now be brought within the jurisdiction of this court. The jurisdiction of thin court over an action based upon the bonds will be determined by the citizenship of Chase & Taylor when the action is brought, and this court cannot know whether they will continue to reside in Iowa or not. It may be that they may remove to another state, and thus jurisdiction in this court would exist over a suit to enforce payment of the bonds. But, aside from these considerations, even if it were true that this court might never be able to take jurisdiction of an action on the bonds, that fact does not defeat the jurisdiction over the suit to enforce payment of the coupons. The evidence shows that the coupons were detached from the bonds, and were purchased, for value, by the plaintiff; and they are as much separate claims against the county as though they had never been attached to the bonds with which they were originally issued. In order to maintain an action on (lie coupons, it is not necessary that the plaintiff should also be the owner of the bonds, and, being the owner of the coupons, he has the right to bring suit thereon in the federal court, because the coupons are payable to bearer, are executed by a corporation, and are owned by a citizen of a state other than Iowa.

The only other defense interposed to the coupons declared on in the first five counts of the petition is that based on the statute of limitation, and, under the ruling of the supreme court in Amy v. City of Dubuque, 98 U. S. 470, it must be held that the 10-years limitation provided for in the Code of Iowa as a bar to actions based upon written contracts is applicable to this case, and therefore no recovery can be had upon any of the coupons which matured more than 10 years before February 25, 1899, the date when the summons in this case was placed in the marshal’s hands for service. In other words, the coupons maturing June 1 and December 1, 1887, and June 1 and December 1,1888, are barred by the statute, and plaintiff is only entitled to recover on the coupons maturing June 1 and December 1, 1889, and June 1, 1890, which, with interest up to November 1, 1899, amount to the sum of 8411.01.

*158The remaining four counts of the petition are based upon four bonds and coupons thereto attached bearing date March 1,1885; one bond — No. 28 — being for the sum of $100, and the other three — Nos. 32, 33, and 34 — being for the sum of $500 each, and payable March 1, 1895. The evidence shows that these bonds were issued for the purpose of refunding outstanding warrants of the county, and were, in fact, exchanged for warrants held by the firm of Miller & Thompson. It is contended on behalf of the defendant that, as Miller & Thompson are citizens of Iowa, this court cannot entertain jurisdiction, in that the plaintiff is an assignee of the bonds holding under assignors who could not bring suit in this court. The bonds are not made payable to Miller & Thompson, but to -, or order, and therefore, as was held by this court in Keene Five-Cent Sav. Bank v. Lyon Co. (C. C.) 90 Fed. 523, the bonds are, in effect, payable to bearer, and therefore come within the exception to the statute which confers jurisdiction over corporate obligations payable to bearer.

It is further pleaded as a defense that these bonds, when issued, were invalid and void, because the indebtedness of the county then exceeded the 5 per cent, limitation imposed by the constitution of Iowa upon the debt-creating power of the county. The evidence shows, as already stated, that these bonds were issued in exchange for outstanding warrants of the county, but the evidence does not show that the warrants were invalid; and, unless they were nonenforceable, the bonds exchanged therefor would be valid, and binding upon the county. The total issue of bonds of date of March 1, 1885, of which the four bonds in question formed part, amounted to the sum of $3,100, and these bonds are not, therefore, part of a series which in itself exceeded in amount the limitation of 5 per cent, upon the taxable property of the county; and under these circumstances the burden is upon the defendant to prove that the warrants for which the bonds were exchanged were themselves invalid and nonenforceable, because, if they were valid, the merging thereof into bonds of like amount would not increase the indebtedness of the county. The evidence adduced on behalf of the defendant county does not show that the debts evidenced by the warrants which were exchanged for the bonds sued on were invalid or nonenforceable, and hence the facts necessary to sustain this defense have not been proven. Furthermore, the evidence shows that the total valuation of ■the taxable property of the county at the date of the issuance of the bonds was $1,580,735, as shown by the last preceding state and county tax lists, and the county could incur an indebtedness to the amount of $79,036.75 without exceeding the constitutional limit. If the Shade bonds are excluded from computation in ascertaining the amount of the county indebtedness at the date of the issuance of the bonds in suit, the amount thereof was the sum of $70,666, and therefore the county had full authority to issue the bonds sued on without thereby reaching the limit of its debt-creating power.

In the several cases before this court based upon the bonds issued by the defendant county it has always been held that the issue of July 1. 1879, known as the “Shade Bonds,” were invalid and nonenforceable, because the issue in itself was for an amount much beyond the constitutional limit, and therefore these bonds must be excluded *159in computing the actual indebtedness of the county; and this view has been sustained by the court of appeals for this circuit in the case of Lyon Co. v. Ashuelot Nat. Bank, 30 C. C. A. 582, 87 Fed. 137. Under these circumstances the county had full authority to issue the bonds sued on without infringing on the constitutional restriction, and therefore, in any view that can be taken of the facts, it must be held that the defense relied on by the county has not been sustained by the evidence adduced, and the plaintiff is entitled to judgment on the bonds sued on and upon all the coupons save those which matured 10 years or more before this suit was brought, which the record shows was February 21, 1899; the total amount being the sum of |3,589.0o, for which sum and costs judgment will be entered in favor of plaintiff.