Respondents are owners of defaulted paving bonds issued by the City of Poteau in Le Flore County, Oklahoma, the bonds being secured by assessments for benefits, payable in ten annual installments, upon the property in two improvement districts established by the city, including certain lots owned by the county, and others belonging to the city, which it later conveyed to the county. Respondents brought suit in 1937 in the District Court for Eastern Oklahoma, against the county, its Board of Commissioners and other officers of the county and city, alleging diversity of citizenship, and seeking a judgment fixing the county's liability under state law for the assessments and asking mandamus to compel a tax levy by the county officials for the payment of the overdue assessments, and other relief.
The District Court dismissed the complaint. The Circuit Court of Appeals for the Tenth Circuit reversed and remanded the cause to the District Court with directions to determine the amounts due on the respective assessments against the lots in question, and in the event of failure to provide funds for the payment of the judgment, then to entertain jurisdiction in an ancillary proceeding in mandamus to compel the necessary tax levies. Dwyer v. Le Flore County, 97 F.2d 823. The District Court entered judgment accordingly, retaining jurisdiction for such action as might be necessary to effectuate the judgment.
One of the defenses to the petition for mandamus in the District Court was that under Oklahoma law a county is without authority to levy and collect a tax in one year to pay improvement assessments which became due in an earlier year. This defense was urged on appeal to the Circuit Court of Appeals which overruled it and affirmed the judgment of the District Court, 137 F.2d 383, after an examination of the Oklahoma authorities, including Independent School District No. 39 v. Exchange National Co., 164 Okla. 176, 23 P.2d 210; First National Bank v. Board of Education, 174 Okla. 164, 49 P.2d 1077; Board of Education v. Johnston, 189 Okla. 172, 115 P.2d 132, and Wilson v. City of Hollis, decided by the Oklahoma Supreme Court on October 6, 1942 and not officially reported. The Court of Appeals found none of these cases to be precisely in point but concluded that the Supreme Court of Oklahoma had consistently and pointedly avoided the announcement of the rule contended for. It accordingly held that the District Court had correctly directed tax levies to provide for payment, from the
Petitioners filed a timely petition for rehearing which was denied on September 1, 1943. On December 17, 1943, petitioners moved for leave to file a second petition for rehearing which the Circuit Court of Appeals denied. In their second petition, petitioners brought to the attention of the court and relied upon an opinion of the Supreme Court of Oklahoma in Wilson v. City of Hollis, of October 19, 1943, ___ Okla. ___, 142 P.2d 633, which had superseded its earlier opinion on which the Circuit Court of Appeals had relied in its opinion in this case. Petitioners contended that by its later opinion the Supreme Court of Oklahoma had determined that Oklahoma law did not authorize the levy of a general fund tax to pay assessment installments which fell due in prior years, but that such installments could be paid only from a sinking fund levy, and that no statutory penalties or additional interest for delinquency could be collected.
In its second opinion the Supreme Court of Oklahoma reexamined in detail the mode of enforcing past due installments of improvement assessments against the property of municipalities and counties in Oklahoma. It differentiated between the liability of municipally owned and privately owned property located within improvement districts, and it appears to have held, with respect to the former, that under the applicable provisions of the Oklahoma statutes mandamus to enforce the levy of a general fund tax will lie only in the year in which the assessment installment falls due, that money from the general fund cannot be applied to the payment of obligations of a prior fiscal year, and that "no delinquency that will carry with it additional interest or penalty can accrue against public property." It said that judgment could be rendered against a county or municipality for past due installments which could be paid as are other judgments against a
State law is the controlling rule of decision in this case as to both substantive and procedural rights of the parties. Erie R. Co. v. Tompkins, 304 U.S. 64; Federal Rules of Civil Procedure, Rules 69 (a), 81 (b), 28 U.S.C. following § 723 (c). It is the duty of the federal appellate courts, as well as the trial court, to ascertain and apply the state law where, as in this case, it controls decision. Meredith v. Winter Haven, 320 U.S. 228. And a judgment of a federal court ruled by state law and correctly applying that law as authoritatively declared by the state courts when the judgment was rendered, must be reversed on appellate review if in the meantime the state courts have disapproved of their former rulings and adopted different ones. "Until such time as a case is no longer sub judice, the duty rests upon federal courts to apply state law under the Rules of Decision statute in accordance with the then controlling decision of the highest state court." Vandenbark v. Owens-Illinois Co., 311 U.S. 538, 543.
The second opinion of the Oklahoma Supreme Court in the Wilson case has at least raised such doubt as to the applicable Oklahoma law as to require its reexamination
Accordingly, without passing on any of the other contentions of the parties, we vacate the judgment below and remand the cause to the Circuit Court of Appeals so that it may reconsider its decision in the light of the decisions