[68 U.S. 175, 176] THE Constitution of the State of Iowa, adopted in 1846, contains the following provisions, to wit:
With these constitutional provisions in existence and force, the legislature passed certain statutes. One,-incorporating [68 U.S. 175, 177] the city of Dubuque, passed February 24, 1847,-provided, in its 27th section, as follows:
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:
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 [68 U.S. 175, 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 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?- [68 U.S. 175, 179] 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,1 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 [68 U.S. 175, 180] 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. 2 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. [68 U.S. 175, 181] Upon this case the Court of Appeals of Virginia (Brooke, J., dissenting) decided:
I. That an act, to be within the legitimate scope of a municipal corporation, need not be performed in the corporate limits, but might properly be extended to objects beyond the limits of the corporation.
II. That the true test of the corporate character of the act, was the interest of the corporation.
III. That the citizens themselves were the judges of what was the interest of the corporation, and not the judges of the court, and however much a court might doubt the wisdom of the citizens in determining that question, they would not interfere with it.
IV. That the majority of such citizens could bind a dissenting minority, and properly charge them and their property with the payment of tax, to which they had given no assent.
V. That the laws in question are not repugnant to the Constitution, and the bill was accordingly dismissed with costs.
The next case in point arose, A. D. 1843, before the Supreme Court of Errors of the State of Connecticut, City of Bridgeport v. Housatonic R. R. Co.3 In that case, in March, 1837, the city of Bridgeport voted to take stock in the Housatonic Railroad Company, and to procure loans of money, pledging the faith of the city therefor. In May, 1838, the legislature confirmed and legalized such acts; and on June 15th, 1838, the bonds sued on were duly issued. The court unanimously decided:
I. The legislature can give power to municipal corporations to subscribe stock in railroads passing through or terminating in them;
II. That the legislature may, by act or resolution, confirm and render valid, prior voidable acts of such corporations;
III. That the fact of a municipal corporation becoming stockholders in a railroad, and therefore, pro tanto, going beyond the legitimate ends for which the corporation was [68 U.S. 175, 182] constructed, is only an incident to the general power to provide for the interests of the citizens of the corporation, and does not, therefore, take it out of the scope of its corporate acts;
IV. That a majority of such citizens can constitutionally decide upon the acts of the corporation, and compel a minority to contribute, by taxation, to objects to which such minority are opposed.
The next case was in the Supreme Court of Tennessee, Nichol v. Mayor of Nashville,4 December Term, A. D. 1848. The legislature of Tennessee had incorporated a railroad company, and by subsequent act the town of Nashville was authorized to subscribe 20,000 shares of its stock, and to borrow money, and to levy taxes to pay principal and interest on such loan. A bill was filed in equity to enjoin the borrowing of money under said act, and to prevent the issue of bonds and the levy of a tax, the ground assigned being, the acts were unconstitutional and void. Demurrer to bill. The court decide:
I. That the building of a railroad or aiding therein, by subscription to the stock, which railroad shall terminate in, or pass through or near a municipal corporation, is within the legitimate scope of corporate acts, and for such purposes a tax may be levied and collected by the delegated authorities of such corporation;
II. That such act neither contravenes the provisions of the Constitution of the United States, nor of the State of Tennessee.
The same questions came before the Court of Appeals in Kentucky, in Talbot v. Dent,5 A. D. 1849, and again, A. D. 1852, in Slack v. Maysville R. R. Co.6
The chief justice delivered the opinion of the court in both cases, and in both, the foregoing decisions of Virginia, Connecticut, and Tennessee were cited, argued, approved, and followed, at length.
The same questions came before the Supreme Court of [68 U.S. 175, 183] Pennsylvania, in The Commonwealth v. McWilliams,7 May Term, 1849, and again in Sharpless v. Mayor,8 and in Moers v. City of Reading. 9 All these cases decide the questions as former and other courts had done, and hold the bonds binding.
The Supreme Court of Illinois, A. D. 1849,10 held an act of the legislature, giving the right of taxation to a certain precinct, to keep up a bridge across Rock River, to be constitutional, and sustained a tax levied by the local authorities under such law; and the Supreme Court of New York,11 May Term, 1840, made a similar ruling in behalf of a law authorizing a municipal tax, for the purpose of paying the excess of expenses for bringing a canal to such corporation, although private individuals had given bond for the payment of such excess to the canal company.
The same questions came before the Supreme Court of Ohio, A. D. 1852, and A. D. 1853, in two cases,12 in which the questions were decided as in all the cases already named. Comment may therefore be spared.
Thus there had then been decisions of the highest appellate courts of eight States of the Union, extending through a period of sixteen years, and numbering in all twelve such decisions.
2. As respects the Courts of Iowa. And here, we premise, that so far as cities are concerned, there has never been a decision made upon the question in Iowa, but the principle has been repeatedly settled in the case of counties, upon principles, however, equally binding upon cities.
The question came before the Supreme Court of Iowa, at the June Term, 1853, in the case of Dubuque Co. v. Dubuque and Pacific R. R. Co.,13 and the court held:
I. That a county has the constitutional right to aid in building a railroad within its limits. [68 U.S. 175, 184] II. That the provision of the Constitution, which limited the State debts to the sum of $100,000, and also the provision which declares that the State shall not directly nor indirectly become a stockholder in any corporation, applied only to the State in its sovereign capacity.
III. That 114 of the Code of 1851, applied as well to railroads as to ordinary roads, and that proceedings regularly had, under that and subsequent sections, to 124 inclusive, were regular and legal, and authorized the issue of bonds for railroad purposes, and that said railroad bonds were valid and binding upon the county. This opinion is written by Greene, J.; Kinney, J. dissenting.
At the June Term, 1854, in The State v. Bissell,14 the same question was raised, together with minor questions, about the regularity of the proceedings. It was a proceeding in Chancery to prohibit the county judge of Cedar County from issuing bonds to a certain railroad company. The county judge in response set out his action in the premises, to which the relators filed a demurrer, which was sustained by the court below, and the defendant prohibited from levying the tax by perpetual injunction. From this decree the defendant, the county judge, appealed, and the case was heard in the Supreme Court, the decree reversed, and the county judge permitted to issue bonds and levy and collect a tax therefor. In this case the opinion was written by Hall, J., and the decision last but one cited is followed without comment. Although Greene, J., dissented on a minor question, growing out of the facts in the case, there was no dissenting opinion on the constitutionality of the bonds.
Next in order, in the course of the history of this question, in the State of Iowa, are two acts of the legislature of the State, passed at the session of December, A. D. 1854, both approved January 28th, 1855.15
By the first of these it is enacted, 'That wherever any [railway] company shall have received, or may hereafter receive, [68 U.S. 175, 185] the bonds of any city or county upon subscription of stock, by such city or county, such bonds may have interest at any rate not exceeding ten per cent., and may be sold by the company, at such discount as may be deemed expedient.'
By the second it is enacted, 'that in all cases where county or town or city incorporations have or may hereafter become stockholders in railroads, or other private companies or incorporations, it shall not be lawful for the county judges, mayors, or other agents of such cities or counties, to issue the bonds of their counties, or cities, until they are satisfied that the contemplated improvements will be constructed through or to their respective cities or counties, within thirty-six months from the issuing and delivery of said bonds; and the proceeds of such bonds shall, in all cases, be expended within the limits of the county in which said city may be situated; Provided, that nothing in this act shall in any way affect corporation rights, for any contracts or subscriptions heretofore made with any railroad company or corporation, for the issuing of county corporation bonds.'
These acts show the construction of the State authorities at that time, and are themselves a legislative acknowledgment that under prior laws such municipal corporations had the right to issue bonds to railroads and to take stock in them, and afforded general authority of law for such actions on the part of such corporations in future.
The next case that came before the Supreme Court of the State, was that of Clapp v. The County of Cedar,16 a suit brought on the same bonds, the issue of which was sought to be enjoined in the case of The State v. Bissell, and was determined before the court at the June Term, A.D. 1857, by a court composed entirely of different judges from those on the bench when the last cause was decided. In that case the majority of the court hold:
I. That the question of the constitutionality of the bonds is decided by the prior decisions, upon which the public and the world have acted, and that a change of ruling would be 'the worst of all repudiation,- judicial repudiation.'- [68 U.S. 175, 186] II. That such bonds and coupons were negotiable as under the law merchant.
Other questions foreign to this subject were also discussed, but it is unnecessary to refer to them. Wright, C. J., dissented, to use his own words, 'very reluctantly,' on the question of the constitutionality of such bonds.
The question again was decided three times at the June Term, 1858, in Ring v. The County of Johnson,17 in McMillen v. Boyles,18 and in McMillen v. The County Judge and Treasurer of Lee County. 19 The opinions in the first two cases were written by Woodward (Wright, C. J., dissenting in the first case); in the second case no one dissented; and the opinion in the third case was written by Wright, former dissenting judge. Each case holds,
I. That the question is settled by the Supreme Court by former adjudications, that the counties have the right, constitutionally, to take stock in a railroad, and to issue their bonds therefor.
II. And the second and third cases decide that the legislature by a curative act had made the bonds of Lee County binding upon the county, although from an informality they were irregularly issued.
In one of the cases, Ring v. The County of Johnson,20 which was decided a few days before the others, Chief Justice Wright wrote a short dissenting opinion.
Next in order in the decisions of this question comes Games v. Robb, 21 June Term, 1859, and the opinion is here written by Chief Justice Wright, who says: 'That the judge had the power to submit a vote to take subscription on a railroad, to the people, and to levy a tax therefor, we understand to be settled in favor of the power by the cases of Clapp v. Cedar County,22 Ring v. The County of Johnson,23 and McMillen v. Boyles,24 and the cases there referred to.' Thus, all the judges concur in the decision of this question, as they did in McMillen v. Boyles, holding the constitutionality of [68 U.S. 175, 187] the bonds to be decided by the former cases, the opinion of the court being, in each case, written by the learned judge who alone had dissented.
We thus have the decisions of the Supreme Court of Iowa, given to the world through a period of six years, by two different benches, in seven different decisions of the court, upon the questions now made before this court, and although two judges had dissented during that time, yet in the opinion of the Chief Justice of the State, written by him who alone had before that time 'very reluctantly' dissented, the great commercial world, whose money was at that very moment building up the commerce of the State by extending railroads through it, were assured that the question was settled, and that, too, in favor of the legality and negotiability of these bonds. Whether, in view of the Constitution of Iowa, it was or was not rightly settled in the first instance, is a matter not important at all to inquire into. It was settled by a tribunal which had power to settle it; and on the faith of judicial decisions the bonds were sold.
Before examining decisions since made by the Supreme Court of Iowa, let us mention the decisions of other courts, down to the date when, at December Term, 1859, the Supreme Court just named took that first step, in Stokes v. The County of Scott, in overthrowing its decision, which was consummated in The State, ex relatione, v. The County of Wapello, at the June Term, 1862
In Ohio, the Supreme Court, at different dates, has affirmed its ruling in five different decisions. 25 In Missouri, its court followed, in 1856, previous rulings also.26 In this, the Supreme Court of the United States, the question was decided twice at December Term, 1858, and once in 1859, and once in 1860.27 [68 U.S. 175, 188] The District Court of the United States for the District of Wisconsin, in A. D. 1861, made similar decisions, in Smith v. Milwaukee & Superior R. R. Co.,28 and Mygatt v. City of Green Bay. 29
The Supreme Court of New York, at June Term, 1857, in Clarke v. The City of Rochester,30 in a review of the question, after an elaborate argument before them, made the same ruling, which was affirmed by the Court of Appeals of that State at the September Term, 1858, nemine dissentiente. 31
The Supreme Court of Indiana, at the May Term, 1857,32 made the same ruling.
The Supreme Court of Illinois made a similar ruling, in April Term, 1858,33 which was, in April Term, 1860, affirmed in two cases. 34
The same question, after elaborate discussion, was also unanimously decided in the same way, at the January Term, 1857, of the Court of Appeals of South Carolina. 35
The Supreme Court of Wisconsin, at the December Term, 1859, in the two cases,36 made the same ruling, and decided every constitutional question in this case under a Constitution the same as that of the State of Iowa, in favor of the legality of such bonds; and that, too, by the unanimous concurrence of the whole bench. There are other cases, in others of the States of the Union, which might be cited, but it would only tend to lengthen the list, rather than to make it stronger.
Nowhere, in short, can an authority be found, save the subsequent ruling of the State of Iowa, where the highest appellate court of a State, or of the United States, has held such bonds to be invalid, in the hands of bon a fide holders for value; and at the time when that decision was rendered, [68 U.S. 175, 189] decisions had been made by the Supreme Court of the United States, and of fifteen of the different States of the Union, of which Iowa was one, running through a quarter of a century of time, and all going to establish the obligation.
But upon what grounds was this contrarient decision finally based?
In Stokes v. The County of Scott,37 the majority of the court held, where the bonds had been negotiated, and rights had become vested, by purchase, by innocent holders, that there they were valid; but that where the question was presented prior to the issue of such bonds, the court might properly interfere to restrain the issue. Wright, C. J., took his former position, holding such bonds to be unconstitutional and void, in the hands of all parties. Stockton, J., held the bonds constitutional, but not warranted by law; that they might be enforced by innocent third parties, but that it was properly within the province of a court of equity to restrain the issue thereof, where the question was presented in limine.
Woodward, J., dissented from both the other judges, holding that the question was settled in the State, and that it was the duty of the court to abide by precedents.
Of the immediate effect of this decision, the world had no right to complain, as no money had been invested, and it was only so far as it tended to cast loose from the accepted decisions of the State of Iowa, and of other States, and to render vested rights insecure, that it tended to work a hardship upon the commercial world.
We come now to The State of Iowa, ex relatione, v. The County of Wapello, June Term, 1862. The court there decided:
I. That section 114 of the Code of 1851, did not afford the authority of law for issuing of county bonds, overruling the case of 1853,-Dubuque County v. Dubuque and Pacific Railroad Co.
II. That certain statutes relied on, did not afford such authority, nor legalize such acts already performed; but--
III. That if a constitutional question did not preclude it, [68 U.S. 175, 190] the court would feel bound by the construction of the statute by former courts, and would follow such decisions.
IV. That such a law, however passed, would not confer the authority, because unconstitutional.
[The counsel then examined this case on principle, arguing that independently of precedents it was wrongly decided.]
Now in the face of this history of decisions in Iowa and everywhere, of what value is this case, The State of Iowa, ex rel., v. The County of Wapello, so much relied on? By whom, after all, is law to be settled among us? By the Supreme Court of the United States, or of the State of Iowa? By the supreme tribunal of fifteen States or of one? By the Supreme Court of Iowa for seven years or for two? By six judges of that State or by three? Are you to hold, in the face of the fact that millions of dollars have been invested, under the law which enters into and forms a part of every contract as it was interpreted by the courts of the whole country, that you yourselves were mistaken? That for twenty-five years all the tribunals of the whole country were mistaken? That for seven years the Supreme Court of Iowa was mistaken? Because it appears now that that tribunal has reversed its long-established rulings? Had the question been presented to you one year ago to-day, you would not have hesitated an hour on the proposition, for then there was no diversity of rulings anywhere. Because the Supreme Court of Iowa has chosen thus to disregard its own precedents, are millions of property, treasured on the banks of the Delaware, the Hudson, the Thames, the Seine, and the Rhine; are the decisions of this State of Iowa itself, as of all the States; the reputation of that people, as of Americans generally, to be swept away? swept away by a 'surge of judicial opinion?' Is the sway of law among us thus to 'shake like a thing unfirm?' This cannot be. At best there is no settled law in Iowa upon the subject. The court of this year has reversed the decisions of former years; and has but taught instructions which will return, hereafter, to plague it. Assuredly, this high tribunal of the United States, whose opinion has been expressed with clearness, [68 U.S. 175, 191] will not vary its opinion and cut loose from its own, and from accepted decisions of the whole country, at a time when, above all times, change would be unwarranted in principle and freighted with disaster.
Mr. Bissell, for the City of Dubuque: The question is, Whether a subscription to an extra-territorial railway,-made by a city corporation under authority of an act of the legislature,-is valid under the Constitution and decisions of the State of Iowa? It is not here important for us to inquire what other courts, acting under other constitutions and under other laws, may have decided. And, first, it is conceded by the other side that a city corporation has no power by virtue of its ordinary franchises to make such subscription. If the power exist at all, it is now admitted that it comes only from legislation directly authorizing it. How, then, stands the case?
1. Let it be considered irrespectively of precedents anywhere. Under our form of government, the legislature, unlike parliament, is not omnipotent. Irrespectively of all constitutions, bills of right, or anything of that sort, it will be conceded that the legislature cannot directly take the property of one man and give it to another, or compel one man, or any number of men, to engage in particular pursuits, or to invest their money in particular securities. Nor can it take private property for even public purposes, without just compensation; compensation of some kind or in some way. What it cannot do in one form it cannot do in another. What it cannot do by command, it cannot do by taxation. If the legislature should tax the property of individuals in one city for all the expenses of another, such legislation would be void. And even in regard to improvements of a kind really public, if more than any citizen's just share of the expense of them is taken, the legislation is null. If power is given to take property in one place which concerns the public at large, property not being proportionably taken from that public at large, or if property is taken from one place only for objects which concern another, the [68 U.S. 175, 192] power is not one conformed to the principles of constitutional republican government. Now a man's property is as much taken by a tax as by any other form. Indeed of all modes of taking property it is the most effective, as also the most difficult to analyze and oppose. It has always been the instrument of unconstitutional legislation, and, therefore, should be watched and guarded. It is of the essence of taxation, therefore, that it be just. And wherein does this justness consist? Plainly in a just apportionment of taxes; that is to say, an apportionment which brings to the party, in some form, just compensation for this property taken away. In regard to a man's property taken by tax and applied to purposes purely local and about him, he gets the just recompense, by the application itself. Where the application is to purposes of a wider and more public kind,-for the purposes of his State, or the United States,-he gets a just recompense, provided all others are taxed proportionably with him. But just in so far as he is taxed above them, he gets no just recompense at all. The principles are readily applied to a case like the present.
It is almost unnecessary to say, that what the legislature cannot do directly, it cannot do indirectly. The stream can mount no higher than its source. The legislature cannot create corporations with illegal powers, nor grant unconstitutional powers to those already granted.
Again: Counsel of the other side do not distinguish well between private corporations and public ones.
Private corporations are only created with the assent of the corporators. They, by becoming corporators, voluntarily enter into a contract, by which they put their money or property into a common fund, to be controlled in accordance with rules to which they have assented, and which cannot be changed without their assent. The legislature cannot change the terms of their charter, neither can the majority of the corporators, unless it has been so prescribed in the contract, to which each corporator has given his assent. It is therefore right that these corporations should be permitted to enter into such speculations as they may choose. Each [68 U.S. 175, 193] member has placed just so much of his property under the control of the corporation, as he has deemed best for his interest, and no more. With public corporations it is different. The corporation is created by the legislature without necessarily consulting the will of the inhabitants, and often, in fact, in opposition to said will. The rights, duties, and powers of public corporations may be altered or taken away at any time by legislative enactment, or greater powers may be conferred upon the corporation in the same manner. The inhabitants of such corporation have no voice in accepting the charter; they have no power of electing how much of their property they will subject to the control of the corporation; they cannot transfer their stock, and thus cease to be members of such corporation. The legislature has power to create such corporation, in opposition to the will of the corporators, because such corporation is a portion of the government of the State itself, and every man yields up to the State just so many of his inherent rights, as are necessary to carry on the government which protects him. As said before, every citizen of a State yields up to the State all those rights which are necessary to carry on the government. He yields up the right without his individual assent, to be united, with other citizens, into cities, towns, counties, &c., as the legislature may deem proper. As it is necessary to have roads, wharves, waterworks, &c., for the use of the citizens of such corporations, he yields his assent to be taxed for the creation of such works. Such works, however, when created, are under the control of the corporation. They are for the sole use of the corporation.
In regard to the State of Iowa, its Constitution comes in aid of general principles. It declares (i) that all laws of a general nature shall have a uniform operation. Is not a law which authorizes a great public improvement-one running over the State-a law of a general nature? Does it have a uniform operation when the cost of it is laid on the people living at one terminus, all those along its line being exempt? It declares ( ii) that the legislative power of the State shall be vested in the Assembly of the State; meaning, [68 U.S. 175, 194] of course, that it shall not be delegated. But is it not delegated when, by statute, you give a city power to legislate in a manner, which, but for the statute, it confessedly would not have? It declares (iii) that the Assembly shall not 'in any manner create any debt, . . . which shall singly or in the aggregate, . . . exceed $100,000.' The restraint is not against the creation of a debt in behalf of the State, any more than on behalf of her subdivisions. The language is broad. When the State authorizes the cities, counties, townships, boroughs, which cover her whole surface, to lay debts on every respective part of her, is not the purpose of the restraint violated? A construction which renders practically vain a constitutional provision which a different interpretation, not forced, will preserve, can not be a sound one. It declares (iv) that corporations shall not, be created by general laws, except for political or municipal purposes. Here is a law, in fact creating a corporation for a purpose which is neither. It declares in the same section that the State shall not directly nor indirectly become a stockholder in any corporation. But does not the State become indirectly a stockholder in a corporation, when she authorizes a portion of her people to enter into an organization, which, but for her statute, they cannot have, and allows them in such form to become a stockholder in a corporation?
It is urged that the courts of the different States of the Union have decided this question so uniformly in favor of the power of the legislature to confer the authority claimed, that it is no longer an open question. We may observe in passing that it is matter of difficulty for professional men or judges-if not belonging to a State-perfectly to understand the value of decisions made under local constitutions and local statutes in that State. They may run into great error if they read them by lights in which they are accustomed to see elsewhere. But assuming all that is claimed for them, such decisions are not binding upon this court; and if the decisions of other courts are not in accordance with the law as understood by this court, they will not be followed. If a dissenting opinion of said courts is based upon correct legal [68 U.S. 175, 195] principles, this court will follow such principles, rather than an erroneous decision of a court. Let us see if the decisions of the courts of the different States do establish the principle, that a legislature, with power like that of the State of Iowa, can confer upon municipal corporations the right to purchase stock in railroad corporations.
In the first case cited, Goddin v. Crump, it was decided that the legislature of Virginia had power to authorize the city of Richmond to levy a tax, to aid in removing a bar from James River, to open navigation to the city, and to take stock in a private corporation, organized to perform such work. This river was a navigable stream, under the laws of Virginia. The court held that the levy of the tax to pay for such stock was legal, and also held that the interest of the corporation was the true test of the corporate character of the act, and that the legislature was the sole judge of what would conduce to the interest of the city. The act giving the power to aid in the construction of said work, was passed at the request of a majority of the citizens of the city. The majority of the court seem to have lost sight of the fact that an interest in an improvement is entirely different from an incidental benefit arising from the same improvement. But there is a dissenting opinion by Brooke, J., which places the question upon the true grounds. He holds that such legislation violated the bill of rights; that the power of such corporations to tax the people must be limited to objects of purely a local character. This case arose under an express act of the legislature, giving the specific power claimed.
In the next case relied on, Bridgeport v. Housatonic Railroad Co., it was decided that the legislature, upon request of a city, may authorize such city to subscribe for and take stock in a railroad leading to such city, provided such act be approved by the people of the city. The only clause in the Constitution, which was claimed to restrict the legislature, was that which forbade private property being taken for public use without compensation. This was also under an express act of the legislature. [68 U.S. 175, 196] In Tennessee it has been decided-the third case cited, shows-that under the provision of the Constitution of that State, which provides that 'the legislature has power to grant to counties and incorporated towns the right to impose taxes for county and corporation purposes,' the legislature may authorize a city to aid in the construction of a railroad to such corporation, and when the expenditure is by a county, the expenditure must be within the county. The Constitution of that State does not limit the grant to an expenditure municipal for municipal purposes, but for corporate purposes.
In Kentucky, it has been decided that the legislature had power to authorize municipal corporations to take stock in railroad corporations, and levy taxes to assist in building said road to such corporation. There is an able dissenting opinion in this case. This decision is founded upon the fact that there was no limitation to the legislative power in their Constitution, and that it was, therefore, omnipotent.
In Pennsylvania, this doctrine was carried to its extreme limit in one case,-Sharpless v. The Mayor of Philadelphia,-where it was decided that a municipal corporation may aid in the construction of a railroad, miles away, if it can be supposed that it may benefit the corporation; and that the legislature is the judge of the question. But in another,-Diamond v. The County of Lawrence,38-when suit was brought on bonds, like those here, in the hands of holders who had paid value for them, the court declared that they were open to defences of every kind; and a recovery was not had.
In Illinois, where there is no constitutional limitation, it has been held that a municipal corporation may, under legislative authority, aid in the construction of railroads within the corporation.
In Florida, under a similar provision of the Constitution to that of Tennessee, it was held that a county might aid in constructing a railroad through the county. 39
Other States have followed the decisions we dissent from; some following them to a full extent, and some limiting the [68 U.S. 175, 197] application to a narrower compass. All of the decisions, we believe, are where there was no constitutional restriction, or where the power was expressly given, as in Tennessee and Florida.
In many of the decisions, the courts seem to have been imbued with the frenzy of the day, and to have lost sight of the well-defined distinction between the powers and liabilities of municipal and private corporations.
This question, it is believed, has not been decided by this court as an independent question; but its decisions so far are based upon the decisions of the courts of the State in which the cases originated, and upon the rule that this court will follow the decisions of State courts, as to the construction of their own Constitution or statutes. If this question has been settled by the courts in the State of Iowa, then this court will follow such ruling; but if they have not settled it, then it is an open question for determination by this court. What is the history of these decisions?
The Supreme Court of Iowa, in the case of The Dubuque and Pacific Railroad Co. v. Dubuque County, which is claimed to be decisive of this question, decided that the Constitution of the State had not deprived the citizens of the county of the right to vote the credit of said county to build a railroad within the county limits. That court uses the following language: 'As the people have not, in the Constitution, delegated this power, to vote upon such propositions, nor in any way conceded or divested themselves of this right, but have in express terms affirmed, in the bill of rights, that 'all political power is inherent in the people' (Art. I, Sec. 2), we conclude that the people may, with constitutional propriety, vote the credit of the county to aid in the construction of a railroad within its limits;' one judge dissenting as to the power of the county to take stock in railroads. That court has thus decided that the Constitution has not conferred upon the legislature of the State any power to authorize such an expenditure. That this power is not in the people in their aggregate capacity, either as a town, city, county, or State, but in their individual capacity. It [68 U.S. 175, 198] holds virtually that the legislature has no such power, but that it is inherent in the people. There is nothing said about the power of the legislature to confer this authority on a city or county.
The next case relied on is the State v. Bissell. In that case the question was not raised, and the court say: 'This decision is not intended to sanction or deny the legal validity of the decision in the foregoing case, but to leave that question where that decision has left it.' 40
The next case is Clapp v. County of Cedar. The court disposes of the constitutional question with the following remarks: 'The second step would be, whether a legislature possesses the power to confer this authority upon a county? Few have doubted the existence of this power, the question having generally been, whether the power had been exercised, or whether a county possessed the desired authority without a special grant?'41 The court, however, say that 'this power is not, as far as the court can see, derived from any legislative enactment,' but, upon the strength of the judgment of the court in the above case of The Dubuque and Pacific Railroad Co. v. Dubuque County, it decides that the counties have power to aid in the construction of railroads within the limits of such county; one judge dissenting.
In Ring v. Johnson Co., and McMillen v. Boyles, the last cases cited on the other side, the question was not directly raised nor decided, the court conceding that counties had the right to aid in the construction of railroads to be constructed within their limits. 42
But confessedly the Iowa decisions in favor of these bonds end here. They were never quite unanimous, and have never given satisfaction to either profession or courts. In Stokes v. The County of Scott, a majority of the court assumed tenable ground, and restrained an issue about to be made. Then came The State, ex relatione, v. The County of Wapello, a case fully argued, much considered, and unanimously decided. That this case does decide these bonds to be void, that [68 U.S. 175, 199] such is now the law in the State of Iowa, is undeniable, we think. The court in that great case remarks, that although some fourteen or fifteen States had expressed their opinions upon this exercise of power by municipal corporations, they had not reached satisfactory conclusions. Hence, it declares, the renewed agitation on the subject; an agitation, it remarks, which 'will continue to obtrude itself upon the courts of the country, year after year, until they have finally settled it upon principles of adjudication which are known to be of the class of those that are laid up among the fundamentals of the law: and which will leave the capital of private individuals where the railroad era, when it dawned upon the world, found it, namely, under the control and dominion of those who have it, to be employed in whatever field of industry and enterprise they themselves might judge best.' The court then speaks of the decisions of Iowa from the first, Dubuque Co. v. The Dubuque, &c., R. R., in 1853, where by a divided court the power was held to have been given, to the last, Stokers v. County of Scott, in 1859, where by a like court it was to a degree decided otherwise. 'The intermediate decisions,' it declares, 'were an acquiescence in the former of these, by two members of the court, not upon the ground that the legislature had in fact authorized the exercise of any such power by the cities or counties in this State (for this they had expressed very great doubts about, and affected not to believe), but because they felt themselves so much committed and trammelled by the previous decision and subsequent legislative recognition, that they did not feel themselves at liberty, from public considerations, to unsettle the construction which the first decision had given to the code on the subject.'
Amey v. Alleghany City, decided in this court in 1859,43 is one of the decisions relied on to support the plaintiff's case; but that decision is against it. The case, a Pennsylvania one, acknowledged the force of the argument we have used as to the proper objects of legislation, and the constitutionality or unconstitutionality of statutes accordingly. But the court considered that constitutionality was not there open for discussion; it having been affirmed by the State court. If it had been open, such legislation would not have been supported. 'We have not,' say the court, 'discussed that position of the learned counsel. Agreeing with him in the main, as to the foundations upon which the correctness of legislation should be tested, and the objects for which it ought to be approved, we cannot, with the respect which we have for the judiciary of his State, discuss the imputed unconstitutionality of the acts; it having been repeatedly decided by the judges of the courts of Pennsylvania, including its Supreme Court, that acts for the same purposes as those are which we have been considering were constitutional.'
If this court considers, as the court of Iowa has done, that the constitutionality of the Iowa acts is open for consideration, they will decide that constitutionality does not exist, and that the bonds are void.
Then, the question is, whether the constitution and laws of a State are to be construed by the State courts of other States, or by its own courts? whether, in a case where no power to interpret above the State's court is given to the Supreme Court of the United States-as such power is given in certain other cases,44 where a writ of error lies to the highest State court from this-this court will determine that the constitution [68 U.S. 175, 202] and statutes of a State mean one thing, when the courts of the State itself have solemnly adjudged that they mean another? whether this court will say, that the State courts have decided a question, when the judges who sit on the bench of that court are declaring unanimously that 'the question is an entirely open one,' and to be passed upon as an 'original question?' whether, because dealers upon change, whose daily bread, like that of underwriters, is 'risk;' people upon the 'Rhine'-the respectable citizens of the Juden-Gasse of Frankf urt-am-Maine,-have bought these bonds at large discounts, on account of those doubts of their legality which everywhere have attended the issue of them, shall have them enforced in the face of constitutions and solemn decisions of the State courts, simply because they have bought and yet hold them? These are the questions; some of them grave ones,-if resolved in the affirmative.
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:
An act approved January 28th, 1857, contains these provisions:
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 bon a 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. 45 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 [68 U.S. 175, 204] under the consideration of the Supreme Court of Iowa, in McMillen v. Boyles,46 and again in McMillen et al. v. The County Judge and Treasurer of Lee County. 47 The validity of the act was sustained. Without these rulings we should entertain no doubt upon the subject. 48
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:
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. [68 U.S. 175, 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. The Dubuque & Pacific R. R. Co. (4 Greene, 1); The State v. Bissel (4 Id., 328); Clapp v. Cedar Co. (5 Iowa, 15); Ring v. County of Johnson (6 Id., 265); McMillen v. Boyles (6 Id., 304); McMillen v. The County Judge of Lee Co. (6 Id., 393); Games v. Robb (8 Id., 193); State v. The Board of Equalization of the 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 the State of Iowa, ex relatione, v. The County of Wapello,49 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. Warren50 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. [68 U.S. 175, 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.' 51
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. 52
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 [68 U.S. 175, 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.
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,53 and The State of Iowa, ex relatione, v. The County of Wapello,54 are relied on. [68 U.S. 175, 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 [68 U.S. 175, 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. [68 U.S. 175, 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.