Opinion of the Court.

in any manner or for any purpose," said: "It shall not become indebted. Shall not incur any pecuniary liability. It shall not do this in any manner. Neither by bonds, nor notes, nor by express or implied promises. Nor shall it be done for any purpose. No matter how urgent, how useful, how unanimous the wish. There stands the existing indebtedness to a given amount in relation to the sources of payment as an impassable obstacle to the creation of any further debt, in any manner, or for any purpose whatever. If this prohibition is worth anything, it is as effectual against the implied as the express promise, and is as binding in a court of chancery as a court of law." Litchfield v. Ballou, 114 U. S. 190, 192, 193.

In Dixon County v. Field, 111 U. S. 83, there was brought in question the effect of the constitution of Nebraska of 1875, art. 12, sec. 2, prohibiting any county or other subdivision of the State from ever making donations to any railroad, without a vote of the qualified electors thereof at an election held by authority of law, and providing that its donations "in the aggregate shall not exceed ten per cent of the assessed valuation of county," (with a proviso immaterial to that case,) and that "no bonds or other evidences of indebtedness so issued shall be valid unless the same shall have indorsed thereon a certificate signed by the secretary and auditor of the State, showing that the same is issued pursuant to law." Bonds issued by a county beyond ten per cent of its assessed valuation were held to be void, even in the hands of a bona fide holder, although each bond, after stating the whole amount issued, stated that they were issued pursuant to an order of the county commissioners, and authorized by an election held on a certain day, and under and by virtue of certain statutes, and the constitution of the State; and bore a certificate of the secretary and auditor that "it was issued pursuant to law." In delivering the opinion of the court, Mr. Justice Matthews said: "We regard the entire section as a prohibition upon the municipal bodies enumerated, in the matter of creating and increasing the public debts, by express and positive limitations upon the legislative power itself." 111 U. S. 89. "No recital involving the amount of the assessed taxable valuation of the

Opinion of the Court.

property to be taxed for the payment of the bonds can take the place of the assessment itself, for it is the amount, as fixed by reference to that record, that is made by the constitution the standard for measuring the limit of the municipal power." 111 U. S. 95.

The constitution of Colorado of 1876, art. 11, sec. 6, provides that the indebtedness contracted in any one year, by any county having a valuation of not less than one million of dollars, shall not exceed a certain per cent on its assessed valuation, and that "the aggregate amount of indebtedness of any county, for all purposes, exclusive of debts contracted before the adoption of this constitution, shall not at any time exceed twice the amount above herein limited." This court held, in Lake County v. Rollins, 130 U. S. 662, that this provision. limited the power of the county to contract debts for any purpose whatever; and in Lake County v. Graham, 130 U. S. 674, that the county was not estopped, as against a bona fide holder for value, to show that the constitution had been violated by issuing bonds which recited the whole amount issued, and that they were issued "under and by virtue of and in full compliance with" a certain statute, and that "all the provisions and requirements of said act have been fully complied with by the proper officers in the issuing of this bond." In the latter case, Mr. Justice Lamar, delivering judgment, said: "In this case the constitution charges each purchaser with knowledge of the fact that, as to all counties whose assessed valuation equals one million of dollars, there is a maximum limit, beyond which those counties can incur no further indebtedness under any possible conditions, provided that, in calculating that limit, debts contracted before the adoption of the constitution are not to be counted." 130 U. S. 680. And again: "In this case the standard of validity is created by the constitution. In that standard two factors are to be considered; one the amount of assessed value, and the other the ratio between that assessed value and the debt proposed. These being exactions of the constitution itself, it is not within the power of a legislature to dispense with them, either directly, or indirectly, by the creation of a ministerial commission whose

Opinion of the Court.

finding shall be taken in lieu of the facts. In the case of Sherman County v. Simons, 109 U. S. 735, and others like it, the question was one of estoppel as against an exaction imposed by the legislature; and the holding was that the legis lature, being the source of exaction, had created a board authorized to determine whether its exaction had been complied with, and that its finding was conclusive to a bona fide purchaser." 130 U. S. 683, 684.

It is hardly necessary to add that the payment of some instalments of interest cannot have the effect of ratifying bonds issued beyond the constitutional limit; for a ratification can have no greater effect than a previous authority; and debts which neither the district nor its officers had any power to authorize or create cannot be ratified or validated by either of them, by the payment of interest, or otherwise. Marsh v. Fulton County, 10 Wall. 676; Loan Association v. Topeka, 20 Wall. 655; Daviess County v. Dickinson, 117 U. S. 657; Norton v. Shelby County, 118 U. S. 425, 451.

In the Supreme Court of Iowa, it is settled law that the constitutional restriction includes not only municipal bonds, but all forms of indebtedness, except warrants for money actually in the treasury, and perhaps contracts for ordinary expenses within the limits of the current revenues. Scott v. Davenport, 34 Iowa, 208; McPherson v. Foster, 43 Iowa, 48; Mosher v. Ackley District, 44 Iowa, 122; Council Bluffs v. Stewart, 51 Iowa, 385; Kane v. Rock Rapids District, 47 Northwestern Reporter, 1076. And a school district has been adjudged to be a political or municipal corporation within the meaning of the constitution. Winspear v. Holman District, 37 Iowa, 542; Mosher v. Ackley District and Kane v. Rock Rapids District, above cited.

In Scott v. Davenport, it was held that after the constitutional limit had been reached, by debts contracted either before or after the constitution took effect, no new debts could be contracted, even for the purpose of erecting public works from which it was expected that the city would derive a revenue. In McPherson v. Foster, it was held that bonds issued in excess of the constitutional limit were void, even in the hands

Opinion of the Court.

of a bona fide purchaser for value, and could not be ratified by the municipality, by payment of interest or otherwise. In Mosher v. Ackley District, it was again held that such bonds were void against a bona fide holder, and that a statute giving a lien on a schoolhouse for materials for which such bonds had been given was unconstitutional. In Council Bluffs v. Stewart, it was held that uncollected taxes and the levy for the current year could not be deducted from the outstanding debt for the purpose of ascertaining the real indebtedness, and that the contrary view "confounds the distinction between an indebtedness and insolvency." 51 Iowa, 396.

The Iowa cases cited by the defendant in error fail to support his position. In Austin v. Colony District, 51 Iowa, 102, the limit in question was not fixed by the constitution, but by a vote of the district. In Sioux City v. Weare, 59 Iowa, 95, the bond held valid was issued and received in payment and satisfaction of a judgment for a tort, and that judgment was not shown to have been in excess of the constitutional restriction. There the bond took the place of the judgment, and therefore, as observed by the court, did not increase the city's indebtedness.

The case of Sioux City & St. Paul Railway v. Osceola County, 45 Iowa, 168, arose under the statute of Iowa of 1872, c. 174, which provided that a judgment creditor of a municipal corporation, in lieu of an execution against its property, might demand and receive the amount of his judg ment and costs in bonds of the corporation; and the decision was that a bond given by a county under that statute, in payment of a judgment recovered upon a warrant of the corporation, could not be defeated in the hands of a bona fide holder by evidence that the warrant was issued in excess of the constitutional restriction, and that the supervisors of the county fraudulently omitted to interpose the defence in the action upon the warrant. That decision went upon the ground that, there having been no defence by the supervisors nor interposition by the taxpayers in the action on the warrant, the purchaser of the bond had the right to presume that there was no defect in the judgment. 45 Iowa, 175, 176. In a subsequent

Opinion of the Court.

case between the same parties, the county, having given bonds partly in exchange for county warrants and partly in exchange for judgments upon such warrants, all the warrants having been issued in excess of the constitutional limit, and all the bonds having passed out of the hands of their original holders, was restrained by injunction from paying the bonds exchanged for warrants on which no judgment had been recovered, and was permitted to pay those bonds only given in exchange for judgments. Appeal was taken from the latter part of the decree only, and the judgment of the Supreme Court of the State, following its former decision between the parties, was confined, in express terms, as well as in legal effect, to "the validity of negotiable bonds of a county, issued in satisfaction of a judgment, in the hands of innocent holders for value." 52 Iowa, 26, 28. The rule there acted on is restricted to such a case in the opinion in Miller v. Nelson, 64 Iowa, 458, 461, and by the adjudication of the same court in a very recent case not yet published in the official reports. Kane v. Rock Rapids District, 47 Northwestern Reporter, 1076.

In the case at bar, the new debts did not arise on warrants for money actually in the treasury of the district, or on contracts for ordinary expenses payable out of its current revenues; and none of the bonds in question were given in payment and satisfaction of judgments. Nor did the plaintiff buy the bonds for value, in good faith, and without notice of any defect, from one to whom they had been issued by the district. He was himself the person to whom they were originally issued by the district, and knew, when he took the first ten bonds, that the district, in issuing them, exceeded the constitutional limit, as appearing by public records of which he was bound to take notice, and that it intended still further to exceed that limit. Under such circumstances he had no right to rely on the recitals in the bonds, even if these could otherwise have any effect as against the plain provision of the constitution of the State. By the uniform course of the decisions of the Supreme Court of Iowa, therefore, as well as of this court, he cannot maintain this action.

Judgment reversed, and case remanded to the Circuit Court with directions to enter judgment for the defendant.