Neely v. McFadden
Neely v. McFadden
Opinion of the Court
The opinion of the Court was delivered by
The plaintiff sues on a promissory note, dated December, 22d, 1863, payable in twelvemonths after date. On the trial the defendant introduced no testimony ; but insisted that under the operation of the “ Act to determine the value of contracts made in Confederate States notes or their equivalent,” passed March 26tli, 1869, the debt was reduced to the- sum which, according to the scale of values set forth in that Act, was the equivalent in the currency of the United States of the face of the note at its date. The Court sustained this view. The plaintiff, thereupon, offered testimony to prove the real consideration of the contract, and that it was
The Act relates to contracts created or contracted in Confederate States notes, or with reference to such notes as a “ basis of value,” made during the years 1861, 1862, 1863, 1864 and 1865. It declares that the obligation of such contracts shall be determined by the value of said Confederate States notes in the lawful money of the United States at the time such debts or obligations were created or contracted. Section 2 commences as follows: “Pursuant to the preceding Section, the value of one dollar of lawful money of the United States in said Confederate States notes is declared as follows, namely ;” then follows a tabular statement of the relative values of such currency during the different months or parts of the year extending through the period of years before mentioned. This table places the nominal amount of $13.50 of Confederate States notes, on the 1st of December, 1863, at the value of one dollar lawful money of the United States. To ascertain the value of that amount of Confederate notes, on the 22d of December, 1863, the rate of increase during the month of December, as ascertained by comparing the values set down for December 1, 1863, with those for January 1, 1864, must be taken into account, and the value from December 1 actually increased accordingly.
The following questions are to be considered: 1st. Where no mention is made on the face of a contract, of Confederate States notes, but the contract calls for “ dollars,” or “ lawful money,” alone, can the fact that the parties dealt with reference to Confederate currency be made out by extrinsic proofs? 2d. When that fact appears, can resort be had to the Act in question as the means of ascertaining the value of such Confederate currency? 3d. Is the Act final and conclusive between the parties, as it regards the class of contracts to which it applies? or may the parties introduce
I. Can the parties resort to proof outside of that afforded by the instrument itself, to convert an obligation to pay “ dollars,” or “ lawful money,” into one to pay according to the value of the notes of the Confederate States? These notes were not lawful money under the Constitution and laws of the United States, and', therefore, could not, as a question of legal conclusion alone, satisfy the expression, “lawful money.” It is necessary, therefore, to show, as matter of fact, that' where the parties said lawful money, they did not mean that which the law adjudged to be lawful money, but certain promises to pay, having current commercial value, but not answering the description of “ lawful money.” This question must be looked at both on grounds of substantial justice and of technical law. The object of technical - rules is to afford lights by means of which justice may be attained. What is justice, in a legal sense, is determined by the conscience of the community as revealed in the spirit of the law's, and not by the conviction of any single individual mind, however gifted.
In December, 1863, the parties to this controversy resided in the State of South Carolina. The Constitution and laws of the United States, although obligatory upon them, were practically inoperative for the time being. The State of which they were citizens was, in common with certain other States, engaged in making war upon the Government and people of the United States. Though a war in form, it was in effect a rebellion against the sovereignty of the United States. The confederated States assumed, among other things, to exercise national power, to make war, to maintain military forces, to levy taxes and contributions, and to establish standards of values. The gold and silver coin of the United States had ceased to be the actual representative of values in the dealings of these communities, not only in the Confederate States, but throughout the territorial limits of the United States. This was not alone due to its insufficient supply for commercial purposes, but to the additional fact that in that portion of the country main- ■ taining the authority of the United States the paper issues of the Government, made a legal tender, .had replaced gold and silver in current transactions, and, as a consequence, the prices of all commodities had adjusted themselves to the nominal value of such issues ; and, as such issues had a relative value as compared- with gold and silver, less than its nominal value, commercial dealing
Such was the general state of affairs. Of much we can take judicial notice; of the rest, it has become part of the history of the country, and, as such, forms, at least, a fair basis for testing the principles involved in the present question.
If the parties really understood Confederate currency as the medium of discharging the obligation expressed by the note in suit, then it is apparent that the plaintiff, in recovering the face of the note, would recover many times the value of the consideration that he must be assumed to have parted with in exchange for the note. Such a result would be obviously unjust. The injustice of such a course has been recognized in many cases, involving this question, which have arisen in other States. It remains to be seen whether such injustice is the inevitable consequence of the rules of law by which we are bound.
All technical rules of construction have for their object the discovery of the actual and fair intent of the parties. The best evidence of that intent is the instrument professing to express it. Parties must be deemed to use words according to their ascertained legal effect, or according to common acceptation and usage, and not
It is, therefore, perfectly correct, in principle, to preclude a party to a contract from saying that he employed words according to a meaning peculiar to himself. What is true of words is equally so of expressions. When parties employ technical formulas to which a definite signification is attached, they are, generally, though not universally, intended to'have used such expressions according to the received technical sense; but ordinarily the sense must be made out by applying general rules of construction to the language employed. These rules do not look to the mental habits of the individual whose expressions are examined by them, but to the common mind.
It is in harmony with these obvious principles that parties to a written contract are ordinarily held to that proof of their intent which appears on the face of their contract. Applying this rule to the case in hand, if the defendant had, on the trial, offered to prove that, at the time he made and delivered his note, he understood “ dollars,” or “ lawful money,” to mean Confederate currency, that proof should have been excluded; but had proof been offered tending to show that what the whole community regarded and dealt with as money was Confederate currency, then the question of the admission or rejection would have directly involved the distinction now under consideration. In the case of the offer first supposed, the attempt would be to construe the contract according to an individual standard, while, in the case last supposed, the inquiry would be as to what, at the time and place of the contract, was the standard according to the common understanding and usage.
The exact question here is, as to the true import of terms used in a contract, with the intention of referring the obligation of that contract to a known money value. It has been already said that there may be two modes of ascertaining the import of these terms, either by referring them to the coinage of the country, the fixed legal standard, or by referring them to the standard of values adopted for the time being by the commerce of the country, or State. Ordinarily these standards are the same, and no question like the present one can arise. Two cases, however, may be conceived, where the commercial standard might differ from the legal: first, where, for the time being, the laws, ascertaining such legal standard of values, are inoperative; and, second, where the medium
One or two propositions may assist this enquiry. In the first place, parties are under no legal obligation to employ the legal standards of value at the time and place of contract. They may contract with reference to foreign money, or a medium of exchange not recognized as money by any system of law's. They may base their contracts on pounds sterling, or Mexican dollars, or anything else possessing value capable of being measured, that is to say, of being compared with other objects of known value. Although the policy of laws of this class is to induce uniformity in contracts, they have never attempted to compel it. In the next place, it is not an invariable rule that parties are to be held to be familiar with the technical force and effect of legal terms and expressions.
It is true that a wrong cannot be justified on the ground of ignorance of law. But that is a very different proposition from the one that parties contracting together in terms having a fixed legal signification, are to be held, under all circumstances, bound to intend such signification.
What is meant by a power of attorney is as much the subject of legal ascertainment as what is meant by a lawful dollar, and yet, in Hunt vs. Roasmaineer, (8 Wheat., 174,) the Supreme Court of the United States reformed a contract, on the ground that the parties, acting under the advice of counsel, had misconceived the import and effect of a power of attorney, and, in view of their real intention, would be regarded as meaning a mortgage where they mentioned a power of attorney as the instrument of effectuating the general object of their contract. Here was an exception to the ordinary rule that parties are to be regarded as intending the legal force and effect of their expressions made out on narrower grounds than the present case affords. In the first place, it had to be brought within the class of mutual mistakes; in the next place, the mistake was not induced by the common understanding and usage of the whole political community, but by the misapprehension of a single legal adviser; and in the last place, the effect was to put the parties in a specifically new relation to the subject-matter of the contract.
The doctrine of Garvin vs. Garvin, (1 DeS., 437,) and Lawrence vs. Beaubien, (2 Bail., 623,) that mutual mistakes of law, induced by mistaken legal advice, may he corrected, could not be upheld if the rule is to prevail that parties are, in all cases, to be bound to have intended the legal consequences of the expressions employed by them according to their technical sense. They cerlainly recognize an exception to that rule. The principle of these cases would clearly reach to a case where the parties have been controlled in their expressions by the common understanding and usage of the whole community, comprising the political body, from which the laws emanate, and including, as it does, not only all private legal advisers, but the judges who are to speak the voice of the political body itself. If, in point of fact, the whole community united in using the notes of the Confederate States as money, and calling them money, even to the extent of ascertaining commercial values with reference to them as a standard; and it also appears, as either matter of proof or presumption, that the present parties considered that the expressions employed by them would be referred to that commercial standard; and if in all this they have mistaken the law, then it is clear that they have as good justification for such mistake as if it had arisen from the erroneous advice of any one legal gentleman professionally consulted by them.
To arrive at such a conclusion, involves a question of fact proper for submission to a jury. We therefore conclude that it was competent for the defendant, on the trial, to go into proof of extrinsic facts and circumstances of what, at the time of the contract, was commonly used and dealt in by the community as money, in order to show the intent of the parties to a contract calling for the payment of “ dollars” as “ lawful money.”
The extent of evidence to which parties 'may resort in such cases,
Proof of the value of the consideration is not in such cases admissible as affording a basis for reforming the contract, but as showing what the parties intended by the use of the'terms “dollars” or “ lawful money.”
The Act of March 26th, 1869, does not assume to determine what contracts are, nor what contracts are not, based on Confederate notes. Its operation is limited in terms, first, to contracts made within certain years, and, second, to such thereof as were based on the values of Confederate’ States obligations. The Act does not obviate the necessity of the defendant’s showing that the contract falls within its provisions, notwithstanding it was made in one of the enumerated years. Where a note on its face calls for the payment of “ dollars,” or “ lawful money,” although made during the enumerated years, yet, in the absence of a finding of fact sufficient to form the basis of a different construction, the law adjudges the established legal currency of the United States to be intended by the parties.
2d. The next question is, whether, when it appears that the parties dealt with reference to the Confederate currency, resort can be had to the Act in question as a means of ascertaining the value of such Confederate currency. This, question is intimately connected with the next, namely: Is the Act final and conclusive between the parties, as it regards the class of contracts to which it applies? or, may the parties introduce evidence, contradictory of the declaration of the Act, of the state of relative values ?
So far as the Act is reconcilable with the relations between the
The proper subject of a legal controversy is not the authority of an Act of legislation, considered as a general question, but the rights of the parties before the Court. Where a question of the constitutionality of a statute actually affects these relations, it must be considered on that ground, and on that alone. We are not to consider, in the present case, the merits or demerits, legal or otherwise, of the means set forth in the Act in question in their relation to contracts at large, based on Confederate currency, but the effect of the Act on the immediate rights of the parties before the Court exclusively.
Section second declares a state of facts as having existed at a particular time. It declares what was the relative value of Confederate States notes and United States currency at the date of the contract, or at least furnishes the means of fixing that relation, according to the principles of the Act. If it had been made to appear, in the present case, that the declaration was not in accordance with the fact, then the question would arise, whether a legislative declaration of a fact could preclude parties to a contract from giving proof of the actual state of the facts under which the extent of the obligation is to be judicially ascertained, without either directly or indirectly impairing the obligation of such contract. No testimony was offered on the trial for the purpose of showing that the actual relative values of the two descriptions of money differed from the declarations of the Act. If the declaration was in accordance with the actual fact, then the contract cannot be prejudicially affected by it, because the rights of the parties are the same under the statute as under the actual state of facts existing. In the absence of proof to the contrary, we are bound to regard the declarations of the Act as conformable to the fact, unless the Legislature was actually precluded from making any declaration on the subject, and the present parties have -a right to insist on such want of legislative authority.
It is not our intention to enlarge the authority of that class of cases in which the Supreme Court of the United States has given a construction to the clause of the Constitution of the United States
On the other hand, the parties are not precluded from showing that the declaration of the second Section, in its bearing on the present case, is inconsistent with the actual state of facts. Wo do not regard the Act as assuming to do more than this. If it had intended to bind the parties absolutely to the state of facts declared, it must be assumed, in view of the doubtful character of such legislation, that language would have been employed distinctly expressing such intent.
It is evident, from its carefully guarded language, that it was intended to confer upon it just that amount of authority that could rightfully be conferred by a statutory declaration of a fact of that character, and no more. In our judgment, that rightful authority can only extend to laying down a basis for determining the rights of the parties in the absence of proof of a conclusive character to the contrary; and, therefore, we must conclude that such was the intent of the Legislature that passed the Act.
It is true that, in that case, the question whether the date or the maturity of the contract was to govern, was of little practical importance, for the note sued upon was payable' one day after date; still there was a theoretical difference, and it would seem that that Court took into consideration that distinction, in order to lay down a general rule, which was done in the language above quoted. We 'must, therefore, .consider the question arising under the Constitution of the United States as settled in favor of the constitutionality of the Act.
Our State Constitution (Art.I, Sec. 21,) contains asimilar clause, prohibiting the Legislature from passing any law impairing the obligation of contracts. If this clause is to be considered precisely as if no similar provision existed ill the Constitution of the United States, then, in giving effect to it, we would have to regard ourselves as bound by the decision in Thorington vs. Smith, only so far as that decision rested upon sound reasoning. We are of opinion,
In the consideration of the questions that have been discussed, it has not been found necessary to examine the nature and legal consequences of the authority of the Governments existing in the confederated States, either unitedly or individually, during the rebellion, for the reason that, although the existence of the Confederate obligations depended on tbe action of the power set up by the Confederate States, still their value and significance, as a medium of exchange and standard of value, depended wholly upon the convenience and action of commerce. There was and could be but one legal standard, and that was enforced by the Constitution and laws of the United States. Nor is it of importance whether the convenience of commerce or the power and influence of the Confederate States controlled the use of Confederate currency by the commercial community; for, in the view that we take of the ease, it is the fact that a certain commercial value was ascribed to this currency, and not the motive that led to its ascription, that is decisive.
The Circuit Judge erred in holding that, as matter of law, the amount of the note was to be reduced, under the operation of the statute, having regard simply to the date of the contract, and irre
The verdict must be set aside, and a new trial ordered.
Reference
- Full Case Name
- J. A. Neely and Wife, in Error v. J. M. McFadden, in Error
- Cited By
- 5 cases
- Status
- Published