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Furman v. Nichol/Opinion of the Court

ERROR to the Supreme Court of Tennessee, the case being this:

In 1838 the legislature of Tennessee chartered a bank, enacting as follows:

'A bank shall be, and is hereby established in the name and for the benefit of the State, to be known under the name and style of 'The Bank of Tennessee,' and the faith and credit of the State are hereby pledged for the support of said bank.'

The capital of the bank, which was five million dollars, consisted chiefly of the school fund of the State and of surplus revenue of the Federal government. The deficiency was to be made up by funds raised on the faith of the State. The dividends which the bank should make were to be applied to common schools and academies, and the bank itself was to be managed in aid of internal improvements. Any losses arising to the trust funds used to make the capital were to be made good by the State. The governor was to nominate to the General Assembly, for confirmation or rejection, twelve directors, to serve for two years, as officers to manage its affairs.

The twelfth section of the charter contained this important provision:

'That the bills or notes of said corporation originally made payable, or which shall have become payable on demand in gold or silver coin, shall be receivable at the treasury of this State, and by all tax collectors and other public officers, in all payments for taxes, and other moneys due to the State.'

The bank went into operation with branches in different parts of the State, and was employed largely in various ways as the fiscal agent of the government.

In May, 1858, the legislature of the State passed an act to revise the statutes of the State, and so established its 'code.' In this code were certain enactments, thus:

'Section 603. The collector shall receive, in discharge of public taxes and other dues to the State, besides the constitutional and lawful currency of the United States,

'1st. Such bank notes as are current at par in this State.

2d. Warrants issued by the comptroller.

3d. Certificates from the county court for killing a wild-cat.'

'Sect. 41. All public and general acts passed prior to the present session of the General Assembly, and all public and special acts, the subject whereof are revised in this code, are hereby repealed.'

'Sect. 42. Local, special, and private acts, and acts of incorporation heretofore passed, are not repealed, unless it be herein so expressed.'

From the character of its organization, the newly incorporated bank was capable of being placed much under the control of the governor and legislature of the State; and at the outbreak of the late rebellion in Tennessee, May 6th, 1861, it passed into the control of the rebel agents, who then managed to possess themselves of the State government. They issued its notes to an indefinite amount, advanced immense sums to the rebel State authorities; and when the Federal army were approaching with superior power, left the bank, carrying with them its coin, and all its assets, except real estate and some uncollected debts. The bank was thus ruined, and its bills became largely depreciated.

In February, 1865, the rebel powers being now driven away, the people of the State reorganized the State government, and declared, in their amended constitution, that 'all notes of the Bank of Tennessee, or any of its branches, issued on or after the 6th day of May, 1861,' were null and void; and an act of the legislature in the following June, repealed by express terms, the already quoted twelfth section of the chartering statute of 1838, which made the notes of the bank receivable in payment of taxes. Finally came an act of February 16, 1866, by which the directors were directed to take in payment of debts due to it its notes, 'which were issued prior to the 6th day of May, 1861, and studiously to refuse and exclude all issues or reissues after that date; also all issues signed by G. C. Torbett; also, all reissues made after the 6th day of May, 1861, as utterly void.'In this state of things, with these statutes, relative to the subject of the sort of money in which taxes, &c., might or might not be paid upon the statute-book-and with other statutes of the State in force, which made the privilege of merchandising taxable, and enacted that any one who wished to engage in that calling must obtain a license from the clerk of the county court where he proposed to carry on the business, and give bond that he would pay a certain percentage on the invoice cost of all goods brought into his mercantile establishment for sale during the year-one Francis Furman, of Nashville, who had obtained, in August, 1865, from the county clerk, a license as a wholesale merchant for the ensuing year, and now purposed forming a partnership before the expiration of his license (a purpose which made it necessary for him to discharge his obligation to the State for the business of the store up to that time), appeared, on the 3d of August, 1866, before the clerk of his county, with Green, his proposed partner, and tendered to the clerk the amount due the State for taxes, in the notes and issues of the Bank of Tennessee, issued prior to the 6th of May, 1861, and tendered also the bond as required by law, and demanded that a license be issued to them as wholesale merchants. But the clerk declined to comply with this request, because these notes were depreciated, and informed the parties that he would not issue the license, unless the taxes were paid in par funds.

Thereupon Furman & Green applied to one of the circuit courts of the State for a mandamus to compel the clerk to receive their bank notes.

Their petition, after setting forth the charter of the bank, and particularly the provisions of the twelfth section, the ownership of the notes, and that they were issued in conformity with the section just named; and issued 'prior to the 6th day of May, 1861,' alleged the tender to the defendant, his official character, and his refusal to receive them, 'because the same were not at par,' and issue the license; adding that the 'said charter was a contract made with the people of the State, and every person into whose possession the said notes and issues of the said bank might come, that the same should be received by all collectors of taxes, and in payment of all dues to the State of Tennessee, and it is not in the power of the legislature of the said State of Tennessee, to impair or annul the validity or binding force of said contract.' The petition referred to the act of February, 1866, by which the directors were directed to take in payment of debts due to it notes issued prior to May 6th, 1861, and to exclude reissues made after that day, and it made the act part of it, so far as the act might be in conflict with their rights. But the petition did not state at what time the notes had come into the bands of the petitioners.

1. Because the petition did not show a contract between the State of Tennessee and petitioners, or either of them, that the notes in question should be received in payment of State taxes; and,

2. Because it failed to show ownership of the notes before the passage of the Tennessee code, 1858, with its section 603; or before the repealing act of 1865.

The local Circuit Court thought the demurrer bad and awarded the mandamus, but the Supreme Court of the State on appeal considered it good, and reversed that decree; the judgment having been in these words, and without any assignment of reasons.

'The court being of opinion that there is error in the judgment of the court below, in overruling the demurrer in this cause, doth order and adjudge that the said judgment be reversed, and the demurrer sustained, and the petition dismissed.'

The case was now brought here on appeal, under the 25th section of the Judiciary Act, which gives this court jurisdiction to review decrees in the highest court of the State, 'where is drawn in question the validity of the statute of, or an authority exercised under any State, on the ground of its being repugnant to the constitution, treaties, or laws of the United States, and the decision is in favor of such their validity.'Two questions were here argued:

1. Whether under the 25th section just quoted, jurisdiction existed in this court?

2. Whether the act of incorporation amounted to a contract with these petitioners; their petition not showing that they had themselves received the notes prior to either the statute of 1858, making the code having section 603; or the act of 1866, repealing the 12th section of the original charter.

Messrs. B. R. Curtis, R. L. Caruthers, and G. Hoadley, for the appellants:

1. As to jurisdiction. That it exists, is plain, since the decision in The Bridge Proprietors v. Hoboken Company, a case decided so late as 1863. There the court says:

'The true and rational rule is, that the court must be able to see clearly, from the whole record, that a certain provision of the constitution was relied on by the party who brings the writ of error, and that the right thus claimed by him was denied.'

Now here, if any one will observe the character of the petition and of the demurrer, it will be as obvious without argument as with it, that the question raised and decided was, by necessary intendment, none other than the constitutionality of the act of repeal, as against the plaintiffs, in violation of the contract with the State to receive the notes for taxes, and the decision in favor of its validity.

2. On merits. The 12th section of the act of incorporation of the Bank of Tennessee was, until repealed, a contract between the State and every bill-holder of the bank, obliging the former to receive the bills for taxes. The contract which we assert arises out of a law. Whatever negotiability and virtue the legislature intended the bills should have, that they do have. Now, what did the legislature intend? The bills were to be receivable by all tax collectors of the State for all moneys due it. Receivable from whom? From the bearer, of course. The design was to aid the bank substantially, by inspiring the greater confidence in its bills; and this confidence could be inspired in no way so well as by attaching to the bills a special virtue, the quality, to wit, that they should be receivable in payment of all debts due the State; so receivable generally and from every one. We have at this time a currency of government notes known as 'greenbacks.' The act of Congress authorizing them enacts that they shall be a legal tender for all debts, public and private (except for two named), and be receivable in payment of all loans made to the United States. And, as we know at this time, this provision of the statute is printed on the back of the notes. No one would doubt that the contract of the Federal government, in regard to these issues, attaches to the bill. But why does it so attach? Not in virtue of the mechanical fact of its being printed on the note, but in virtue of the statute authorizing the notes, and giving to them the advantages which it does. The same thing exists here. If the 12th section of the charter of the Bank of Tennessee had been printed on all notes of the bank, it would be conceded that the privilege followed the bills and attached to them in the hands of every holder. But the printing of the law on the back of the bill is nothing. It is the law itself, its having been enacted and enrolled in the Capitol, which gives the distinctive virtue.

The section 603 of the code did not repeal the twelfth section of the charter. It could repeal it only by a feeble implication. Implied appeals are not favored. Courts, indeed, would be slow to pronounce in favor of an implied repeal of a section, which gave value and credit to the issues of a bank, that was, perhaps, daily increasing in circulation, and that had been established with the funds, and for the benefit of the State itself, to supply a circulating medium to pass from hand to hand of the people as money.

If section 603 of the code repealed impliedly section 12 of the charter, of what use was the express repeal of the same section by the act of 1865?

The case is then decided by Woodruff v. Trapnall, as well as by numerous later cases.

In Woodruff v. Trapnall, where the facts, though resembling ours, were immeasurably stronger than they, the court says:

'The guaranty included all the notes of the bank in circulation as clearly as if on the face of every note the words had been engraved, 'This note shall be received by the State in payment of debts.' And that the legislature could not withdraw this obligation from the notes in circulation at the time the guaranty was repealed, is a position which can require no argument.'

1. As to Jurisdiction.-It is nowhere averred in the petition, as it ought to have been in order to bring the case within the twenty-fifth section, that the State had passed a law impairing the obligation of a contract. Nor can this be inferred by any necessary intendment from the record. The court below does not assign any reasons why it sustained the demurrer. The record indicates that the main question in that court was, upon a construction of the act of 1838; a question, namely, whether there was any contract arising out of the twelfth section, as contended for by the plaintiffs, and as to the legal effect of plaintiffs in error taking the bank issues tendered, after the act of 1858 and the act of 1865.

If the court decided (as we may remark that in fact it did) that there was no contract, none at least running with the note, created by that act, the matter involved the construction of a Tennessee statute by a Tennessee court, not the validity of any statute; and the matter is not revisable here. But looking to the record in a less favorable light, we must assume that the court may have decided the case upon either one of the causes set down in the demurrer, viz., that there was no contract, or that the plaintiffs in error were not entitled to maintain their petition, because they failed to show that they became the holder of the bank issues prior to the act of 1865, or lastly, that they were not entitled to maintain their suit, because they did not show they became the holder of said notes, the issues of the Bank of Tennessee, before the passage of the act of 1858.

It may have decided on any one of these grounds, and not have decided in favor of a law passed by the State and asserted by the party against whom the decision was given, to have impaired the obligation of a contract. If this is so, then there is no jurisdiction under the twenty-fifth section.

The decision would have gone off upon the construction given to these several statutes of Tennessee, particularly to section twelfth of the charter. But when the construction alone, and not the validity of a State statute, is involved in the decision of the State court, no jurisdiction exists under the twenty-fifth section. Independently of all which the judgment was right-as we show hereafter.

2. On merits.-Obviously there was no contract with the bank, and none with persons who had not yet received the notes. There is no guaranty on the face of the note, nor anything, anywhere, operating like a covenant running forever, with the land. Whatever contract existed arose from a statute. So long as section 12 remained on the statute-books unqualified and unrepealed, there was a proposition of the bank of this sort. It was first to the persons to whom the notes were first offered by the bank. To them the State in effect said: 'If you will receive these notes from the bank, we will receive them from you.' And the proposition was, in fact, repeated whenever the notes were offered to new parties by the original takers, and a contract was made whenever by those new parties the notes were accepted.

Thus, if section 12 remained unrepealed and unmodified, and so long as it did so remain, the notes would go on circulating with all the rights in their holders given by section 12, not because of a guaranty running with the note, for none was on it, but because as long as the proposition was continued and accepted, a separate contract was made. But the State had a right, without doubt, to repeal or to modify its propositions, and if, after the modification or repeal, any person took the notes, he took them with a knowledge of what was done, and gave credit accordingly.

Now, unquestionably, the act of 1865 did repeal the twelfth section of the charter, and, unless the party shows (which these petitioners do not pretend was the fact in their case), that he got the notes prior to the repeal, he makes no case against the State.

2. Independently of this, these petitioners allege that the notes they tendered were issued prior to May 6th, 1861. This is not enough. The notes, when tendered, having been below par, as the petition shows, the petitioners should have alleged that the notes were issued prior to May, 1858, when section 603 of the code came into force. Admitting the view of the other side, that the contract attached to the note in every one's hands, and always, it will not apply to any notes after the legislature in any way took away the privilege given by section 12.

Now the contract was modified by section 603 of the code. We need not and do not argue that this section repealed section 12 of the charter. It is enough if it amounts to a certain modification of it. And this it did. It was in pari materia with section 12. It was in a code, that is to say in a statute, making a corpus juris, or body of the law, in which all previous provisions on any given subject were comprehended, arranged, enlarged, diminished, qualified, first enacted, or repealed. The section 603 first of all adverts to one class of money in which, independently of State power, taxes were payable, viz., constitutional and lawful money of the United States, and then makes a comprehensive enumeration, specifying, generally and particularly, both the sorts of money and the sorts of things in which, by its authority, the same taxes might also be paid. One of the provisions-'such bank notes as are current and passing at par'-included, by pre-eminence, as a matter of then existing fact, all notes of the Bank of Tennessee; for the notes of no bank circulated so largely or were so much confided in. It probably meant specially to include them. It gave the notes certainly the same value as did section 12 of the charter, qualifying, however, by a familiar principle of legal hermeneutics, the privileges whenever the notes should cease to be at par, a condition not in the least anticipated at that time, but one to which, unhappily, and by extraordinary events, have since arrived to them.

The fact that we assert section 603 to be but a modification of section 12 of the charter, answers the question of the other side as to the act of 1865 repealing expressly that section 12. After the act of 1865, the notes of the Bank of Tennessee were not receivable at all; not even if they were at par. Before it and after the enactment of the code, they were receivable if at par.

3. There is no allegation in this petition that the notes tendered were lawful issues of the bank. The general allegation in the petition that the notes tendered were issued prior to the 6th of May, 1861, was not sufficient, because they may have been reissued after the 6th of May, 1861. It is evident from the act of February 16, 1866, made part of the petition, that notes of the bank, although dated prior to 6th of May, 1861, were reissued after that date. This court will not validate the acts of rebels and robbers who seized on the bank and reissued notes in this unlawful manner.

4. We have already said that the contract was one derived from statute and given to the person who took the note during the existence of the statute. The repealing act of 1865 put an end to the contract. After that date the notes lost their privilege.

5. If Woodruff v. Trapnall went to the extent of covering with the privileges of section 12 all the issues of this bank, we should ask, in view of the dissent by four very able judges of that day, including Grier, J., happily surviving, to review this case. We should insist that the taxing power of the State could not be irremediably annulled by a legislature assuming to bind the State to receive mere paper in payment of its revenues; that the treasury could not thus be helplessly committed to what might prove as worthless as South Sea certificates, or Confederate paper; that the taxing power unlimited and unrestrained, was vital, and could not be annihilated by being traded away; that power could not be constitutionally given to dishonest officers to bind the people of the State to the burden of redeeming multiplied millions of their promises, leaving the government, meanwhile, with no available source of revenue. But Woodruff v. Trapnall is not this case. The bank there was merely a money-making money agent of the State. The capital was borrowed on the credit of the State, and all dividends belonged to it. Here the capital consisted of certain trust funds, and was itself a sacred fund, set apart by the constitution of the State, and invested by public-spirited men, so as to be profitable for the purposes of the trust. The bank was used as a fiscal agent and public depositary in promotion of the general objects of the trust. The provision of the twelfth section was merely a regulation to govern the revenue officers of the State; a rule directory to the revenue officers and an authority to them, protecting them from liability should they receive the paper and loss ensue. It was not a contract with the holders of the bank paper, superadded to such contract, as the officers of the bank might think proper to make and express in language upon the paper itself.

In Woodruff v. Trapnall, it was admitted that the State might repeal the provision giving virtue to the notes, and that 'the emissions of the bank subsequently are without the guarantee.' As in this case, the plaintiffs do not allege a tender of notes issued prior to the enactment of section 603, that is, prior to 1858, but only of those issued prior to May 6th, 1861, they have not brought themselves within the provisions of the section.

Mr. Justice DAVIS delivered the opinion of the court.

The main question involved in this suit is of more importance than difficulty; but before we proceed to discuss it, it is necessary to consider the point of jurisdiction which is raised by the defendant in error. The circumstances under which this court is authorized to review the decisions of State tribunals has been so often considered and decided, that there is hardly anything left to do, but to apply the already well-settled legal principles which govern this class of cases, to a particular record, in order to decide, whether or not we have jurisdiction to hear and determine the matter in controversy. It would be useless labor to go through with the various adjudications of this court on this subject. It is enough for the purposes of this suit to say, that a cause can be removed from a State court into this court under the 25th section of the Judiciary Act of 1789, whenever some one of the questions embraced in it was relied on by the party who brings the cause here, and when the right he claimed it gave him, was denied to him by the State court. It is urged that the particular provision of the Constitution, which the plaintiffs in error say has been violated in its application to their case, should be contained in the pleadings, but this is in no case necessary. If the record shows, either by express averment, or by clear and necessary intendment, that the constitutional provision did arise, and that the court below could not have reached the conclusion and judgment it did reach, without applying it to the case in hand, then the jurisdiction of this court attaches. And it need not appear that the State court erred in its judgment. It is sufficient to confer jurisdiction that the question was in the case, was decided adversely to the plaintiffs in error, and that the court was induced by it to make the judgment which it did.

Testing the case at bar by these rules, it is apparent that it is properly here, and must be disposed of on its merits.

Furman and Green, conceiving themselves aggrieved by the conduct of the county clerk in refusing their tender of the amount due the State for taxes in the notes and issues of the Bank of Tennessee issued prior to the 6th May, 1861, applied to the local Circuit Court for a mandamus to compel the county clerk to accept payment of the notes in discharge of Furman's obligation, and to issue to them a license as wholesale merchants. The application for the writ proceeded on the theory that the State had, in the passage of the act creating the Bank of Tennessee, in 1838, made a contract with its people to receive these notes in payment of State taxes, and that it was not in the power of a subsequent legislature to impair the binding force of this contract.

The proceeding was an effort on the part of the plaintiffs in error to test the question of the validity of the authority of a public officer of the State, exercising authority under the State, on the ground that such authority was repugnant to that provision of the Federal Constitution which forbids a State to pass any law impairing the obligation of a contract. The purpose of the petition, the issue which it presented and sought to have determined, were as plainly to be seen, as if the words of the particular constitutional provision relied on had been inserted in it, and the obnoxious legislation spread out at length. All courts take notice, without pleading, of the Constitution of the United States, and the public laws of the State where they are exercising their functions.

It is insisted that the petition should have averred that the State had impaired, or by some act attempted to impair, the obligation of a contract, but this does sufficiently appear by necessary intendment, for it is alleged that Furman was the owner of the notes and entitled to have them received for taxes, by virtue of a contract with the State; that he had tendered them to the defendant, who refused to receive them, and that it was not in the power of the legislature to impair the validity of this contract.

The mandamus was asked for to enforce a contract-to act directly on Nichol, the clerk and collector, who was exercising an authority under the State. What is plainer than that this proceeding impeached this authority, in its application to their case, because of legislation construed by this officer as depriving Furman of his right to pay his State taxes in notes of the Bank of Tennessee. If so, then the petitioners, insisting on the protection of the Constitution, drew in question both the validity of State legislation and the authority of the State officer; and unless the record discloses that the Supreme Court of Tennessee denied relief. on other than Federal grounds, it is perfectly manifest that we are compelled to take jurisdiction of this cause.

But to proceed a step further. The cause was heard on the petition and a demurrer, admitting its truth, but denying its sufficiency.

There were three principal defences to the relief asked, specified in the demurrer, as was required by the Tennessee code of practice.

These were, first, that the twelfth section of the act incorporating the Bank of Tennessee, did not constitute a contract. Secondly, that there was no contract, because the said twelfth section was repealed by implication by section 603 of the code of 1858, and there was no averment that the notes were issued before that time. The third and last defence was, that the petition did not show that the plaintiffs became the owners of the notes before the direct repeal of the twelfth section by the legislature, in 1865. What possible difference can it make, in deciding the question of jurisdiction, on which of these three grounds the Supreme Court of Tennessee based their judgment? The right and duty of this court to hear and determine this case does not depend on our ability to prove that the Supreme Court of Tennessee was wrong in its judgment. Whether that judgment was right or wrong, it is reviewable here, if it necessarily drew in question the validity of a State statute, or of an authority exercised under it, on the ground of the repugnancy of the statute to the Constitution of the United States. That it did do this there would seem to be no doubt.

The defence really amounts to this, either that the alleged contract did not exist, or if it did, that there has been no legislation that impairs it.

Whether it be true or false, depends on the construction to be given the laws of the State, which are claimed as proving the making of the contract and its violation.

If so, this court decides for itself, whether the construction which the court below gave to these different statutes was correct or incorrect; and we are required to reverse, under the twenty-fifth section of the Judiciary Act, if we find that, under an error of construction, that court has adjudged that no contract has been impaired. To do otherwise, would be to surrender to the State courts an important trust confided to this court by the Constitution.

Without pursuing the subject any further, it is clear from the record that the Supreme Court of Tennessee, in dismissing the petition for mandamus, necessarily adjudged that there was not at the time such a contract as the plaintiff, Furman, claimed authorized him to make the tender to the clerk, of the notes of the Bank of Tennessee. The jurisdiction of this court is, therefore, complete, and the case must be decided on its merits.

The State of Tennessee, through its legislature, in 1838, thought proper to create a bank 'in its name and for its benefit.' It was essentially a State institution. The State owned the capital and received the profits; appointed the directors, and pledged its faith and credit for its support. This would seem to have been enough to establish the credit of the institution on a firm basis, and to inspire confidence in the value of its notes, so that they would obtain a free circulation among the people as money. But the legislature, in its anxiety to insure for these notes a still greater confidence of the community, went further, and provided that they should be receivable at the treasury of the State, and by all tax collectors and other public officers, in all payments for taxes and other moneys due the State.

It will be readily seen, that nothing could have been better calculated to accomplish the purpose the legislature had in view than the incorporation of this guaranty into the charter of the bank. It assured the free circulation of their notes, gave them a credit over the issues of other banks, and furnished a security to those who held them against any serious loss, if, in the vicissitudes of trade, the bank itself should become embarrassed; for, annually, they would be enabled to use the notes at their par value in the payment of their taxes.

That this guaranty was, until withdrawn by the State, a contract between the State and every note-holder of the bank, obliging the State to receive the notes for taxes, cannot admit of serious question.

The State was engaged in banking, and like other corporations engaged in the same business, desirous of using all legitimate means to increase the profits of the enterprise. The profits of a bank of issue depend in a great measure on the ability of the bank to keep its currency afloat. The longer the bills are withheld from redemption the greater the remuneration to the corporation. Every additional guaranty thrown around the bills, affecting their security and increasing the uses to which they can be put, affords necessarily additional inducements for the people in whose hands they fall to keep them, and not return them to the counter of the bank for redemption in specie. What so natural as that the intelligent legislators of 1838, knowing all this, should say to every person discounting a note, or taking it in the ordinary transactions of life, 'If you will not return this note for redemption, we will take it from you for taxes? It is true you can demand specie for the bills, and so can the State demand specie for taxes, but if you will forego your right the State will do the same, and consent to receive from you, in lieu of specie, for the taxes due her, the notes of the bank.' In such a transaction the benefit is mutual between the parties. The bank gets the interest on the notes as long as they are unredeemed, and the holder of the bills has a ready and convenient mode of paying taxes. The State did, therefore, in the charter creating the Bank of Tennessee, on good consideration, contract with the bill-holders to receive from them the paper of the bank for all taxes they owed the State. Until the legislature, in some proper way, notifies the public that the guaranty thus furnished has been withdrawn, such a contract is binding on the State, and within the protection of the Constitution of the United States.

An attempt is made to restrict the operation of this guaranty to the person who, in the course of dealing with the bank, receives the note, and not to extend it further. Such an interpretation would render the guaranty of comparatively little value, and defeat the object which we have attempted to show, the legislature designed to accomplish by it. The guaranty is in no sense a personal one. It attaches to the note-is part of it, as much so as if written on the back of it; goes with the note everywhere, and invites every one who has taxes to pay to take it.

The quality of negotiability is annexed to the notes in words that cannot be misunderstood, and which indicate the purpose of the legislature, that they should be used by every one who is indebted to the State.

It is contended that the promise of the State was withdrawn in 1858, by section 603 of the code of that year-not in express terms, but by necessary implication. Courts do not favor repeals by implication, and never sanction them if the two acts can stand together. The provision of the code, which is deemed inconsistent with the continuance of the promise of the State, directs the kind of funds which collectors shall, after that time, receive for taxes. The legislature thought fit to confer upon the people the privilege of paying their taxes in the issues of other banks that were at par. As these issues were in circulation at the time, it was doubtless thought a wise policy to allow the people to pay their taxes in them, and as long as they were at par the State could not be the loser. This policy was adopted for the convenience of the people. There are in the statute no words of negation, saying that no funds other than those specified in the section shall be received. But we are to construe the different sections of the code together in order to arrive at the meaning of the legislature. In doing this, we find that where acts of incorporation are not expressly repealed, they are, in terms, saved from repeal by section 42 of the code. As there was no attempt in the code to interfere with the charter of the Bank of Tennessee, it follows that it was saved from repeal, and of course, that the guaranty contained in the twelfth section of the act of its incorporation was still continued. That the legislature so understood it receives additional confirmation from the consideration, that this guaranty was expressly withdrawn in 1865. Why withdraw it then if it was withdrawn in 1858?

The effect of the repealing act of 1865 remains to be considered. It is true the State had the right at any time to withdraw its guaranty, but it is equally true that it must be done in such manner as not to impair the obligation of its contract with the note-holders of the bank. That this repealing act operated on all the issues of the bank after its date cannot be doubted, but the question with which we have to deal is, what effect did it have on the notes of the bank issued prior to its passage? It is conceded that these plaintiffs are entitled to the relief they ask, if the defendant was obliged to receive the notes which were tendered. The tender was made in the notes of the bank, issued prior to the 6th day of May, 1861, which were in conformity to its charter, and were payable to bearer. It does not appear when the notes came to the hands of the plaintiffs-whether before or after the repealing act-but it is a fair presumption, in the absence of any averment to the contrary, that it was after the date of that act.

It is insisted, as the bank during the rebellion was under the control of the usurping government, and was used by it for unlawful purposes, that it should have been stated that the notes tendered were the lawful issues of the bank. But it would seem the pleader had this state of things in his mind, and wished to avoid the issue it involved, for he avers that the notes were issued prior to the 6th day of May, 1861, the time when the State endeavored to sever its relations with the Union. The presumption is that the bank, before that time, issued its notes properly; and, in addition, it is stated, as we have seen, that they were issued in conformity with the twelfth section of its charter. It follows from this statement, necessarily, that they were the lawful issues of the bank. If the defendant wished to contest this point he should have answered, and not by his pleading, admitted the truth of the petition and all legal inferences that could be drawn from it.

This case is, therefore, not embarrassed by the changed relation of the State after 1861; and the discussion of the principles which settle this case are not intended by the court to apply to the issues of this bank while under the control of the insurgents, because such a case is not before us, and it will be time enough to decide the important questions which it would present when it arises, if it ever should arise.

It is contended that the repealing act took from those persons who did not at the time hold the paper of the bank, the right to acquire it afterwards, and use it to discharge their debts to the State.

This construction of the contract would limit the obligation to the person, and withdraw it from the paper. If, as we have endeavored to show, the guaranty attached to the paper itself, and could not be withdrawn from it, then it follows that the notes in circulation at the time of the repeal are not affected by it, and carry with them the pledge of the State to be received in payment of taxes by every bona fide holder.

It would seem to be unnecessary to discuss any further the principles which lie at the foundation of this case, as they were settled in Woodruff v. Trapnall, heretofore decided by this court. The mere statement of that case will show its similarity to this. In 1836, the State of Arkansas, in the charter of a bank (owned and controlled by the State), declared that the notes of the institution should be received in payment of all debts due the State. Some years afterwards this provision of the charter was repealed. After its repeal, Trapnall, acting in behalf of the State, sued out an execution upon a judgment which the State had obtained against Woodruff, a defaulting treasurer. Woodruff met the demand of the writ by a tender (which was refused) of the notes of the bank, but whether he got these notes before or after the repealing act was passed, did not appear. On this state of things, Woodruff, to test his right to pay his debt in the paper of the bank, applied for a writ of mandamus against Trapnall, which was denied him by the State court The case was brought here, as this is, under the twenty-fifth section of the Judiciary Act, and this court held that the undertaking of the State to receive the notes of the bank, constituted a contract between the State and the holders of the notes, which the State was not at liberty to break; and that the tender of notes issued prior to the repealing act was good. It was also held, that it made no difference whether the debtor had the notes in his possession when the repealing act was passed or not.

It will thus be seen that Woodruff v. Trapnall, and this case, in all important features, are alike.

An attempt has been made to distinguish the cases, because in the Tennessee bank trust funds were embarked in the enterprise; but if the State thought proper to use them in this manner, it took care to pledge its faith to supply any deficiency that should arise through the mismanagement of the bank. It is difficult to see how the employment of these funds made the bank any less a State institution, for it was created expressly for the benefit of the State, who had the exclusive management of it, and agreed to support it. But if we concede that the State did wrong in using these funds in banking, can that tend even to justify her in breaking her promise to the note-holders of the bank?

Enough has been said to show, as the result of our views, that section 28 of the charter of the Bank of Tennessee constituted a contract with the holders of the notes of the bank, and that it was not in the constitutional power of the legislature to repeal the section so as to affect the notes which, at the time, were in circulation.

JUDGMENT reversed, and the cause remanded, with directions to enter a judgment

AWARDING THE WRIT OF MANDAMUS.

title: Furman v. Nichol/Opinion of the Court


text: Talk:Furman v. Nichol/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Memphis City v. Dean

APPEAL from the Circuit Court for the Western District of Tennessee, the case being thus:

In 1849 the State of Tennessee incorporated a company called the Memphis Gaslight Company. The charter provided as follows:

Sec. 3. It shall be the duty of said company to establish, within three years from the 1st of January, 1850, a gas manufactory within the city of Memphis, of sufficient capacity, to supply its corporate authorities and inhabitants with such public and private gaslights as may be required.

Sec. 4. To enable said company to establish said works, they are hereby authorized and empowered to lay down pipes and extend conductors and other apparatus through all or any of the streets, lanes, or alleys of the said city.

Sec. 5. The said company shall have the privilege of erecting, establishing, and constructing gasworks, and manufacturing and vending gas in the said city, by means of public works, for the term of fifty years. A reasonable price per thousand feet for gas shall be charged in the case of private individuals, to be regulated by the prices in the other Southwestern cities; and for public light such sums as may be agreed upon by the company and the public authorities of Memphis.

Another section provided, that if, at the end of twenty years, the city resolved to buy the gasworks, it might do so; and a mode of fixing a fair price was prescribed for taking into consideration the value of the said gasworks, and the lands, buildings, utensils, rights, and interests, and everything thereunto appertaining.

The company being duly organized and set in operation, entered, in 1852, into a contract with the city authorities, by which these conferred upon it the exclusive privilege for twenty years, and until thereafter notified to the contrary, of lighting the city with such public lamps as might be agreed upon between the parties, and also the right to lay down its pipes and extend its conductors and other apparatus through all or any of the streets, alleys, lanes, or squares, and to exercise all the rights granted by its charter, without any other charge or tax by the city than upon the estimated value of their house and lot and one hundred dollars per annum.

The contract proceeded: 'Still further to encourage the company, the city agree to take fifty lamps to begin with, to be extended hereafter as the public wants and increase of the city may demand, and such as may be agreed on by the company and the city; and the company, on its part, agree, in consideration of the said several grants, concessions, and privileges, to furnish the city, for the use of its public lamps, gas, at one-half the price they charged their private consumers.'

In 1866, the State passed an act incorporating another gaslight company, to wit: 'The Memphis Gayoso Gaslight Company,' which established an office in Memphis, and went to work to lay down its gaspipes and extend its conductors and other apparatus through the streets of the city. The old company hereupon filed a bill in one of the State courts of chancery against the new company, setting forth the above facts, asserting that the privilege of furnishing gas to the city conferred by the act of 1849, incorporating the old company, was, by its very nature and purpose, an exclusive one, and that under the contract of 1852, it had been the intent of the city not only to vest in the old company the exclusive privilege of furnishing the public lights to the city, but, in fact, also to license it exclusively for a term of twenty years, to make and sell gas for lights to the inhabitants by means of public works, and praying accordingly an injunction to the new company against laying pipes or establishing new works. On this bill, in the State court, a preliminary injunction was granted by the chancellor, so far as to restrain the new company from laying gaspipes so near to the pipes of the old company as to cause any injury to them, but denied so far as the bill sought to restrain the new company from proceeding with its works; the chancellor not seeing, as he said, that any exclusive privilege had been conferred on the old company.

Immediately after the decree, the city authorities of Memphis passed an ordinance authorizing the mayor to hold an election to test the sense of the voters of the city as to subscribing $250,000 to the stock of the new company; whereupon, on the following day, and before any election was held, Dean, a citizen of New York (the present appellee, and a large stockholder in the old company), filed a bill in this case in the court below, against the new company, and also against the city of Memphis, setting forth the act of incorporation of the old company, the company's organization and successful operation, with a statement of the outlays and trouble which organizing and putting it in such operation had cost; setting forth the contract of 1852; the act of incorporation of the new company; that this new company was laying down pipes and disturbing the ground where the pipes of the old one lay, and was injuring them; that it was asserting the right to manufacture gas by public works and sell the same to the inhabitants of Memphis in competition with the said company, and that this last had the exclusive privilege of supplying the corporate authorities and inhabitants with such public and private gaslights as might be required, which grant the General Assembly could not constitutionally revoke.

The bill set forth also the act of the city government authorizing an election, the bill in connection with that point, proceeding as follows:

'And the complainant apprehends that the influence of the corporate authorities will be exercised upon the voters of the city, very few of whom comparatively are purchasers of gas, favorably to the said project, and that the said authorities will proceed to subscribe to the stock of the new company, and issue the bonds as contemplated in the said ordinance, and thus the defendants will consummate a great wrong to the complainant, to the great injury of the franchise of the old one.'

Finally, the bill complained that the old company, of which the complainant alleged himself to be, perhaps, the largest stockholder, declined, at his request, to proceed in the courts against the rival company, and against the corporate authorities of Memphis, alleging that they had already filed a bill in the Chancery Court of the State, against the company, and obtained a partial injunction, but that they refused to proceed further.

The prayer was for an injunction restraining the city authorities from holding the election intended, or from subscribing to the stock, or issuing bonds, &c., and enjoining the new or Gayoso Company from laying pipes in the streets of Memphis, and from manufacturing gas and selling the same to the inhabitants.

To this bill the new or Gayoso company pleaded:

1. That it was not true, as alleged, that the Memphis or old company had refused to take the necessary legal steps to assert, and maintain the rights of complainant, but that, on the contrary, they had filed a bill in the State Chancery Court, wherein the same relief was sought as in the present bill, & c., &c.

2. That the said cause instituted in the said Chancery Court was then still pending; that the same identical matters were presented for adjudication as in the present bill; that the said court had full and ample jurisdiction; that a partial injunction had been obtained, and that the Gayoso or new company was still bound by the said partial injunction, and was still subject to the further order of the said Chancery Court in the premises, &c., &c. The record of the prior suit was tendered with the pleas, and substantiated the facts set forth in them. The new company and the city of Memphis also put in answers. These admitted the facts stated by the bill as to the incorporation of the respective companies and their organization under the laws. They admitted also the contract between the old company and the city authorities, but they denied that the said contract gave any exclusive privilege except as to the public lamps. They also denied the power of the city to grant any such exclusive right, even if it had purposed to do so.

The cause was set down for hearing by consent of parties on the bill and exhibits, and on the answer of the new company and exhibits, and the answer of the city. And the court, after hearing, determined that the complainant was entitled to the relief prayed for, and decree perpetual injunctions against the new company and the city, thus annihilating the new company. The cause was now before this court on appeal.

The questions considered by the court were:

1. Admitting that Dean, a mere individual stockholder in the older Memphis Gaslight Company, would have had a right to represent by himself, as he here assumed to do, the interest of the entire corporation, if the corporation had not itself brought suit in the State court, how far that suit, yet pending, precluded the institution of the present action; the suit in the State court being against the new corporation alone, and the present one being against both it and the city of Memphis?

2. It being decided that the suit in the State court against the new company did preclude the institution of the present one though against it and the city, whether-technical objections being disregarded-the contract of 1852 estopped the city from subscribing to stock in the new company.

Mr. F. P. Stanton, for the appellants:

1. Admitting that Dean, to establish an exclusive right in the old company, might have instituted suit against the new one, if the old company had refused to do so, yet here the pleas disclosed that there was no such refusal, but on the contrary, the commencement of a suit. The injunction granted there was in full operation when Dean filed his bill in the court below; and it is evident that he went into the Federal court, in order to evade the jurisdiction of the local one; to appeal, in fact, from the decision of the State chancellor, who had refused to recognize the monopoly claimed by the old company. He made the mayor and aldermen parties to the proceeding, probably because he suppose that would enable him to avoid the plea of a prior action pending. But the fact of additional parties being included in the second suit does not alter the application of the principle. The test is the identity of the matters in issue, the rights claimed, and the relief sought. In both cases, the foundation of the proceeding is the same. Both rely upon the monopoly claimed by the elder gas company, the exclusive right said to be granted in their charter, to make and sell gas in Memphis. The proceeding against the city authorities depends wholly on this claim; for unless the exclusive right claimed can be established, there is no pretence of any right in a citizen of New York to interfere with the proposed acts of the mayor and aldermen. If that exclusive right can be established, then the injunction against the city would be useless, inasmuch as an injunction against the new company would suspend their work, in spite of the people or public authorities of Memphis.

2. The matter of exclusive right under the charter had been therefore passed on primarily, or was pending in the State court, a competent tribunal. This court would not interfere. Nothing therefore remained for the complainant but the contract of 1852, and it was plain from the terms of that contract, that under it all exclusive right was confined to supplying the public lamps, and this for but a limited term. Until the city should violate the contract, which it was not alleged that it had yet done, no right of action could lie against it.

Messrs. McRea and Humes, contra:

1. The plea denying the allegation of the bill that the old or Memphis Gaslight Company had refused to take the necessary legal steps to assert and maintain the rights of the complainant, and the assertion in the plea that there was a former suit depending for the same cause of action, are answered by the fact that the suit begun in the State court by the old company, was brought against the new or Memphis Gayoso Gas Company alone. That bill only set up the claim of the old company to the exclusive privilege, and only asked an injunction to stop the progress on the streets of the rival company. The action of the other defendant-the city authorities-was taken after the disposition of the other cause in the State court, and was a new grievance. The present bill alleged that without reference to any exclusive privilege in the old company under its charter, the action of the city authorities is a fraud upon the contract made by them with the complainant's company; that the action of the board gives strength and credit to the other defendant, which enables it to prosecute its wrongs. This is enough to take the case from the objection of a prior suit pending, or res judicata; and to leave us the benefit of the principle quia timet; as a preventive remedy, one most beneficial to both parties, and to be therefore encouraged.

2. The contract of 1852 is exclusive not only of the right to supply public lamps for a certain term, but also of the right to encourage a rival to come into the city within the term, for after beginning with fifty lamps, it promises in order 'still further to encourage the company,' that as the city extends itself, it will increase the number of lamps for which gas shall be furnished. It gives the old company, moreover, 'the right to lay down its pipes and extend its conductors and other apparatus through all of the streets, alleys, lanes, or squares of the city.' This is necessarily exclusive. Gaspipes must be laid down so as to occupy an inclined plane, and cannot be laid otherwise. This necessity arises from two cause: first, the gas being lighter than common air, its tendency is to rise, and hence the difficulty and great pressure required to force it through pipes descending from the reservoir. Secondly, the gas, in its passage from the works or reservoir, carries with it vapor of water; this vapor, in its passage through the pipes underground, is condensed, and if no provision were made, the water would eventually obstruct the pipes and stop the passage of the gas. Therefore drip-boxes are placed at intervals to collect the liquor caused by condensation. The pipes must all incline into these drip-boxes to enable the water to drain into them. Thus the network of pipes is placed in a plane inclining to the drip-boxes and the reservoirs. Hence the absolute necessity that the company should have the exclusive use and occupation of the streets.

Moreover, the subtle character of gas renders it difficult to convey it through pipes without serious loss from leakage, and requires that the pipes should be laid on solid earth and remain perfectly undisturbed. The easement of the old company in the streets of the city would obviously be impaired by yielding to another company the same easement, and the charter of the latter must impair and destroy the obligation of the contract, made in 1852, with the former.

[In addition to the points thus raised, the counsel on both sides argued largely-asking the opinion of this court upon it-the question of the exclusive right of the old or Memphis Company under its charter; Mr. Stanton relying on the constitution of Tennessee, which he stated in section 22 of its declaration of rights declared 'that perpetuities and monopolies were contrary to the genius of a free State, and should not be allowed,' and on the Bridge Proprietors v. Hoboken Company, and The Turnpike Company v. The State, late cases in this court, and to earlier ones, referred to in these cases, to show that neither on principle nor authority could the claim be sustained; and Messrs. McRae and Humes referring to the Binghamton Bridge Case, to show that grants of exclusive privileges by legislatures were entirely legal, and that no strained or artificial construction would be made to defeat them if intended to be given; and that here the nature of the enterprise, one new, great, and hazardous in 1849, requiring to be encouraged and 'still further encouraged,' the facts that the charter was, by its words, but a limited term; that the duty of supplying the city and its inhabitants was made a condition of the privileges granted, imposed, and assumed, and so implied a correlative obligation to take; that the price of the gas was to be reasonable and regulated by the price in other and larger cities, where it might cost much less to manufacture; that the works were called 'public works;' that the legislature had reserved a right to compel the old corporation to sell out on paying fair value for its property and rights, a reservation which would have been useless if they could set up another company, and a reservation which, to suppose was inserted with such a purpose secretly entertained, to set up such other company, would be discreditable to the city against which such supposition was raised.]

Mr. Justice NELSON delivered the opinion of the court.

title: Memphis City v. Dean


text: Talk:Memphis City v. Dean

title: Talk:Memphis City v. Dean


text:
Memphis City v. Dean/Opinion of the Court

The judgment of the court in the case of Dodge v. Woolsey, authorizes the stockholder of a company to institute a suit in equity in his own name against a wrong-doer, whose acts operate to the prejudice of the interests of the stockholders, such as diminishing their dividends and lessening the value of their stock, in a case where application has first been made to the directors of the company to institute the suit in its own name, and they have refused. This refusal of the board of directors is essential in order to give to the stockholder any standing in court, as the charter confers upon the directors representing the body of stockholders, the general management of the business of the company. There must be a clear default, therefore, on their part, involving a breach of duty, within the rule established in equity, to authorize a stockholder to institute the suit in his own behalf, or for himself and other stockholders who may choose to join. The plea in abatement in the record is founded upon this view of the law. It not only denies the refusal, but avers the institution of a suit in a court of competent jurisdiction, and in which the ground of complaint is substantially the same as set forth in the complainant's bill. This is a plea to the person of the complainant. Pleas to the person, says Mr. Daniel, like pleas to the jurisdiction, do not necessarily dispute the validity of the rights, which are made the subject of the suit, but object to the plaintiff's ability to sue, or the defendant's liability to be sued respecting them. And Judge Story observes, 'They object to the plaintiff that he is by law disabled to sue in a court of justice, or that he cannot institute a suit alone, or that he is not the person he pretends to be, or that he does not sustain the character he assumes.' These are properly pleas in abatement, or at least in the nature of abatement.

It is insisted, however, on the part of the learned counsel for the appellee, that the suit in the State court did not cover all the grievances set forth in his bill, as the directors were required to proceed against the city of Memphis, which was not a party defendant in that suit, but is in the present one. The charge in his bill is, that the city authorities passed an ordinance authorizing the mayor to hold an election to test the sense of the voters of the city as to the propriety of subscribing $250,000 to the stock of the Memphis Gayoso Company, and he apprehends that the influence of the corporate authorities will be exercised on the voters favorable to the company, and will proceed to subscribe to its stock; and further, that the city had entered into a contract with complainant's company to furnish the lamps of the city with gas for twenty years, and that this action of the city is in violation of that contract; and the bill prays that the city may be enjoined from holding the election or subscribing to the stock. This is the branch of the case relied on to show that the suit in the State court was not a compliance with, or a fulfilment of, the request of the complainant to the directors of the Memphis Gaslight Company to institute legal proceedings.

But, admitting all this to be true, it furnishes no valid ground for making the Memphis Gayoso Gas Company a party, and agitating over again the same question which was pending in the State court, namely, whether or not the Memphis Gaslight Company had an exclusive right to furnish the city of Memphis with gas. There is no necessary connection between that suit, or the subject-matter involved in it, and the one against the city. The former turns upon a construction of the charter of the Memphis Gaslight Company. The latter, upon a written contract between this company and the city. The question here has no connection with that of the exclusive privileges of the company under the charter. If any suit was desired, or advisable, against the city, it should have been a separate one, founded on the contract.

Besides, the suit against the city was premature. Until the question was decided whether or not the Memphis Gayoso Gas Company was valid, and had a right to establish itself in the city of Memphis, the suit against the city was founded on a hypothetical case. If held by the State court, on the final hearing, that the Memphis Gas Company had the exclusive right, the existence of the other company must cease, and the suit against the city would be superfluous.

The suit is premature, also, for the reason it is founded on a contingency, that a majority of the voters of the city will vote in favor of a city subscription to the stock. The bill seeks to enjoin the city from holding the election, for fear a majority may favor subscription; and then, that the city will subscribe. The complainant should have waited till after the result of the election, and, if it had been against making any subscription, no suit would have been required; if in favor, it would have been time enough to have filed the bill.

But, over and beyond all these objections, we are satisfied that there is nothing in the provisions of the contract that can be made available to estop the city from subscribing to the stock. It secures to the complainant's company the exclusive privilege of supplying the public lamps in the streets of the city with gas for twenty years, at one-half the price which is charged to private persons. This is the essence of the contract. There are other details to enable the company to fulfil its portion of the stipulations, such as the privilege of laying down their pipes in the streets, and of exercising all the rights under the charter within the limits of the city, without any other tax or charge than upon the estimated value of their house and lot, and one hundred dollars per annum. The city agrees to take fifty public lamps to begin with, to be extended thereafter according to the public wants. All the obligations, whatever they may be, to be found in the contract on the part of the city are binding upon it, and if broken, the courts will afford the proper remedy. The establishment of another company therein will not change its nature or obligation, much less abrogate it. To this extent the city is bound, but no further. There is neither an express or implied obligation not to take stock in any other company.

The idea that the subscription to the stock of the new company would aid or encourage its establishment in the city, and hence would operate as a violation of the contract, finds no support in that instrument.

The result of our opinion is, that the only question that it was competent for the complainant, as a stockholder of the Memphis Gaslight Company, to compel the directors to present to a court of justice, was that involving its exclusive right, under the charter, to furnish the city of Memphis with gas; and as that had been presented to a court of competent jurisdiction, in a suit then pending, he is disabled, according to the settled rule on this subject, from instituting a suit in his own name in another court.

DECREE BELOW REVERSED, remitted to the court below, with directions to dismiss the bill.


text: Talk:Memphis City v. Dean/Opinion of the Court


text:
United States v. Speed

APPEAL from the Court of Claims. The case was thus:

By an act of 14th April, 1818, 'the Commissary-General and his assistants shall perform such duties in purchasing and issuing of rations as the President shall direct;' 'supplies for the army (unless in particular and urgent cases the Secretary of War should otherwise direct) shall be purchased by contract, on public notice,' &c., 'which contract shall be made under such regulations as the Secretary of War may direct.' One of the regulations prescribed by the Secretary of War, and which made Rule No. 1179 in the Army Regulations of 1863, is thus:

'Contracts for subsistence stores shall be made after due public notice, and on the lowest proposals received from a responsible person who produces the required article. These agreements shall expressly provide for their termination at such time as the Commissary-General may direct.'

By an act of March 2, 1861, it is provided, that

'All purchases and contracts for supplies or services in any of the departments of the government, except for personal services, when the public exigencies do not require the immediate delivery of the article or articles, or performance of the service, shall be made by advertising a sufficient time previously for proposals respecting the same. When immediate delivery or performance is required by the public exigency, the articles or service may be procured by open purchase or contract at the places, and in the manner in which such articles are usually bought and sold, or such services engaged between individuals.'

These statutes and regulations being in force, the Secretary of War, through the Commissary-General, authorized Major Simonds, at Louisville, in October, 1864, and during the late rebellion, to buy hogs and enter into contracts for slaughtering and packing them, to furnish pork for the army.

On the 27th of October, Simonds, for the United States, and Speed, made a contract, by which the live hogs, the cooperage, salt, and other necessary materials, were to be delivered to Speed by the United States, and he was to do the work of slaughtering and packing. The contract was agreed to be subject to the approval of the Commissary-General of Subsistence.

No advertisements for bids or proposals was put out before making the contract, nor did the contract contain a provision that it should terminate at such times as the Commissary-General should direct.

After the contract was made, Simonds wrote-as the facts were found under the rules, by the Court of Claims, to be-to the Commissary-General, informing him substantially of its terms; but no copy of it, nor the contract itself, was presented to the Commissary-General for formal approval. The Commissary-General thereupon wrote to Simonds, expressing his satisfaction at the progress made, and adding: 'The whole subject of pork-packing at Louisville is placed subject to your direction under the advice of Colonel Kilburn.'

The claimant incurred large expenditures in the preparation for fulfilling his contract. He also kept, during the whole season, the full complement of hands necessary to have slaughtered the whole 50,000 hogs within the customary season. During the season, there were furnished to the claimant 16,107 hogs; but owing to the high price of hogs, Simonds, with the approval of the Commissary-General, gave up the enterprise, and refused to furnish the remainder of the 50,000 hogs.

Upon these facts the Court of Claims held,

1st. That the Secretary of War, through the Commissary-General, might authorize such a contract to be made without a resort to the advertisement and bids proposed.

2d. That the letter of the Commissary-General was a virtual approval of the contract.

3d. That the contract was an engagement on the part of the United States to furnish 50,000 hogs to the claimant, to slaughter and pack at the stipulated price, and that their failure in part to perform the same entitled the plaintiff to recover damages.

4th. That the true measure of damages was the difference between the cost of doing the work and what the claimant was to receive for it, making reasonable deductions for the less time engaged, and for release from the care, trouble, risk, and responsibility attending a full execution of the contract.

The court awarded damages accordingly to the claimant, and the United States appealed.

Mr. Dickey, Assistant Attorney-General, for the appellant:

1. Where Congress has intended that the government shall embark in the business of manufacturing any of the materiel of war, it has made special provision by law for its doing so. It has established armories and navy-yards, and provided for the making of arms and the building of vessels; but no-where can be found any enactment authorizing any officer or class of officers to embark the government in the business of curing pork or bacon, or in the business of raising corn, or hogs, or cattle, or horses, or mules, or asses for the army.

2. The contract is not binding upon the United States, because it contains no provision 'for the termination' of the contract 'at such times as the Commissary-General may direct.'

This contract, containing no such provision, is a contract made in violation of the statute of 1818, and is not binding upon the United States.

3. If the want in this contract of the provision for its termination at such time as the Commissary-General shall direct, does not vitiate the contract, it must be held that the contract will be treated as containing the clause, inasmuch as the law requires that it should contain the clause. Porkpacking and curing bacon is not within the scope of the powers of the Secretary of War and of his subordinates, and if the contract is regarded as containing this provision, then there is an end of this case, for in that case it was no violation of the contract for Simonds, with the approbation of the Commissary-General, to terminate the contract at any time.

4. This contract is not binding upon the United States, because there was no advertisement for proposals before the contract was made, as required by the act of March 2, 1861. The Court of Claims do not find that any public exigency required 'the immediate delivery of the article, or performance of the service;' on the contrary, the very nature of the contract shows that immediate delivery or immediate performance was not contemplated.

5. Where a contract is made subject to the approval of the Commissary-General, it is not binding on the United States until it is so approved, after the commissary has full knowledge of all the provisions and defects of the contract. It is not sufficient that he be informed 'substantially of its terms,' as was the fact in this case. This does not show that the Commissary-General was informed that this contract contained no clause for its termination at the will of the Commissary-General; nor that the Commissary-General was informed that the contract was made privately without advertisement for proposals, as required by law and the regulations.

6. By the terms of the contract, the United States were not bound to furnish to the claimant any given number of hogs. The true construction of the contract is, that claimant agreed to slaughter the 'hogs presented' by the United States, for the price per hundred pounds specified, up to the number of 50,000 hogs.

7. Assuming the contract valid and binding upon the United States, and that it required the United States to furnish the full 50,000 hogs, and that it could not be terminated by the Commissary-General without the consent of the claimant, still the facts found do not show a statement of case enabling claimant to have an action for a breach of the contract by the United States. Though the 'claimant incurred large expenditures in the preparation for fulfilling his contract,' yet it does not appear that he completed the necessary preparation to fulfil his contract, or that he was ever ready at any time to slaughter a single hog. He kept, it is true, all 'the hands necessary,' but it required other things beside hands, and it does not appear that any one of these things was provided.

The covenants or undertakings in this contract are clearly mutual and dependent, and before claimant can recover for the breach alleged, he must show a readiness, a willingness, and an offer on his part to perform.

8. The rule for the measure of damages is not a correct rule as applied to the facts found. It does not appear that the claimant's hands were kept in idleness, or even unprofitably employed. For aught that appears, they and the other expensive preparations were in fact more profitably employed in slaughtering hogs for other parties, which work could not have been performed if the government contract had not been abandoned. In fact, the abandonment of the contract by the government may have been a source of profit to claimant rather than of loss.

Mr. C. F. Peck, contra.

Mr. Justice MILLER delivered the opinion of the court.

title: United States v. Speed


text: Talk:United States v. Speed

title: Talk:United States v. Speed


text:
United States v. Speed/Opinion of the Court

The counsel for the appellant urges eight separate objections to this judgment, which we must notice in the order they are presented.

1. Pork-packing and curing bacon is not a business within the scope of the powers of the Secretary of War, or his subordinates.

If by this is meant that the War Department has no authority to enter into the business of converting hogs into pork, lard, and bacon, for purposes of profit or sale as individuals do, the proposition may be conceded. But, if it is intended to deny to the department this mode of procuring supplies when it may be the only sufficient source of supply for the army, the proposition is not sound. The Commissary Department is in the habit, and always has been, of buying beef cattle and having them slaughtered and delivered to the forces. Is there no power to pay the butchers who kill for their services? That is just what the claimants contracted to do with the hogs which the government had purchased of other parties, and it is for this butchering and curing the meat that the government agreed to pay. The proposition places a construction altogether too narrow on the powers confided to the War Department in procuring subsistence, which in time of war, as this was, must lead to great embarrassment in the movement and support of troops in the field.

2. The contract is not binding, because it contains no provision for terminating it at the discretion of the Commissary-General.

This objection is based on Rule 1179 of the Army Regulations of 1863. But that has reference to contracts for the regular and continuous supply of subsistence stores, and not to contracts for services or labor; and it is required because the post or force to be supplied may be suddenly removed or greatly diminished. It has no application to a contract for a certain amount of supplies, neither more nor less, or to do a specific job of work requiring skilled labor. While the commissary might have insisted on a provision in this contract that he should only be required to pay for packing as many hogs as he chose to furnish, for which he might in that event have been charged a higher price, he did not do so, and cannot have the benefit of it as though he had.

3. This answers also the third point, namely: that the agreement is to be treated as though that provision were in it.

4. That it is not binding on the United States, because there was no advertisement for proposals to contract.

This objection is founded on the act of March 2, 1861.

But that statute, while requiring such advertisement as the general rule, invests the officer charged with the duty of procuring supplies or services with a discretion to dispense with advertising, if the exigencies of the public service require immediate delivery or performance.

It is too well settled to admit of dispute at this day, that where there is a discretion of this kind conferred on an officer, or board of officers, and a contract is made in which they have exercised that discretion, the validity of the contract cannot be made to depend on the degree of wisdom or skill which may have accompanied its exercise.

5. The contract was not approved by the Commissary-General.

The agreement contains a provision that it is subject to the approval of that officer. The Court of Claims finds that, while no copy of the agreement was presented to the Commissary-General for formal approval, Major Simonds wrote him a letter informing him substantially of its terms, to which he replied, expressing his satisfaction at the progress made; and the court further finds as a conclusion of law that the letter of the Commissary-General was a virtual approval of the contract. We are of opinion that, taking all this together, it is a finding by the court as a question of fact that the contract was approved by that officer; and inasmuch as neither the instrument itself nor any rule of law prescribes the mode in which this approval shall be evidenced, that a jury would have been justified in finding as the court did.

6. That by the terms of the contract the United States were not bound to furnish any given number of hogs.

Without entering into a discussion of the general doctrine of the implication of mutual covenants, we deem it sufficient to say that where, as in this case, the obligation of plaintiffs requires an expenditure of a large sum in preparation to enable them to perform it, and a continuous readiness to perform, the law implies a duty in the other party to do whatever is necessary for him to do to enable plaintiffs to comply with their promise or covenant. But the last article of the agreement seems to be an express promise to furnish all the hogs mentioned in the contract.

7. That plaintiffs have not proved that they were ready and willing to perform.

But the Court of Claims find this readiness, for they say that 'claimants incurred large expenditures in preparation for fulfilling their contract, and during the whole season kept the full complement of hands necessary to have slaughtered the whole 50,000 within the customary season.'

8. The rule for the measure of damages is not the correct rule as applied to the facts.

What would be the true rule is not pointed out. And we do not believe that any safer rule, or one nearer to that supported by the general current of authorities, can be found than that adopted by the court, to wit: the difference between the cost of doing the work and what claimants were to receive for it, making reasonable deduction for the less time engaged, and for release from the care, trouble, risk, and responsibility attending a full execution of the contract.

The leading case on this subject in this country is Masterton v. Brooklyn, and that fully supports the proposition of the Court of Claims.


text: Talk:United States v. Speed/Opinion of the Court


text:
Ex parte Yerger

On motion and petition for writs of habeas corpus and certiorari, the case being thus:

The Constitution ordains in regard to the judiciary as follows:

'The judicial power of the United States shall be vested in one Supreme Court and in such inferior courts as the Congress may from time to time ordain and establish. The judicial power shall extend to all cases in law or equity arising under this Constitution, the laws of the United States,' &c.

'In all cases affecting ambassadors, other public ministers, and consuls, and those in which a State shall be a party, the Supreme Court shall have original jurisdiction. In all the other cases before mentioned, the Supreme Court shall have appellate jurisdiction, both as to law and fact, with such exceptions, and under such regulations as the Congress shall make.'It makes provision, also, in regard to the writ of habeas corpus, thus:

'The privilege of the writ of habeas corpus shall not be suspended unless when in cases of rebellion or invasion the public safety may require it.'

With these provisions in force, as fundamental law, the first Congress by the 14th section of the act of September 24th, 1789, to establish the judicial courts of the United States, after certain enactments relating to the Supreme Court, the Circuit Courts, and the District Courts of the United States, enacted:

'That all the before-mentioned courts shall have power to issue writs of scire facias, habeas corpus, and all other writs not especially provided for by statute, which may be necessary for the exercise of their respective jurisdictions, and agreeable to the principles and usages of law, and that either of the Justices of the Supreme Court, as well as Judges of the District Courts, shall have power to grant writs of habeas corpus for the purpose of and inquiry into the cause of commitment: Provided, That writs of habeas corpus shall in no case extend to prisoners in jail unless they are in custody under or by color of the authority of the United States, or are committed for trial before some court of the same, or are necessary to be brought into court to testify.'

By statute of 1833, the writ was extended to prisoners confined under any authority, whether State or National, for any act done or omitted in pursuance of a law of the United States, or of any order, process, or decree of any judge or court of the United States; and by an act of 1842, to prisoners, being subjects or citizens of foreign states, in custody under National or State authority for acts done or omitted by or under color of foreign authority, and alleged to be valid under the law of nations.

The writ was, however, much further extended, by an act of the 5th February, 1867, entitled 'An act to 'amend' the Judiciary Act of 1789, above quoted.' This act of 1867, provided:

'That the several courts of the United States, and the several justices and judges of such courts, within their respective jurisdictions, in addition to the authority already conferred by law, shall have power to grant writs of habeas corpus in all cases where any person may be restrained of his or her liberty, in violation of the Constitution, or of any treaty or law of the United States,' &c.

And after providing for the awarding and hearing of the writ, the act proceeds:

'From the final decision of any judge, justice, or courts inferior to the Circuit Court, appeal may be taken to the Circuit Court of the United States for the district in which the said cause is heard, and from the judgment of said Circuit Court to the Supreme Court of the United States.'

Finally, by an act of March 27th, 1868, passed after an appeal in a particular case, the subject of much party discussion, under the above-quoted act of 1867, from the Circuit Court to the Supreme Court of the United States, had been argued before this latter court, had been taken into advisement by it-a history more particularly set forth in Ex parte McCardle -Congress passed an act providing by its second section:

'That so much of the act, approved February 5th, 1867, entitled 'An act to amend an act to establish the judicial courts of the United States, approved September 24th, 1789,' as authorized an appeal from the judgment of the Circuit Court to the Supreme Court of the United States, or the exercise of any such jurisdiction by said Supreme Court on appeals which have been or may hereafter be taken, be, and the same is hereby, repealed.'

In this state of constitutional and statutory provisions, a writ of habeas corpus upon the prayer of one Yerger, addressed to the Circuit Court of the United States for the Southern District of Mississippi, was directed to certain military officers holding the petitioner in custody, commanding them to produce his body, and abide the order of the court.

In obedience to this writ, the petitioner was brought into court by Major-General R. S. Granger, who made return in due form, certifying the cause of detention to be, that the petitioner had been arrested, and was held for trial, upon a charge of murder, by a military commission, under the act of Congress of the 2d of March, 1867, 'to provide for the more efficient government of the rebel States.'

Upon this return, the petitioner was ordered into the custody of the marshal, and the court proceeded to hear argument. It was admitted on the part of the United States, that the petitioner was a private citizen of the State of Mississippi; that he was being tried by the military commission, without a jury, and without presentment or indictment by a grand jury; and, that he was not, and never had been, connected with the army and navy of the United States, or with the militia in active service in time of war or invasion.

Upon this case, the Circuit Court adjudged that the imprisonment of the petitioner was lawful, and passed an order that the writ of habeas corpus be dismissed, and that the prisoner be remanded to the custody of the military officer by whom he had been brought into court, to be held and detained for the purposes, and to answer the charge set forth in the return.

To obtain the reversal of that order, and relief from imprisonment, the petitioner now asked for a writ of certiorari to bring here for review the proceedings of the Circuit Court, and for a writ of habeas corpus to be issued, under the authority of this court, to the officers to whose custody he was remanded.

title: Ex parte Yerger


text: Talk:Ex parte Yerger

title: Talk:Ex parte Yerger