Gelpcke v. City of Dubuque (68 U.S. 175)

THE Constitution of the State of Iowa, adopted in 1846, contains the following provisions, to wit:

'ART. 1. § 6. All laws of a general nature shall have a uniform operation.'

'ART. 3. § 1. The legislative authority of the State shall be vested in a Senate and House of Representatives, which shall be designated the General Assembly of the State of Iowa,' &c.

'ART. 7. The General Assembly shall not in any manner create any debt or debts, liability or liabilities, which shall, singly or in the aggregate, with any previous debts or liabilities, exceed the sum of one hundred thousand dollars, except in case of war, to repel invasion, or suppress insurrection.'

'ART. 8. § 2. Corporations shall not be created in this State by special laws, except for political or municipal purposes; but the General Assembly shall provide, by general laws, for the organization of all other corporations, except corporations with banking privileges, the creation of which is prohibited. The stockholders shall be subject to such liabilities and restrictions as shall be provided by law. The State shall not directly or indirectly become a stockholder in any corporation.'

With these constitutional provisions in existence and force, the legislature passed certain statutes. One,-incorporating the city of Dubuque, passed February 24, 1847,-provided, in its 27th section, as follows:

'That whenever, in the opinion of the City Council, it is expedient to borrow money for any particular purpose, the question shall be submitted to the citizens of Dubuque, the nature and object of the loan shall be stated, and a day fixed for the electors of said city to express their wishes; the like notice shall be given as in cases of election, and the loan shall not be made unless two-thirds of all the votes polled at such election shall be given in the affirmative.'

By an act passed January 8, 1851, this charter was 'so amended as to empower the City Councils to levy annually a special tax to pay interest on such loans as are authorized by the 27th section of said act;' that is to say, by the section just quoted. A subsequent act,-one passed 28th January, 1857,-enacts thus:

'The city of Dubuque is hereby authorized and empowered to aid in the construction of the Dubuque Western, and Dubuque, St. Peter's and St. Paul Railroad Companies, by issuing $250,000 of city bonds to each, in pursuance of a vote of the citizens of said city, taken in the month of December, A.D. 1856. Said bonds shall be legal and valid, and the City Council is authorized and required to levy a special tax to meet the principal and interest of said bonds, in case it shall become necessary from the failure of funds from other sources.'

'The proclamation, the vote, bonds issued or to be issued, are hereby declared valid, and the said railroad companies are hereby authorized to expend the moneys arising from the sale of said bonds, without the limits of the city and county of Dubuque, in the construction of either of said roads; and neither the city of Dubuque nor any of the citizens shall ever be allowed to plead that the said bonds are invalid.'

With this Constitution, as already mentioned, in force, and after the incorporation of the city and the passage of acts of Assembly, as just mentioned,-and after certain decisions of the Supreme Court of Iowa as to the constitutionality of these acts, the character and value of which decisions make the principal subject of discussion in this case,-the city of Dubuque issued a large amount of coupon bonds, which were now in the hands of the plaintiffs. The bonds bore date on the 1st of July, 1857, and were payable to Edward Langworthy, or bearer, on the 1st of January, 1877, at the Metropolitan Bank, in the city of New York. The coupons were for the successive half year's interest accruing on the bonds respectively, and were payable at the same place. The bonds recited that they were given 'for and in consideration' of stock of the Dubuque Western Railroad Company,-(one of the roads to which, by the act last mentioned, the city was authorized to subscribe),-and that for the due payment of their principal and interest, 'the said city is hereby pledged, in accordance with the code of Iowa, and an act of the General Assembly of the State of Iowa, of January 28, 1857,'-the act just referred to. The coupons on the bonds not being paid, the plaintiffs sued the city of Dubuque in the District Court of the United States for the District of Iowa, claiming to recover the amount specified in the coupons, with the New York rate of interest from the time of their maturity, and exchange on the city of New York.

The city set up the following grounds of defence:

1. That the bonds were issued by the city to aid in the construction of a railroad extending beyond its limits into the interior of the State.

2. That at the time of issuing the bonds and coupons, the indebtedness of the city exceeded one hundred thousand dollars.

3. That at the time of issuing the bonds and coupons, the indebtedness of the State of Iowa exceeded one hundred thousand dollars.

4. That at the time of issuing the bonds and coupons, the indebtedness of the cities and counties of Iowa exceeded, in the aggregate, one hundred thousand dollars.

The plaintiffs demurred. The demurrer was overruled, and judgment entered for the defendant. On error, the question in this court was, whether the judgment had been rightly given?Mr. S. V. White and Mr. Allison for the bondholders: In one point of view, the question before the court is a narrow one; a question as to the number and relative weight of decisions of the Supreme Court of Iowa alone, and in its own constitution and statutes; a settlement of the balance on an account domestic simply. It is a question whether this court will regard seven solemn decisions, made by the Supreme Court of Iowa, beginning in A.D. 1853, and ending in A.D. 1859, on the faith of which decisions, strangers have lent their money for the improvement of the State itself, or of cities which adorn and enrich it, so overruled by a decision made in A.D. 1860, or decisions of a later date, as that bonds issued payable to BEARER, are now void in the hands of bearers who, between the said years of 1853 and 1859, and on the faith of those decisions, bought them in good faith and for value. Undoubtedly we shall ask that this question be decided; that this settlement of the account domestic simply be settled. The case involves, as a necessity, perhaps no other question. The court may possibly confine itself much to these limits. In some points of view, however, the issue is of greater dignity. It concerns the honor, not of Iowa only, but of all the States; the value of millions of securities issued by nearly every State of the Union, and by cities and counties and boroughs in them all. Yet, more: we shall ask this court to treat as contradicting precedents made by the Supreme Court of Iowa itself, and so as subversive of regard for authority,-as erroneous, therefore, in the law, and of no obligation,-the latest decisions of a State of this Union; the decision, we mean, in The State of Iowa, ex relatione, v. The County of Wapello, and any decisions which, to the disregard of earlier and settled precedents, follow it. On all these accounts the subject deserves an examination on a wider view of precedents than those of Iowa alone. Time is not wasted in appropriating much of it to an inquiry as to American decisions universally. We propose, therefore, to examine 1. The adjudications of courts of the different States upon the same or similar questions, prior to its adjudication by the courts of Iowa.

2. The adjudications of the courts of the State of Iowa, upon such questions; and,

3. The adjudications of the courts of the United States, and of the several States, since the question was first decided by the courts of Iowa.

1. And first, we may admit that all courts have held uniformly, that such acts and contracts as those to be considered in this case do not arise from any legislative power delegated to the municipal corporations, but that they arise only from powers conferred by legislative act of the State.

The first case upon the subject arose in Virginia, and was decided by the Court of Appeals of that State, A. D. 1837, in Goddin v. Crump. The legislature of that State had authorized the city of Richmond to subscribe for stock in a company incorporated for the improvement of the navigation of James River, and for building a road to the Falls of the Kanawha River, and to borrow money to pay the same, and to levy and collect a tax for the payment of principal and interest so borrowed. Under these acts the Common Council of the city of Richmond passed an ordinance subscribing for such stock, and for levying a tax, as authorized by such acts, and the collector of the city had levied upon a slave, the property of complainant, to satisfy the tax due from him under such levy. The complainant exhibited his bill in equity, in behalf of himself and others, citizens of the city of Richmond, who were property-holders therein, and who had not consented to the passage of the acts of the legislature, nor the acts of the council in passing the ordinance and in levying the tax, and prayed to be relieved from the payment of such tax; and that the collector, who, with the Common Council of Richmond, was made a party defendant, might be enjoined and restrained from the collection of such tax, perpetually; upon the ground that the law authorizing such subscription and levy was unconstitutional and void.

Upon this case the Court of Appeals of Virginia (Brooke, J., dissenting) decided: