U.S. Supreme Court
Butz v. City of Muscatine, 75 U.S. 8 Wall. 575 575 (1869)
Butz v. City of Muscatine
75 U.S. (8 Wall.) 575
1. The limitation in the Act of 22 January, 1852, of the Legislature of Iowa, amendatory of the charter of the City of Muscatine, and which authorized the council to levy a tax not exceeding one percent on the assessed value, in any one year, of the property of the city is a limitation touching the exercise of the power of taxation in the ordinary course of municipal action.
2. It does not apply to a case where a judgment has been recovered against the city. Such a case, on the contrary, falls within the provisions of the code of 1851 (reenacted in 1860), which make obligatory the levy of a tax as early as practicable sufficient to pay off the judgment with interest and costs; the extent of the limitation in such a case is the only limitation of the amount to be levied.
3. Where a question involved in the construction of state statutes practically affects those remedies of creditors which are protected by the Constitution, this Court will exercise its own judgment on the meaning of the statutes, irrespectively of the decisions of the state courts, and if it deems these decisions wrong, will not follow them, and this whether the case come here from the circuit court in ordinary course or from the supreme court of the state under the 25th section of the Judiciary Act.
4. A remedy, which the statutes of a state, on what this Court considers a plainly right construction of them, give for the enforcement of contracts cannot be taken away, as respects previously existing contracts, by judicial decisions of the state courts construing the statutes wrongly.
5. The extent to which the writ of mandamus from the federal courts can give relief against decisions in the state courts involves a question respecting the process of the federal courts, and that being so, it is peculiarly the province of this Court to decide all questions which concern the subject.
A code of the State of Iowa, adopted in 1851 and known as the code of that year, after enacting that neither the public property of any city corporation necessary to carrying on the general purposes for which the corporation was established nor the property of private citizens shall be levied on to pay the debt of such corporation, goes on to enact that if any corporation against which judgment has been obtained has no property which can be seized, "a tax must be levied chanrobles.com-red
on as early as practicable sufficient to pay off the judgment, with interest and costs." And by the code, a failure on the part of the officers of the corporation to levy such a tax in the case prescribed makes them personally responsible for the debt.
With this code in force, the City of Muscatine was incorporated, and in 1852 it was enacted specially in reference to that city by an amendment to its charter that an assessor should be appointed whose duty it should be
"to make an assessment of the property of the city subject to taxation, and upon whose assessment the council may levy a tax of not exceeding one percent upon the value in any one year."
With this provision in force, the city, which under its charter had "power to borrow money for any purpose in its discretion," &c., did borrow, under that power, in the year 1854, money, issuing bonds, of which one Butz, of Pennsylvania, bought a large amount.
In 1860, the State of Iowa reenacted the provisions of its already mentioned code of 1851 on the subject of executions. But on a question whether those general provisions of the code applied to a case like that of the charter of Muscatine, where there was a limitation about taxes, the Supreme Court of Iowa determined more than once that it did not. [Footnote 1]
With these state decisions unquestioned in any way in the state courts, Butz, whose bonds were unpaid and who had a return of nulla bona to an execution against the City of Muscatine, after judgment had by him on them against the city, applied in 1867 to the court below, the Circuit Court of the United States for Iowa, for a mandamus against the city officers to levy, under the provisions of the code, a tax "sufficient to pay off the judgment, with interest and costs." The city, relying on the limitation in its amended charter and on the decisions of the supreme court of the state, made return that under the laws of Iowa they were not permitted to levy a tax exceeding in amount one percent upon the taxable property of the city for all purposes in any one year; chanrobles.com-red
that this amount had been levied for the year 1867; that a part of it had been collected, and that for a part the taxpayers were delinquent; that the entire amount collected had been expended for the necessary current and incidental expenses of the city, and that the entire amount levied and collected for the year 1868 would be needed for the same purposes for the year, and that those expenses were a paramount lien upon the fund.
The plaintiffs demurred to the return. The circuit court overruled the demurrer. The plaintiffs elected to abide by it, and judgment was entered against them.
The questions now here were:
1. Whether the construction given by the Supreme Court of Iowa to the provisions of the codes and to the charter of the city was one which in the judgment of this Court could, in itself, be sustained?
2. If not, then -- since the effect of the decisions in question was to deprive creditors of the only practicable means of enforcing against certain corporations which had made them, contracts solemnly entered into by those corporations prior to the date of the decisions -- whether this was a case where the Supreme Court would adhere to its rule, confessedly obligatory in most cases, that it would follow, irrespectively of what it might itself think of the correctness of such decisions, the decisions given by the state courts in the construction of their own state statutes, the question here more particularly arising on a writ of error in ordinary course to a Circuit Court of the United States, and not on a writ to the supreme court of the state, in which case this Court has power by the Judiciary Act to reexamine and reverse any decision of such a court, where there has been drawn in question the validity of a statute of or an authority exercised under any state on the ground of their being repugnant to the laws of the United States and the decision has been in favor of such their validity. chanrobles.com-red