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by the law as it was judicially construed at the court or governing body thereof; (4) the tiine of issuance of the bond.
o trustee of Obion county; (5) the board of 9. Counties en 184–Bonds issued by county of directors of Obion River drainage district
Tennessee for benefit of drainage district not No. 2 of Obion county; (6) several indiobligations of county,
viduals sued as the delinquent taxpayers Bonds issued by a county of Tennessee un
as the owners of lands within the drainage der Tennessee Drainage Act (Laws 1909, C. 185 (Shannon's Code Tenn. 88 3871a7- aistrict mentioned. 3871a170]), for the benefit of a drainage dis- The bill contains the necessary allegatrict named therein, and which recite that they tions to show jurisdiction in this court and are issued pursuant to said act and are payable alleges in brief that there was created in solely out of the proceeds of the special assessment for benefits levied on the lands in said
Obion county, Tenn., a drainage district district, are not general obligations of the under the style of Obion River drainage county, nor did the officials executing the same district No. 2 in the year 1913; that bonds have any power to make them such by recitals were issued by Obion county, Tenn.. to the therein or otherwise, and a purchaser of the bonds is chargeable with notice of the provi
total amount as stated of $62,229, which sions of the statute and that the assessments went into the hands of plaintiff as a bona made for their payment are by its terms liens fide holder for value; that at the time of only on the lands against which they are levied. the filing of the bill the bonds maturing 10. Counties en 223_Evidence that county in the years 1921 and 1922, with interest
records do not show election authorizing is- coupons attached, amounted to the sum suance of bonds, and that they were issued sued for. It is further alleged that the asunder special statute for benefit of drainage
ainage sessments on the lands within said draindistrict, held competent. In a suit to hold a county liable on bonds is
a age district for the years 1919, 1920, sued by it, testimony of a county official is com- and 1921 were delinquent in the total sum petent that the records of the county do not of $12,856.56, upon which it is claimed show that an election was held authorizing the plaintiff has a lien for the payment of the issuance of the bonds, which under the statute amount sued for: that said drainage district was essential to make them obligations of the county, as also evidence that they were issued
was regularly established under the laws of by officers of the county under a special statute Tennessee, embraced within its bounds 4,030 for the benefit of a drainage district.
acres; that the bonds were issued by Obion
county by its proper officials; and that the In Equity. Suit by the First National duty rests upon #
ational duty rests upon the designated authorities Bank of Columbus, Ohio, against Obion of Obion county to collect the assessments County, Tenn., and others. . Decree for de- against said lands and apply the same to fendant County, and for complainant the liquidation of the bonds issued for the against the other defendants.
construction of said drainage district. G. W. L. Smith, of Brewton, Ala., and By the prayer of the bill it is sought to Anderson, Rothrock & Carroll, of Jackson, have a decree against all the defendants, to Tenn., for plaintiff.
have the amount of the decree declared & Pierce & Fry, W. M. Miles, and H. H. lien upon the lands within said drainage disLannom, all of Union City, Tenn., and trict and certain funds in the hands of the Taylor & Adams, of Trenton, Tenn., for trustee collected as the amounts paid in by defendants.
the owners of lands within the district, to
have the amount held by the trustee apROSS, District Judge. The plaintiff plied on the judgment, and to have a debrought this bill in equity to recover on cer- cree against Obion county for the amount tain bonds called the bonds of Obion River of the bonds issued with interest thereon drainage district No. 2, issued by certain of- and attorney's fees. A decree is further ficials of Obion county, Tenn. The amount sought against each individual landowner sought to be recovered is the sum of $11,- for his pro rata share of the bonds with 643.74 with interest. The total issue of interest thereon and attorneys' fees and the such bonds held by plaintiff is the sum of costs of this proceeding, and against all $62,229 covering a period of time from purchasers of any of said lands, their heirs 1913 to 1932.
or assigns, for any and all other assessments Plaintiff is a duly organized national bank which have been made, and for general reof Columbus, Ohio, and the particular de- lief. fendants sued are: (1) Obion county, Answers were filed by Obion county, the Tenn.; (2) the county court of said county, county officials, and certain of the individvested with power to create and govern said uals sued as such. In so far as it is necesdrainage district; (3) the county judge of sary to here state, issues were presented Obion county, as chairman of the county denying any liability on the part of the
8 F.(20) 623 county or the individual county officials and to have applied thereon the funds collected certain of the individuals sued. The crea- from assessments against the lands within tion and construction of the district is ad- the drainage district and now in the hands mitted, and it is further admitted that the of the trustee. In so far as judgments are district lies wholly within Obion county. sought against the individual owners of The jurisdiction of this court is denied as lands, plaintiff's right is limited to a judgto the right of the plaintiff to sue the in- ment to the extent only of the assessments dividuals made defendants to the bill, and against the lands of that individual within certain of the other defendants; but it is the drainage district, and such judgment admitted that certain of the assessments can be enforced against no other property claimed by plaintiff are delinquent and the of the individual than such land. That is to bonds sued on are unpaid. However, the say, the individual landowner is liable only individuals answering as well as the officials to the extent of the value of the land within deny the right of any individual recovery the district, as it is specifically provided as to them respectively.
by statute that no other or further liability The matter is presented upon the plead- exists. Acts of Legislature of Tennessee ings and exhibits thereto and a stipulation of 1909, c. 185, 88 24, 33, 34. of counsel filed in the case, wherein it is I t seems to be conceded that the drainagreed in substance that the matters to be age district is a failure; that the canal considered shall be the pleadings of the which was dug for the purpose of drainrespective parties, the bonds sued on, the ing the lands embraced within the disaffidavit of G. W. L. Smith, counsel for trict is inadequate and has failed to ac plaintiff, the letter of the trustee of Obion complish the objects sought. It appears. county showing that he has in his hands that many of the owners of land within the $2,595.20, collected as assessments against district have abandoned their lands rather the lands, which sum should be paid to than pay the taxes or assessments imposed plaintiff, a list of the delinquent taxpayers thereon, and that others agree that the lands in said district, the drainage laws of Ten- may be sold for such assessments.' It apnessee, and the agreement as to what would pears further from the statements of counbe the testimony of Geo. R. Kenney, former sel that several of the various tracts are decounty judge of Obion county, and F. J. linquent in the matter of state and county Smith, the attorney acting in the creation taxes, and that the lands embraced within and organization of said drainage district the district are not worth the amount of with the exceptions of plaintiff to this tes- the bonds issued. Therefore the principal timony. There is further presented the contention in this case, and really that updraft of an order proposed for entry in on which plaintiff most earnestly insists, is. the case agreed to in part by counsel rep- as to whether there exists a right to a judgresenting plaintiff and counsel for Obion ment against Obion county. In other words, county. While this proposed decree is bind- are the bonds sued on the obligation of ing upon no one, it may be considered as Obion county, Tenn., or is the plaintiff limthe respective admissions of the parties ited to the lands embraced within the drainagreeing thereto to the extent of such agree age district as security or as the property ments. The respective contentions of the out of which collection must be enforced ? parties have been ably presented by oral Whether or not the county of Obion is liaarguments made and briefs filed in the case. ble depends upon whether the county 'had
 The question of the jurisdiction of authority to issue such bonds. Plaintiff this court may be disposed of without com- insists that at the time the bonds were isment, for it is clear that plaintiff had a right sued ample authority existed under the statto come into this court to determine the utes of Tennessee to warrant the county in question of its right to recover on the bonds placing these bonds upon the market as the in the first instance, and inasmuch as the obligations of Obion county for the paycourt has jurisdiction for that purpose, all ment of which the entire resources of the matters incident to the proceedings and nec- county stood pledged. The contention of essary to a determination of the rights of the county is that it had authority to issue the parties or to secure such rights follow bonds as it did through its proper officers, as a matter of law, as has been often de but that for the payment of such bonds cided.
plaintiff must look to the lands embraced The right of plaintiff to a judgment on within the drainage district, for the con-. the bonds in question against Obion River struction of which they were issued. drainage district No. 2 is unquestioned and [2-5] The right of a county in Tennessee in fact conceded, as is the right of plaintiff to issue negotiable interest-bearing bonds or
warrants must be found within the Consti- L. Ed. 631; Marcy v. Oswego, 92 U. S. 637, tution and statutes of the state. In the ab- 23 L. Ed. 748; Daviess County v. Huidekopsence of such authority, no right whatsoever er, 98 U. S. 98, 25 L. Ed. 112; Orleans v. exists whereby a county can bind itself by Platt, 99 U. S. 676, 25 L. Ed. 404; Anthony time certificates, bonds, or warrants, nor V. Jasper County, 101 U. S. 693, 25 L. Ed. has the county court or any county author- 1005; Buchanan v. Litchfield, 102 U. S. ity, in the absence of a statute expressly 287, 291, 26 L. Ed. 138; Wells v. Pontotoc
sue negotiable bonds of the county for any ham v. Needles, 103 U. S. 648, 651, 26 L purpose whatsoever. This has been often Ed. 451; School Dist. v. Stone, 106 U. S. determined and has been the settled law 183, 1 S. Ct. 84, 27 L. Ed. 90; Bank v. of Tennessee almost from the time of the Porter, 110 U. S. 608, 616, 4 S. Ct. 254, adoption of the Constitution of the state in 28 L. Ed. 258; Dixon County v. Field, 111 1870. Colburn v. Railroad, 94 Tenn. 43, U. S. 83, 4 S. Ct. 315, 28 L. EL. 360; Gren49, 50, 28 S. W. 298; Burnett v. Maloney, ada County v. Brogden, 112 U. S. 267, 5 S. 97 Tenn. 715, 37 S. W. 689, 34 L. R. A. Ct. 125, 28 L. Ed. 704; Merchants’ Bank 541; Richardson v. Marshall County, 100 v. Bergen County, 115 U. S. 392, 6 S. Ct. 88, Tenn. 349, 45 S. W. 440; Weil v. Newbern, 29 L. Ed. 430. 126 Tenn. 263, 148 S. W. 680, Ann. Cas. It is equally well established that, as 1913E, 25. And the power to issue bonds above stated, where no authority exists for and incur extraordinary debts can spring the issuance of such an obligation, no recitafrom no other source than the Constitution tion in the bond or subsequent act of the and laws of the state, and in Tennessee such county or municipality can bind the county powers are strictly construed. Pulaski v. or municipality, even though the bonds may Gilmore, 3 Shan. Cas. 115; Milan v. Rail- go into the hands of a bona fide holder. road, 79 Tenn. (11 Lea) 334; Johnson City It was said in Anthony v. County of Jasv. Railroad, 100 Tenn. 138, 44 S. W. 670; per, 101 U. S. at page 697: Burnett v. Maloney, supra; Richardson v. “Dealers in municipal bonds are charged Marshall County, supra. Nor has a county with notice of the laws of the state granta right to vary the bonds authorized by the ing power to make the bonds they find on statute. Burnett v. Maloney, supra. And the market. This we have always held. If bonds issued by a county where no legisla- the power exists in the municipality, the tive authority for their issuance exists are bona fide holder is protected against mere void and nonenforceable regardless of their irregularities in the manner of its execurecitations. Richardson v. Marshall Coun- tion, but if there is a want of power, no ty, supra. Nor does any authority exist in legal liability can be created." a county by any act on its part to ratify If any other authority be needed on this a void action. Wallace v. Tipton County, point, the cases above cited are ample, but 3 Shan. Cas. 542; Marsh v. Fulton County, in addition there are Katzenberger v. Aber77 U. S. 673, 683, 684, 19 L. Ed. 1040; deen, 121 U. S. 172, 7 S. Ct. 947, 30 L. Ed. Daviess County v. Dickinson, 117 U. S. 657, 911; German Savings Bank V. Franklin 6 S. Ct. 897, 29 L. Ed. 1026; Norton v. County, 128 U. S. 526, 9 S. Ct. 159, 32 L. Shelby County, 118 U. S. 425, 453, 454, 6 S. Ed. 519; Lake County V. Graham, 130 Ct. 1121, 30 L. Ed. 178; Railway & Naviga- U. S. 674, 9 S. Ct. 654, 32 L. Ed. 1065; tion Co. v. Hooper, 160 U. S. 514, 524, 16 Doon v. Cummins, 142 U. S. 366, 12 S. Ct. 379, 40 L. Ed. 515; Scott Co. v. S. Ct. 220, 35 L. Ed. 1044; Barnett v. Thresher Co. (C. C. A.) 288 F. 739, 749. Dennison, 145 U. S. 135, 14 S. Ct. 1142,
 It seems clear and well settled that 38 L. Ed. 1075; Knox County v. Bank, 147 if any authority exists for the issuance of a U. S. 91, 13 S. Ct. 267, 37 L. Ed. 93; Sutbond on the part of a county or municipal- liff v. Lake County, 147 U. S. 230, 238. 13 ity and a bond is in fact issued which by its S. Ct. 318, 37 L. Ed. 145; Hedges v. Dixon recitations purports to have been issued by County, 150 U. S. 182, 187, 14 S. Ct. 71, virtue of such authority, such county or 37 L. Ed. 1044; Citizens' Saving & Loan municipality is bound by the recitations in Association v. Perry County, 156 U. S. 692, the bond and estopped to deny its liability 709, 710, 15 S. Ct. 547, 39 L. Ed. 585. thereon as against a bona fide holder for  It is the law that, in the administravalue. Mercer County v. Hackett, 68 U. S. tion of state laws in cases between citizens 83, 17 L. Ed. 548; Kenicott v. Wayne Coun- of different states, the courts of the United ty, 83 U. S. 452, 466, 21 L. Ed. 319; Colo. States have an independent jurisdiction coma v. Eaves, 92 U. S. 484, 23 L. Ed. 579; ordinate with that of the state courts and Moultre County v. Bank, 92 U. S. 631, 23 are bound to exercise their own judgment 3 F.(20) 623 as to the meaning and effect of those laws; A long list of authorities is cited in a but such is not the rule where by the course note on pages 34 and 35. of the decisions of state courts certain rules The Constitution and statutes of Tennesare established which become either rules of see in similar matters have been construed property or rules of action, nor is such the by our state courts, and by such decisions rule in courts of the United States as to the it is held that municipalities have no imsettled construction of Constitutions and plied power to issue negotiable bonds merestatutes by the state courts.
ly because they may have power in certain In Burgess v. Seligman, 107 U. S. at page ways to subscribe for stock. Milan v. Rail33,2 S. Ct. 21 (27 L. Ed. 359), it is said: road, 79 Tenn. (11 Lea) 329; Pulaski v.
"The federal courts have an independent Gilmore, supra; Norton v. Dyersburg, 127 jurisdiction in the administration of state U. S. 160, 174, 175, 8 S. Ct. 1111, 32 L. Ed. laws, co-ordinate with, and not subordinate 85; Kelley v. Milan, 127 U. S. 149, 155, 8 to, that of the state courts, and are bound S. Ct. 1101, 32 L. Ed. 77; Clark v. R. R., to exercise their own judgment as to the 123 Tenn. 245, 130 S. W. 751; Hotel Co. meaning and effect of those laws. The ex- v. Dyer, 125 Tenn. 306, 142 S. W. 1117; istence of two co-ordinate jurisdictions in Weil V. Newbern, 126 Tenn. 263, 148 the same territory is peculiar, and the re- S. W. 680, Ann. Cas. 1913E, 25. And sults would be anomalous and inconvenient county bonds issued by county officers but for the exercise of mutual respect and without authority of the county court are deference.
not binding on the county, nor is the coun"Since the ordinary administration of the ty estopped by receipt of the coupons atlaw is carried on by the state courts, it nec- tached to such bonds for taxes. Barnard essarily happens that by the course of their v. Hawkins County, 2 Shan. Cas. 97; Cardecisions certain rules are established which riger v. Morriston, 69 Tenn. (1 Lea) 257; become rules of property and action in the Weil v. Newbern, supra. Furthermore, mustate, and have all the effect of law, and nicipal bonds not expressly authorized which it would be wrong to disturb. This by statute are void. Pulaski v. Gilmore, is especially true with regard to the law supra; Richardson v. Marshall County, suof real estate and the construction of state pra; Weil v. Newbern, supra. constitutions and statutes. Such established  It is further held that the power to rules are always regarded by the federal make contracts generally does not confer courts, no less than by the state courts them- power to sign municipal interest-bearing selves, as authoritative declarations of what bonds, and that they must be expressly emthe law is. But where the law has not been powered so to do. Moreover, in Pulaski v. thus settled, it is the right and duty of the Gilmore and Richardson v. Marshall Counfederal courts to exercise their own judg- ty, supra, it is held that where a municipalment; as they also always do in reference ity had no authority to issue bonds in questo the doctrines of commercial law and gen- tion, such want of authority might be intereral jurisprudence. So when contracts and posed as a defense against such bonds, altransactions have been entered into, and though the same might be held and sought rights have accrued thereon under a partic- to be enforced by innocent purchasers for ular state of the decisions, or when there value. Also it is settled that the validity has been no decision, of the state tribunals, of a connty bond must be determined by the the federal courts properly claim the right law as it was indicially construed at the to adopt their own interpretation of the date of the issuance of such bond. Richlaw applicable to the case, although a dif
ardson v. Marshall County, supra; Shaefferent interpretation may be adopted by the
fer v. Mitchell, 109 Tenn. 211; State ex state courts after such rights have accrued.
rel. v. Bristol, 109 Tenn. 315, 70 S. W. 1031; But even in such cases, for the sake of har
Douglass v. Pike County, 101 U. S. 677, mony and to avoid confusion, the federal
686, 687, 25 L. Ed. 968; Ralls County v. courts will lean towards an agreement of views with the state courts if the question
Douglass, 105 U. S. 728, 732, 26 L. Ed. seems to them balanced with doubt. Acting
957; Taylor v. Ypsilanti, 105 U. S. 72, 73, on these principles, founded as they are on 26 L. Ed. 1008; La. . Pilsbury, 105 U. S. comity and good sense, the courts of the 278, 26 L. Ed. 1090; Thompson v. Perrine, United States, without sacrificing their own 106 U. S. 589, 591, 1 S. Ct. 564, 568, 27 L. dignity as independent tribunals, endeavor Ed. 298; Green County v. Conners, 109 U. to avoid, and in most cases do avoid, any S. 104, 3 S. Ct. 69, 27 L. Ed. 872; Anderson unseemly conflict with the well-considered v. Santa Anna, 116 U. S. 356, 361, 6 S. Ct. decisions of the state courts . . ." 413, 29 L. Ed. 633; German Savings Bank
V. Franklin County, 128 U. S. 526, 9 S. of such a ditch by the individual landownCt. 159, 32 L. Ed. 519.
er, which damages are to be paid by him, With these principles established it re- and they provide for making their findmains to determine if there existed under ings the order of the court, and have certhe laws of Tennessee any authority what tain conditions which must be complied with soever to warrant the issuance of the bonds as to the location of the ditch. Under this in question. If such authority existed, it act no authority whatever exists for the inwas under and by virtue of article 2, § 29, suance of any bonds from any source. The of the Constitution of Tennessee and cer- next act is that of 1871, c. 131, embraced tain statutes. The constitutional provision within sections 3855–3871, inclusive, of the is:
above compilation, and relates solely to the "The General Assembly shall have power construction of levees to prevent the overto authorize the several counties and in- flowing of lands by headwater or in times corporated towns in this state, to impose of high water. This statute provides how taxes for county and corporate purposes such levees may be constructed, and the first respectively, in such manner as shall be pre- section thereof contains this provision: scribed by law; and all property shall be “The county courts of the several countaxed according to its value, upon the prin- ties in this state within the limits of which ciples established in regard to state taxa- are lands rendered unfit for occupation and tion.
farming purposes by reason of the over"But the credit of no county, city or town flowing of the same in times of high water shall be given or loaned to or in aid of any in the rivers adjacent thereto, may issue person, company, association or corpora- bonds for the purpose of constructing levees tion, except upon an election to be first held to protect the same.” by the qualified voters of such county, city H owever, before this could be done it was or town, and the assent of three-fourths necessary that an election be held and that of the votes cast at said election. Nor shall the right to issue such bonds should be sancany county, city or town become a stock- tioned by three-fourths of the votes cast holder with others in any company, asso- at such election. When such proceedings ciation or corporation except upon a like were bad, the county was authorized to issue election, and the assent of a like majority bonds to defray the expenses of the work
of construction. While the Acts of 1901, (The portion of the section omitted re- c. 65, as embraced within sections 3871allates to certain counties excepted for a lim- 3871a6, would seem to be more properly an ited time from the provisions quoted.) amendment of the act last referred to, in
The statute laws of Tennessee pertaining that this latter act simply provides a means to drainage matters and kindred subjects whereby the counties issuing levee bonds may be found in Shannon's Compilation of may retain the state's increment of taxes the Statutes of Tennessee, sections 3849 to to apply on the same. The fact that such 3871a170, inclusive, being the Acts of the latter act makes use of the words that for Legislature of Tennessee of 1841-42, 6. 71, the purpose of constructing or aiding in of 1871, c. 131, of 1901, c. 65, and of 1909, the construction of a levee or "levees or C. 185, with the amendments thereto.
drainage to reclaim and improve the low, Plaintiff seems to recognize the principle wet, and overflowed lands” within said that if no authority existed for the issuance county could not be construed to warrant of the bonds in question the county is not the issuance of bonds for the construction liable thereon, and insists that such author- of a drainage district unless authority to ity is to be found in the statutes to which construct such district existed. Certainly reference is above made.
this latter act could not, by the mere use The Acts of 1841-42, c. 71, relates alone of the word "drainage,” in the way in which to the draining of swamp lands belonging it appears in the act, give authority to esto an individual when surrounded by the tablish drainage districts and issue bonds lands of others who refuse to permit such or certificates in payment therefor. It was individual to cut drains through their landsmanifestly not the intention of the Act of where such drains are necessary to reclaim 1901 to do other than provide for an apthe lands of the individual in the first in- portionment of the funds as stated above. stance. These provisions as embraced in Nor could it hardly be said that the authorsections 3849–3854, inclusive, of Shannon's ity to construct a levee would warrant the Code 1917, confer among other things, au- digging of a canal or ditch or the straightenthority to have a jury of view appointed to ing of a stream with a view of draining assess the damages incident to the cutting certain areas. Different riparian rights are