Opinion
12-13-1872
ANTONI v. WRIGHT, sheriff, & c. WRIGHT, sheriff, & c. v. SMITH.
by the attorney-general for the sheriff, and Ould & Carrington and B. T. Johnson & Royal for the petitioner and appellee.
Absent, MONCURE P.[a1]
1. The act of March 30, 1871, entitled " An act to provide for the funding and payment of the public debt," provides that the coupons attached to the bonds to be issued under that act " shall be payable semi-annually, and be receivable at and after maturity, for all taxes, debts, dues and demands due the State; which shall be expressed on their face." The act constitutes a contract on the part of the State, which can not be repealed by the General Assembly, and the contract follows the coupons in the hands of the holders thereof, though purchased after an act repealing the said act.
2. The act is not repugnant to § 7 of article 8, nor to § 9 of article 10 of the constitution of Virginia.
3. The act of March 7, 1872, which directs what shall be received in payment of taxes, dues, & c., to the State, and repeals all acts inconsistent with it, so far as it respects the provision of the act of March 30, 1871, in relation to the coupons of bonds issued under this last act, is repugnant to the provision of the constitution of the United States, which forbids a State to pass any law impairing the obligation of contracts.
These cases were heard together in this court. They involve a single, and the same question; and that is whether the act of March 7th, 1872, which provides " that hereafter it shall not be lawful for the officers charged with the collection of taxes or other demands of the State, due now or that shall hereafter become due, to receive in payment thereof any thing else than gold or silver coin, United States treasury notes, or notes of the national banks of the United States," is repugnant to the provision of the constitution of the State or of the United States, which forbids a State to pass any law impairing the obligation of contracts. And this question depends upon the question whether the act of March 30th, 1871, entitled " An act to provide for the funding and payment of the public debt," which provides that " the coupons attached to the bonds to be issued under that act, shall be payable semi-annually, and be receivable at and after maturity, for all taxes, debts, dues and demands due the State, which shall be so expressed on their face; " constitutes a contract on the part of the State, which cannot be rescinded, and follows the coupon into the hands of any holder for value.
The first case is an application to this court by Andrew Antoni for a writ of mandamus to John Wright, sheriff of the city of Richmond, to compel him to receive from Antoni a due coupon of one of the bonds issued under the last mentioned act, in payment of taxes due from Antoni to the State; upon which Wright made a return the same as set out in the next case. The other was a similar application by A. Austin Smith, to the Circuit court of the city of Richmond. The sheriff made his return to the rule upon him, and set up several objections to the issue of the mandamus. 1st. That the mere legislative declaration, that such coupons shall be receivable in payment of taxes, does not authorize him to receive them, they not having been tendered before the repeal of that provision of the act of March 30th, 1871. That the act of March 7th, 1872, forbids the receipt of the coupons in payment of taxes; and repealed the provision of the act of March 30th, 1871, authorizing them to be received. 2d. That if the holder of the coupons had the imperative right to demand that they should be received in payment of taxes, then the act was in conflict with the 5th section of article 10 of the constitution of Virginia; and the General Assembly had the right to repeal it. 3d. That the auditor had instructed the respondent, in writing, not to receive the coupons issued under the act of March 30th, 1871, in payment of taxes. That if the act created a mode of appropriating the State revenues different from that ordained by the constitution of the State, it was in violation of the constitution; or if it was intended to make them bills of credit, then it was in contravention of the constitution of the United States. And that said Smith was never the owner of the bonds from which the coupons were taken; and he became the owner of the coupons tendered by him after the passage of the act of March 7, 1872. 4th. A mandamus will not lie when the party has other adequate remedies.
To this return Smith demurred, and the court sustained the demurrer, and directed that a peremptory mandamus be awarded, directed to the said John W. Wright, sheriff of the city of Richmond, commanding him to receive from the plaintiff matured coupons issued by the State of Virginia under the provisions of the act of March 30, 1871, to an amount equal to the sum due from the plaintiff for taxes due to the State for the year 1871. And thereupon Wright applied to a judge of this court for a writ of error, which was awarded.
The cases were argued by the attorney-general for the sheriff, and Ould & Carrington and B. T. Johnson & Royal for the petitioner and appellee.
OPINION
BOULDIN, J.
The first of these cases is before the court on an original application by Antoni for a writ of mandamus to Wright as sheriff of the city of Richmond, and the other, on a writ of error to a judgment of the Circuit court of the city of Richmond, by which a peremptory writ of mandamus was awarded against the same sheriff. The object of the proceedings in both cases was to compel the sheriff to receive from the parties respectively, in payment of taxes due the State, certain matured interest coupons issued by the State of Virginia, under the act of the General Assembly approved March 30th, 1871, known as the funding act; which coupons had been duly tendered to said sheriff in payment of taxes, and were as is agreed by the parties in form and substance as follows;
" Receivable at and after maturity for all taxes, debts and demands due the State.
The Commonwealth of Virginia will pay the bearer three dollars interest, due 1st July 1872, on bond No. 3501.
GEO. RYE,
Treasurer of the Commonwealth of Virginia.
Coupon No. 2."
The sheriff refused to receive them, because as he alleged, he was prohibited from so doing by the act of March 7th, 1872. Sess. Acts 1871-'2, ch. 148, p. 141, entitled " An act declaring what shall be received in payment of taxes, or other demands of the State." There being no conflict of fact, the case was submitted to the court on the legal questions arising on the record, and the Circuit court awarded a peremptory writ of mandamus requiring the sheriff to receive the coupons aforesaid in payment of taxes due the State; and the cases are now before this court on a writ of error to the judgment aforesaid of the Circuit court, and on the original application of Antoni, to which the sheriff makes the same defence.
The questions involved in the two cases are identical; and as was said by Judge Davis, of the United States Supreme court, in a similar case, Furman v. Nichol, 8 Wall. U. S. R. 44, are of much greater " importance than difficulty."
They are the following:
1. Was there under the act aforesaid of March 30th, 1871, a valid contract between the State and such of her creditors as accepted and complied with the terms of the act, that the interest coupons issued thereunder should be " receivable at and after maturity for all taxes, debts, dues and demands due the State?"
2. If so, was the obligation of this contract impaired by the act aforesaid of March 7th, 1872, which substantially declares that the collecting officers of the State shall not receive the coupons aforesaid in discharge of any " taxes or other demands of the State now due or that shall hereafter become due?"
The first and all essential question is, was there a valid contract between the State and her bondholders?
To consider this question intelligently, a brief reference to the substance of the funding act, and to the facts and circumstances under which it was passed, is proper and perhaps necessary.
We know as matter of history, that prior to the late war between the United States and the Confederate States, and before her violent dismemberment, the State of Virginia for the common benefit of the whole and every part of the State, had contracted a very heavy debt, amounting at the date of the funding act, to about $40,000,000 of principal. During the war, and by an act of violence she was powerless to resist, about one-third of the territory and population of the State was cut off, and formed into a new State called West Virginia; and by that name that portion of the State of Virginia has been acknowledged as a State by the constituted authorities of the Federal government, and admitted as a member of the Federal Union. Both States in their constitutions and by legislation have acknowledged their respective liability for a just and equitable proportion of the old debt; and efforts had been made from time to time, to adjust that liability; but very little progress towards a settlement of any kind seems to have been made. In the meantime, the payment of interest on the debt was for a time wholly suspended, and afterwards only partially resumed by the State of Virginia alone; whilst West Virginia had not, and has not to this day, paid any part of the debt, principal or interest; and the entire debt standing in the name of the State of Virginia, and her bonds being held for the whole amount, much anxiety was felt and manifested on the subject as well by the State as by her creditors.
Under these circumstances, and hopeless of any early settlement with West Virginia, the State of Virginia proposed to her creditors, by the act aforesaid of the 30th of March 1871, a separate adjustment of what she deemed her own indebtedness, which she assumed to be two-thirds of the entire debt. Her object, as declared in the preamble to the act, was " to enable the State of West Virginia to settle her proportion of said debt with the holders thereof, and to prevent any complications or difficulties which might be interposed to any other manner of settlement; and for the purpose of promptly restoring the credit of Virginia by providing for the prompt and certain payment of the interest upon her proportion of said debt as the same shall become due; " and her offer was to issue to her creditors new bonds for two-thirds of the entire debt, principal and interest, to run for thirty-four years, with interest payable semi-annually on the aggregate amount of principal and interest, the bonds to be coupon or registered, at the option of the creditor, and to be convertible the one into the other at like option; and to secure " the prompt and certain payment of the interest as the same shall fall due," and to give the coupons greater value, they were to be " receivable, at and after maturity, for all taxes, debts, dues and demands due the State," which should be so expressed on their face.
As to the remaining third assumed to be the just proportion of West Virginia, the State of Virginia proposed the adjustment set forth in the following certificate; like certificates to be issued to all creditors who should accept the terms proposed by the State:
" COMMONWEALTH OF VIRGINIA, TREASURER'S OFFICE,
Richmond, Virginia, ____ 187 ____
| No.____________________ | $____________________ |
This is to certify, that there is due unto ____, heirs, executors, administrators or assigns, ____ dollars, being one-third of bond surrendered under the provisions of an act approved March the 30th, 1871, entitled ‘ An act to provide for the funding and payment of the public debt,’ (viz: bond No. ____, with interest amounting to ____ dollars), payment of said one-third, with interest thereon at the rate of six per cent. per annum, will be provided for in accordance with such settlement as shall hereafter be had between the States of Virginia and West Virginia in regard to the public debt of the State of Virginia, existing at the time of its dismemberment, and the State of Virginia holds said bonds, so far as unfunded, in trust for the holder hereof or his assigns.
In testimony whereof, this certificate has been signed by the Treasurer and countersigned by the Second Auditor, as provided by law.
____ Treasurer of the Commonwealth of Virginia. " ____ Second Auditor of Va."
For value received, ____ assign unto ____ of ____ the within certificate of the Commonwealth of Virginia, and hereby transfer all of my right, title and interest therein____ Dated ____ 18 ____ Executed in presence of ____, a Notary Public of ____"
Upon the receipt by the creditors of the bonds of the State for her assumed indebtedness, and of the certificates aforesaid, the creditors thus accepting the terms offered by the State, were to surrender their old bonds to be cancelled.
A large proportion of the creditors accepted the terms proposed, received the bonds of the State for two-thirds only of their claims--received certificates as aforesaid for the remaining third--and surrendered their old bonds to be cancelled; and the question is, whether the undertaking by the State set forth in the coupons issued under the act, that they should be " receivable at and after maturity for all taxes, debts, dues and demands due the State," is a valid legislative contract upon sufficient consideration? Were it a contract between individuals, the mere statement of the case would suggest the answer. To illustrate; A and B owe to C a joint debt, but in unequal proportions as between themselves. B leaves the country, and the pecuniary condition of A, and the circumstances of the case, make it reasonable, in A's judgment, that he should propose a separate adjustment of the amount due from him as between himself and B, and as part of the arrangement, proposes, as agent and trustee, to collect for C, B's proportion of the debt. C accepts the proposition, takes from A his individual bond for the principal and interest of his part of the debt, with largely extended credit; takes his undertaking in writing, as agent and trustee, to collect, if practicable, and account for B's proportion of the debt, and surrenders to A for cancellation the joint bond of A and B. Is there an intelligent judicial tribunal on earth that would, for a moment, tolerate the defence by A that his bond was without legal consideration? We think not. The surrender alone by the creditor to the debtor of a bond or note to be cancelled, constitutes, of itself, ample legal consideration for its renewal, with all arrearages of interest added, and is a daily transaction between individuals. A fortiori, is there ample legal consideration, when other considerations, involving principles of compromise, enter into the adjustment; when one-third of the principal and interest is temporarily or permanently abated, and when the new bond is taken for only two-thirds of the debt?
Such would certainly be the case on such a contract between individuals; and what is a valid consideration between individuals is alike valid between the State and individuals. We have never had in such matters one code of law and morals for the State, and another for individuals: the same laws govern both.
Authority on the question whether the adjustment we are considering is a contract--and a contract on sufficient consideration, would seem to be scarcely necessary; but the case of State of New Jersey v. Wilson, 7 Cranch's R. 154, involving in substance the same question, is directly in point. The arrangement claimed to be a a contract in that case, was a stipulation by the Legislature of the then colony of New Jersey, in a grant of lands to the Indians within the colony, that the lands granted should be forever exempt from taxation. In the year 1804, more than fifty years after the date of the grant, when the colony had become a State of the American Union, and after the Indians had sold their lands and left the State, an act of Assembly was passed by the State of New Jersey, repealing the privilege aforesaid of exemption from taxation; and a question arose between an owner of a portion of these lands and the State of New Jersey as to the validity of the act of repeal. In deciding the case, Chief Justice Marshall said: " The question is narrowed to the inquiry, whether, in the case stated, a contract existed, and whether that contract is violated by the act of 1804. Every requisite of a contract is found in the proceedings between the then colony of New Jersey and the Indians. The subject was a purchase on the part of the government of extensive claims of the Indians, the extinguishment of which would quiet the title of a large portion of the province. A proposition to this effect is made, the terms stipulated, the consideration agreed upon, which is a tract of land with the privilege of exemption from taxation; and then in consideration of the arrangements previously made, one of which this act of Assembly is stated to be, the Indians make their deed of cession. This is certainly a contract, clothed in forms of unusual solemnity. The privilege, though for the benefit of the Indians, is annexed by the terms which create it to the land itself, and not to their persons." And he held that the law of the State of New Jersey passed in 1804, more than fifty years after the grant, and after the Indians had sold the land and left the State, repealing the section by which the privilege of exemption from taxation was secured, impaired the contract, and was void. He says, " this contract is certainly impaired by a law which would annul this essential part of it." Ibid, p. 166-7.
Now, it will be seen on examination, that all the requisites of a contract referred to by Chief Justice Marshall in the case of State of New Jersey v. Wilson, exist in the cases under consideration. The subject matter was an equitable adjustment of the State debt under the novel and anomalous condition in which the State of Virginia was placed; so that complications with West Virginia might be avoided, and the amount for which Virginia was willing to be held directly bound to her creditors might be distinctly ascertained, and her bonds given for that amount, in lieu of the old bonds; " a proposition to this effect is made--the terms stipulated--the consideration agreed upon; which is" the issue by the State of the bonds and certificates aforesaid, with the extended credit thereby secured to the State, and the further consideration of the surrender by the creditors, of their old bonds to be cancelled. The consideration on the part of the creditors is, in fact, complied with by the surrender of their bonds to the State to be cancelled; and the State issues to them bonds and certificates as agreed on, with the privilege aforesaid of receivability for taxes, & c., secured on the face of the coupons. Is this a contract? In the language of Chief Justice Marshall in the case just referred to, we say, " This is certainly a contract clothed in forms of unusual solemnity; " and like the privilege of exemption from taxation in that case, the quality of receivability in payment of taxes and other dues to the State, in these cases, is annexed not to the persons of the holders, but to the coupons themselves, and follows them wherever they may go.
But we are not without other authority on this question, more directly to the point. In 1836 the Legislature of the State of Arkansas chartered a bank called the Bank of the State of Arkansas, the whole capital of which belonged to the State, and the president and directors were appointed by the General Assembly. A section of the charter provided " that the bills and notes of said institution shall be received in all payments of debts due to the State of Arkansas; " but this section was repealed in 1845. At the date of the repeal a large amount of the issues of the bank were in circulation, a portion of which were acquired after the date of the repeal, by Woodruff, a judgment debtor of the State, and were tendered by him to the collecting officer of the State in payment of the judgment, who refused to receive them because the law making them receivable had been repealed.
A mandamus was applied for to compel the officer to receive them, but was refused by the Supreme court of the State; whereupon the case was taken by writ of error to the Supreme court of the United States; and the judgment of the State court was reversed.
The United States Supreme court held that the legislation aforesaid making the notes of the bank receivable in payment of debts to the State constituted a contract between the State and the holders of the notes, which was binding on the State. Woodruff v. Trapnall, 10 How. U. S. R. 190. Judge McLean, delivering the opinion of the court, said, " The entire stock of the bank is owned by the State. It furnished the capital and receives the profits. And in addition to the credit given to the notes of the bank by the capital provided, the State declares in the charter they shall be received in all payments of debts due to it. Is this a contract? A contract is defined to be an agreement between competent parties to do, or not to do, a certain thing. The undertaking on the part of the State is to receive the notes of the bank in payments from its creditors.
This comes within the definition of a contract. It is a contract founded on good and valuable consideration--a consideration beneficial to the State, as its profits are increased by sustaining the credit and consequently extending the circulation of the paper of the bank.
With whom was this contract made? We answer with the holders of the paper of the bank. The notes are made payable to bearer; consequently every bona fide holder has a right, under the 28th section, to pay to the State any debt he may owe it in the paper of the bank. It is a continuing guaranty by the State that the notes shall be so received. Such a contract would be binding on an individual, and it is not the less so on the State." Ibid, p. 205-6. " 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. Any one had a right to receive them and to test the constitutionality of the repeal." Ibid, p. 206.
All this reasoning applies with full force to the contract under consideration. Indeed, the contract in the cases before us stands on higher ground than that in the case of Woodruff v. Trapnall, in this; that here the State is herself both creditor and debtor, directly and immediately. It is her own debt, and not the debt of an insolvent corporation which she has contracted to receive. And it stands on higher ground in this also--that here the receivability of the coupons in payment to the State is engraved on the face of each coupon, whereby the State makes known to every one who may desire to acquire them, that they will be received in all payments to the State, and thus invites him to take them; whereas, in the case of Woodruff v. Trapnall, although the same right was secured by law, yet it did not appear on the face of the notes. And furthermore, the consideration in this case is more valuable and beneficial to the State than that in Woodruff v. Trapnall, because here the State secures a temporary or permanent abatement of one-third of her debt, and a credit of thirty-four years on the residue. If then the contract in Woodruff v. Trapnall be a contract on good and sufficient consideration, and binding on the State, a multo fortiori would the contract here appear to be on good and sufficient consideration, and binding on the State?
It is true that four of the judges dissented in the case of Woodruff v. Trapnall; but the same question identically arose in the recent case of Furman v. Nichol, 8 Wall. U. S. R. 44; and the decision in Woodruff v. Trapnall was reaffirmed by the Supreme court without a dissenting voice.
The question in that case arose under the charter of the Bank of the State of Tennessee, which, like the Bank of the State of Arkansas, was exclusively a State institution, chartered for the benefit and sustained by the credit of the State. The 12th section of the charter provided " that the bills or notes of said corporation, originally made payable, or which shall 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 the State." Held that this provision constituted a valid contract by the State with all persons receiving them; that the bank notes issued whilst that section should remain in force should be received in payment of all public dues; that the guaranty was in no sense a personal one, but attached to the notes themselves as much as if written on the back thereof; that this guaranty went with the notes every where as long as they existed, and was a standing invitation to all persons to receive them notwithstanding the fact that after the notes had been issued the section had been repealed.
The court say, p. 61, without a dissenting voice, " 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."
Every word thus quoted will apply to the coupons in this case--using the word " coupons " in lieu of " notes." The court go on to decide that the contract thus made could not, under the constitution of the United States, be impaired by subsequent legislation.
These decisions, made directly on the point, upon elaborate argument by the Supreme court of the United States--a tribunal which assumes to act, and has been generally regarded, as the appellate tribunal in the last resort in such cases--would seem to be conclusive of the question.
But a very earnest assault has been made on the first of those cases-- Woodruff v. Trapnall ; the opinion of one of the minority judges has been commended to us, and we have been warned not to render servile submission to the decisions of the United States Supreme court. This court will always pay due respect as well to the decisions of the Supreme court as to the opinions of its judges; but if controlled by either, will certainly prefer, as a general rule, to be guided rather by the decisions of the court than by the opinions of the minority--especially when, as in the case of Woodruff v. Trapnall, the decision of the court commends itself to us as justly propounding the law. The views of the minority in that case certainly found no favor in the judgment of this court when, in the case of the Exchange Bank of Virginia v. Knox, & c., 19 Gratt. 739, the decision of the court, and not the opinion of the minority, was unanimously approved by this court (Judge Anderson being absent, but concurring, as shown by his opinion in this case, with the other four judges).
The case of Woodruff v. Trapnall had been pressed on the court as ruling the cases then under argument; but in deciding those cases, Judge Christian, delivering the unanimous opinion of the court, drew a distinction between the case of Woodruff v. Trapnall and these cases, and said of the case of Woodruff v. Trapnall: " The court decided that the act of 1845, repealing the ninth section of the act of 1836, was unconstitutional, because it impaired the obligation of the contract created by that section between the State and the billholder, to receive its own notes (the State being the bank in this case ) in payment of debts due to it. The judgment in this case was a debt due to the State of Arkansas, and the provision was that the notes and bills of this institution shall be received in payment of all debts due the State of Arkansas. This was clearly a case of contract which could not be impaired by legislation. " 19 Gratt. p. 753.
Such was the unanimous opinion of this court on the contract in the case of Woodruff v. Trapnall. Whilst they distinguished the case from the cases before them, all the judges held that the provision in Woodruff v. Trapnall was " clearly a case of contract which could not be impaired by legislation," because they considered the bank and the State as, in effect, the same, and that the contract was, in substance, between the State and her creditors. Much more " clearly, " then, is this a " case of contract which could not be impaired by legislation," since here the State, not indirectly through her interest in the bank, but directly and immediately, is both creditor and debtor, and as such enters into the agreement with her creditors set forth on the face of the coupons, that they shall be receivable in payment of all taxes, debts and demands due the State; " that a debt of hers past due shall be received in payment of a debt due to her.
But it is earnestly argued that it is not within the legitimate power of the Legislature to make such a contract; that it would tend to trammel and embarrass the action of subsequent Legislatures--to deprive them of proper control of the annual revenue--and might, by absorbing the revenue, substantially annul the taxing power, and put a stop to the wheels of government.
It is unquestionably true, that one Legislature cannot, by an act of ordinary legislation, bind or control, in any manner, subsequent Legislatures. Such acts of legislation are, and of right should be, always subject to amendment or repeal. But it is equally true, that by special legislation amounting to a contract, a subsequent Legislature may be bound. It is bound irrevocably by a legislative grant, forever parting with the real or personal property of the State, which is held to be a contract not to be impaired by legislation; by a temporary or perpetual exemption of specific property or interests from taxation; by a bond or certificate of debt issued by the State for money loaned, or other good and sufficient consideration; by charters of incorporation, unless the right to modify or repeal them is reserved by law; and by all legitimate legislative contracts. The exercise of such power in special cases, although necessarily controlling, to a certain extent, subsequent Legislatures, has been always held to be salutary, and one of the " " " essential elements of sovereignty."
The power exercised in the cases referred to, or in most of them, goes far beyond that exercised in this case; for here, no rightful power is surrendered, but simply a provision made for a debt. The annually accruing interest on the debt of a State is, in all well regulated governments, deemed an essential part of the annual expenses of government, and is always annually provided for.
To add, as an additional sanction to this high obligation already existing, for the purpose of securing its prompt and punctual performance, that coupons for interest shall be received as money in payment of debts due to the State, would seem ordinarily to be, not only a very innocent, but a just and convenient measure; for it would prevent a double process of collection and payment, by applying to the State the familiar law of setoff, which is good between individuals; and, even as the general law now stands, is good against the State in any case in which she may happen to be a plaintiff against a person holding a debt of hers, past due. The setoff could be pleaded against her, and the courts would be bound to allow it. The rule, as we have said, is one of justice and convenience, and there is no good reason why, in cases like those under consideration, it should not with her consent, through her Legislature, be applied to the State. That consent has been given in these cases, and in giving it, the Legislature certainly did not act without precedent.
By the act of March 13, 1847, Sess. Acts 1846-7, ch. 73, p. 65, the sheriffs of the Commonwealth were required " to take in payment of taxes, county and parish levies within their respective counties, at par value, all claims that may have been allowed against the county by the County courts," & c., when offered by the creditor. This is nothing but a quasi setoff, adopted as a matter of convenience; and the law is still in force, having been on our statute books for more than a quarter of a century. Code 1860, ch. 49, § 30, p. 285.
Again, in 1856, in order to borrow money for the use of the State, an issue of treasury notes was authorized to be made from time to time, not to exceed one million three hundred thousand dollars at any one time, and the third section of the act provided that these notes should be transferable by delivery and assignment endorsed thereon by the person to whose order on the face thereof the same shall have been made payable.
The fourth section was as follows:
" § 4. The said treasury notes shall be received by way of setoff in liquidation of all taxes and debts due to the Commonwealth after the 30th day of September next, that being the close of the present fiscal year, other than moneys due on the sale of her bonds: provided, that such taxes and debts are due and payable at the time when said treasury notes may be so offered in liquidation as aforesaid," & c., & c.
The authority to issue these notes continued until the end of the fiscal year in 1858; the amount to be outstanding at one time being diminished from time to time. Here again is a precedent for the principle of setoff allowed in the cases under consideration.
And yet again, by the act of April 25th, 1867, Sess. Acts 1866-7, ch. 103, p. 904, the second auditor was required to issue certificates for interest on a portion of the public debt therein mentioned, in the nature of coupons, to such persons as might require it; and the third section of the act provides: " The certificates aforesaid may be used and shall be received in payment of all State taxes and other public dues. " The fourth section makes a similar provision in relation to holders of interest coupons, for the payment of which provision has been made.
We see, then, that in the course of twenty years, from March '47, to April '67, three different Legislatures of the State had, prior to the funding act, exercised the power so liberally denounced. The first two of them were elected and assembled when Virginia was herself and represented by her sons; and the last, although it assembled since the war, and amidst clouds and darkness, was yet elected by Virginians, and had among its members some of the best and ablest men of the State. These are the Legislatures which had furnished to the General Assembly of 1871 the precedents for the setoff feature of the funding act--a feature, we repeat, just and equitable in principle and convenient in practice. It withdraws not one dollar's worth of property from taxation. It interferes in no manner whatever with the legitimate power of subsequent Legislatures. It does, it is true, incidentally place an obstacle in the way of the power, not the right, of subsequent Legislatures to decline to provide for an obligation which they are forbidden by the constitution to impair. In other words, it may have the effect, incidentally, of an appropriation of a portion of the annual revenue of the State for thirty-four years to meet during that period the annually accruing interest on a specific debt.
Whether the exercise of this power at the time, and under the circumstances, was wise or prudent, is not a question before this court. That was a matter left exclusively to legislative discretion; but such legislation does not seem to be a great stretch of power, or very alarming legislation, for a State whose organic law not only contemplates the punctual annual payment of the interest on her entire debt, but imperatively requires, on the creation of a debt, that a sacred sinking fund shall be at once established, to be applied solely to the extinction of the debt; thus not merely authorizing, but requiring, the Legislature which creates a debt to bind all future Legislatures by the establishment of a fund to be applied solely to the extinction of the debt itself.
This may be, and, we believe, usually is, for thirty-four years, but may be for a longer or shorter period.
If it be said that such legislation may, and probably would, result in crippling the power and resources of the State in time of war or other great calamity, we can only say that legislation cannot well be adapted in advance to extraordinary and exceptional cases. Such cases must and will occur at times with all nations, and must always be provided for by the wisdom and prudence of the government for the time being. At such a time, however, the honored name and high credit secured to a State, by unbroken faith, even in adversity, will, apart from all other considerations, be worth more to her in dollars--incalculably more--than the comparatively insignificant amount of the interest on a portion of the public debt enjoyed by breach of contract.
We think the incidental appropriation of a portion of the annual revenue of the State for the period of thirty-four years (a mere point of time in the life of a nation) to meet the annually accruing interest on a specific debt, is certainly not a larger exercise of legislative power than the creation and irrepealable dedication of a fund for thirty-four years, or longer, to the extinction of the debt itself, as required by the constitution; nor a larger exercise of power than the purchase by the State of an extensive tract of land, and a grant of the same for ever, with perpetual exemption from taxation, as was done in the case of New Jersey v. Wilson, The one--the act in question--to say the most of it, is only a temporary appropriation in advance of a portion of the public revenue to the payment of a debt of the State, past due when the appropriation takes effect, and which ought to be paid. The other is an absolute and unconditional surrender for ever of a portion of the public revenue--that is to say, of so much thereof as would arise from the taxes remitted.
Nor do we think it a larger exercise of power than the surrender for ever of the right of the State to tax the property and income of great and wealthy corporations. On the contrary, we think the latter immeasurably greater than the former.
That such powers may be legitimately exercised has been over and over again decided by the courts of the States, and of the United States; and in the face of the very argument now urged, over and over repeated, and as often overruled.
In one of the latest cases on the subject, Home of the Friendless v. Rouse, 8 Wall. U. S. R. 430, the court, at p. 438, says: " The validity of this contract is questioned at the bar, on the ground that the Legislature had no power to grant away the power of taxation. The answer to this position is, that the question is no longer open for argument here; for it is settled by the repeated adjudications of this court, that a State may, by a contract based on a consideration, exempt the property of an individual or corporation either for a specific period or permanently." " And it is equally well settled that the exemption is presumed to be on sufficient consideration, and binds the State, if the charter containing it is accepted," citing, in a note, numerous cases which we need not repeat.
But as we have been warned against too ready obedience to the decisions of the Supreme court, we will fall back on an authority which all of us are bound to respect. We mean the unanimous decision of this court in the case of the City of Richmond v. The Richmond and Danville Railroad Company, 21 Gratt. 604, in which this court, with entire unanimity, concurred with the United States Supreme court that the question was no longer open. Had the question in the then state of judicial decision been considered open, there might have been in that case some room for relying on the principle established in the case of Burroughs v. Peyton, 16 Gratt. p. 470; and for insisting that the duty of paying taxes and the duty of rendering military service were analagous, and that neither could be surrendered without endangering the very life of the State. But the question was regarded by this court as already settled. In delivering the opinion of the court, Judge Staples says: " The power of exemption, as well as the power of taxation, is one of the essential elements of sovereignty. The right of the Legislature to surrender the power of taxation in specific cases has been the subject of one of the ablest and most exhaustive judicial discussions ever known in the Supreme court of the United States, and is now regarded as established upon the most solid foundations of public policy and expediency." This authority, at least, will not be questioned here, and we think the principle established not only covers the cases before us, but goes far beyond them. If not, however, the cases of Woodruff v. Trapnall and Furman v. Nichol, directly on the point, approved as the former case (Woodruff v. Trapnall ) has been, by the unanimous opinion of this court in The Exchange Bank of Virginia v. Knox, & c., already cited, are decisive of the question; and we are of opinion, in the absence of other objections, that the power of the Legislature to make the contract under consideration is unquestionable.
But conceding that proposition, it is argued that the contract in this case is void, because it is repugnant to the eighth section of the eighth article and the third section of the tenth article of the State constitution, dedicating certain portions of the State revenue to the support of free schools.
We think there is no such conflict in the case. The interest on the debt funded may be paid in the mode prescribed, and the constitutional provisions in relation to the schools respected and complied with. It only requires that the obligations of succeeding Legislatures shall be firmly met; that there should be what the creation of every new debt imperatively demands, to wit: an increase of taxation, if the existing rate be insufficient. The argument is based on the assumption that subsequent Legislatures will fail in their duty, and pursue such a course as may result in a malappropriation of the funds referred to; that they will decline to meet faithfully the high obligation resting on them, and then rely on the irregular consequences of their own default as an argument against the validity of the debt for which they will have failed to provide. The malappropriation which would follow would not be the legitimate result of the funding act, but in effect would be the act of the Legislature failing to discharge its duty. The obligation to provide for the interest due by these coupons is as high as the duty of applying the capitation tax and other funds to the schools. Both duties are alike obligatory, and both may be discharged, as there is no conflict between them. It is only by a failure to discharge the one that the performance of the other can be put in jeopardy, and it rests with the Legislature, by faithfully and fearlessly meeting both obligations, to preserve the plighted faith of the State, and protect her constitution from violation.
It is contended further, that the entire funding act is unconstitutional and void, because it violates the ninth section of the tenth article of the constitution, which provides that the unfunded debt of the State " shall not be funded or redeemed at a value exceeding that established by law at the time said debt was contracted." It might, perhaps, with good reason be held that the provision cited does not apply to the funding act at all, as the debt funded was not the " unfunded debt " of the State, but her old funded debt and its accretions. But it is unnecessary to decide that question, because, conceding the section to be applicable, we are of opinion that its provisions are not violated by the funding act. The provision of the constitution under consideration might certainly have been made more clear as to its intent, by the addition of a very few words; but we do not regard it very difficult of solution as it is written. One definition of the word " value" is " rate. " If that word had been used instead of " value" the difficulty of construction would disappear. We would understand at once that it was forbidden to fund or redeem the unfunded debt at a greater " rate " of interest than that " " " established by law" at the creation of the debt. We are of opinion that this was the true intent, and is the proper construction of the provision, and that there was no reference whatever to the amount of the debt.
The rate of interest has always been " established by law" in this State; but we do not well see how the constitution could reasonably speak of the amount of an unfunded and floating debt as " established by law," at the time of its creation. A maximum might be " established by law," beyond which no floating debt should be created, but from its nature the actual amount of such debt must be left to circumstances--must be fluctuating and uncertain.
Another and equally conclusive objection to the construction contended for, is, that it would prohibit the payment of all arrearages of interest on the redemption of the public debt; because the constitution forbids alike either the funding or redemption of the unfunded debt of the State at a value exceeding that " established by law" at the creation of the debt.
If " value" means " amount," as argued at the bar, then the large arrearages of interest at the date of the funding act could not have been paid at all, even were the money in hand, and the State entirely ready and willing to redeem, instead of funding; since the arrearages of interest, when added to the principal, would make an aggregate amount greatly larger than the original amount of the debt; and in that sense the " value " of the debt redeemed would be largely in excess of its value when created. Under that construction the arrearages of interest, amounting at the date of the funding act to about $7,000,000, could have been neither funded nor redeemed, and must, therefore, have been wholly lost to the creditors. Such, certainly, is not the meaning of the constitution.
Again, we are told that the funding act is void, because it impairs the obligation of the contract made by the State with the holders of coupons for interest, under the act of April 25th, 1867.
It is enough to say that no such question arises in these cases. No holder of those coupons, if indeed any such holder now exists (which is at the least doubtful), is here complaining that he is injured in any way by the funding act; and it is well settled that the courts will never pronounce a statute unconstitutional because it may perhaps impair the rights of others not complaining. " The statute is assumed to be valid until some one complains whose rights it invades." Cooley on Constitutional Limitations, p. 163-4, and cases there cited.
As to the objection, that the funding act violates that portion of the tenth section of the tenth article of the constitution which provides that " no money shall be paid out of the State treasury, except in pursuance of appropriations made by law," we need only say, that it has no application to the cases before us. By the equitable principle of setoff allowed by the funding act, the taxes are paid or extinguished by the coupons without ever going into the State treasury, and consequently no money is actually paid out of the treasury. If, however, by legal intendment it should be regarded as such payment, then, by like intendment, the funding act would be regarded as an act of appropriation. But we think there is no payment of money out of the treasury in the case; the taxes being intercepted by setoff.
Upon the whole, the court is of opinion, that the undertaking on the part of the State in the funding act, as set forth on the face of the coupons issued thereunder, constitutes a valid legislative contract on good and sufficient consideration, that the said coupons should be received in payment of all taxes, debts and demands of the State; and that the obligation of such contract cannot under the State and Federal constitutions be impaired by subsequent legislation.
That provision of the State and Federal constitutions which forbids the State to impair by legislation the obligation of contracts, has received mature consideration by this court in the recent cases of Taylor v. Stearns, 18 Gratt. 244; and in the Homestead Cases, to be reported in 22 Gratt. 266. In delivering the unanimous opinion of the court in the last mentioned cases, Judge Christian says: " The inviolability of contracts, public and private, is the foundation of all social progress, and the cornerstone of all the forms of civilized society, wherever an enlightened jurisprudence prevails; " and we do not think he has attached an undue importance to this great principle. It must be preserved.
Has the obligation of the contract of the State in this case been impaired by the act of March 7th, 1872?
The simple statement of the substance of each will furnish the answer to the question.
The contract of the State is, that the coupons issued under the funding act shall when matured be received in payment of all taxes and public dues.
The act of March 7th, 1872, forbids the collecting officers of the State to receive, in payment of " taxes and other demands of the State, anything else than gold or silver coin, United States treasury notes, or notes of the national banks of the United States," and repeals " all acts or parts of acts inconsistent with that act," thus repealing, or attempting to repeal, that portion of the funding act which makes the matured coupons receivable in payment of all taxes and public dues. In the language of Chief Justice Marshall, in the case of State of New Jersey v. Wilson, " this contract is certainly impaired by a law which would annul this essential part of it."
We are of opinion, therefore, that the act aforesaid of March 7th, 1872, is repugnant to the constitutions of this State and of the United States, inasmuch as it impairs the obligation of the contract of the State with the holders of coupons issued under the funding act, as above set forth, and is on that account and to that extent void. And being further of opinion, both on principle and authority, that the writ of mandamus is the proper remedy in both cases--the duty of the sheriff being purely ministerial--a peremptory writ of mandamus must be awarded in the case of Antoni v. Wright, and the judgment of the Circuit court of the city of Richmond in the case of Wright v. Smith must be affirmed.
The court is sensible that a grave, responsible and painful duty will be cast on the General Assembly by this decision, in the present impoverished condition of our people, but we feel assured that it will be faithfully and wisely met.
We think with the entire court in the Homestead Cases, that temporary relief from pecuniary pressure is too dearly bought, at the price of the violated faith of Virginia. She has just emerged from a terrible trial--an ordeal of fire--without a stain on her escutcheon. Impoverished, crushed and dismembered, but not dishonored, she is now taking a new departure, and we would hope to see it in the right direction. In the language of a vigorous writer, " Now is the seed time of faith and honor. The least fracture now will be like a name engraved with the point of a pin on the tender rind of a young beech, the wound will enlarge with the tree, and posterity will read it in full grown characters."
This court is unwilling to inflict that wound.
STAPLES, J.
I do not concur in the opinion just delivered. I do not concur either in the reasoning or the conclusions to which a majority of the court have arrived. It is not my intention, however, to attempt any elaborate discussion of the questions arising in this case. Regarding it in all its bearings and results as by far the most important that ever engaged the attention of this court, I deem it proper and becoming to state the reasons which influence my judgment. The first point to be considered is, whether the funding act is in conflict with any of the provisions of our State constitution. One of these declares that the proceeds of all public land donated by Congress for public school purposes, and of all waste and unappropriated lands, the proceeds of all escheated property, and all fines collected for offences against the State, and such other sums as the General Assembly may appropriate, shall be set apart as a permanent and perpetual literary fund. The capitation tax and an annual tax upon the property of the State, of not less than one nor more than five mills on the dollar, are also to be applied to the public free schools for the benefit of all the people of the State. It will be perceived that these provisions dedicate the proceeds of the sale of escheated and waste lands-- lands donated by Congress, and all fines collected to the cause of education. How is this object to be accomplished if the funding bill creates a valid and binding obligation upon the State? The purchasers of the lands mentioned and parties assessed with fines will have the right to discharge their indebtedness with these coupons in all cases. The same privilege will, of course, be accorded to all persons assessed with the capitation tax. That this is practically a diversion of the funds mentioned from the objects designated in the constitution, would seem to be too clear for argument. It is said, however, the Legislature, by taxation of other subjects, may raise a revenue for the public schools equal to the amount so diverted, and thus comply with the requirements of the constitution. But how is the Legislature in any one year to anticipate the amount that may be realized from these sources, and then by the necessary taxation make provision for the deficiency thus created? But if this objection were removed, what right has the Legislature to apply in payment of the public debt a fund sacredly dedicated to the cause of education? The difficulty is not obviated by another law raising the same amount of revenue from other subjects of taxation. The Legislature is not authorized to legislate at all in respect to the school fund, except in furtherance of the objects contemplated by the constitution. It has no right to expose this fund to any contingencies or hazards of any sort. My objection is not based upon any idea that a specific sum is set apart in the public treasury in particular coin and notes for the common schools which may not be touched; but that the Legislature cannot constitutionally provide that the school tax shall be paid in any other medium than money or its equivalent. And for the obvious reason that a fund is to be raised from the particular source designated, to be applied to the establishment of public free schools for the benefit of all the people of the State. These objects are effectually defeated by the funding act. Suppose the Legislature had passed an act directing that all fines, the proceeds of waste and unappropriated lands, the capitation tax and the literary fund, shall for thirty-four years be applied to the payment of the public debt, but at the same time providing it should be the duty of every succeeding Legislature to raise the amount thus diverted by a resort to other taxable subjects, will any lawyer or court maintain that such a law is not a palpable violation of the constitution? Whatever form such an enactment might assume, no future Legislature would be under the slightest obligation to respect it. The money derived from the sources already alluded to is a trust fund, and the General Assembly is made a trustee for its inviolable application to the promotion of the cause of education; and that body is as absolutely prohibited from appropriating it to any other purpose as any other trustee is restrained from applying a trust fund to his individual debts. It is said that the obligation to pay the public debt is as strong and sacred under the constitution as that of providing for the support of the common schools. That may be so, still it does not follow that revenues, dedicated by the constitution to one object exclusively, can be applied to the other.
The constitution of Iowa contains a provision that certain designated funds, and such other means as the Legislature may provide, shall be inviolably appropriated to the support of common schools throughout the State. The Supreme court of that State, in construing that provision, decided " that whenever the Legislature raises a fund, by taxation or otherwise, for the support of common schools, it cannot, by any contemporaneous or subsequent legislation, divert the fund to a different purpose." City of Dubuque v. County Judge of Dubuque County, 13 Iowa R. 250. In Crosby v. Lyon, 37 Cal. R. 240, the Supreme court says: The Legislature provided that the board of supervisors shall have power to levy a tax not to exceed a specific sum, for the support of common schools in their respective counties, and by force of the constitutional provision in question, the money, when collected, becomes inviolably appropriated to school purposes. It would hardly be considered a valid answer to these objections to say, that as the identical bank notes received were not appropriated, it was competent for the Legislature to devote the money to other objects, and supply the deficiency by a resort to other objects of taxation. The language of our constitution is much stronger. The tax must be imposed and collected, and when collected, must be appropriated in the specific way designated. The practical operation of the funding bill is to defeat these objects, to divert the fund before it reaches the treasury, and apply it to the payment of the public debt, in plain contravention of the express language of the constitution.
These are some of my objections to the funding bill, as affected by the constitution of Virginia. It can hardly be necessary to adduce argument or authority to show that no valid contract can be founded on a law which violates the constitution of a State. No binding obligation can result from such a law. It confers no legal right on the one party and imposes no corresponding legal duty on the other. Its repeal can, therefore, in no manner impair the obligation of a contract.
Conceding, however, the constitutionality of the funding act, I propose to consider the question of the power of the Legislature to repeal it.
The interest upon the public debt is estimated in round numbers at two millions of dollars annually. To meet this sum, coupons will be issued and used, to a large extent each year, in the payment of the public dues. To what extent they will be so used, it is impossible, in the nature of things, even to anticipate. The Legislature must, therefore, impose annually, a tax sufficient to pay the entire interest. It must also lay a tax sufficient to defray the ordinary expenses of government and to carry on the system of public schools provided for in the constitution. It is, therefore, clear, whatever else may happen, provision must be made for the creditors of the State, or the government will fall to pieces for the want of means to sustain it. It is substantially, and in its practical effects, an appropriation by the Legislature of 1870-71 of the public revenues to the amount of two millions of dollars each year for the next thirty-four years, and probably longer. It is claimed that the act imposing this obligation constitutes an inviolable contract, which this court may compel the Legislature to perform. In support of this, as it seems to me, alarming and extraordinary doctrine, certain cases decided by the Supreme court of the United States are much relied on. I do not mean to discuss the question, whether in construing our own constitution and laws we are bound to follow, with blind submission, the decisions of the Supreme court of the United States, however erroneous and unjust we may consider them.
This may be said, however, our own books contain the report of a celebrated case, in which this court unanimously refused not only to obey, but even enter upon its records, a decision of the Supreme court of the United States, notwithstanding the case involved the validity of a treaty, and an appeal had been taken under the twenty-fifth section of the judiciary act, from the judgment of this court to the Supreme court of the United States. These are, however, old fashioned doctrines, and have now but few avowed supporters anywhere. Every day's history but teaches the melancholy lesson that the Federal courts, the Federal Legislature and executive will, in the end, absorb every vestige of the rights of the States.
The cases of Woodruff v. Trapnall, 10 How. U. S. R. 190, and Furman v. Nichol, 8 Wall. 224, are those principally relied on here. They present substantially the same points, and I shall content myself with a brief reference to the last mentioned decision. It appeared in that case that the Bank of Tennessee was essentially a State institution. The State owned the capital and received all the profits. The Legislature, in its anxiety to increase the circulation of the notes, provided they should be received in payment of all public dues. The effect of this provision was to prevent the return of the notes for redemption, and thus the State was enabled to realize a clear profit from the interest on its loans, and from the notes which were never returned for payment. In this way the State of Tennessee became, in fact, a bank, assuming all the obligations and reaping all the advantages that appertain to these corporations. In the present case, if the State will derive any benefit from the funding bill--if that enactment is founded upon a valuable consideration--I am unable to perceive it. It is said that the creditor has released one-third of his debt. I do not so understand it, and I will hazard the assertion, the creditor does not so construe the law. If this was the intention of the framers of the act, they have adopted an obscure and equivocal mode of expressing a plain and simple agreement. The creditor surrenders his bond and obtains a new one for two-thirds of his debt, and coupons for the interest. For the remaining third the bond is held in trust by the State, and a certificate is given him stating that payment will be provided for in accordance with such settlement as may be made with West Virginia. If that State is faithful to the obligations resting upon her, the creditor will receive the other third also. On the other hand, if she repudiates these obligations, there is no agreement or understanding absolving the State from the payment of such third. It is as much bound for the payment of the whole debt as before the passage of the funding bill. I am, therefore, unable to perceive that the State has derived any advantage from the creditors' acceptance of the provisions of the funding act. The contract, if such it be, is wanting in the essential element of a valuable consideration, so much relied on in the opinion of the Supreme court of the United States.
But the material distinction between the cases lies in the fact, that the notes of the Tennessee bank were entirely valueless to the holders, unless they were permitted to use them in the payment of State dues. In this case, the coupons, although they may not be receivable in discharge of taxes and other demands of the State, constitute, nevertheless, a subsisting obligation as valid and binding on the State as the original bond held by the creditor. As the bondholder gave no consideration for the privilege of using the coupons in the payment of his taxes, so he will lose nothing to which he is justly entitled by the withdrawal of that privilege He may, perhaps, lose the opportunity of speculating in these coupons; and he will be required to pay his share or proportion of the taxes in the currency exacted from every other citizen. The State does not seek to repudiate the debt, or deny its validity, but simply postpones the period of payment. If the creditor is not satisfied, he may resort, I imagine, to his original obligation, which is in nowise impaired. The Legislature of the State has often arrested for a time the collection of private debts, and however the constitutionality of such statutes may be doubted, as applied to individuals, no State can be justly chargeable with impairing the obligation of a contract because of a failure or refusal to discharge all its liabilities at the appointed day. Governments are established for the benefit of mankind. They constitute a trust created for the general good, and that general good sometimes requires the dedication of every resource to the common cause. A State, under some great and overruling necessity, may feel impelled to call to its aid every arm and every dollar in the final struggle for existence. And so in times of great pecuniary distress and embarrassment, when credit is prostrate, finances disordered and the people reduced to general bankruptcy and ruin, extraordinary measures become necessary to restore confidence and prosperity to a prostrate and languishing State. Disasters like these have occurred to us in times past, and will occur again. They come upon all people. They constitute a chapter in every history. Of the measures necessary at such periods the legislative department, and not the judicial, must be the judge. It belongs to the former, and not to the latter, to say when the public burdens shall be increased or diminished, whether the public interests demand a payment of the State debt, or its postponement. According to the theory and practice of our government, the whole subject of taxation, the raising and collecting public revenue, and its appropriation, are under the exclusive control of the representatives of the people. These are sovereign powers, which no Legislature is competent to surrender; nor can it, by any contract or enactment, deprive any future Legislature of the right to adopt any laws, to impose any burdens, and apply the public revenue in any manner the public interest may require, not prohibited by the constitution.
This court held, in Burroughs v. Peyton, 16 Gratt. 470, that the Congress of the Confederate States could not, by any agreement with a private citizen to exempt him from military duty, create an obligation which the same, or any future Congress might not disregard, if the public interest demanded it. Judge Robinson, in delivering the opinion of the court, said: " By the term contract in the constitution is not meant to include rights and interests growing out of measures of public policy. Acts in reference to such measures are to be regarded as rather in the nature of legislation, than of contract; and although rights and interests may have been acquired under them, those rights and interests cannot be considered as violated by subsequent legislative changes which may destroy them. Whatever in the nature of a contract could be considered to exist, there must be implied in it a condition that the power is reserved to the Legislature to change the law thereafter, as the public interest may, from time to time, appear to require." Every word that is here said applies with peculiar force to the subject of taxation. What is taxation but the tribute paid by the citizen for the protection which he receives. It is not asked, but demanded, exacted by the government to fill the public coffers, that the general welfare may be promoted and the rights and the liberties of the people protected. In particular specific instances, it may be the subject of contract, and may be surrendered by the government. And this is all that was claimed or asserted in the opinion just quoted, which was delivered by me in the case of the City of Richmond v. Richmond and Danville Railroad Co., 21 Gratt. 604. And this is as far as the courts have gone in any case--that for a consideration received, the State may exempt from taxation certain rights and franchises; but if the exemption is made as a privilege only, it may be revoked at any time. But what is the exemption of a church or an institution of learning, or even a railroad corporation, probably called into existence by an agreement for such exemption--what is all this compared with an abandonment of the power of collecting the public revenue to the amount of two millions annually for more than a quarter of a century.
It is impossible to imagine a stronger instance of an attempt, by an irrepealable law, to diminish the powers of succeeding Legislatures in respect to the subject of taxation and the public revenue--powers inherent in all governments, and important to the well being of every organized society.
In the case of the Ohio Life Insurance and Trust Company v. Debolt, 10 How. U. S. R. 416, Chief Justice Taney, in discussing this subject, said:
" They (the Legislature) cannot, therefore, by contract, deprive a future Legislature of the power of imposing any tax it may deem necessary for the public service, or of exercising any other act of sovereignty confided to one legislative body, unless, indeed, the power to make such contract is conferred upon them by the constitution of the State."
In Virginia it has been the uniform practice for each Legislature to impose the taxes necessary for the purposes of the government during the existence of such Legislature; and this attempt, thirty years in advance, to appropriate the sum of two millions yearly to a specific purpose, beyond the control of every power in the State, is believed to be without precedent in the history of this or any other State. If there be any advantage in the frequent recurrence of popular elections, it is only in the fact, that the burdens annually laid upon the people are imposed by those fresh from their midst, and familiar with their condition, wants and circumstances. An irrepealable law, therefore, imposing taxes to a large amount, and dedicating the revenue thus raised to any specific object, even the payment of a public debt, would seem to be contrary to the genius and spirit of our institutions. If some future Legislature, in an hour of madness or folly, should provide that the bonds of the State should be received in payment of all public dues, we must equally hold that such legislation constitutes a valid and binding contract. This is the necessary result of the decision just made.
In Woodruff v. Trapnall, the Supreme court of the United States went so far as to hold that a defaulting collector, against whom a judgment had been rendered, had the right, even after the rendition of the judgment, to buy up the worthless notes of an insolvent bank, and with them discharge a judgment for gold. It is gratifying to know that this case was decided by a majority of one only, in a court consisting of nine judges. Mr. Justice Greer, with whom Justices Catron, Daniel and Nelson concurred, delivered a very able dissenting opinion. He protested against the assumption that the Supreme court had the power to compel a State of the Union, who repudiates her debts, to pay them, upon any idea that such refusal or repudiation impaired the obligation of a contract. He protested against the decision, because under it, so long as any portion of the three millions of dollars of notes issued by the bank before 1845 remained unpaid, the State of Arkansas could not collect a dollar of taxes of citizens in lawful money. He denied that when a State published to the world its willingness to accept payment of its notes in the issues of a bank, it amounted to a contract by implication, with the public and each individual comprising it, to guarantee the notes held by said banks; that this contract was with and is attached to said notes in the hands of the bearer, provided the notes were issued before such offer was withdrawn. Now, whether the majority or minority of the court was right--with such a division--the case, if it were analogous in all respects to the present, could not be regarded as binding authority, or even a precedent, in any other than a Federal court. It is true that the subsequent decision was made by a unanimous court; but in the meantime Judges Catron and Daniel had left the bench, and we are to presume that the other dissenting judges had not abandoned their long entertained and most deliberate convictions, but simply acquiesced in the decision of a majority. However this may be, I do not consider either of the cases as involving the questions arising in this, and with the greatest possible respect for my brethren, I do not believe the Supreme court of the United States will ever hold that one Legislature can, by any form of enactment, bind succeeding Legislatures and the public revenue in the manner attempted in the provisions of the funding act; and until they so decide I am not willing that this court should sanction a precedent which may prove most disastrous to all the vital interests of the State, and under authority of which, practically, liens and mortgages may be given upon the future revenues of the State by statutes assuming the form of contracts. We have heard a good deal of violated faith, and of the obligation and duty of paying the public debt. These are questions for the consideration of the Legislature, and not of the courts. They who purchased the bonds of the State were well aware of this when they made their investments. They who deliberately, and in defiance of a positive enactment of the Legislature that these coupons will not be received in payment of public dues, persist in purchasing them, are not entitled to the least favor or consideration, and should receive none from the court.
Upon this question of public faith I will say this: that for four years Virginia bore upon her bosom the burden of a civil conflict as great as any recorded in history. She came out of the struggle presenting a lamentable spectacle of a prostrate and bleeding State, without a currency, without any organized system of labor, one-half of her territory almost a waste, and vast numbers of her citizens reduced to hopeless insolvency and ruin. For years after the rage of battle had ceased she was kept in subjection to military power, under the rule of aliens and strangers, unacquainted with her laws, her traditions and her sufferings--and yet her statutes exhibit the gratifying spectacle of an honest endeavor on the part of her representatives, while still under the shadow of these great disasters, to make some provision for the payment of her creditors. I believe it will still be done, and payment be made from time to time until the last farthing is paid. But regarding the whole subject as involving the exercise of legislative functions of sovereign powers, I am content to leave it where it properly belongs, under our constitution and form of government. Virginia's representatives will not fail to preserve untarnished Virginia's honor.
After the decision of the court was announced, the attorney-general moved the court for a rehearing of the case. This question was, according to the practice of the court, submitted to the judges who had concurred in the decision.
ANDERSON J.
When the decision of the court in these causes was announced a few days ago, I briefly stated orally the grounds of my opinion. And as they are brought before us again, on the petition of the attorney-general, for a rehearing, I deem it proper to state the reasons which have conducted me to the conclusion to which I have arrived.
It is the practice of this court to grant a rehearing if any one of the judges who united in the decision is in doubt as to its correctness. And considering the importance which has been attached to this decision, and that the motion is on behalf of the Commonwealth, I should be disposed to favor a rehearing if I could see any ground to doubt the correctness of the decision, or the slightest probability that it would be changed upon a reargument. But that not being the case, it would be worse than an unprofitable consumption of time to keep the public mind in suspense as to the final decision.
The whole case is embraced in this one inquiry, did the State contract, in the sense in which the word is used, in both the Federal and State constitutions, to receive these coupons from the holders thereof in payment of taxes or other dues to the Commonwealth? If so, the act of 1872 in question annuls a contract, and consequently impairs its obligation, and falls within the prohibition of the Federal constitution, art. I., section 10, which declares that no State shall " pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts" ; and of the Virginia constitution, article V., section 14, which declares that " the General Assembly shall not pass any bill of attainder or any ex post facto law, or any law impairing the obligation of contracts," & c.
That a State may make a contract with an individual, which is binding on the State, will hardly be questioned by any one whose opinions are entitled to respect, or who has any self-respect. And that a State law impairing the obligation of such a contract is unconstitutional, is no longer an open question. If any doctrine of law can be said to be settled, this has been since Fletcher v. Peck, 6 Cranch, R. 87, 137, decided in 1810, upon the unanswerable reasoning of C. J. Marshall, and which afterwards, in the case of State of New Jersey v. Wilson, 7 Cranch, R. 164, was recognized, and by all the courts since, State and Federal, as far as I am informed, as the settled doctrine on that subject.
But it is said that one Legislature cannot bind a future Legislature. That is not fairly the question here. It does not fully present the case made by this record. The question rather is this: When a contract is made by the State with an individual, by authority of the supreme legislative power of the Commonwealth, can a subsequent General Assembly annul it? I hold that it cannot. If it was such a contract as the Legislature had the power to make, or to authorize to be made, it is binding upon all subsequent General Assemblies, just as it is binding on the other departments of the government. The question is then reduced to this, had the General Assembly of 1871 power to authorize, on the part of the State, the contracts in question to be made?
The argument that the contracts are not binding, because not for valuable consideration, can hardly require an answer. The plainest understanding will comprehend that if I owe you a debt, upon which interest has accumulated, which I have not been prepared to pay, and I give you a new bond for the principal and accrued interest, and you surrender my old bond, it is a contract for valuable consideration. And not only that, but the consideration is sufficient to support a deed of trust on property, to secure its payment, Exchange Bank for, & c., v. Knox & al., 19 Gratt. 739, 747; citing 13 Gratt. 427 and 15 Gratt. 153. If the receivability provision be reregarded as security for payment, the pre-existing debt was sufficient consideration.
It matters not whether the State is released from one-third of the debt or not; if the new bond had been given for the whole of the debt, it would have been a valid obligation for a valuable consideration. Whether the State is released or not for one-third of the debt, it is very clear that in this transaction she has only assumed to pay two-thirds of it. And I could not say that she is bound for any more. That question, though one of great interest to the State, is not involved in this case. Because, however, it may be decided the obligations assumed by the State are for valuable consideration.
The release of the State from a part of the old debt may, and does, affect the question, whether the contract was very beneficial to the State or not, but cannot affect the question whether the contract was valid or not. A contract may be for valuable consideration, and binding, although it may not be beneficial to the party; else the binding obligation of a contract would depend upon whether the contractor had made a good bargain or not, which is an absurdity. Whether the contracts made on behalf of the government with the public creditors were beneficial to the State, is a question about which men differ in opinion. It is not a question for the courts. When they are called upon to expound and enforce contracts, if the contract was fair and for a valuable consideration, it is not for them to inquire whether it was a good bargain or not for either party.
But it is argued that the Legislature had no power, under the constitution, to authorize a contract to be made binding the State to receive the interest coupons when due in payment of taxes, & c., upon the ground--Frst, that it is incompatible with other obligations imposed upon the Legislature by the constitution of the State. And in support thereof, it is said those provisions of the constitution which set apart certain funds, and a certain proportion of the tax for the public schools, would be defeated by this legislation. It would seem to be a sufficient reply to say, that if it were impracticable to raise a sufficient revenue for both purposes, the latter did not impose an obligation on the Legislature paramount to the obligation to provide for the payment of the interest on the public debt. That was an obligation antecedent and paramount to the constitution itself, and could not be repudiated by the constitution, if it had so provided. But it is not repudiated nor ignored; but the obligation is clearly recognized by sections 7, 8, 19 and 20 of article 10--at least to pay Virginia's proportion. And, furthermore, this being an obligation of debt, and not eleemosynary in its character, as are the other provisions referred to, however desirable and important it may be, that they should be carried out, I hesitate not to say, this is of higher obligation. A man must be just before he can be generous.
But there need be no clashing of duties here. It is only required that the Legislature should levy a tax sufficient for both objects; a duty imposed on it by the constitution. It has not been the practice to set apart in the public treasury the identical money received for the public schools; nor is it required by the constitution, or act of Assembly. And the Legislature has discharged its constitutional obligation when it has set apart the required amount for that purpose.
But secondly, it is urged that the whole subject of taxation, the raising and collecting the public revenue, and its appropriation, is under the exclusive control of the representatives of the people, and that it is a power which cannot be surrendered. That principle will not be questioned; but to give validity and effect to the coupon provision of the act of 1871 does not in any sense, or in any respect, conflict with that principle. For it was the act of the representatives of the people. It was the act of a legislative assembly clothed with precisely the same powers with which the present General Assembly is vested. Indeed, it is the same legislative department of power in the government, though the persons delegated by the people to its exercise are not identical. Neither Assembly is superior to the other; and the acts of one, within the limitation of its powers by the State and Federal constitutions, are entitled to the same respect that the acts of the other are, and have the same binding force. A subsequent Assembly may, indeed, repeal the acts of a preceding, not because it is superior, but because it is equal, in legislative power. But the repeal, where rights have vested, can only operate prospectively. When it undertakes to annul and invalidate rights which have vested under the previous act, which was enacted within the scope of the powers of the Assembly, it claims a superiority, and invades the rights of individuals which are guaranteed by the constitution.
A majority of this court, in Griffin v. Cunningham, 20 Gratt. 31, went very far in the expression of their sacred regard for this doctrine of vested rights, when they held that decrees of certain persons, who had been detailed or appointed by a military commander, to fill the office of judges of the Supreme court of Appeals of Virginia, during the military rule, and which were pronounced, after whatever of authority they had under the military appointment had ceased, against the protestation of at least one of the parties who complained, could not be reviewed by this court, because rights had been vested by the said decrees. And that an act of the Legislature which expressly authorized this court to review them, upon the petition of any party who felt himself aggrieved, was unconstitutional. J. Staples, in delivering his opinion, said: " The parties interested in them (the decrees) acquired thereby vested rights, of which they cannot be divested by special enactments of a retrospective character." Two of the judges held that the pretended decrees vested no rights, and that the law was constitutional.
In the case of the Bank of the Old Dominion v. McVeigh, 20 Gratt. 457, the court held that an act of the Legislature was unconstitutional, which authorized payment of a debt contracted to be made to the President and Directors of the mother bank, by a citizen of the Confederate States, to be made to the branch bank, when the place of business and the directory of the mother bank were within the enemy's lines, because it impaired the obligation of contract. In dissenting from that decision I did not controvert the principle, that if the law violated a contract between the State and the bank, or between the bank and its debtor, it was unconstitutional and void. But I held that it did not violate the contract between the State and the banks, because the Legislature had reserved, in the act of incorporation, which was the contract with the banks, the right to alter and amend the charter; and under that reservation had the right to change the name and domicil of the bank, and the organ through which the body corporate might act and speak; and that it did not impair the obligation of the contract between the bank and its debtor, because the debt was not due to the President and Directors of the mother bank propriis personis, but was due the body corporate, and that a payment to the new agency was as much a payment to the creditor as payment to the old, who were not within the jurisdiction of the State, while the corporation was, and therefore was no violation of contract between the bank and its debtor.
It is true, that government may, in the exercise of the right of eminent domain, divest individuals of their rights of property, which public necessity requires should be appropriated to public uses. But it is equally the settled law, that government cannot exercise this power without compensating the individual for the fair value of his property. This principle of eminent domain can, therefore, have no application to the questions involved in these causes.
But the doctrine that one legislative Assembly cannot invest rights which a subsequent Assembly may not divest, which has recently been promulgated, can find no warrant in reason or authority, and leads to the most pernicious consequences. If the Legislature may enact laws divesting you of your rights of property in contracts and personal securities, it may divest you of your title to your lands; for the bondholder is as much entitled to his bond as to his land. And as all our titles to real estate are mediately or immediately vested by acts of legislation, and as no time runs against the Commonwealth, if that doctrine be true the tenure by which we hold our lands is the will of the Legislature. And so it may be said with regard to the rights and franchises which have been invested in all our railroad, manufacturing, and industrial and financial associations. Such a doctrine would doubtless be pleasing to those who hold that all private estates should be divested, and an equal division made amongst the people, " without distinction of color" --that it is against natural right that one man should have more of this world's goods than another. It is the principle of the freebooter and the highwayman, and can find no toleration within the sacred precincts of law and justice.
Thirdly, It is objected, that no rights vested by virtue of the contract on the part of the State, to receive the coupons in payment of taxes and public dues, because the General Assembly had no power to appropriate a part of the revenues of the State for a period of thirty-four years, for the payment of interest on the public debt in a way to bind future Legislatures. Is this so? Cannot one General Assembly make an appropriation of future revenues of the State, so as to vest in parties the right to the appropriation in such manner that it cannot be divested by a subsequent General Assembly?
The power to appropriate, as well as the power of taxation, is a legislative function.
Indeed, it is claimed by those who sustain the act of 1872 that they are sovereign legislative powers, which cannot be surrendered by the Legislature. By article V., section 1, of the constitution of Virginia, the legislative power of the Commonwealth is vested in the General Assembly. Consequently the Assembly which enacted the act of 1871 in question, was, during the term of its existence, fully invested with the whole legislative power of the State, and could appropriate the revenues, or such part of the revenues as was necessary to meet the annual legitimate liabilities of the State, as long as those liabilities existed, unless its powers in this respect are limited by the State or Federal constitutions. For it is an established principle that the State Legislatures are invested with all legislative powers which are not prohibited by the constitution of the State or of the United States. It is not pretended that any restriction of this legislative power can be found in the Federal constitution, and it is not embraced in the limitation of the powers of the General Assembly in the State constitution.
The convention which framed our State constitution might have withheld this power from the General Assembly, and doubtless would have done so if it had so designed, because it was then no novel principle of legislation in America. By the act of the Virginia Legislature of March 18th, 1856, treasury notes were authorized to be issued, not to exceed, at any one time outstanding, $1,300,000 in principal, which, it was provided by the act, shall be received by way of setoff in liquidation of all taxes and debts due the Commonwealth after the 30th of September 1856. The issue of $1,000,000 of notes was authorized by the act of March 14th, 1861, bearing six per cent. interest; $2,000,000 by ordinance of April 30th, 1861, and $4,000,000 by the ordinance of 28th of June 1861. All these issues were made receivable in payment of taxes and dues to the Commonwealth, and a doubt was never raised, that I ever heard, as to the constitutionality of that provision. The same principal of legislation had been practiced in other States of the Union--in Michigan as far back as 1841, and in Tennessee as far back as 1836, and by the Congress of the United States more frequently and on a more extended scale, from 1847 down to the act of July 17th, 1865, embracing an issue of bonds, registered and coupon, and treasury notes exceeding one billion, the coupons and treasury notes of the entire issue being made receivable and payable for taxes and public dues, except import duties, & c.
I think I am, then, well warranted in saying that this was no novel principle of legislation when the constitution of Virginia was framed; and I infer from the fact that there is no limitation in the constitution of the powers of the General Assembly in this respect, that no limitation was intended.
But this power is recognized in the constitution, and the General Assembly is expressly required to appropriate a part of the revenue in advance for the extinguishment of the principal of the debt. Section eight of article X. of the constitution is in these words: " The General Assembly shall provide by law a sinking fund, to be applied solely to the payment of the principal of the State debt, which sinking fund shall be continued until the extinguishment of such State debt; and every law hereafter enacted by the General Assembly, creating a debt or authorizing a loan, shall provide a sinking fund for the payment of the same." This provision of the constitution does not invest the power in the General Assembly to appropriate a part of the annual revenues of the State in advance, but imposes the obligation on it to exercise the recognized power with which it was invested for the purpose indicated in the way prescribed. And now, if it is a legislative function of the General Assembly to create a sinking fund, by an appropriation of a part of the revenue, thirty-four years in advance, to extinguish the principal of the public debt at its maturity, which appropriation cannot be disturbed or diverted from its object by subsequent General Assemblies, it would follow that to make an appropriation in advance for the payment of the interest of the public debt, is not contrary to the legislative function. And being stipulated for in this case, and made a part of the contract, its repeal by a subsequent General Assembly would fall within the prohibitory clauses of both the Federal and State constitutions above recited.
But fourthly, it is objected that the provision in the act of 1871, obligating the Commonwealth to receive the interest coupons in payment of taxes and public dues, is a surrender or abdication of a power which, in future legislation, may be necessary to carry on the government, and incapacitates the Legislature to discharge important constitutional duties in future, and is, therefore, unconstitutional and void.
That the Legislature cannot enact a law which will disable and make it impossible for it to discharge important duties to the country, which the constitution devolves upon it, is a principle which I will not controvert. And this is the whole of Burroughs v. Peyton, 16 Gratt. 470, as far as it bears the remotest analogy to any question raised upon this record. In that case it was held to be the constitutional duty of Congress to provide for the common defence, and to call into the military service of the country every able-bodied citizen, if needed for the public defence, and that it was a power which Congress could not abdicate. And it was held that if the act of Congress could be construed to authorize, without limitation, able-bodied citizens to be released by contract for ever afterwards from the obligation of rendering military service for the country, the act was unconstitutional, as it would, if carried into execution, divest Congress of the power to discharge an important duty essential to the public defence, which had been confided to it by the constitution, and the contract was void.
And it is now argued that, inasmuch as it is the constitutional duty of the Legislature to levy taxes and raise a revenue necessary to carry on the government and to fulfil its obligations--which it cannot fail to do without violating its constitutional duty--that an act, whether by the same Assembly or a previous one, which would deprive it of the power to discharge that constitutional duty, would be unconstitutional and void. What we have to consider, then, is, Is such the nature and effect of the coupon provision in the act of 1871?
The presumption is in favor of the constitutionality of a law, and that the Legislature did not intend to enact a law which would in future incapacitate it to discharge its important legislative functions and constitutional duty. That was a matter which it concerned the Legislature to ascertain before they authorized the contract to be made. It was purely a legislative enquiry. It would not be meet or seemly in the judicial tribunals to go into extrinsic evidence of fact as to the operation of an act of the Legislature, to show that the act was unconstitutional. And when they enter upon such an enquiry they enter a field which is foreign to their jurisdiction. They invade the territory of another department of the government.
I would not say, however, that in no case would it be competent for the judicial tribunal to declare a law to be unconstitutional upon this ground. Such a case might be supposed. For example, if the Legislature should enact a law for ever exempting the property, real and personal, of all the people of the State from taxation, who should claim the benefit of the exemption within a limited time, I am not prepared to say that such an act would not be unconstitutional. But if the judicial authority could interpose to annul a law enacted by the Legislature, upon the ground that it incapacitated it in future to discharge its important constitutional duties, it could only be in an extreme case, and where it was palpable on the face of the law, that such was intrinsically its nature, and that such must be its effect and operation.
It does not palpably appear from the intrinsic character of the act of 1871, or otherwise, that its provisions in relation to the receivability of the coupons amount to a surrender or abdication of any important power of the Legislature, or that it disables the Legislature now, or in future, to fulfil its constitutional obligation to raise a sufficient revenue to pay the interest on the public debt and carry on the government. It in fact only provides that the Legislature will do that which it is its constitutional duty to do, to levy a revenue sufficient to pay the interest on the public debt, and to carry on the government. To argue that an act which requires the Legislature to fulfil its constitutional duty is an abdication, or that it incapacitates it to do its constitutional duty, is a fallacy and a contradiction.
And the method which it adopts to secure it is not novel, as we have seen; nor is it an " ingenious contrivance" in any improper sense. It only authorizes the application of the equitable principle of setoff in such cases. And why is it not as equitable and just to apply this principle of setoff against the government as against individuals? Why should I not have the same right to setoff against a demand of the government against me, a just claim which I hold against the government, as I would have against an individual? It is said " governments are established for the benefit of mankind." They should be, and not to trample on the rights of mankind. To be a benefit to mankind, they should act with the utmost good faith and integrity in all cases. They ought not to observe with less fidelity and integrity their contracts with individuals than they exact from them in their dealings with one another. In the United States v. Mann, 2 Brock. R. p. 9, which was a case of setoff against a demand of the United States, C. J. Marshall said: " The clearest principles of equity and law require that it (the setoff) should not be rejected; and if the court be permitted to take jurisdiction of the subject, it cannot be disregarded without disregarding also the soundest principles of law." The setoff was allowed against the United States demand.
Doubtless the General Assembly which enacted the law allowing the application of this principle believed they were making a judicious and beneficial arrangement for the Commonwealth; and that the resources of the State were sufficient to fulfil the engagements authorized to be made with the public creditors in good faith, and to carry on the government. A majority of the succeeding General Assembly, if not of a different opinion, believe it will be onerous on the people of the State to comply with the terms of those contracts, and at the same time to raise a revenue sufficient for the other purposes of the Commonwealth, which may be, in their opinion, of more importance or more beneficial to the State than paying the interest on the public debt, whilst a respectable minority believe that there is no incapacity on the part of the State to pay the interest on the public debt in fulfilment of the contract, and to carry on the government; and that to do so will not require any considerable increase of taxes. Which opinion is most correct is not a question for the court. But it is our province to say that the State cannot be relieved from the obligation of a contract any more than an individual can, because it is onerous.
We deeply sympathize with our fellow-citizens in the burdens which have been thrown upon us as the result of the war, and the policy of the general government towards us since the war, which we have suffered in common with them. No people perhaps ever deserved better, and fared worse, than the people of Virginia. But the courage, firmness and fidelity to principle, with which they have borne the ravages of war, and none the less nobly the disasters consequent upon final defeat has attracted to them the admiration of all noble and generous minds; and I cannot believe that this same people would, for the sake of a few cents additional taxes upon the one hundred dollars value of property, be willing to repudiate their contract. I have no thought that a virtue which has been tried in the crucible of severest affliction, without faltering, will yield to so slight a pressure. It seems to be conceded by the action of the Legislature that the revenues arising from the present rate of taxation will be sufficient to meet all the other engagements and current expenses of the State, and pay four per cent. interest on the public debt, as adjusted by the act of 1871. To enable her then fully to redeem the pledge she gave to her creditors who accepted the adjustment proposed, would require an increase of but sixteen cents on the $100 value of property, without resorting to other sources of taxation. I am not to be told that this great State, with such a population as she has, invested with a landed and personal property, actually assessed to be worth three hundred and seventy-five millions of dollars, which is probably at least a third less than its real value, is incapable of fulfilling the solemn contract which it made with its creditors through its Legislature. And the promulgation of such an idea would be ruinous to the public credit.
There is nothing then in the nature of the act itself, or in the circumstances of the country, to show that it is unconstitutional. But the constitutionality of such legislation has been settled, as far as it can be, by the Supreme court of the United States, in two cases, Woodruff v. Trapnall, 10 How. U. S. R. 190, and Furman v. Nichol, 8 Wall. U. S. R. 44. The former case was decided by a majority of only one. And I am free to say that there is much in the circumstances of that case, whilst I regard the principle as sound, which would cause me to doubt the correctness of the decision. But in the recent case of Exchange Bank v. Knox, 19 Gratt. 739, decided by this court, in which I did not sit, the principle decided in the above case was approved. And in Furman v. Nichol it was unanimously reaffirmed by the Supreme court of the United States.
In cases involving the construction of the constitution and laws of the United States, it seems now to be generally conceded that the decisions of the Supreme court are binding upon the State courts. And practically they are conclusive of the rights of the parties, whether approved by the State courts or not. But I hold that this court is also supreme in its sphere, and is not bound to follow with " blind submission" any court on earth.
From the best consideration I have been able to give this subject, I have not a doubt on my mind that the decision is right. And such, I understand, is the case with the other judges who united in that decision. What, then, should this court do? We have been told, in the petition for a rehearing, that our decision has met with great disfavor. And outside of this hall the admonition has been given, that we hold our office at the will of the Legislature, and that it is perilous to thwart it. If this be so, that which has been regarded heretofore as indispensable to the security of the citizen in the enjoyment of his civil rights of life, liberty and property--the separation of the judicial power of the State from the legislative, and an independent judiciary--is repudiated by our constitution. If we sit here to obey the behests of the Legislature, and to do its will and pleasure, why the mockery of having a judicial department in the State? The remarks of Judge Scott, in delivering his opinion in Bouldin's case, 6 Leigh 639, in 1836, are appropriate to this occasion, some extracts from which I hope will not be considered out of place here.
Speaking of the convention of 1829-30--perhaps the most distinguished body of men that ever assembled on this continent, of which he was a distinguished member, he says: " No member of that body appreciated more highly than I did the inestimable value of an independent judiciary; none felt more intensely the thrilling appeal of the late Chief Justice (John Marshall, clarum et venerabile nomen ), in which he deprecated ‘ an ignorant, a corrupt, or a dependant judiciary, as the greatest scourge an angry Heaven ever inflicted upon an ungrateful and sinning people,’ and implored us not to ‘ draw down this curse upon Virginia.’ " Again he says: " The courts of justice are the guardians of the dearest rights of man in a social state. To them is assigned the task of ascertaining and enforcing the rights and redressing the wrongs of every member of the community. It is there the ignorant find relief from the arts and frauds of the crafty and designing; it is there alone that wealth and poverty may contend on equal terms; it is there that the weak find refuge from the strong. They are formidable only to the guilty. It is not by laws alone, but by an enlightened, honest and fearless administration of justice, that every man may sit under his own fig tree, and there is none to make him afraid. What will be the condition of the poor and unfriended suitor? Who can resist a powerful and popular adversary? What chance for him who is marked out as a victim by government, if the judge stands in awe of political power? If ever those who lead and direct public opinion, not satisfied with victories in their appropriate field, shall wage war upon the courts, I trust the people will come to the rescue, and not realize the fable of the wolves and the sheep."
I am opposed to a rehearing.
THE REHEARING REFUSED.
Mandamus awarded in the first case, and in the second judgment affirmed.
[a1] He declined to sit in the cause, because he was interested in the question.