Gelpcke v. City of Dubuque, 68 U.S. 175 (1863)

U.S. Supreme Court

Gelpcke v. City of Dubuque, 68 U.S. 1 Wall. 175 175 (1863) Gelpcke v. City of Dubuque

68 U.S. (1 Wall.) 175

ERROR TO THE DISTRICT COURT OF THE

UNITED STATES FOR THE DISTRICT OF IOWA

Syllabus

1. By a series of decisions of the Supreme Court of Iowa prior to that, A.D. 1859, in State of Iowa v. County of Wapello, 13 Ia. 388, the right of the legislature of that state to authorize municipal corporations to subscribe to railroads extending beyond the limits of the city or county and to issue bonds accordingly was settled in favor of the right, and those decisions, meeting with the approbation

Page 68 U. S. 176

of this Court and being in harmony with the adjudications of sixteen states of the Union, will be regarded as a true interpretation of the constitution and laws of the state so far as relate to bonds issued and put upon the market during the time that those decisions were in force. The fact that the said Supreme Court of Iowa now bolds that those decisions were erroneous and ought not to have been made, and that the legislature of the state had no such power as former courts decided that they had, can have no effect upon transactions in the past, however it may affect those in the future.

2. Although it is the practice of this Court to follow the latest settled adjudications of the state courts giving constructions to the laws and constitution of their own states, it will not necessarily follow decisions which may prove but oscillations in the course of such judicial settlement. Nor will it follow any adjudication to such an extent as to make a sacrifice of truth, justice, and law.

3. Municipal bonds with coupons payable to "bearer" having, by universal usage and consent, all the qualities of commercial paper, a party recovering on the coupons will be entitled to the amount of them with interest and exchange at the place where, by their terms, they were made payable.

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

Page 68 U. S. 177

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 & 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

Page 68 U. S. 178

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 defense:

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.

Page 68 U. S. 202

MR. JUSTICE SWAYNE delivered the opinion of the Court:

The whole case resolves itself into a question of the power of the city to issue bonds for the purpose stated.

The act incorporating the city, approved February 24, 1847, provides as follows:

"SEC. 27. That whenever, in the opinion of the city council, it is expedient to borrow money for any public 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 approved January 8, 1851, the act of incorporation was 'so amended as to empower the city council to levy annually a special tax to pay interest on such loans as are authorized by the 27th section of said act.'"

An Act approved January 28, 1857, contains these provisions:

"That the City of Dubuque is hereby authorized and empowered

Page 68 U. S. 203

to aid in the construction of the Dubuque Western and the Dubuque, St. Peter's & 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, and bonds issued or to be issued, are hereby declared valid, and the said railroad companies are hereby authorized to expend the money 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 said bonds are invalid."

By these enactments, if they are valid, ample authority was given to the city to issue the bonds in question. The city acted upon this authority. The qualifications coupled with the grant of power contained in the 27th section of the act of incorporation are not now in question. If they were, the result would be the same. When a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority, and they are no more liable to be impeached for any infirmity in the hands of such a holder than any other commercial paper. [Footnote 1] If there were any irregularity in taking the votes of the electors or otherwise in issuing the bonds, it is remedied by the curative provisions of the Act of January 28, 1857.

Where there is no defect of constitutional power, such legislation in cases like this is valid. This question, with reference to a statute containing similar provisions, came

Page 68 U. S. 204

under the consideration of the Supreme Court of Iowa in McMillen v. Boyles [Footnote 2] and again in McMillen v. County Judge and Treasurer of Lee County. [Footnote 3] The validity of the act was sustained. Without these rulings, we should entertain no doubt upon the subject. [Footnote 4]

It is claimed

"that the Legislature of Iowa had no authority under the constitution to authorize municipal corporations to purchase stock in railroad companies or to issue bonds in payment of such stock."

In this connection, our attention has been called to the following provisions of the constitution of the state:

"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 as 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, exceed the sum of one hundred thousand dollars, except"

&c. The exceptions stated do not relate to this case.

"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."

Under these provisions it is insisted:

1. That the general grant of power to the legislature did not warrant it in conferring upon municipal corporations the power which was exercised by the City of Dubuque in this case.

Page 68 U. S. 205

2. That the seventh article of the constitution prohibits the conferring of such power under the circumstances stated in the answer -- debts of counties and cities being, within the meaning of the Constitution, debts of the state.

3. That the eighth article forbids the conferring of such power upon municipal corporations by special laws.

All these objections have been fully considered and repeatedly overruled by the Supreme Court of Iowa: Dubuque Co. v. Dubuque & Pacific R. Co., 4 Greene 1; State v. Bissel, 4 id. 328; Clapp v. Cedar Co., 5 Ia. 15; Ring v. County of Johnson, 6 id. 265; McMillen v. Boyles, 6 id. 304; McMillen v. County Judge of Lee Co., 6 id. 393; Games v. Robb, 8 id. 193; State v. Board of Equalization of County of Johnson, 10 id. 157. The earliest of these cases was decided in 1853, the latest in 1859. The bonds were issued and put upon the market between the periods named. These adjudications cover the entire ground of this controversy. They exhaust the argument upon the subject. We could add nothing to what they contain. We shall be governed by them unless there be something which takes the case out of the established rule of this Court upon that subject.

It is urged that all these decisions have been overruled by the supreme court of the state in the later case of State of Iowa v. County of Wapello, [Footnote 5] and it is insisted that in cases involving the construction of a state law or constitution, this Court is bound to follow the latest adjudication of the highest court of the state. Leffingwell v. Warren [Footnote 6] is relied upon as authority for the proposition. In that case, this Court said it would follow "the latest settled adjudications." Whether the judgment in question can, under the circumstances, be deemed to come within that category it is not now necessary to determine. It cannot be expected that this Court will follow every such oscillation, from whatever cause arising, that may possibly occur. The earlier decisions, we think, are sustained by reason and authority.

Page 68 U. S. 206

They are in harmony with the adjudications of sixteen states of the Union. Many of the cases in the other states are marked by the profoundest legal ability.

The late case in Iowa, and two other cases of a kindred character in another state, also overruling earlier adjudications, stand out, as far as we are advised, in unenviable solitude and notoriety. However we may regard the late case in Iowa as affecting the future, it can have no effect upon the past.

"The sound and true rule is that if the contract, when made, was valid by the laws of the state as then expounded by all departments of the government, and administered in its courts of justice, its validity and obligation cannot be impaired by any subsequent action of legislation, or decision of its courts altering the construction of the law. [Footnote 7]"

The same principle applies where there is a change of judicial decision as to the constitutional power of the legislature to enact the law. To this rule, thus enlarged, we adhere. It is the law of this Court. It rests upon the plainest principles of justice. To hold otherwise would be as unjust as to hold that rights acquired under a statute may be lost by its repeal. The rule embraces this case.

Bonds and coupons, like these, by universal commercial usage and consent, have all the qualities of commercial paper. If the plaintiffs recover in this case, they will be entitled to the amount specified in the coupons, with interest and exchange as claimed. [Footnote 8]

We are not unmindful of the importance of uniformity in the decisions of this Court and those of the highest local courts giving constructions to the laws and constitutions of their own states. It is the settled rule of this Court in such cases to follow the decisions of the state courts. But there have been heretofore, in the judicial history of this Court, as doubtless there will be hereafter, many exceptional cases. We shall never immolate truth, justice, and the law because

Page 68 U. S. 207

a state tribunal has erected the altar and decreed the sacrifice.

The judgment below is reversed, and the cause remanded for further proceedings in conformity to this opinion.

Judgment and mandate accordingly.

[Footnote 1]

Commissioners of Knox Co. v. Aspinwall, 21 How. 539; Royal British Bank v. Turquand, 6 Ellis & Blackburne 327; Farmers, Land & T. v. Curtis, 3 Selden 466; Stoney v. A.L.I. Co., 11 Paige 635; Morris Canal & B. Co. v. Fisher, 1 Stockton's Chancery 667; Willmarth v. Crawford, 10 Wendell 343; Alleghany City v. McClurkan, 14 Pa.St. 83.

[Footnote 2]

6 Ia. 305.

[Footnote 3]

Ibid., 391.

[Footnote 4]

Wilkinson v. Leland, 2 Pet. 627; Satterlee v. Matthewson, 2 Pet. 380; Baltimore & S. R. Co. v. Nesbit, 10 How. 395; Whitewater Valley Canal Co. v. Vallette, 21 How. 425.

[Footnote 5]

13 Ia. 390.

[Footnote 6]

67 U. S. 2 Black 599.

[Footnote 7]

The Ohio Life & Trust Co. v. Debolt, 16 How. 432.

[Footnote 8]

White v. V. & M. R. Co., 21 How. 575; Commissioners of the County of Knox v. Aspinwall, 21 How. 539.

MR. JUSTICE MILLER, dissenting:

In the opinions which have just been delivered I have not been able to concur. But I should have contented myself with the mere expression of dissent if it were not that the principle on which the Court rests its decision is one not only essentially wrong in my judgment, but one which, if steadily adhered to in future, may lead to consequences of the most serious character. In adopting that principle, this Court has, as I shall attempt to show, gone in the present case a step in advance of anything heretofore ruled by it on the subject, and has taken a position which must bring in into direct and unseemly conflict with the judiciary of the states. Under these circumstances, I do not feel at liberty to decline placing upon the records of the court the reasons which have forced me, however reluctantly, to a conclusion different from that of the other members of the Court.

The action in the present case is on bonds of the City of Dubuque, given in payment of certain shares of the capital stock of a railroad company whose road runs from said city westward. The court below held that the bonds were void for want of authority in the city to subscribe and pay for such stock. It is admitted that the legislature had, as to one set of bonds, passed an act intended to confer such authority on the city, and it is claimed that it had done so as to all the bonds. I do not propose to discuss this latter question.

It is said in support of the judgment of the court below that all such grants of power by the Legislature of Iowa to any municipal corporation is in conflict with the constitution of the state, and therefore void. In support of this view of the subject, the cases of Stokes v. Scott County [Footnote 2/1] and State of Iowa v. County of Wapello [Footnote 2/2] are relied on.

Page 68 U. S. 208

In the last-mentioned case, the County of Wapello had agreed to take stock in a company whose road passed through the county, but had afterwards refused to issue the bonds which had been voted by the majority of the legal voters. The relator prayed a writ of mandamus to compel the officers of the county to issue the bonds. One question raised in the discussion was whether section 114 of the Code of Iowa of 1851 was intended to authorize the counties of the state to take stock in railroad companies. And another was that, conceding such to be the fair construction of that section of the code, was it constitutional?

The supreme court, in a very elaborate and well reasoned opinion, held that there was no constitutional power in the legislature to confer such authority on the counties, or on any municipal corporation. This decision was made in a case where the question fairly arose and where it was necessary and proper that the court should decide it. It was decided by a full bench and with unanimity. It was decided by the court of highest resort in that state, to which is confided, according to all the authorities, the right to construe the constitution of the state, and whose decision is binding on all other courts which may have occasion to consider the same question until it is reversed or modified by the same court. It has been followed in that court by several other decisions to the same point not yet reported. It is the law administered by all the inferior judicial tribunals in the state, who are bound by it beyond all question. I apprehend that none of my brethren who concur in the opinion just delivered would go so far as to say that the inferior state courts would have a right to disregard the decision of their own appellate court and give judgment that the bonds were valid. Such a course would be as useless, as it would be destructive of all judicial subordination.

Yet this is in substance what the majority of the Court have decided.

They have said to the federal court sitting in Iowa,

"You shall disregard this decision of the highest of the state on this question. Although you are sitting in the State of

Page 68 U. S. 209

Iowa and administering her laws and construing her constitution, you shall not follow the latest, though it be the soundest, exposition of its constitution by the supreme court of that state, but you shall decide directly to the contrary, and where that court has said that a statute is unconstitutional, you shall say that it is constitutional. When it says bonds are void issued in that state because they violate its constitution, you shall say they are valid because they do not violate the constitution."

Thus we are to have two courts, sitting within the same jurisdiction, deciding upon the same rights, arising out of the same statute, yet always arriving at opposite results, with no common arbiter of their differences. There is no hope of avoiding this if this Court adheres to its ruling. For there is in this Court no power in this class of cases to issue its writ of error to the state court and thus compel a uniformity of construction, because it is not pretended that either the statute of Iowa or its constitution or the decision of its courts thereon are in conflict with the Constitution of the United States or any law or treaty made under it.

Is it supposed for a moment that this treatment of its decision, accompanied by language as unsuited to the dispassionate dignity of this Court, as it is disrespectful to another court of at least concurrent jurisdiction over the matter in question, will induce the Supreme Court of Iowa to conform its rulings to suit our dictation in a matter which the very frame and organization of our government places entirely under its control? On the contrary, such a course, pursued by this Court, is well calculated to make that court not only adhere to its own opinion with more tenacity, but also to examine if the law does not afford them the means in all cases of enforcing their own construction of their own constitution and their own statutes within the limits of their own jurisdiction. What this may lead to it is not possible now to foresee, nor do I wish to point out the field of judicial conflicts, which may never occur but which if they shall occur, will weigh heavily on that court which should have yielded to the other but did not.

Page 68 U. S. 210

The general principle is not controverted by the majority that to the highest courts of the state belongs the right to construe its statutes and its constitution except where they may conflict with the Constitution of the United States or some statute or treaty made under it. Nor is it denied that when such a construction has been given by the state court, that this Court is bound to follow it. The cases on this subject are numerous, and the principle is as well settled and is as necessary to the harmonious working of our complex system of government as the correlative proposition that to this Court belongs the right to expound conclusively, for all other courts, the Constitution and laws of the federal government. [Footnote 2/3]

But while admitting the general principle thus laid down, the Court says it is inapplicable to the present case because there have been conflicting decisions on this very point by the Supreme Court of Iowa, and that as the bonds issued while the decisions of that court holding such instruments to be constitutional were unreversed, that this construction of the constitution must now govern this Court instead of the later one. The moral force of this proposition is unquestionably very great. And I think, taken in connection with some fancied duty of this Court to enforce contracts, over and beyond that appertaining to other courts, has given the majority a leaning towards the adoption of a rule, which in my opinion cannot be sustained either on principle or authority.

The only special charge which this Court has over contracts beyond any other court is to declare judicially whether the statute of a state impairs their obligation. No such question arises here, for the plaintiff claims under and by virtue of the statute which is here the subject of discussion. Neither is there any question of the obligation of contracts or the right to enforce them. The question goes behind that. We are called upon not to construe a contract, nor to determine how one shall be enforced, but to decide whether there ever

Page 68 U. S. 211

was a contract made in the case. To assume that there was a contract, which contract is about to be violated by the decisions of the state court of Iowa, is to beg the very question in dispute. In deciding this question, the court is called upon, as the court in Iowa was, to construe the constitution of the state. It is a grave error to suppose that this Court must or should determine this upon any principle which would not be equally binding on the courts of Iowa, or that the decision should depend upon the fact that certain parties had purchased bonds which were supposed to be valid contracts when they really were not.

The Supreme Court of Iowa is not the first or the only court which has changed its rulings on questions as important as the one now presented. I understand the doctrine to be in such cases not that the law is changed, but that it was always the same as expounded by the later decision, and that the former decision was not and never had been the law, and is overruled for that very reason. The decision of this Court contravenes this principle and holds that the decision of the court makes the law, and in fact that the same statute or constitution means one thing in 1853 and another thing in 1859. For it is impliedly conceded that if these bonds had been issued since the more recent decision of the Iowa court, this Court would not hold them valid.

Not only is the decision of the Court, as I think, thus unsound in principle, but it appears to me to be in conflict with its former decisions on this point, as I shall now attempt to show.

In the case of Shelby v. Guy, [Footnote 2/4] a question arose on the construction of the statute of limitations of Tennessee. It was an old English statute, adopted by Tennessee from North Carolina, and which had in many other states received a uniform construction. It was stated on the argument, however, that the highest court of Tennessee had given a different construction to it, although the opinion could not then be produced. The Court said that out of a desire to follow

Page 68 U. S. 212

the courts of the state in the construction of their own statute, it would not then decide that question, but as the case had to be reversed on other points, it would send it back, leaving that question undecided.

In the case of United States v. Morrison, [Footnote 2/5] the question was whether a judgment in the State of Virginia was, under the circumstances of that case, a lien on the real estate of the judgment debtor. In the circuit court this had been ruled in the negative, I presume by Chief Justice Marshall, and a writ of error was prosecuted to this Court. Between the time of the decision in the circuit court and the hearing in this Court, the Court of Appeals of Virginia had decided, in a case precisely similar, that the judgment was a lien. This Court, by Chief Justice Marshall, said it would follow the recent decision of the Court of Appeals without examination, although it required the reversal of a judgment in the circuit court rendered before that decision was made.

The case of Green v. Neal [Footnote 2/6] is almost parallel with the one now under consideration, but stronger in the circumstances under which the Court followed the later decision of the state courts in the construction of their own statute. It is stronger in this, that the Court there overruled two former decisions of its own, based upon former decisions of the state court of Tennessee, in order to follow a later decision of the state court after the law had been supposed to be settled for many years. The case was one on the construction of the statute of limitations, and the circuit court at the trial had instructed the jury,

"that according to the present state of decisions in the Supreme Court of the United States, they could not charge that defendant's title was made good by the statute of limitations."

The decisions here referred to were the cases of Patton v. Easton [Footnote 2/7] and Powell v. Harman. [Footnote 2/8]

The first of these cases was argued in the February Term, 1815, by some of the ablest counsel of the day, and the opinion delivered more than a year afterwards. In that opinion,

Page 68 U. S. 213

Chief Justice Marshall recites the long dispute about the point in North Carolina and Tennessee and says it has at length been settled by the supreme court of the latter state by two recent decisions, made after the case then before it had been certified to this Court, and the court follows those decisions. This is reaffirmed in the second of the above-mentioned cases.

In delivering the opinion in the case of Green v. Neal, Justice McLean says that the two decisions in Tennessee referred to by Judge Marshall were made under such circumstances that they were never considered as fully settling the point in that state, there being contrariety of opinion among the judges. The question, he says, was frequently raised before the Supreme Court of Tennessee, but was never considered as finally settled, until 1825, the first decision having been made in 1815. The opinion of Judge McLean is long, and the case is presented with his usual ability, and I will not here go into further details of it. It is sufficient to say that the Court holds it to be its duty to abandon the two first cases decided in Tennessee, to overrule their own well considered construction in the case of Patton v. Easton and its repetition in Powell v. Green, and to follow without examination the later decision of the Supreme Court of Tennessee, which is in conflict with them all.

At the last term of this Court, in the case of Leffingwell v. Warren [Footnote 2/9] my very learned associate, who has just delivered the opinion in this case, has collated the authorities on this subject, and thus on behalf of the whole Court announces the result:

"The construction given to a state statute by the highest judicial tribunal of such state is regarded as a part of the statute, and is as binding upon the courts of the United States as the text. . . . If the highest judicial tribunal of a state adopt new views as to the proper construction of such a statute and reverse its former decision, this Court will follow the latest settled adjudications. [Footnote 2/10] "

Page 68 U. S. 214

It is attempted, however, to distinguish the case now before us from those just considered, by saying that the latter relate to what is rather ambiguously called a rule of property, while the former concerns a matter of contract. I must confess my inability to see any principle on which the distinction can rest. All the statutes of the states which prescribe the formalities and incidents to conveyances of real estate would, I presume, be held to be rules of property. If the deed by which a man supposes he has secured to himself and family a homestead fails to comply in any essential particular with the statute or constitution of the state as expounded by the most recent decision of the state court, it is held void by this Court without hesitation, because it is a rule of property, and the last decision of the state court must govern, even to overturning the well considered construction of this Court. But if a gambling stockbroker of Wall Street buys at twenty-five percent of their par value the bonds issued to a railroad company in Iowa, although the court of the state, in several of its most recent decisions, have decided that such bonds were issued in violation of the Constitution, this Court will not follow that decision, but resort to some former one, delivered by a divided Court, because in the latter case it is not a rule of property, but a case of contract. I cannot rid myself of the conviction that the deed which conveys to a man his homestead or other real estate is as much a contract as the paper issued by a municipal corporation to a railroad for its worthless stock, and that a bond when good and valid is property. If bonds are not property, then half the wealth of the nation, now so liberally invested in the bonds of the government, both state and national, and in bonds of corporations, must be considered as having no claim to be called property. And when the construction of a constitution is brought to bear upon the questions of property or no property, contract or no contract, I can see no sound reason for any difference in the rule for determining the question.

The case of Rowan v. Runnels, [Footnote 2/11] is relied on as furnishing

Page 68 U. S. 215

a rule for this case and support to the opinion of the Court. In that case, the question was on the validity of a note given for the purchase of slaves imported into the State of Mississippi. It was claimed that the importation was a violation of the constitution of the state, and the note therefore void. In the case of Groves v. Slaughter, [Footnote 2/12] this Court had previously decided that very point the other way. In making that decision it had no light from the courts of Mississippi, but was called on to make a decision in a case of the first impression. The Court made a decision, with which it remained satisfied when Rowan v. Runnels came before it and which is averred by the Court to have been in conformity to the expressed sense of the legislature and the general understanding of the people of that state. The Court therefore, in Rowan v. Runnels, declined to change its own rulings under such circumstances to follow a single later and adverse decision of the Mississippi court.

In the case now before the Court, it is not called on to retract any decision it has ever made or any opinion it has declared. The question is before this Court for the first time, and it lacks in that particular the main ground on which the judgment of this Court rested in Rowan v. Runnels. It is true that the chief justice, in delivering the opinion in that case, goes on to say, in speaking of the decision of the state courts on their own constitution and laws:

"But we ought not to give them a retroactive effect, and allow them to render invalid contracts entered into with citizens of other states which, in the judgment of this Court, were lawfully made."

I have to remark in the first place that this dictum was unnecessary, as the first and main ground was that this Court could not be required to overrule its own decision when it had first occupied the ground and when it still remained of the opinion then declared. Secondly, that the contract in Rowan v. Runnels was between a citizen of Mississippi, on the one part, and a citizen of Virginia on the other, and the language of the Chief Justice makes that the ground of the

Page 68 U. S. 216

right of this Court to disregard the later decision of the state court, and in this case the contract was made between the City of Dubuque and a railroad company, both of which were corporations existing under the laws of Iowa and citizens of that state in the sense in which that word is used by the Chief Justice. And thirdly, the qualification is used in the Runnels case that the "contracts were, in the judgment of this Court, lawfully made." In the present case, the court rests on the former decision of the state court, declining to examine the constitutional question for itself.

The distinction between the cases is so obvious as to need no further illustration.

The remaining cases in which the subject is spoken of may be mentioned as a series of cases brought into the Supreme Court of the United States by writ of error to the Supreme Court of Ohio under the twenty-fifth section of the Judiciary Act. In all these cases, the jurisdiction of the Supreme Court of the United States was based upon the allegation that a statute of Ohio, imposing taxes upon bank corporations, was a violation of a previous contract made by the state with them in regard to the extent to which they should be liable to be taxed. In the argument of these cases it was urged that the very judgments of the Supreme Court of Ohio which were then under review, being the construction placed by the courts of that state on their own statutes and constitution, should be held to govern the Supreme Court of the Union in the exercise of its acknowledged right of revising the decision of the state court in that class of cases. It requires but a bare statement of the proposition to show that if admitted, the jurisdiction of the federal Supreme Court to sit as a revisory tribunal over the state courts in cases where the state law is supposed to impair the obligation of a contract would be the merest sham.

It is true that in the extract given in the opinion of the Court just read from the case of the Ohio Trust Company v. Debolt, language is used by CHIEF JUSTICE TANEY susceptible of a wider application. But he clearly shows that there was in his mind nothing beyond the case of a writ of error to

Page 68 U. S. 217

the supreme court of a state, for he says in the midst of the sentence cited, or in the immediate context,

"The writ of error to a state court would be no protection to a contract if we were bound to follow the judgment which the state court had given and which the court brings up here for revision."

Besides, in the opinion thus cited, THE CHIEF JUSTICE says in the commencement of it that he only speaks for himself and JUSTICE GRIER. The remarks cited, then, were not the opinion of the Court, were outside the record, and were evidently intended to be confined to the case of a writ of error to the court of a state where it was insisted that the judgment sought to be revised should conclude this Court.

But let us examine for a moment the earlier decisions in the state court of Iowa on which this Court rests with such entire satisfaction.

The question of the right of municipal corporations to take stock in railroad companies came before the Supreme Court of Iowa for the first time, at the June Term, A.D. 1853, in the case of Dubuque County v. Dubuque & Pacific Railroad Company. [Footnote 2/13] The majority of the court, Kinney J., dissenting, affirmed the judgment of the court below, and in so doing must necessarily have held that municipal corporations could take stock in railroad enterprises. The opinions of the court were by law filed with the clerk, and by him copied into a book kept for that purpose. The dissenting opinion of Judge Kinney, a very able one, is there found in its proper place, in which he says he has never seen the opinion of the majority. No such opinion is to be found in the clerk's office, as I have verified by a personal examination. Nor was it ever seen until it was published five years afterwards, in the volume above referred to, by one of the judges, who had ceased to be either judge or official reporter at the time it was published. Shortly after this judgment was rendered, Judge Kinney resigned, and his place was supplied by Judge Hall. The case of State v. Bissell [Footnote 2/14] then came before the court in 1854. In this case, after disposing of

Page 68 U. S. 218

several questions relating to the regularity of the proceedings in issuing bonds for a railroad subscription, Judge Hall, who delivered the opinion of the court, then refers to the right of the county to take stock and issue bonds for railroad purposes. He says:

"This point is not urged, and the same question having been decided at the December Term of this Court in 1853, in the case of Dubuque & Pacific Railroad Company v. Dubuque County, is not examined. This decision is not intended to sanction or deny the legal validity of that decision, but to leave the question where that decision left it."

It is clear that if Judge Hall had concurred with the other two judges, no such language as this would have been used, but they would have settled the question by a unanimous opinion. In the case of Clapp v. Cedar County, [Footnote 2/15] the question came up again in the same court, composed of new judges. The Chief Justice, Wright was against the power of the counties to subscribe stock, and delivered an able dissenting opinion to that purport. The other two judges, however, while in substance admitting that no such power had been conferred by law, held that they must follow the decision in Dubuque case. Several other cases followed these, with about the same result, up to 1859, Wright always protesting, and the other judges overruling him. In 1859, in the case of Stokes v. Scott County, [Footnote 2/16] which was an application to restrain the issue of bonds voted by the county, Judge Stockton said that, in a case like that, where the bonds had not passed into the hands of bona fide holders, he felt at liberty to declare them void, and concurring with Judge Wright that far, they so decided; Judge Wright placing his opinion upon a want of constitutional power in the legislature. Finally, in the case of the State of Iowa v. Wapello County, the court, now composed of Wright Lowe, and Baldwin held unanimously that the bonds were void absolutely because their issue was in violation of the Constitution of the State of Iowa. The opinion in that case, delivered by Judge Lowe, covers the whole ground, and after

Page 68 U. S. 219

an examination of all the previous cases, overrules them all, except Stokes v. Scott County. It is exhausting, able, and conclusive, and after a struggle of seven or eight years, in which this question has been always before the court and never considered as closed, this case may now be considered as finally settling the law on that subject in the courts of Iowa. It has already been repeated in several cases not yet reported. It is the first time the question has been decided by a unanimous court. It is altogether improbable that any serious effort will ever be made to shake its force in that state, for of the nine judges who have occupied the bench while the matter was in contest, but two have ever expressed their approbation of the doctrine of the Dubuque County case.

Comparing the course of decisions of the state courts in the present case with those upon which this Court acted in Green v. Neal, [Footnote 2/17] how do they stand?

In the latter case, the court of Tennessee had decided by a divided court in 1815, and that decision was repeated several times, but with contrariety of opinion among the judges, up to 1825, when the former decisions were reversed. In the cases which we have been considering from Iowa, the point was decided in 1853 by a divided court; it was repeated several times up to 1859, by a divided court, under a continuous struggle. In 1859, the majority changed to the other side, and in 1862 it became unanimous. In the Tennessee case, this Court had twice committed itself to the decision first made by the courts of that state, yet it retracted and followed the later decision made ten years after. In the present case, this Court, which was not committed at all, follows decisions which were never unanimous, which were struggled against and denied, and which had only six years of judicial life, in preference to the later decisions commenced four years ago and finally receiving the full assent of the entire court.

I think I have sustained by this examination of the cases the assertion made in the commencement of this opinion,

Page 68 U. S. 220

that the court has, in this case, taken a step in advance of anything heretofore decided by it on this subject. That advance is in the direction of a usurpation of the right, which belongs to the state courts, to decide as a finality upon the construction of state constitutions and state statutes. This invasion is made in a case where there is no pretense that the constitution, as thus construed, is any infraction of the laws or Constitution of the United States.

The importance of the principle thus for the first time asserted by this Court, opposed as it is to my profoundest convictions of the relative rights, duties, and comities of this Court and the state court will, I am persuaded, be received as a sufficient apology for placing on its record, as I now do, my protest against it.

[Footnote 2/1]

10 Ia. 166.

[Footnote 2/2]

13 id. 398.

[Footnote 2/3]

See Shelby v. Guy, 11 Wheat. 361; McCluny v. Silliman, 3 Pet. 277; Van Rensselaer v. Kearney, 11 How. 297; Webster v. Cooper, 14 id., 504; Elmendorf v. Taylor, 10 Wheat. 152; Bank v. Dudley, 2 Pet. 492.

[Footnote 2/4]

24 U. S. 11 Wheat. 361.

[Footnote 2/5]

29 U. S. 4 Pet. 124.

[Footnote 2/6]

31 U. S. 6 Pet. 291.

[Footnote 2/7]

14 U. S. 1 Wheat. 476.

[Footnote 2/8]

27 U. S. 2 Pet. 241, erroneously cited in Green v. Neal, 6 Pet. 291, as Powell v. Green -- REP.

[Footnote 2/9]

67 U. S. 2 Black 599.

[Footnote 2/10]

United States v. Morrison, 4 Pet. 124; Green v. Neal, 6 Pet. 291.

[Footnote 2/11]

46 U. S. 5 How. 134.

[Footnote 2/12]

40 U. S. 15 Pet. 449.

[Footnote 2/13]

4 G.Greene 1.

[Footnote 2/14]

4 id. 328.

[Footnote 2/15]

5 Ia. 15.

[Footnote 2/16]

10 id. 166.

[Footnote 2/17]

31 U. S. 6 Pet. 291.