City of Ottumwa v. City Water Supply Co.

Citations

• 119 F. 315
• 59 L.R.A. 604
• 1902 U.S. App. LEXIS 4671

Syllabus

<p>1. Jurisdiction of Federal Courts—Amount in Dispute—Suit by Taxpayer for Injunction.</p> <p>In a suit by a taxpayer to enjoin a city from issuing bonds claimed to be in excess of the constitutional limit of its indebtedness, the power of the city to issue such bonds is the matter in dispute for the purpose of determining whether the amount or value in controversy is sufficient to give a federal court jurisdiction, and not the tax to which complainant would be subjected.</p> <p>2. Same—Following State Decision—Application of Local Laws.</p> <p>While the federal courts are bound by the construction placed by the highest court of a state on a state statute or constitutional provision, when it becomes necessary to apply the statute or provision, as thus construed by the local courts, to a particular contract, and to determine from a consideration of all its provisions whether it is a violation of the law, a federal court is entitled to express an independent judgment.</p> <p>8. Municipal Corporations—Limitation on Power to Create Indebtedness— Iowa Constitution.</p> <p>The constitution of Iowa provides (article 11, § 3) that “no county or other political or municipal corporation shall be allowed to become indebted in any manner or for any purpose to an amount in the aggregate exceeding five per centum on the value of the taxable property within, such county or corporation, to be ascertained by the last state and county tax lists previous to the incurring of such indebtedness.” The city of Ottumwa, which was at the time indebted to an amount beyond such limit, passed an ordinance authorizing the issuance of nearly ?100,000 in negotiable bonds to be sold by the city, and the proceeds used in the construction of a waterworks plant to be owned by the city, and such action was subsequently approved by a vote of the electors. The bonds were to be payable at stated times, to bear interest payable semiannually, and to be secured by a mortgage on the water plant. The ordinanc