Lincoln County v. Luning

Supreme Court of the United States · 1890 · Federal Courts

Federal CourtsEleventh Amendmentcounty liabilitymunicipal corporationfederal jurisdictiondiversity jurisdictionexclusive state forumstatute of limitations

Facts

Lincoln County issued bonds under a Nevada funding act, and the holder sued on the bonds and coupons after the county failed to pay. The county argued that, as part of the State, it could not be sued in federal court under the Eleventh Amendment, and also argued that the bond statute made a state court the exclusive forum. Some coupons would have been barred under Nevada's general statute of limitations, but after the county defaulted on interest, a 1877 amendatory act allowed overdue coupons to be registered and paid in order from funds later coming into the treasury. The coupons at issue were presented, payment was refused for lack of funds, they were registered, and no applicable money entered the treasury before suit was filed.

Issue

Whether a federal circuit court had jurisdiction over a suit against a Nevada county on its bonds and coupons despite the Eleventh Amendment and a state statute specifying a state forum, and whether the county could defeat the action by invoking presentment requirements or the statute of limitations. Also at issue was whether the bond statute was invalid under the state constitution.

Rule

The Eleventh Amendment withdraws federal jurisdiction only as to suits against a State, including cases where the State is the real party defendant; a county, though territorially part of the State, is a municipal corporation subject to suit and is not the State for this purpose. A state statute restricting suits to a particular state court cannot defeat federal jurisdiction otherwise given by the Constitution. Presentment statutes for claims and accounts do not apply to liquidated bond and coupon obligations. Where the debtor provides for payment from a particular fund to be created by its own act and the creditor accepts that arrangement, the debtor cannot rely on the statute of limitations until it shows the fund has been provided.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Marta Silva, a citizen of Arizona, sues Red Mesa County in federal court in New Mexico on county-issued road bonds. The county argues that because it is a territorial subdivision of New Mexico, the suit is really against the State and barred by the Eleventh Amendment.

How should the federal court rule on the county's Eleventh Amendment argument?

Explanation. The controlling rule is that the Eleventh Amendment bars suits against a State, including cases where the State is the real defendant in substance, but not ordinary suits against a county as a municipal corporation. A county is only part of the State in the remote sense that cities and towns are; that does not make the county the State itself for Eleventh Amendment purposes. Thus the county's argument fails.