Gelpcke v. City of Dubuque (1863) – Guest Essayist: Gary Porter

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Gelpcke v. City of Dubuque, 68 U.S. 1 Wall. 175 (1863) – “Oscillations” in the Law

On its face, Gelpcke v. Dubuque appears to be about the validity of municipal bonds and not much else, but there were deeper legal issues at play. Namely, who has the ultimate authority to interpret a state constitution or statute, the highest state court or the federal courts (including the Supreme Court)? And when a state supreme court gives a new interpretation to a state statute, does that constitute an amendment of the statute, i.e. does it have the status of “law?” If so, and this has the effect of rendering a contract void, can this then bring the opinion of the state supreme court into conflict with the U.S. Constitution, i.e., the Impairment of Contracts clause?

Here are the facts in the case:

The 1846 Iowa Constitution contained a provision (Article 7) which restricted the General Assembly from creating any “debt or debts, liability or liabilities, which shall, singly or in the aggregate, with any previous debts or liabilities, exceed $100,000.” The following year, an act of the General Assembly incorporated the city of Dubuque. In 1857, the Assembly passed an act authorizing the City of Dubuque to issue bonds, redeemable in 20 years but paying interest along the way, to aid in the construction of railway lines to be built and operated by the Dubuque Western, and Dubuque, St. Peter’s & St. Paul Railroad Companies. Bonds in the amount of $250,000 (notice the amount) were authorized to be issued for each of the two companies. In the act authorizing the bonds the Assembly declared “Said bonds shall be legal and valid.” and “neither the City of Dubuque nor any of the citizens shall ever be allowed to plead that the said bonds are invalid.” Such bond measures required the approval of 2/3 of the citizens in an election, which the citizens gave (it would appear that, as now, the citizens were not completely conversant in their state constitution).

A New York citizen, Edward Langworthy, purchased some of these bonds, the amount not disclosed in the opinion, and subsequently conveyed some of them to Mr. Gelpcke. On January 1st, 1877, when Mr. Langworthy attempted to redeem a coupon for an accrued half year’s interest, the bank, acting on behalf of the city, refused payment. Gelpcke sued the City of Dubuque in the U.S. District Court for the District of Iowa.

At trial, the City claimed that since the bonds exceeded the constitutional limit of $100,000, the bonds were improperly issued, were thus void, and that the interest should not be paid (What about redemption? Not mentioned.). The plaintiff objected (“demurred”) to this line of reasoning and the court overruled the objection and rendered judgement for the defendant. The case record does not specify this, but clearly Mr. Gelpcke, a citizen of another state, could not have known of the conflict between the amount of the bond issue and the Iowa Constitution, and must have received the bonds in good faith.

Gelpcke then appealed to the U.S. Supreme Court, which reversed the District Court opinion.

Before the high court, the city argued that the Iowa Constitution did not confer upon the legislature the authority it gave to the City of Dubuque.

The Court pointed to a series of cases in which the Supreme Court of Iowa rejected this argument. But then in a later case, State of Iowa v. County of Wapello, the Iowa Supreme Court had apparently reversed itself, and the city argued that the U.S. Supreme Court should defer to the Iowa Supreme Court’s later opinion and thus sustain the District Court ruling. Associate Justice Noah Swayne, in delivering the opinion of the court, called these changed opinions of the Iowa Court “oscillations.”

“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…. 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…. 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.”

And then, in what could now be called “Scalia-esque” fashion, Swayne concluded: “We shall never immolate truth, justice, and the law because a state tribunal has erected the altar and decreed the sacrifice.”

Associate Justice Samuel Miller delivered a heated dissent. He pointed out that the Supreme Court of Iowa had the responsibility to “construe the constitution of the state,” and that its “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.”

Miller argued that his fellow Justices had, in effect, said to the Federal District 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 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.”

He went on to note that, yes, courts on occasion reverse a previous ruling:

“I understand the doctrine to be in such cases not that the law is changed, but…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.”

Soon after the opinion, many in the law profession took issue with the case, generating, among other analyses, a four part expose in the American Law Register.[1] In the years immediately leading to the Civil War, state’s rights issues were prominent in the courts. Some contended that a state court system should have the exclusive authority to interpret the state’s statutes unless there is a constitutional issue at stake; others agreed, but insisted that the Iowa Supreme Court’s ruling itself brought a constitutional issue into play: the Impairment of Contracts Clause.

This ruling is similar to Fletcher v. Peck, another case where tainted contracts (in Fletcher, by corruption, in Gelpcke, by constitutional infirmity) were held to be legitimate nevertheless.

Aside the implications that Gelpcke had on contract law, the more dangerous result, as Justice Miller rightly pointed out, was the implication that any court ruling creates “law.”  Today that implication is considered received wisdom. We bow down to the rulings of the high court and now act in accordance with the new “law.”

Gelpcke v. City of Dubuque, 68 U.S. 1 Wall. 175 175 (1863):
https://supreme.justia.com/cases/federal/us/68/175/

Gary Porter is Executive Director of the Constitution Leadership Initiative (CLI), a project to promote a better understanding of the U.S. Constitution by the American people.   CLI provides seminars on the Constitution, including one for young people utilizing “Our Constitution Rocks” as the text.  Gary presents talks on various Constitutional topics, writes a weekly essay: Constitutional Corner which is published on multiple websites, and hosts a weekly radio show: “We the People, the Constitution Matters” on WFYL AM1140.  Gary has also begun performing reenactments of James Madison and speaking with public and private school students about Madison’s role in the creation of the Bill of Rights and Constitution.  Gary can be reached at gary@constitutionleadership.org, on Facebook or Twitter (@constitutionled).

[1] The American Law Register, Vol 38, No. 9, Sept 1899, pp. 530-532, found at: http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=5673&context=penn_law_review

2 replies
  1. Publius Senex Dassault
    Publius Senex Dassault says:

    Thank you explaining clearly a complex case. The Constitutional impairment of the Contract Clause does seem to have valid cause for SCOUTS to rule.

    Sadly, as highlighted by Justice Miller, Mr. Porter, and additional rulings, courts have taken extreme liberty to create laws that violate the [dead] Constitution when it suits their global world view. God help us take our country back, or …

    PSD

    Reply

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