7.

8.

McClure v. Owen.

2. If the highest judicial tribunal of a State adopt new views as to the construction of a statute, and reverse its former decision, the federal courts will follow the latest settled adjudications.

CONSTRUCTION OF STATE CONSTITUTION. The foregoing rules and principles apply as well to the construction of a State Constitution as to the local or statute laws of a State.

The decision of the Supreme Court of the United States in Gelpecke v. The City of Dubuque, 1 Wallace, 206, shown to be unsupported by the prior decisions of that court.

Appeal from Washington District Court.

THURSDAY, DECEMBER 17.

IN CHANCERY. The plaintiffs, who are tax payers of Washington county, in May, 1860, filed the original bill herein, to restrain Owen, the treasurer of the county, and others, from the collection of certain taxes for the payment of interest on bonds issued by the officers of the county in payment of a subscription by the county to the capital stock of the Mississippi and Missouri Railroad company. This railroad corporation was made a party defendant to the bill. The bill asks the relief of a perpetual injunction against the defendants, officers of the county and others, to restrain them from the collection of taxes for the payment of said bonds and the interest thereon, etc. The grounds for the relief, as shown in the bill, are irregularity in the acts of the officers of the county in issuing the bonds, and want of power in the county, under the Constitution and laws of the State, to issue such obligations.

The cause has been before in this court, and was reversed and remanded on account of a defect of parties, and because it was decided in vacation without consent. 21 Iowa, 134. After being remanded the proper parties were made defendants.

McClure v. Owen.

Certain holders of the bonds of the county, which are the subject of the litigation, made themselves defendants and answered the bill.

The District Court rendered a decree in accordance with the prayer of the bill.

The defendants, the Mississippi and Missouri Railroad company, and Durant, and other bondholders, appeal.

Grant & Smith for the appellants.

From the case of Aspinwall v. Knox County, down to the last one reported in 6 Wallace, the Supreme Court has held the right to require the tax, a part of the contract which was irrepealable. They have also held, that the decisions of this court which held these bonds consonant with the Constitution and Code, were a part of the laws of the land, and that bonds issued, while the court so held, would be enforced. If there had been anything irregular in the vote on the first series of bonds, it was validated by two acts of the legislature, authorizing their issue by the railroad company and the county judge (see acts January 25, 1855, pp. 192, 219), and the recital of their issue in pursuance of law has been held by the United States Supreme Court to be conclusive of regularity.

The difference of opinion between the Supreme Court of the United States and this court must be regarded as settled now.

When the Supreme Court of the United States has decided that a State court decision impairs the obligation of a contract, their decision is not only final but binding on this court, and on such questions the federal courts are not governed by the decisions of the State courts, Branch Bank v. Skelly, 1 Black. 443; Provident Institution for Savings v. Com. Mass. 6 Wallace.

McClure v. Owen.

The cases in the federal courts on these and like bonds are familiar to the court. We append a list for reference. Aspinwall v. Knox County, 21 How. 539, 524, 376; Mercer County v. Hackett, 1 Wallace, 83; Gelpke v. Dubuque, id. 173; Meyer v. Muscatine, id. 384; Van Hortup v. Madison County, id. 291; Thompson v. Lee County, 3 id. 327; Havameyer v. Iowa County, id. 274; Marshall v. Skent, 5 id. 772; Galena v. Amy, id. 705; Van Hoffman v. Quincy, 4 id. 535; Mitchell v. Burlington, id. 270; U. S. Riggs v. Johnson County, 6 id. 166; U. S. Weber v. Lee County, id. 210; U. S. Weber v. Keokuk, id. 514; S. C., id. 518.

us.

We desire to present this point solely, that we may not be embarrased with technicalities if the court is against The further agitation of the difference of opinion between this court and the United States Supreme Court is not to be encouraged by any court. It is the interest of the State, that litigation should end. This court has adhered to its opinion with constancy hoping to influence the final arbiter. It has failed, and we trust that they will consider it as honorable fairly to yield, as it was manful to contest.)

Patterson & Rhinehart for the appellees. (No brief found on file.)

BECK, J. Certain grounds of error, as that after the reversal of the cause in this court it could not be again tried in the court below; that the bondholders, who are defendants, have recovered judgment upon these bonds in the federal courts, and that proper application was made to and refused by the court below to transfer the case to the United States Circuit Court, are pointed out in the printed argument of appellants' counsel; but they expressly ask a decision on another ground and desire that point to

1. CONSTITU

TIONAL LAW:

McClure v. Owen.

be decided solely. We do not hesitate to comply with the wishes so plainly expressed by appellants' counsel. They, in fact, amount to a waiver of errors on their part, if any should be found in the points they suggest. If the parties are content with such rulings of the court below, so far as to ask us to omit a review of them, we know of no reason why we should not comply with their request. The only point made by appellant's counsel which they call upon us to decide, is, in their language, this: "The decision of the court below impairs the obliobligation of gation of the contract, made with the bondcontracts. holders on commercial paper, that a specific tax should be levied to pay the bonds." This court has often held, that, under the Constitution of the State, bonds of the character of those involved in this suit can not be issued by the counties and municipal corporations, and are therefore void; that contracts of this kind are unauthorized and forbidden by the Constitution, and cannot therefore be enforced by the courts of the State. The decisions, in thus delaring such instruments void, in effect, hold, that they are not contracts at all, inasmuch as the counties and cities issuing them are in no manner bound by them. Without at length pointing out the distinctions, it is very obvious that a decision of a court declaring a contract void ab initio an instrument to be no contract at all-is a very different thing from a decision impairing the obligation of a valid contract, whereby a valid instrument is rendered inoperative and its binding effect destroyed. It is the duty of courts, not only to construe contracts and to apply them to their proper subjects, but also to pass upon their binding effect and obligation, and if from want of power in the obligors to contract, or from want of form in the contracts themselves, or because they are contrary to public policy, or contravene the laws of the State, either as contained in the Constitu

McClure v. Owen.

tion, statutes, or adjudications of the courts, they will be declared void and will not be enforced. This power is continually exercised, and questions as to the validity of contracts probably arise more frequently in the courts of our State than any other class of questions. The power of the courts in such cases to determine the invalidity of contracts cannot be denied. It is the power exercised in the case before us, where a contract is declared void because it contravenes the Constitution of the State.

Laws impairing the obligation of contracts are repugnant to express provisions of the Constitution of the State as well as the United States.

The prohibitions of these constitutional provisions extend to laws that impair the obligation of valid, existing contracts, and cannot be extended to judicial decisions which declare an instrument void because it contravenes the Constitution, or is in conflict with public policy, and is, therefore, held to be in fact no contract at all. A contrary doctrine has never been advanced in any court of the Union, so far as we are advised. No more fit occasion for the discussion of this doctrine by counsel, and its recognition by the courts, if it be true, could have been presented, than the cases in the State and federal courts growing out of the frequent litigations upon bonds of the character of those involved in the case before us. We have not observed that in such cases it has ever been advanced by counsel or referred to in the opinions of the court, except in one instance, when it is denied that the question can with reason be raised.

We are asked by appellants' counsel to change the later ruling of this court and abandon the principles of 8. Construction the adjudications so frequently heretofore anand Constitu- nounced in the cases that have arisen upon these county and city railroad bonds. This

of State laws

tion: federal

courts.

we are asked to do, not because these rulings and the