(after stating the facts as above). The first question presented for consideral ion in the briefs of counsel is that of the jurisdiction of the court:, it being claimed on behalf of the defendant ¡hat the plaintiff bank was not the original holder of the bonds sued on; that the action is therefore in the name of an assignee, and that the court cannot take jurisdiction, unless that right would exist if the action was in the mime of the assignors, from whom the plaintiffs derived title to the bonds sued on; and that, as the evidence shows that the bonds were originally issued to citizens of Iowa, it follows that this court is without jurisdiction. The bonds are made by a corporation, and if they were, in legal effect, payable to bearer when they became the property of the plaintiff, then they come within *530the exception contained in the first section of the act of congress approved August 13, 1888 (25 Stat. 434), which excepts, out of the clause preventing jurisdiction from attaching in favor of an assignee when it would not exist in favor of the assignor, cases based upon foreign bills of exchange, or upon corporate obligations payable to bearer. Counsel for the defendant county place some stress upon the use of the words “made payable to bearer,” which are found in some of the cases cited by them, and found thereon the argument that, to come within the exception of the statute, the bond or other corporate obligation must, in terms, or on its face, be made payable to bearer; but the statute does not use the word “made,” upon which reliance is placed in the argument of counsel. The language of the statute is, “if such instrument be payable to bearer”; and therefore the question is whether a bond issued in blank (that is, without the name of a payee being inserted), and which in that form is sold, and passes from hand to hand, is or is not, in legal effect, an instrument payable to bearer. If it is, then it comes within the exception, and the question of jurisdiction is not affected by the citizenship of the parties by whom it may have been owned before becoming the property of the person in whose name the action is brought. It is well settled that if a note or bond is made payable to a named person or order, and is by him indorsed in blank, it becomes transferable by delivery, or is, in effect, an instrument payable to bearer. School Dist. v. Hall, 113 U. S. 135, 5 Sup. Ct. 371. The test is whether the plaintiff in the given case, in order to maintain the action, is compelled to rely upon an assignment or indorsement from another as proof of title to the chose in action, or whether such title and consequent right of action will be inferred from possession of the instrument, as the holder or bearer thereof. In White v. Railroad Co., 21 How. 575, it appeared that the railroad company, a Massachusetts corporation, had issued a number of bonds payable in blank, which were sold in the market, and passed from hand to hand, the original purchaser being a citizen of Massachusetts; but the same were finally bought by the plaintiff, White, who was a citizen of the state of New Hampshire, and who inserted his own name as payee, and then brought suit thereon in the United States circuit court in Massachusetts. That court held that, under the facts of the case, it did not have jurisdiction, but the supreme court reversed this ruling, stating in the opinion that:
“The ground upon which this ruling below is sought tó be maintained, is that these bonds were issued to citizens of Massachusetts, and as they could not be regarded as negotiable instruments, or, if negotiable, not payable to bearer, the plaintiff was disabled from suing in the federal court, within the prohibition of the eleventh section of the .judiciary act. Smith v. Clapp, 15 Pet. 125; Bank v. Wister, 2 Pet. 318; Bonnafee v. Williams, 3 How. 574; Sheldon v. Sill, 8 How. 441. in answer to this ground, we think it is quite clear, on looking into the agreed state of facts, in connection with the bonds and the mortgage given to secure their payment, that it was the intention of the company, by issuing the bonds in blank, to make them negotiable and payable to the holder, as bearer, and that the holder might fill up the blank with his own name, or make them payable to himself or bearer, or to order. * * * Assuming, then, that these bonds were intended to be made negotiable, we do not see the difficulty suggested in maintaining the suit in the federal court; for, until the plaintiff chose to fill up the blank, he is to be regarded as holding the bonds as bearer, and held them in this character till made payable to himself or order.”.
*531Under tlie doctrine thus announced hy the supreme court, it must he held that the bonds, which remain payable in blank, are in tact payable to bearer, and the plaintiff bank does not sue thereon as an assignee of another; and therefore jurisdiction exists in the case of all the bonds which remain payable in blank, or in which the blank has been filled by the insertion of the name of the plaintiff.
Coming to the merits of the cases, it appears that the only question involved is whether the bonds sued on, or any part thereof, are 'invalid because issued in contravention of section 3 of article 11 of the constitution of Iowa, which provides that:
“No county or other political or municipal corporation shall be allowed to become indebted in any manner or tor any purpose to an amount in the aggregate, exceeding five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax lists, previous to the incurring of such indebtedness.”
Under the facts of these cases, the question arises whether the value of the taxable property of the county, upon which the 5 per cent is to he calculated in determining the amount for which the county could create a valid indebtedness, should be held to include or exclude the exemption under what are known as the “Tree Culture Acts” of the legislature of (he state of Iowa. The law in force at the date when the bonds sued on were issued is found in section 1272 of McClain’s Code of Iowa for 1888, and reads as follows:
“Sec. 1272. Forest and Fruit Trees. For every acre of forest trees planted and cultivated for timber within the state, the trees thereon not being more than twelve feet apart and kept in a healthy condition, the sum of one hundred dollars shall be exempted from taxation upon tlie owner’s assessment for ten years after each acre is so planted; provided, that such exemption be applied only to the realty owned by the party claiming the exemption, not to exceed each one hundred and. sixty’acres of land, upon which the trees are grown, and in a growing condition. For every acre of fruit trees planted and suitably cultivated within the state, the trees thereon not being more than thirty-three feet apart and kept in a. healthy condition, the sum of iifty dollars shall be exempted from taxation upon the owner’s assessment, for five years after each acre is planted. Such exemption shall be made by the assessor at the time of the annual assessment, upon satisfactory proof that the party claiming the same has complied with this section; and the assessor shall return to the board of equalization the name of each person claiming exemption, the quantity of lands planted to timber or fruit trees, and tlie amount deducted from the valuation of liis property. Provided, that the amount so deducted shall not exceed one half of tlie valuation of the realty on which such exemption is claimed.”
In section 1271 it is declared that “ihe following classes of property are not to he taxed, and they may he omitted from the assessments herein required”; and liten follow eight classes of properly, none of which include the exemptions allowed for tree culture under the provisions of section 1272. From the provisions of these two sections, it is made clear that the realty upon which the trees are cultivated is not intended to he exempted from valuation and assessment, either in whole or in part. If that had been the intent of the legislature, the land would have been included within the classes of property enumerated in section 1271; and, furthermore, the exemption would have been of the land, or a certain proportion of it, instead of a given amount of money. Hection 1272 declares that the exemption shall be deducted from the *532assessment of the owner of the land, and shall not exceed one-half of the valuation of the realty on which the exemption is claimed. To meet the requirements of the section, it is incumbent on the assessor to place a valuation on (that is, to assess) all the land owned by the party claiming the exemption; then to ascertain and return the quantity of land planted in forest and fruit trees, with the deduction allowed therefor. As the section expressly provides that the deduction must not exceed one-half of the valuation of the realty on which the exemption is claimed, it is clear that the statute requires all the land to be valued by the assessor. Having thus ascertained the value of the land for the purposes of taxation, then the assessor is authorized to deduct from the total sum which would otherwise be entered against the landowner as the amount of his assessment the amount of the exemption allowed under the section in question. The evidence shows that, in maldng out the tax lists for the defendant county, it whs the custom to enter in one column the number of acres owned by each person, in the next column the value of the land, in the next the value of the personalty, in the next the amount of exemptions for trees, and in the next the value for taxation; being the difference left after deducting the amount of the exemption allowed from the total valuation of the realty and personalty. Thus, we have presented the question whether the amount of the constitutional limitation is to be determined by taking 5 per cent, of the total valuation of the property as it is shown on the tax list, or by taking 5 per cent, of the assessment returned against the property owners. The language of the constitution is “five per centum on the value of the taxable property within such county or corporation, to be ascertained by the last state and county tax lists.” If section 1272 exempted from taxation a named number of acres, out of a larger number devoted to tree culture, then the value of these would not be included in the taxable property of the county; but that is not the fact. The statute requires the assessor to place upon the tax list, and to value for taxing purposes, all the lands, regardless of the fact that a portion thereof may be devoted to tree culture. This being done, then, if the owner claims an exemption for tree culture, the assessor must ascertain the facts, and determine whether the property owner is entitled to a deduction. If the exemption is allowed, no part of the property is declared nonassessable, nor is the valuation placed thereon reduced in amount upon the tax list, but the total amount of the assessment against the owner for realty and personalty is reduced by the deduction of the exemption allowed. In effect, this is but the payment of a bounty to landowners, to encourage the culture and growth of trees. The constitutional provision requires the ascertainment of the value of the táxable property in the county, and not the amount of the assessments entered up against the property owners. All the land ifi the defendant county, including that devoted to tree culture, was liable to taxation during the years when the bonds sued on were issued, except such as was exempt under section 1271; and the assessors were bound, under "the law, to assess the valuation thereof, regardless of the question whether any portion was planted in trees or not; and this valuation was required to be, and was in fact, entered upon the tax lists as the assessable value of the land. Under these circumstances, it seems clear that *533it is this assessed value of the realty and personalty as shown upon the tax lists that must be resorted to in determining the value of the taxable property in the county as the basis for ascertaining the limit of lawful indebtedness incurráble by the county. Counsel have not cited any decision by the supreme court of Iowa upon the proper construction of this clause of the constitution; and, in the absence of a ruling of that court upon the question, I shall hold, as indicated, that the value of the taxable property in the county includes the valuation put on the realty and personalty in the tax lists, without deducting therefrom any amounts allowed to the property owners as exemption under the tree culture acts.
The next and perhaps the most material question arising in the cases is whether, in ascertaining the amount of indebtedness outstanding against the county at the several dates when the bonds sued on were issued, the series of bonds issued under date of July 1, 1873, to the amount of $100,000, and known as the “Shade Bonds,” are to be recognized as existing claims against the county; for, if they are to be included in the outstanding indebtedness of the county, then the limit had been exceeded before any of the bonds sued on were issued. The facts show that this issue was itself in excess of the constitutional limit, and therefore these bonds did not create a valid or enforceable indebtedness against the county; and in the case of Lyon Co. v. Ashuelot Nat. Bank, 30 C. C. A. 582, 87 Fed. 137, it was held by the circuit court of appeals for this circuit that the fact that in 1885 these bonds were retired by the proceeds of another series of bonds issued and sold by the county would not validate the Shade bonds as of any date prior to the date of their payment; and, under the ruling in this case, it is clear that the Shade bonds cannot be included as part of the indebtedness existing when the bonds sued on were issued, as they all bear date before May 1, 1885, and the Shade bonds were not taken up, as above stated, until after that time.
It is admitted by counsel for the defendant county that, if the Shade bonds are not to be computed as part of the existing indebtedness of the county, then no defense exists to the bonds issued June 1,1880, and September 6,1881; and therefore the next inquiry is as to the validity of the issue of June 13, 1882. At this date the total value of the property in Lyon county for the purposes of taxation was the sum of f 1,149,-773; being- the total valuation of the taxable property as shown by the tax lists for 1881, without deducting therefrom the exemptions allowed for tree culture. Upon this basis the limit of indebtedness would be the sum of $57,488.65, or, 'if the 5 per cent, be calculated' on the sum left after deducting the tree culture exemptions, the limit would be the sum of $48,912.95. On behalf of the defendant it'is claimed that there were outstanding on June 13, 3882, unpaid warrants to the amount of $15,225, which amount is not in dispute, and that in addition thereto there should be counted warrants to the amount of $3,244, which it is claimed the evidence shows were issued for claims that were in existence before June 13,1882, the date of the bonds now in issue, although the warrants bear dates subsequent to that time. Thus, the question arises whether unliquidated claims which have not been presented for allowance to the county board of supervisors can be included in the ex*534isting indebtedness of the county, in determining whether the debt limit had been reached on a given date. Must a person, when about to purchase an issue of county bonds., ascertain, at his peril, every possiblp claim which may thereafter be presented to the county board and be allowed? If so, no one can ever know whether he may safely purchase the bonds or not, for it is impossible for him to interrogate every person who might hold a claim; and, furthermore, if the person, although he had a claim, should deny it, the would-be purchaser could not rely on the denial, for that would not be binding upon the county, and, if he bought the bonds, the validity could be questioned by the county, upon the showing that the person inquired of in fact did have or hold a claim, which was subsequently allowed, of an amount sufficient to invalidate the bonds. If it be held that claims against a county which have never been filed in any county office, which have never been presented to the county board for allowance, of which no record can be found in any county office, can be subsequently relied upon to defeat the validity of bonds otherwise legal and binding, then it is'made impossible for a purchaser ever to ascertain whether the bonds offered him are valid or not. Such a construction of the law would practically defeat the purpose and intent of the statutes authorizing counties to issue negotiable bonds; for it would render their validity so uncertain that no purchasers could be found, except at figures so low as to work the financial ruin of the county. The rule to be followed is that enunciated by the supreme court in U. S. v. Kirby, 7 Wall. 482, wherein it is said:
“All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to injustice, oppression, or an absurd result. It will always be presumed that the legislature intended exceptions to its language which would avoid results of this character. The reason of the law in such cases should prevail over its letter.”
The Code of Iowa (section 3528) enacts that:
“No action shall be brought against any county on an unliquidated demand, until the same has been presented to such board and payment demanded and refused or neglected.”
The practice is to file the claims, duly, sworn to, with the county auditor, who is, ex officio, the clerk of the board of supervisors, and then the same come before the board for its action. By thus invoking the action of the county board, a claim is asserted against the county, and in such form that notice thereof can be taken by all interested. Until a claim is thus presented, it cannot be known whether the holder thereof will ever- present it or seek to assert it. Can it be fairly said, within the meaning of the constitution, that- a county is indebted on a claim which the holder thereof has never presented against the county, and which the county board has never acted upon and allowed, or refused to allow? Until presented for allowance to the county board, the claim is one upon which no action can be maintained in a court, and for which no payment can be made from the county funds. Is a purchaser of county bonds compelled, at his peril, to take notice of inchoate claims of this character, which may never ripen into enforceable debts, and of the amount of which he cannot possibly obtain accurate knowledge? To so hold would make it impossible for the county officers, or a proposed purchaser of county bonds, to determine the amount of the *535county indebtedness at any given date, and thus it would be made impossible to determine the amount of the indebtedness which could be lawfully created at any given time. To avoid this difficulty, and the injurious results flowing therefrom, it must be held that, so far as un-liquidated claims are concerned, they cannot be deemed to be debts, within the constitutional limitation, until the holder has taken steps to assert the claim against the county by presenting it for allowance, and lias thereby made it possible to ascertain from the county records the amount of the claim.asserted against the county. There may be cases which should be held to be exceptions to this rule, owing to the fact that the existence of the claim was a matter of public notoriety; but such ground of exception does not exist with respect to the claims now under consideration, and therefore it cannot be held that the un-liquidated claims not presented for allowance until after the issuance of (he bonds sued on should be taken into consideration in determining the amount of the county indebtedness at the date of the issuance of the bonds.
According to the claim of the defendant in the brief filed, the amount of the bonds outstanding on June 13,1882, was $133,400, which amount includes the Shade issue of $100,000, which, as already stated, cannot be included in the computa! ion; and thus the amount is reduced to $33,400. It is further admitted that, of this amount, the evidence shows tiiat $2,400 had been canceled before June 13, 1882; and thus the amount of bonds outstanding at that date is reduced to $31,000. Adding to this amount the warrants claimed to be outstanding at that date, and we have a total of $40,225 as the debt of the county on June 13, 1882, not including the $9,000 of bonds issued under that date, which being added would make the total $55,225, or an amount within the constitutional limit, if the 5 per cent, is to be calculated on the basis of the valuation of the taxable property of the county, without deducting the allowances made to the property owners under the tree culture acts.
The next issue of bonds was that of September 1, 1884, amounting to $3,100. The tax list for 1883 shows that the value of the taxable property in the county for that year was the sum of $1,561,471, or, excluding the allowances under the tree culture acts, the sum of $1,384,289. Upon the former basis the debt limit would be $78,073.55, and upon the latter, $69,214.45. According to the contention of defendant’s counsel, the number of bonds outstanding on September 1, 1884, exclusive of the Shade bonds, was $42,400, and of warrants, #25,-850, or a total of #68.250; hut from this total must be subtracted the amount of the bonds which had been paid and canceled before September 1, 1884, amounting to $4,300, which leaves a total of $63,-950, and adding thereto the bonds issued on that date would bring the final total up to $67,050, or a sum clearly within the limit, whether calculated on the basis of excluding or including the tree culture allowances in the valuation of the taxable property of the county, and without making allowance for the warrants which had been exchanged for bonds up to that date.
We thus reach the last issue of bonds, being those issued under date of March 1, 1885, none of which are held by the Keene Five-Cent Sav*536ings Bank. The valuation of the taxable property of the county upon the last preceding tax list was at that date the sum of $1,580,735, or, deducting the tree culture allowances, the sum would be $1,437,527; thus making the 5 per cent, debt limit either $79,036.75, or $71,776.35, according to the basis of valuation adopted. At this time there were outstanding bonds to the sum of $41,200, and warrants to the amount of $29,466, or a total of'$70,660. It thus appears that the outstanding debt of the county had not reached the restrictive limit of the constitution when the county authorities determined to issue the series of bonds of which those held by the plaintiff Faulkner form part. The bonds were authorized and issued for the purpose of funding then existing and outstanding indebtedness. The evidence shows that part thereof were directly exchanged for outstanding warrants, and part were sold for cash, and the money was used in paying up other parts of the warrants of the county. The evidence fafis to show that as a result of the issuance of this series of $3,100 of bonds, and the retirement of the county warrants caused thereby, the debt of the county was so enlarged as to reach or exceed the constitutional limit. As the legislature has conferred full authority upon the county to issue negotiable bonds for the purpose of funding the pre-existing warrant debt, every presumption is in favor of the validity of the bonds issued by the county; and to defeat bonds thus issued, and held by innocent purchasers for value, on the ground that the issuance thereof caused the debt of the county to exceed the constitutional limit, the necessary facts must be clearly proven, the burden thereof being upon the defendant. City of Huron v. Second Ward Sav. Bank, 30 C. C. A. 38, 86 Fed. 272.
The conclusion reached is that in each case the bonds sued on must be held to be valid, and the plaintiff' is entitled to judgment for the amount due upon the bonds and coupons sued on, except such coupons as had matured more than 10 years before these actions were brought; it having been decided by the supreme court in Amy v. Dubuque, 98 U. S. 470, that the statute of limitations is applicable to coupons, whether attached -to or detached from the bonds with which they were issued. . These suits were brought August 10, 1897, and therefore the statutory limitation of 10 years bars only the coupons that had matured before August 10, 1887, which includes coupons No. 14 of the bonds issued June 1, 1880, No. 10 of the issue of June 13, 1882, and No. 5 of the issue of September 1, 1884. Omitting these coupons, the amount due to the Keene Five-Gent Savings Bank, including the principal of the bonds, and interest thereon from the maturity of the bonds up to December 1, 1898, and the coupons, with interest from the maturity thereof to tire date named, is the sum of $33,275.20, for which amount judgment will be entered for plaintiff in that case. Upon the same basis, the total amount due to Eliza J. Faulkner is the sum of $5,504.92, for which sum judgment will be entered in her favor in the second case.