Company for the construction of a bridge over the Colorado river, and, incidentally, the weight to be given to alleged conflicting decisions of the supreme court of Texas as to the validity of such bonds.

As bearing upon this question, the following sections of article 11 of the constitution of Texas, upon the subject of "Municipal Corporations," are pertinent:

"Sec. 2. The construction of jails, court houses and bridges, and the establishment of county poor houses and farms, and the laying out, construction and repairing of county roads, shall be provided for by general laws."

"Sec. 7. All counties and cities bordering on the coast of the Gulf of Mexico are hereby authorized, upon a vote of two-thirds of the taxpayers therein, (to be ascertained as may be provided by law,) to levy and collect such tax for construction of sea walls, breakwaters or sanitary purposes, as may be authorized by law, and may create a debt for such works and issue bonds in evidence thereof. But no debt for any purpose shall ever be incurred in any manner by any city or county unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and to provide at least two per cent. as a sinking fund; and the condemnation of the right of way for the erection of such works shall be fully provided for."

In apparent compliance with the sections above quoted, the legislature in 1887 enacted the following law (chapter 141, § 1):

"Section 1. That the county commissioners' court of the several counties of this state are hereby authorized and empowered to issue bonds of said county, with interest coupons attached, in such amounts as may be necessary, for the purpose of buying or constructing bridges for public uses within such county, said bonds to run not exceeding twenty years, and bearing interest at any rate not to exceed eight per cent. per annum.

"Sec. 2. The commissioners' court shall levy an annual ad valorem tax, not to exceed fifteen cents on the one hundred dollars valuation, sufficient to pay the interest on and create a sinking fund for the redemption of said bonds. The sinking fund herein provided for shall not be less than four per cent. on the full sum for which the bonds are issued."

It is admitted that no provision was made on July 3, 1888, "at the time of creating" the debt, for levying and collecting a sufficient tax to pay the interest thereon and 2 per cent. for a sinking fund, as required by the second clause of section 7, if said clause be applicable to a debt incurred for building bridges. It was alleged in the petition, however, that in the February preceding the commissioners' court ordered an ad valorem tax of 20 cents for general purposes, and an annual ad valorem tax of 15 cents for road and bridge purposes; and it also appeared that in the following February (1889) it ordered an annual ad valorem tax of 25 cents for general purposes,

15 cents for road and bridge purposes, court house and jail tax of 5 cents, and an ad valoren-tax of 5 cents to create a sinking fund for bridge bonds to pay the interest on said bonds.

Plaintiff insisted in the court below that the language of the last clause of section 7, requiring a provision to be made for the levying and collection of a tax to pay the interest and to provide a sinking fund, must be read in connection with the preceding clause of the section, and, taking the two together, that the last clause must be held to apply only to counties bordering on the Gulf of Mexico. Both the circuit court and the court of appeals, however, held that the last clause contained a separate and independent provision, and was applicable to the contract made by the county for the building of this bridge, and that, the petition of the plaintiff failing to show compliance with it, the contract was void, and the bonds issued without authority of law. Both courts relied upon the construction given by the supreme court of Texas in numerous cases to this section of the constitution.

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It is important in this connection to note that the opinion of the circuit court was pronounced on March 13, 1896, and that of the court of appeals on June 16, 1897. Since that time it is asserted that the supreme court of Texas has taken a somewhat different view of the law, and an examination of these several decisions becomes important. In the earliest of them (City of Terrell v. Dessaint [1888] 71 Tex. 770, 9 S. W. 593), which was an action on a promissory note given by the city in payment for material for waterworks supplies, it was squarely held that the last clause of section 7, above quoted, must be held to apply to all cities alike, and that the clause contained no word or words which restricted its application to the cities previously mentioned in the same section. "The language is general and unqualified," said the court, "and we find nothing in the context to indicate that the framers of the constitution did not mean precisely what is said; that is, that no city shall create any debt without providing, by taxation, for the payment of the sinking fund and interest." It was also held that a debt of $1,500 for materials to extend its waterworks was within the clause in question, and that, as the current expenses proper of the city exceeded 3 its resources for* general purposes, and no ap-? propriation was made for the payment of this debt, there could be no recovery.

In Bassett v. City of El Paso (1895) 88 Tex 168, 30 S. W. 893, it was held that the language and purpose of the constitution were satisfied by an order for the annual collection by taxation of a "sufficient sum to pay the interest thereon and create a sinking fund," etc., although it did not fix the rate or per cent. of taxation for each year by which the sum was to be collected, but left the fixing of such rate for each successive year to the commissioners' court or the city council. It was contended that the ordinance, which provided for the issue of waterworks bonds, was void, be

cause it did not levy a tax, but delegated to the assessing and collecting officers the power to make such levy from year to year. But it was said that "to so construe these provisions as to require, at the time the debt is created, the levy of a fixed tax, to be collected through a long series of years, without reference to the unequal 'sums' that would in all probability be realized therefrom, instead of the collection annually of a certain sufficient sum' to pay the annual interest and create the sinking fund required by law, would be doing violence to the language used, and authorize, in cases where values rapidly increase, the extortion from the taxpayers of large amounts of money in excess of the amount necessary to satisfy the interest and principal of the bonds, and this in turn would invite municipal corruption and extravagance."

In McNeal v. City of Waco (1895) 89 Tex. 83, 33 S. W. 322, plaintiff sued the city on a contract for building cisterns for fire protection, to recover the contract price for one and damages for refusing to allow him to complete the others. The petition failed to show a provision for taxes to pay interest and a sinking fund, or an existing fund for the payment; nor did the contract show facts from which the court could say that it was an item of ordinary expenditure. It was held that a general demurrer to the petition should have been sustained, and it was also held that the word "debt" included every pecuniary obligation imposed by contract outside of the current expenditures for the year. To same effect is Howard v. Smith, 91 Tex. 8, 38 S. W. 15.

*Such was the construction placed by the supreme court of Texas upon the constitutional provision at the time when the case under consideration was decided by the courts below. It was held by the circuit court that the county commissioners' court should have made provision, at the time the contract was executed, July 3, 1888,-by levy of a tax or otherwise, for a sinking fund, and the interest on the bonds issued for the erection of the bridge; that the levy made by the commissioners' court in February, 1888, could not be held applicable to the bonds in controversy, for the manifest reason that the contract for the erection of the bridge was not then in existence, nor even in the contemplation of the parties, so far as the allegations of the petition disclosed; that the general levy made in February, 1889, could not be held applicable to the bonds of the bridge company for two reasons: First, because it was made some six months after the execution of the contract; and, second, because the order of the commissioners' court, authorizing the levy, made no reference whatever to the bonds in controversy, nor to the contract between the county and the bridge company. The circuit court of appeals came practically to the same conclusion.

Since these cases were decided, however, the supreme court of Texas has put a construction upon the constitution which fully supports the position of the plaintiff in this

case. In Mitchell Co. v. City Nat. Bank of Paducah, 91 Tex. 361, 43 S. W. 880, decided in January, 1838, the action was upon interest coupons attached to bonds issued by the county for the purpose of building a court house and jail, and upon others for constructing and purchasing bridges. An act had been passed in 1881 with reference to the creation of courthouse debts similar to the act subsequently passed in 1887 respecting bridge bonds, a copy of which is given above. The same defense was made,-that at the time of the creation of the debts the county made no provision for levying and collecting a sufficient tax to pay the interest and sinking fund, although for the year 1881 the court levied a court house and jail tax of 25 cents on the $100, repeated during subsequent years, and increased to 50, cents; and every year after the issue of the bonds for bridge purposes the court levied 15 cents on the $100 as a tax for road and bridge purposes. It was held, quoting Bassett v. City of El Paso, 88 Tex. 175, 30 S. W. 893, that it was unnecessary to ascertain the rate per cent. required to be levied in order to raise the proper sum, and to actually levy that rate of tax at the time; that, if the laws of 1881 and 1887 had never been passed, the county would have had no authority, under the constitution, to contract the debts represented by the bonds, nor to levy a tax for the payment of the interest and sinking fund on such debts. The power to do so could be derived from the legislature only. "We understand," said the court, "that the provision required by the constitution means such fixed and definite arrangements for the levying and collecting of such tax as will become a legal right in favor of the bondholders of the bonds issued thereon, or in favor of any person to whom such debt might be payable. It is not sufficient that the municipal authorities should by the law be authorized to levy and collect a tax sufficient to produce a sinking fund greater than two per cent., but to comply with the constitution the law must itself provide for a sinking fund not less than two per cent., or require of the municipal authorities to levy and collect a tax sufficient to produce the minimum prescribed by the constitution." It was held that, the laws of 1881 and 1887 having been enacted for the purpose of putting into force the constitutional provisions, it was the duty of the courts to so construe the laws as to make them valid, and give effect to them. The court came to the conclusion that these laws did make such provision for the levying and collecting of a tax as was required by the constitution, and that, in case the court had refused to levy the tax after the bonds were issued and sold, the bondholders would have been entitled to a mandamus to compel the commissioners' court to levy such tax as purely a ministerial duty. The bonds, with certain immaterial exceptions, were held to be valid obligations of the county.

It is quite evident that if this case had been decided and called to the attention of the

courts below, the validity of the bonds involved in this action would have been sustained, and the main question involved in this case is whether we shall give effect to this decision of the supreme court of Texas, pronounced since the case under consideration was decided in the courts below, and giving, as is claimed, at least, a somewhat different construction to the constitution of the state.

We do not ourselves perceive any such inconsistency between the case of Mitchell Co. v. City Nat. Bank of Paducah and the earlier cases as justifies the county, in the case under consideration, in claiming that the supreme court of Texas had overruled the settled law of the state, and set in motion a new departure. No such inconsistency is indicated in the opinion in the Mitchell Co. Case. So far as the prior cases are cited at all, they are cited with approval, and there is certainly nothing to indicate that the court intended to overrule them. That court had not changed in its personnel since the prior judgments, except the first, were pronounced, and it is not probable that the judges would have changed their views without some reference to such change. Indeed, but one of the earlier cases was cited in the Mitchell Co. Case (Bassett v. City of El Paso, 88 Tex. 175, 30 S. W. 893), and that supports, rather than conflicts with, the opinion. As we read them, they merely decided that some provision for payment must be made. In the Mitchell Co. Case the question was for the first time presented whether the laws of 1881 and 1887 were constitutional, and whether action taken under these laws was an adequate compliance with the requirement that provision should be made "at the time of creating" the debt for a sufficient tax to pay the interest and to provide a 2 per cent. sinking fund. It was held that they were. This overruled nothing, because the question had never before been decided, and the point was not made in the courts below in this case. We are simply called upon. then, to determine what is the law of Texas upon the subject, since, under Rev. St. § 721, the "laws of the several states * shall be regarded as rules of decision in trials at common law in the courts of the United States." While, if this case had been brought before this court before the decision in the Mitchell Co. Case, we might have taken the view that was taken by the courts below, treating the question as one hitherto unsettled in that state, we find ourselves relieved of any embarrassment by the decision in the Mitchell Co. Case, which manifestly applies to this case, and requires a reversal of their judgment.

But, assuming that the later case was intended to overrule the prior ones, and to lay down a different rule upon the subject, our conclusion would not be different. In determining what the laws of the several states are, which will be regarded as rules of decision, we are bound to look, not only at their constitutions and statutes, but at the deci

sions of their highest courts giving construction to them. Polk's Lessee v. Wendell, 9 Cranch, 87; Luther v. Borden, 7 How. 1, 40; Nesmith v. Sheldon, Id. 812; Bank v. Skelley, 1 Black, 436; Leffingwell v. Warren, 2 Black, 599; Christy v. Pridgeon, 4 Wall. 196; Post v. Supervisors, 105 U. S. 667; Bucher v. Railway Co., 125 U. S. 555, 8 Sup. Ct. 974.

If there be any inconsistency in the opinions of these courts, the general rule is that we follow the latest settled adjudications in preference to the earlier ones. The case of U. S. v. Morrison, 4 Pet. 124, seems to be directly in point. The United States recovered judgment against Morrison, upon which a . fa. was issued, goods taken in execution, and restored to the debtor under a forthcoming bond. This bond having been forfeited, an execution was awarded thereon by the judg ment of the district court rendered April, 1822, which it was asserted created a lien upon the lands, and overreached certain conveyances under which the defendants claimed, dated February and March, 1823. The circuit court was of opinion that the lien did not overreach these conveyances. But, the court of appeals of Virginia having subsequently decided that the lien of a judgment continued pending proceedings on a writ of fi. fa., this court adopted this subsequent construction by such court, and reversed the decree of the circuit court.

In Green v. Neal's Lessee, 6 Pet. 291, a construction given by the supreme court of Tennessee to the statute of limitations of that state having been overruled, this court? followed the later case, although it had pre-2 viously adopted the rule laid down in the overruled cases. See, also, Leffingwell v. Warren, 2 Black, 599; Fairfield v. Gallatin Co., 100 U. S. 47.

In Morgan v. Curtenius, 20 How. 1, the circuit court placed a construction upon an act of the legislature in accordance with a decision of the supreme court of Illinois with reference to the very same conveyance, and it was held that that, being the settled rule of property which that court was bound to follow, this court would affirm its judgment, though the supreme court of the state had subsequently overruled its own decision, and had given the act and the same conveyance a different construction. We do not consider this case as necessarily conflicting with those above cited.

An exception has been admitted to this rule where, upon the faith of state decisions affirming the validity of contracts made or bonds issued under a certain statute, other contracts have been made or bonds issued under the same statute before the prior cases were overruled. Such contracts and bonds have been held to be valid, upon the principle that the holders, upon purchasing such bonds, and the parties to such contracts, were entitled to rely upon the prior decisions as settling the law of the state. To have held otherwise would enable the state to set a trap

for its creditors by inducing them to subscribe to bonds, and then withdrawing their only security. Gelpcke v. Dubuque, 1 Wall. 175; Havemeyer v. Iowa Co., 3 Wall. 294; Mitchell v. Burlington, 4 Wall. 270; Riggs v. Johnson Co., 6 Wall. 166; Lee Co. v. Rogers, 7 Wall. 181; Chicago v. Sheldon, 9 Wall. 50; Olcott v. Supervisors, 16 Wall. 678; Douglass v. Pike Co., 101 U. S. 677; Burgess v. Seligman, 107 U. S. 20, 2 Sup. Ct. 10.

Obviously, this class of cases has no application here. The bonds were issued in good faith, for a valuable consideration received by the county, and were purchased by the plaintiff with no notice of infirmity attaching to them. If certain decisions, pronounced after the bonds were issued, threw doubt upon their validity, those doubts have been removed by a later decision pronouncing unequivocally in favor of their validity. In the theory of the law the construction given to the bonds of this description in the Mitchell Co. Case is, and always has been, the proper one, and as such, we have no hesitation in following it. So far as judgments rendered in other cases which are final and unappealable are concerned, a different question arises.

The judgments of the court of appeals and of the circuit court must be reversed, and the case remanded to the circuit court for the Western district of Texas for further proceedings in conformity with this opinion.

A waterworks company, to which a town has issued its warrants in due form, and signed by its proper officers, in payment of water rentals accruing under a contract between the town and company, on the refusal of the town to pay the warrants at maturity on the ground of their illegality cannot maintain a suit in equity to enforce a specific performance of the rental contract, its remedy being upon the warrants, which are legal demands, and, if valid, enforceable in a court of law.

Appeal from the Supreme Court of the Territory of New Mexico.

In August, 1895, the Raton Waterworks Company, a corporation organized under the laws of the territory of New Mexico, filed, in the district court of the county of Colfax, territory of New Mexico, a bill of complaint against the town of Raton, a municipal corporation of that territory.

It was narrated in the bill: That a contract had been entered into in July, 1891, between the waterworks company and the town of Raton, whereby the company agreed to erect and maintain waterworks, and to supply the town and its inhabitants, and the town agreed to pay rental for the use of hydrants in certain amounts during a period of 25 years. That waterworks company had fully performed

and complied with the contract on its part at an expenditure of $115,000. That the town, from time to time, made certain payments of rental for hydrants furnished. That on January 1, 1895, the town, in pursuance of ordinances, issued to the waterworks company, in payment, warrants of said town, of that date,, and falling due one every six months, and aggregating several thousand dollars. Each of* said warrants was duly drawn on the treasurer of the town of Raton, signed by the mayor, and countersigned by the recorder of said town. That in pursuance of law it was the duty of the treasurer of the said town to have and keep in his office a book to be called "The Registry of Town Orders," wherein should be entered and set down, at the date of the presentation thereof, each of said warrants, and to pay out of the funds of said town in his hands for disbursement the amount of each of said warrants in the order in which the same were presented to him for payment. That subsequently the board of trustees of said town wrongfully and without authority of law, and in disregard of the contract rights of the waterworks company, undertook to repeal the ordinance in which the terms and method of payment for the rent of hydrants were prescribed, and to pass certain other ordinances in conflict with the preceding ordinances under which the rights of the company had accrued. That, in pursuance of the latter ordinances, the town treasurer refused to register warrants held by the company and presented for registration. That, in addition to the amount of said warrants, there will accrue and become due to the company semiannually during the continuance of said contracts the sum of $1.962.50. That said town refuses to pay the said several amounts heretofore accrued and payable, and refuses to pay the said several amounts which will hereafter accrue, and gives out and pretends that the said contract is inoperative and invalid, and refuses to perform the same on its part, although in the possession, use, and enjoyment of the said water plant under said contract.

The bill prayed that the town of Raton should be decreed specifically to perform the said contract, and to pay the amounts of said rental which had theretofore accrued and become payable, and might thereafter accrue and become payable, in pursuance of the terms of the contract, and should be enjoined from enforcing said repealing ordinances.

The defendant, in its answer, admitted the making of the contract; the performance thereof by the company; that the board of trustees issued to the company the several warrants, drawn in manner, amount, and number as alleged in the bill;*that it was the duty of the treasurer of the town to keep in his office a book of registry, but denied that it was the duty of the treasurer to enter and set down, at the date of the presentation thereof, each of said warrants, and to pay out of the funds of the town in his hands for disbursement the amount of each of said warrants in

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the order in which the same were presented, or in any other order, said warrants being illegal, null, and void. Also admitted the passage of the original ordinance prescribing the method of payment of rental by the issuance of warrants, and the passage of the repealing ordinance complained of, and that it has been and now is in the possession, use, and enjoyment of the water plant of the waterworks company. The answer likewise admitted that it has given out that said contract, so far as It calls for the payment of $1,962.50 semianqually, is inoperative and invalid, and that it has refused to pay said sum semiannually.

By way of defense, the answer alleged that defendant, as a municipal corporation of the territory of New Mexico, is authorized by law to levy each year and collect a special tax sufficient to pay off the water rents agreed to be paid to the complainant, provided that said special tax shall not exceed the sum of 2 mills on the dollar for any one year; that said alleged semiannual rental of $1,962.50 claimed by the complainant is far in excess of the amount derivable from a 2-mill tax levy on the assessed value of property subject to taxation within said town of Raton, and that said rental, so far as it is in excess of the proceeds of such a tax levy, is illegal; that said original ordinance, so far as the same imposes upon the defendant the obligation to pay complainant an annual sum greater than the proceeds of a 2-mill tax, or to impose a tax levy greater than said rate, was and is null, void, and inoperative, the same having been made and entered into by defendant's trustees in violation of law, and in excess of the powers conferred upon them by the statutes of New Mexico; and that the warrants issued to complainant were and are null and void, because issued in excess of the amount derivable from a 2-mill tax levy on each dollar of taxable property.

Having thus answered, the defendant pleaded "that all and every the matters the complainant's bill mentioned and complained of are matters which may be tried and determined at law, and with respect to which the complainant is not entitled to any relief from a court of equity, and this defendant asks that it shall have the same benefit of this defense as if it had demurred to the complainant's bill."

The cause was heard on bill and answer, and in September, 1896, the said district court entered a decree in accordance with the prayer of the bill, decreeing that the said original ordinance, contract, and agreement should in al things be specifically performed by and on the part of the town of Raton, and that the town should issue and pay the warrants out of any funds or moneys in the treasury of the town, whether derived from general or special taxes. From this decree an appeal

was taken to the supreme court of the territory, where the decree of the lower court was reversed, and an order was entered directing the lower court to dismiss the bill at the costs of the waterworks company. 49 Pac. 898. The cause was then brought to this court on an appeal from the decree of the supreme court of the territory.

Henry A. Forster, for appellant. N. B. Laughlin, for appellee.

Mr. Justice SHIRAS, after stating the facts in the foregoing language, delivered the opinion of the court.

The waterworks company, when it filed its bill in this case, was in possession of warrants that had been issued to it by the town of Raton in pursuance of the provisions of a contract existing between the company and the town. Those warrants were in the form of drafts drawn on the treasurer of the town, signed by the mayor, and countersigned by the recorder of the town. They were for specific sums of money, payable at fixed periods, bearing interest from date, and some of them, past due when the bill was filed.

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In short, the warrants, if valid, were legal• causes of action enforceable in a court of law. The defendant did not waive the question, but averred in its answer that the matters complained of in the bill were matters which could be tried and determined at law. And the supreme court of the territory, in its opinion, says: "If the warrants upon which payment is sought here are valid, an action at law is the proper remedy to enforce their payment. They have been issued, and are claimed to be outstanding obligations against the defendant town, and it says they are void, and therefore declines to pay them. Then, if, in an action at law, judgment should be in favor of the legal holders, and defendant's trustees should decline to provide for their payment, mandamus would be the proper remedy to compel the necessary levy."

In this state of facts we think the courts below erred in considering and determining the legal controversy in a suit in equity, but should have dismissed complainant's bill without prejudice to its right to bring an action at law. Barney v. Baltimore, 6 Wall. 280; Kendig v. Dean, 97 U. S. 423; Rogers v. Durant, 106 U. S. 644, 1 Sup. Ct. 623.

Accordingly, and without expressing or implying any opinion of our own on the merits of the controversy,

The decree of the supreme court of the territory is reversed, and the cause is remanded to that court, with directions to amend its decree by directing the district court to dismiss the bill without prejudice to the right of the complainant to sue at law.