Mississippi Central Railroad v. State

By an act of congress of the 4th of July, 1836, a quantity of land, equal to one-thirty-sixth part of the land ceded by the Chickasaw Indians, within the state of Mississippi, was granted to said state, for the use of schools within said territory in said state so ceded as aforesaid by said Chickasaws. This land was sold or leased by the state and the proceeds thereof were placed in the treasury of the state, and constituted a trust fund for the use of schools in the territory composing the Chickasaw cession.

In the year 1856 an act of the legislature of this state was passed authorizing a loan to certain railroad companies of an amount of money equal to all the money in the treasury arising from the sale or lease of the Chickasaw school lands not to exceed $400,000. Under this act the appellants obtained at different times the sum of $199,000.

On the 7th day of December, 1863, another act of the legislature was passed entitled “an act to enable the railroad companies of this state to pay the moneys borrowed by them.” And, on the 21st day of November, 1865, was approved an act of the legislature of this state, entitled, *214“An act further to secure the indebtedness of the railroad companies in this state on account of the money borrowed from the state, under an act approved March 7, 1856.” This act made it the duty of the governor of the state to demand of the appellants, among other things, new bonds or obligations and securities for the money which was due and owing to the state on account of money borrowed by said company under said act of March 7, 1865. The demand contemplated by this act of 1865 was made, and not being complied with, the appellee filed her bill in the chancery court of Madison county, alleging the loan as aforesaid to the appellants, of $199,000, at different times, before the 9th day of January, 1861, and that since that time, and before the 7th day of December, 1863, the appellants paid to the insurrectionary government of the state of Mississippi, the sum of $95,850 of the money loaned as aforesaid, and that, since the 7th of December, 1863, the appellants paid to the said insurrectionary government the sum of $103,150. The bill charges that these payments were not made in gold or silver nor in the lawful money of the United States, but in treasury notes issued by the insurrectionary government of the state of Mississippi. The bill prays that these pretended payments may be decreed by the court to be null and void, and that an account be taken and stated of the amount of principal and interest due from the defendants to the complainant, and that the defendants be decreed to pay the same.

The defendants demurred to the bill. The demurrer was overruled by the court, and the case comes to this court by appeal on the part of the Mississippi Central Railroad Company, who assign for error the action of the court below in overruling the demurrer to the bill of complaint. We approach this case with a due sense and proper appreciation of its magnitude, and have given it that deliberation and mature consideration which its importance demands,

i The main question presented by this record for our solu[tion is, was the payment by the appellants of principal and *215interest of tills loan, to persons professing to represent this state from 1861 to 1864 inclusive, a valid payment,] In the decision of this case we feel relieved from the necessity of discussing the powers of the government of the state of Mississippi during that period. Suffice it to say that it was insurrectionary and revolutionary in its character. The government of the state of Mississippi of the United States was not the government of the state of Mississippi of the Confederate States. The government of the former was overthrown and destroyed by the establishment of that of the latter. The money" sued for was borrowed by the appellants from th‘e legal government of the state as a member of the federal union, and to that state was the obligation of the appellants to repay it, and they were not released from that obligation by a payment to any other government or authority than that of the state of Mississippi, as a member of the United States, acknowledging the constitution and paramount authority of the government of the United States. Whatever effect may be given to acts produced by necessity or paramount force, it is not pretended that any inevitable necessity existed, or that any physical force was used, or even pretended, to compel the', appellants to pay the money borrowed to the insurrection- j ary and revolutionary government of the state. ISTor is it in the least inconsistent with the fact that they might have been desirous and willing to make the payment upon the very favorable terms proposed by the legislature. They , show no effort to retain or secure the funds to the legitimate i government, to which it was due and owing. Nor does it! appear that they would have suffered any inconvenience, or, been punished in any way by the authorities of the insur-; rectionary government of the state, if they had refused to pay the money to those authorities. There was no inevit-' able overpowering force to compel the payment. Nor does the act of the legislature of the 7th of December, 1863, contemplate any such thing as compulsion ; for it provides in the first section “ that the railroad companies in this state *216be and they are hereby authorized to pay into the treasury the sums of money by them respectively borrowed.”

The money loaned the appellants was good funds. It was regarded as a gold and silver debt, and yet the said act of the legislature authorized the railroad companies, to which these funds were loaned, to pay the sums borrowed by them respectively into the treasury in treasury notes of the state. [Asa historical fact it was well known that the fortunes of the Confederacy were at that time on the wane, and that I these treasury notes were greatly depreciated and that the / sinews of war were much needed. The treasury required replenishing and this was the mode adopted by the legislature to aid in effecting that purpose, and the appellants, no doubt, cheerfully availed themselves of the opportunity thus offered of paying a par debt in depreciated notes, which, however, would aid the state in the prosecution of the war waged for the express purpose of subverting the constitution and government of the United States. For the second section of this act provides “ that any money paid into the state treasury under the provisions of this act may be used in payment of any debts and appropriations of the state in the same manner as other funds' belonging to the r state are used.” And it was a matter of public history, and j therefore well known to all, that at the time the resources of i the state were heavily taxed to raise the means of carrying on the war.

It will be seen that we are not without authority for the positions we assume in the discussion of this cáse. In 1851, the United States issued five thousand bonds of $1,000 each, amounting to $5,000,000, to the state of Texas in arrangement of certain boundary claims made by that state. The bonds, which were dated January 1, 1851, were coupon bonds, payable by their terms to the state of Texas or bearer, with interest at five per cent semi-annually, and redeemable after the 31st of December, 1864.

In pursuance of an act of the legislature of Texas, the controller of public accounts of the state was authorized to *217go to Washington and to receive there the bonds, the statute making it his duty to deposit them, when received, in the treasury of the state of Texas, to be disposed of as may be provided by law; and the statute further provided, that no bond, issued as aforesaid and payable to bearer, should be available in the hands of any holder until the same shall have been indorsed in the city of Austin by the governor of the state of Texas. Most of these bonds were indorsed and sold according to law, and paid, on presentation, by the United States prior to 1860. A part of them, however, which had been appropriated by act of the legislature as a school fund,, were still in the treasury of Texas in January, 1861, when the late southern rebellion broke out.

On the 1st of February, 1861, the convention of the people of Texas adopted an ordinance to dissolve the union between the state of Texas and the other states, commonly called the ordinance of secession, whereby the legitimate government of the state was overthrown, and an insurrec-tionary government erected in its stead. And on the 11th of January, 1862, the legislature of the usurping government of the state of Texas passed an act repealing the act which made an indorsement of the bonds by the governor of Texas necessary to make them available in the hands of the holder.

On the 12th of January, 1865, the military board which had been established by the insurrectionary government, agreed to sell White & Chiles one hundred and thirty-five of these bonds, then in the treasury of Texas, and, seventy-six others, deposited with certain bankers in England, in payment for which White & Chiles were to deliver a large quantity of cotton cards and medicines. The former bonds were delivered to White & Chiles on the fifteenth of March following. None of them were indorsed by any governor of Texas. After the rebel forces were disbanded, and the insurrectionary government of the state was overthrown, a provisional government was established in 1865, under the proclamation of the president of the *218United States, and the people proceeded to make a constitution, and reconstructed their state government. By an act of the legislature of 1866, the governor of Texas was authorized to take such steps as he might deem best for the interests of the state in the matter. In this condition of things a bill in equity was filed on behalf of the state of Texas against White & Chiles, and others, claiming to be bona fide holders of a portion of said bonds, praying an injunction against their asking or receiving payment from the United States; and that the bonds might be delivered to the state of Texas.

It was insisted by the counsel for the defendants in that case, that the contract with White & Chiles, being for the purchase of cotton cards and medicines, was not a contract in aid of the rebellion, but for obtaining goods capable of a use entirely legitimate and innocent, and, therefore, that payment for these goods, by the transfer of any property' of the state, was not unlawful. The court say, “We cannot adopt this view, without entering, at this time, upon the inquiry, whether any contract made by such a board can be sustained. We are obliged to say that the enlarged powers of the board appear to us to have been conferred in furtherance of its main purpose, of war against the United States, and that the contract under consideration, even if made in the execution of these enlarged powers, was still a contract in aid of the rebellion and, therefore, void, and we cannot shut our eyes to the evidence which proves that the act of repeal was intended to aid rebellion by facilitating the transfer of these bonds. It was supposed, doubtless, that negotiation of them would be less difficult if they bore upon their face no direct evidence of having come from the possession of any insurgent state government. We can give no effect, therefore, to this repealing act. It follows that the title of the state was not divested by the act of the insurgent government in entering into this contract.” Texas v. White, 7 Wall. 700, 734.

The case at bar is verj^ similar in many of its features and *219attendant circumstances to that of Texas v. White. That was a contest between the state of Texas and her own citizens. This is a contest between the state of Mississippi and one of her railroad companies. Both suits'were brought to recover school funds which had been placed in the respective treasuries of these states before the rebellion, and which had been appropriated by the insurrectionary governments of these states during the rebellion. The convention of the people of Texas of 1866 passed an ordinance looking to the recovery of these bonds. The convention of the people of Mississippi in 1865 refused to ratify and declare to .be valid and binding, the act to enable the railroad companies of this state to pay the moneys borrowed by them, approved December 7, 1863. By an act of the legislature of Texas, in October, 1866, the governor of that state was authorized to take such steps as he might deem best for the interest of the state, either to recover the bonds or compromise with the holders. By an act of the legislature of the state of Mississippi, approved November 21, 1865,'it was made the duty of the governor to look after these funds and to take such steps as may secure the payment of the moneys borrowed by the railroad companies in this state under an act approved March 7,1856.

If the act of the legislature of Texas, of the 11th of January, 1862, repealing the act requiring the indorsement of the bonds by the governor to make them available, was, as decided in the case above referred to, in aid of the rebellion, by facilitating the transfer of those bonds, it may, with equal propriety, be said, that the act of the legislature of this state, of December the 7th, 1863, to enable said railroad companies- to pay the moneys borrowed by them, in the treasury notes of the state, was in aid of the rebellion, by supplying an exhausted treasury with the means of prosecuting the war for the avowed purpose of subverting the government of the United States.

In the case of Thomas v. Taylor, 42 Miss. 710, the high court of errors and appeals of this state has decided that *220r these treasury notes, being issued in aid of the late civil war, are illegal and void. Upon the whole, we have arrived at the conclusion that the treasurer of the state had I no authority to receive either Confederate or state treasury ¡notes from the appellants, in payment of the money borrowed by them as set forth in the appellee’s bill of complaint.

The decree is therefore affirmed, and the cause remanded, with leave to the appellants to answer the appellee’s bill of complaint, within sixty days from this date.

It is not proposed to argue the general subject (that has been done at length by the chief justice), but to state a single view of it, which impresses my mind most strongly. It is a principle of law, so often and in such various forms declared and applied by the federal judiciary, and our own, to wit: that all laws enacted by the several states, at war with the United States, in aid of it, to further its prosecution, are void and of no effect, that it is unnecessary to refer to the cases. The same principle is affirmed with more or less emphasis in the new constitutions of those states. So that the question for determination is one of intention, of purpose and effect. One of the modes, and not the least efficient of ascertaining the intention and purpose of a law, is to look at the state of affairs at the time of its enactment, and the effects that will be produced by it.

It must be assumed as a truth, which enforces itself upon the understanding, that there must have been some extraordinary motive that induced the legislature of 1863 to invite the railroad companies to pay into the treasury this large indebtedness (loaned in coin or its equivalent), in a currency then depreciated four, five or six hundred per centum below the coin standard. It was not called in for re-investment, for these companies held it. up on ample security. The cheap funds in which the payment might be made, was a stimulant to the debtors to comply with the law; that *221they should do so speedily. They would be cut off from the opportunity altogether unless they complied within four months. Contemporaneous history, as expressed in the public events of the times, and written in coeval legislation, furnish a conclusive explanation.. The territory of the state was then a part of the theater of the war; vast, hostile armies were upon or within her frontiers, and the legislature were putting into requisition every energy and resource to meet the crisis. A considerable force of state troops had been put in the field. There was a necessity for large sums of money to meet necessary and pressing expenditures. In looking over the legislation of 1863, a short time before and after the passage of the law under consideration, it will be seen that it was chiefly directed to measures of military defense, to maintain troops in the field, and the families of soldiers at home.

On the 9th of December, 1863, an act was passed appropriating $2,400,000 for the support of troops, outfit, etc., for the ensuing fiscal year. On the same day $25,000 was voted to aid in equipping a cavalry regiment. On the same day $100,000 were placed at the disposal of the governor for the purchase of cotton and woolen cards for the families (primarily) of soldiers. On the third of the same month, payment was directed to be made ont of the treasury for cavalry horses lost in the service. On the fifth of the same month, the three per cent fund (also a trust fund) then in the treasury, or that might afterward come in, was placed subject to general warrants.

The space of six days embraces these acts of the legislature, and also the act to authorize the railroad companies to pay their indebtedness to the state. Those extraordinary demands for, and appropriations of, money, could not be met by the income from taxes; besides these, were the expenses of the civil establishments of the state. Therefore, the indebtedness of the railroad companies to the state was called in. Therefore, also, the three per cent fund was liberated from its trust character. Money is an indispensable *222sinew of war. I cannot resist the conviction that the act was passed for the purpose of raising means to wage war against the United States. The case is stronger, in its parts, than Texas v. White.