RESPONDENT:City of Dubuque
DOCKET NO.: None
DECIDED BY: Taney Court (1863-1864)
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.
Is the obligation to pay a debt a contract beyond impairment by any state?