U.S. Supreme Court
Sherman County v. Simons, 109 U.S. 735 (1884)
Sherman County v. Simons
Submitted December 10, 1883
Decided January 7, 1884
109 U.S. 735
1. A bona fide holder for value before maturity of a bond issued by a county is not bound to go behind the recitals in the bond to inquire whether the amount of the indebtedness of the corporation exceeds that authorized by law.
2. When a statute directs an officer to examine and determine the amount of the indebtedness of a county for the purpose of further determining the amount of bonds to be issued by the county for a given purpose, and the officer performs the duty, the county cannot, in a suit by a holder of a bond issued as a result of the exercise of the power by the officer, set up that the finding was not true.
3. When the Legislature of Nebraska authorized a county which was indebted to issue bonds for the amount of the indebtedness, that act was no infringement of the provision in the state constitution then in force that, "the legislature shall pass no special act conferring corporate powers." The case of Commissioners of Jefferson County v. People, 5 Neb. 127, followed.
4. The issuing of bonds under such authority was no violation of the provision in the present Constitution of Nebraska that the legislature shall not pass any local or special laws
"granting to any corporation, association or individual any exclusive privileges, immunities, or franchise whatever. In all other cases where a general law can be made applicable, no special law shall be enacted."
A county is not a corporation within the meaning of this clause. Woods v. Colfax County, 10 Neb. 552, followed.
The Court made the following statement of the case on which its opinion is founded.
This was a suit brought on the coupons of certain bonds issued by the Commissioners of Sherman County, in the State of Nebraska, dated January 1, 1876, under an Act of the legislature of that state approved February 18, 1875, entitled
"An act to authorize the Commissioners of the counties of Colfax, Platte, Boone, Ante, Howard, Greeley, and Sherman to issue bonds for the purpose of funding the warrants and orders of said counties."
The act referred to authorizes the commissioners of each of chanroblesvirtualawlibrarychanroblesvirtualawlibrary
the counties named to issue bonds of the county, and to sell and negotiate the same for money, and declares that the proceeds arising therefrom should be used for the redemption of all warrants and other evidences of indebtedness drawn on the treasurer of the county, which were outstanding at the date of the approval of the act, or might be outstanding prior to the first day of January, 1875. The act contained the following provisos:
"Provided, that no more of the bonds authorized to be issued by virtue of this act shall be issued than is necessary to pay off and redeem such warrants so outstanding, and provided further that the said commissioners shall not issue of said bonds to exceed in value the amount of said indebtedness up to January 1, 1875, nor shall said bonds be negotiated at a less price than eighty-five cents on the dollar."
The bonds recited on their face that they were issued by authority of said act.
The answer averred that bonds were issued under said act by the Commissioners of said County of Sherman to the amount of $45,000 and that on January 1, 1875, the debts of said county did not exceed the sum of $16,000, and that the said bonds were negotiated for less than 85 cents on the dollar. On this answer, the plaintiff below took issue. The parties waived a trial by jury and submitted the cause to the court, which made findings from which the following facts appear:
On January 1, 1876, the Commissioners of Sherman County, in pursuance of the Act of February 18, 1875, issued, among others, the bonds and coupons described in the petition, and the same came into the possession of the plaintiff, who was a bona fide purchaser for value, without notice of defects other than appear on the face of the bonds, and was still the holder and owner of said bonds and coupons.
The record of the Commissioners of Sherman County showed the allowance of $15,000 in claims against the county from the organization of the county to January 1, 1875, for which warrants were drawn on the treasury, and no more, but they also showed that the commissioners at one of their meetings estimated the amount of the county indebtedness which might chanroblesvirtualawlibrarychanroblesvirtualawlibrary
be funded at the sum of $36,874.95, for which it would be necessary to issue bonds to the amount of $43,400, and that bonds were issued pursuant to such estimate, but it was not shown what the actual indebtedness of the county was at the time the bonds were issued. Upon this finding, the circuit court rendered judgment in favor of the plaintiff below for $5,671.60. To reverse that judgment, this writ of error is prosecuted.