Gelpcke v. City of Dubuque

PETITIONER: Gelpcke
RESPONDENT: City of Dubuque
LOCATION:

DOCKET NO.: None
DECIDED BY: Taney Court (1863-1864)
LOWER COURT:

ARGUED: Dec 15, 1863 / Dec 16, 1863
DECIDED: Jan 11, 1864

Facts of the case

Iowa's constitution limited the amount of state debt and forbade the state to own stock in private corporations. But Iowa was enamoured with railroading. The legislature authorized municipal governments to issue bearer bonds to aid railroad construction throughout the state. The idea was that permitting municipalities to do what the state government could not do would circumvent the state constitutional limitation. Railroad prosperity did not materialize and the taxpayers were taxed to pay off the bonds which had been used to buy railroad stock. Bondholders filed suit in federal court to recover interest on the bonds.

Question

Is the obligation to pay a debt a contract beyond impairment by any state?