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BUCHANAN V. LITCHFIELD, 102 U. S. 278 (1880)
U.S. Supreme Court
Buchanan v. Litchfield, 102 U.S. 278 (1880)
Buchanan v. Litchfield
102 U.S. 278
1. The twelfth section of the ninth article of the Constitution of Illinois, adopted in 1870, declares 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 percentum 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."
Under a statute of that state approved April 15, 1873, authorizing cities to construct waterworks, and for that purpose to appropriate and borrow money, and levy and collect a general tax in the same manner as other municipal taxes may be levied and collected, the City of Litchfield, by her ordinance, authorized and directed the issue of city bonds not exceeding a certain amount to be used for borrowing money for the erection, construction, and maintenance of waterworks for the use of the people of that city. Bonds in the form and amount prescribed were accordingly issued, bearing date Jan. 1, 1874. Each recites that it
"is issued under authority of an Act of the General Assembly of the State of Illinois, entitled 'An Act authorizing cities, incorporated towns, and villages to construct and maintain waterworks,' approved April 15, 1873, and in pursuance of an ordinance of the said City of Litchfield, No. 184, and entitled 'An Ordinance to provide for the issuing of bonds for the construction of the Litchfield waterworks,' approved Dec. 4, 1873."
The said twelfth section is not referred to in the statute or the ordinance, nor does the latter make mention of the city's indebtedness, although at the time of the issue of the bonds it exceeded the constitutional limit. A bona fide bolder of them brought suit upon the unpaid coupons thereto attached. Held that he was not entitled to recover.
2. Inasmuch as neither the constitution nor the statute prescribes any mode by which a party dealing with the city can ascertain the amount of her indebtedness, quaere if the bonds had contained recitals which could be justly interpreted as amounting to a representation by her constituted authorities that her indebtedness, increased by the amount of the bonds, did not exceed the constitutional limit, would she, as against a bona fide holder of them, be estopped from disputing the truth of such representations.
3. The present case distinguished from others wherein it was held that certain recitals in the bonds of a municipal corporation were conclusive as to their validity and its liability to pay them.
4. In determining whether the constitutional limit of the indebtedness of the city had been exceeded by the issue of the bonds, the court permitted -- there having been no separate assessment of the property within the city for the preceding year made or required by law -- the introduction of the assessments for state and county taxes embracing all taxable property within the county and townships of which the city formed a part, from which, in connection with a map, the location and taxable value of all the property within the limits of the city for that year could be readily ascertained. Held that the evidence, being the best which the law afforded, was properly admitted.
5. Quaere, is the city legally bound to refund to the proper parties the money which her authorized agents or officers received and paid into her treasury as the proceeds of the sale of the bonds.
This was an action of assumpsit, brought Nov. 25, 1876, by Alexander Buchanan against the City of Litchfield, Illinois, to recover the amount of certain coupons of which it was admitted that he was the bona fide holder for value. The declaration, besides a count upon the coupons themselves, contains the usual counts for money lent and advanced and for money had and received. The city defended the action upon the ground that the bonds were issued in violation of the Constitution of the state, and that they were consequently void. The court which, by the stipulation of the parties, tried the issue found for the defendant, and the plaintiff sued out this writ.
The Legislature of Illinois passed, April 15, 1873, an act entitled "An Act authorizing cities, incorporated towns, and villages to construct and maintain waterworks," by the first section of which act it is provided that all cities, incorporated towns, and villages in the state be, and are hereby, authorized and shall have power to provide for a supply of water for the purpose of fire protection and for the use of the inhabitants of such cities, incorporated towns, and villages, by the erection, construction, and maintaining of a system of waterworks.
The second section provides that such cities, incorporated towns, and villages may borrow money and levy and collect a general tax in the same manner as other municipal taxes may be levied and collected, for the erection, construction, and maintaining
of such waterworks, and appropriate money for the same.
The city council, the legislative authority of the city, adopted, Dec. 4, 1873, an ordinance in the words following:
"An Ordinance to provide for the issuing of Bonds for the Construction"
"of the Litchfield Waterworks"
"Be it ordained by the City Council of the City of Litchfield:"
"SEC. 1. That in accordance with the power conferred by section second of an Act of the General Assembly of the State of Illinois entitled 'An Act authorizing cities, incorporated towns and villages to construct and maintain waterworks,' approved April 15, 1873, the mayor and city clerk are hereby authorized and instructed to issue not exceeding fifty thousand dollars in Litchfield water bonds, which bonds shall be used for borrowing money for the erection, constructing, and maintaining of waterworks for the use of the people of said City of Litchfield."
"SEC. 2. That the said Litchfield water bonds shall be of the denomination of five hundred dollars each, shall be dated Jan. 1, 1874, and shall become due twenty years after said date, but may be redeemed at par at any time after the year 1878, notice being given at the Nassau Bank, in the City of New York, six months in advance of the intention so to redeem, and said bonds shall bear interest at the rate of ten percentum per annum, payable semiannually at the said Nassau Bank in the City of New York."
As required by the charter, the mayor of the city approved this ordinance, and after its adoption he and the city clerk made one hundred bonds of the denomination of $500 each, as follows, differing in the numbering from 1 to 100, inclusive.
"No. ___] LITCHFIELD WATER BOND [$500.00"
"CITY OF LITCHFIELD, STATE OF ILLS."
"The City of Litchfield, in the State of Illinois, for value received, promises to pay to Geo. Wm. Ballou or bearer five hundred dollars, in current money of the United states, at the Nassau Bank in the City of New York, twenty years after date, with interest thereon from the date hereof at the rate of ten percentum per annum, which interest shall be payable semiannually in current money of the United states on presentation at said bank of the coupons hereto annexed, provided that the said City of Litchfield shall
have the right to pay off and redeem this bond at its par value at any time after the year A.D. 1878, first giving said bank six months' notice in writing of the intention to so redeem."
"This bond is issued under authority of an Act of the General Assembly of the State of Illinois, entitled 'An Act authorizing cities, incorporated towns, and villages to construct and maintain waterworks,' approved April 15, 1873, and in pursuance of an ordinance of the said City of Litchfield numbered 184, and entitled 'An Ordinance to provide for the issuing of bonds for the construction of the Litchfield waterworks,' approved Dec. 4, 1873."
"In testimony whereof, the mayor of said city has hereunto set his hand and caused the corporate seal to be affixed, and the clerk of said city to countersign the same this first day of January A.D. 1874."
"W. S. PALMER, Mayor"
"B. S. HOOD, City Clerk"
Coupons for the semiannual interest were attached to the bonds, and the whole number, amounting to $50,000, were sold by the city for the purposes for which they were authorized. The plaintiff's coupons were due July 1, 1876.
The defendant then proved against the objection of the plaintiff, who insisted that such evidence was not admissible against him as the bona fide holder of the coupons, that the City of Litchfield is incorporated under a special law which defines its boundaries; that there was no assessment made of the taxable property within said city for the year 1873, separately, but that the city is within the limits of two municipal townships organized under the township organization laws of the state, one called North Litchfield and the other South Litchfield, each six miles square, and that the taxable property in the city was assessed for state and county taxes in the township in which it was situated and to which it belonged; that the property of the city as assessed for state and county taxes for the year 1873 was $1,400,000, which valuation was ascertained by the following method:
The assessors of North and South Litchfield returned to the clerk of the county court the lists and value of the property assessed for taxation for the year 1873 in said townships respectively, which lists contained a description of all the lands, lots, and other real estate in said township, with the proper
valuation opposite each tract or lot. With these lists and the plat of the city before him, the clerk was able to ascertain the description and value of all the real estate in the city, and by footing the value of the several lands and lots found within the city limits the aggregate value of all the real estate of the city was ascertained for the year 1873.
By another special law, the City of Litchfield is made one school district, called the Litchfield School District. And it is a part of the legal duty of the township to note opposite the name of each owner of personal property assessed for taxation the school district in which he resides. That the assessors of North and South Litchfield for the year 1873 noted opposite the names of the owners of personal property in their township residing within the city limits that they resided in Litchfield School District, and the assessed value of the personal property of the City of Litchfield was ascertained by computing the value of all the personal property assessed for taxation in the school district.
That railroad property and the property of corporations were assessed by the State Board of Equalization, and the whole value of these species of property lying in Montgomery County (in which the City of Litchfield is situated) was certified by the auditor to the county clerk, and the proportion taxable in Litchfield was ascertained by the clerk.
That the assessment thus made by the town assessors of the towns of North and South Litchfield was the only assessment made, or authorized by law to be made, of the property situated in the City of Litchfield for state and county taxes for the year 1873, and which assessment for the purposes aforesaid was the last assessment for state and county taxes previous to the issuing and making of said bonds. That by compiling the assessments thus made the exact amount of the value of taxable property in said City of Litchfield for the year 1873, as assessed for state and county taxes, should be and is ascertained to be the said sum of $1,400,000.
It was proved that the debt of the City of Litchfield on and before the first day of January, 1874, exclusive of the water bonds, was $70,000.
Sect. 12 of art. 9, in force in 1870, of the constitution of the
state, is in these words:
"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 percentum 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."
Upon the trial the following questions arose:
First, whether said twelfth section of the ninth article of the Constitution of the State of Illinois, by its own force and terms, without appropriate legislation, limited or affected the otherwise lawful power of the City of Litchfield to issue the bonds and coupons and sell the same to raise money for the construction of waterworks according to the provisions of the Act of April 15, 1873, and the Ordinance of the City of Litchfield No. 184, in relation thereto, so as to render said bonds and coupons void as being in excess of five percent including existing indebtedness on the value of taxable property in said city as ascertained by the last assessment for state and county taxes preceding the issue of such bonds.
Second, whether the facts offered in evidence for the purpose of showing the value of taxable property in the City of Litchfield for the year 1873 are competent and sufficient to establish the value of taxable property therein, to be ascertained by the last assessment thereof, for state and county taxes previous to the issue of such bonds.
Third, whether the said facts tending to prove that the said bonds, including the indebtedness of said city, exceed five percent on the value of the taxable property of said city at the time they were issued, as ascertained in manner before stated, are admissible or competent as evidence in this case to impair the rights of the plaintiff as the bona fide holder of the coupons sued on.
And the opinion of the said judges being opposed upon the questions, the latter were duly certified to this Court.
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