City Water Supply Co. v. City of Ottumwa

Citations

• 120 F. 309
• 1903 U.S. App. LEXIS 5277

Syllabus

<p>1. Municipal Corporations — Suit to Enjoin Creation of Illegal Indebtedness — Parties.</p> <p>To a suit by a taxpayer against a city to enjoin it from creating a debt beyond the constitutional limit, by carrying out a contract made with a person or corporation, such person or corporation is not an indispensable party defendant.</p> <p>2. Same — Limitation of Indebtedness — Basis of Computation.</p> <p>Under the provision of the Iowa constitution limiting the indebtedness which may be contracted by any municipality to 5 per cent, of the value of its taxable property, such per cent, is to be computed on the assessed value of the property for taxation, and not on the actual value, where the two are not the same.</p> <p>8. Same — Contract Creating Indebtedness.</p> <p>That a city which is already indebted in excess of the constitutional limit has in its treasury a part of the money necessary to discharge the obligation it assumed in entering into a contract for a public improvement, and may be able to collect the remainder from taxes by the time the obligation matures, does not alter the fact that such contract creates an indebtedness within the constitutional inhibition, and is therefore one which the city was without power to make.</p> <p>4 Federal Courts — Following Decision of Appellate Court — Conflicting State and Federal Decisions.</p> <p>Where the circuit court of appeals in a suit by a taxpayer determined that a contract made by a city under an ordinance was void as creating an indebtedness, *when the city was then indebted to the limit permitted by the constitution of the state, such decision is binding on a circuit court of the United States in a subsequent suit between the same parties, involving a different contract, but one which was made pursuant to the same ordinance, notwithstanding a contrary decision by the supreme court of the state.</p> <p>¶ 2. Constitutional and statutory limitations of municipal indebtedness, see note to City of Helena v. Mills