Legal Tender Acts Constitutional-as to contracts made before their passage-Hepburn v. Griswold, overruled.

The Acts of Congress, known as the Legal Tender Acts, are constitutional when applied to contracts made before their passage.

They are also valid as applicable to debts contracted since their passage.

Hepburn v. Griswold, XIX., 513, so far as it held the Legal Tender Acts unwarranted by the Constitution so far as they apply to contracts made be

fore their enactment, overruled.

A confiscation sale of property had under the authority of the so called Confederate States, in aid of the rebellion, conveyed no title. [Texas v. White, XIX., 227].

[Nos. 10, 17.]

No. 10, Argued Nov. 17, 1869. Re-argued, Feb. 23, 1871, and further, Apr. 18 and 19, 1871. No. 17, Argued Apr. 18 and 19, 1871. Both Decided May 1, 1871.

IStates for the Western District of Texas; and

'N ERROR to the Circuit Court of the United

In error to the Supreme Judicial Court of the Commonwealth of Massachusetts.

In the case of Knox v. Lee, suit was brought in the court below by the defendants in error, to recover the value of certain sheep, which defendant had bought at a confiscation sale, had under authority of the so-called Confederate States. Judgment having been given for the plaintiffs, the defendant sued out this writ of error. Upon the trial, the judge charged the jury as follows:

It appears from the evidence that these sheep were confiscated as the property of an alien enemy, and sold under the authority of the so called Confederate Government, Mar. 7, 1863, and that the defendant, Knox, in connection with others, perhaps, became the purchaser thereof.

I have to say to the jury, that such sale conferred no title whatsoever upon the purchaser, or upon anyone, knowing that title was derived from this source."

During the progress of the trial, and before the above instructions were given, and before the plaintiffs had closed their case, the plaintiff offered to prove what was the difference in value between specie (gold and silver) and United States currency, generally known as greenbacks, for the purpose of showing that gold and silver had a greater value than greenbacks, and for the purpose of allowing the jury to estimate the difference between the two, to which evidence the defendant, at the time it was offered, objected, on the ground that United States currency was made a legal ten der by law, and that there was no difference in value, in law, between the two; and the court sustained the objection and excluded all evidence as to the difference in value between specie and legal tender notes of the United States, and no evidence was allowed to go to the jury on this point. The court, after hav ing ruled as above and given the instructions above set forth after evidence was closed, on its own motion, in the final paragraph of its charge to the jury, gave them the following instructions:

"In assessing damages, the jury will recollect that whatever amount they may give by their verdict, can be discharged by the pay. ment of such amount in legal tender notes of the United States.

Judgment having been given for the plaintiffs the defendant sued out this writ of error. Messrs. George W. Paschal and George W. Paschal, Jr., for plaintiff in error:

been before this court. I am aware of its great I believe this is the first time the question has importance, and of some preconceived opinions upon the subject; but duty requires us to follow facts to their legitimate conclusions. It is very easy to say that the organization of the Confederate States was not a government; that its officers were not officers; its courts not courts; their judgments not judgments, and, in the fashionable cant, that their every official act was void ab initio; but to those of us who knew it, and were compelled to submit to its operations, it was a fearful reality. It worked by the strong arm of power; and now the question is: how far will that power be recognized stitution it organized courts, with powers and jurisdiction much after the model of our own. These courts took possession of the records of our Federal Courts, and, so far as the jurisdiction had not been ousted, they adjudicated upon precisely the same laws which governed their predecessors upon the same Benches. As a government, it declared war against the United States, or that part of it where our civil and criminal jurisdiction was still in operation. one of the consequences of this recognized war, it passed laws to sequester and appropriate the property of those who adhered to the Union cause.

in the transmission of property? In its con

As

Fortunately, our case does not rest upon the ability to prove that these acts were legal and valid, when tested by the Constitution and laws of the United States; nor does it rest upon our ability to prove that Texas was out of the Union; for the contrary has been settled in the great case of Texas v. White, 7 Wall., 700 (74 U. S., XIX., 227); 25 Tex. Supp., 465; nor yet upon the fact, that this law of Congress, this sequestration and sale, were not acts in aid of the rebellion; for the proceeds of such sequestrations were, by the terms of the law, to be appropriated as indemnity for like confiscations by the United States; but our case rests upon the question of whether the Confederate States was or not a de facto government. And here any language of mine would but weaken that of Mr. Justice Nelson, in Mauran v. Ins. Co., 6 Wall., 13 (73 U. S., XVIII., 842).

He says: A de facto government is defined to be one in possession of supreme or sovereign power, but without right, a government of usurpation founded, perhaps, on crime, and in violation of every principle of international law and of right and justice; yet, while it is thus organized and in control of the sovereign authority, there can be no question between the insurer and insured as to the lawlessness of the government under whose commission the capt ure has been made." And upon this point the court cited the case of Nesbitt v. Lushington, 4 T. R., 783.

The cases cited by the learned judge, as rendering further investigation unnecessary, greatly strengthen and give force to this view. See, also, Dole v. Ins. Co., 6 Allen, 373; The Prize Cases, 2 Black, 687 (67 U. S., XVII.,483); Mrs. Alexander's Cotton, 2 Wall., 419 (69 U.S., XVIL,

919); The Venice, 2 Wall., 274 (69 U. S., XVII., 866); Ga. v. Brailsford, 2 Dall., 402; Ware v. Hylton, 3 Dall., 199.

Perhaps the impregnable rule was never bet ter defined than in the quotation from Vattel by Mr. Justice Chase.

Vattel, lib. 4, sec. 22; S. P., Lee, Captures, ch. 8, p. 118; 3 Dall., p. 226.

a State hostile to the United States, and preju dicial to the rights of citizens of States adhering to the Union, are void, and convey no title."

As Lee and Vattel quote the passage from Bynkershoek, lib. 1, ch. 7, p. 117, and as this text was solemnly approved by this court, and supported by many authorities, I need not pursue the principle further.

The plaintiff, for the purpose of enhancing the damages, offered to prove the difference in value between coin and paper currency. While this court might hesitate to set aside a verdict upon the mere question of excessive damages, yet where, as in this case, the verdict must have been influenced by an erroneous instruction, a new trial will be granted.

Bailey v. Mills, 27 Tex., 434, 438; Blanchet v. Davis, 3 Tex.,142; Rogers v. Broadnax, 24 Tex., 543; Herrington v. Holman, 25 Tex. Supp., 256. And the same rule has been adopted in Texas cases in this court. Chandler v. Von Roeder, 24 How., 224 (65 U. S., XVI., 633).

Mr. J. A. Wills, for defendant in error: It is argued that the Confederate States were a government de facto, and that, therefore, these laws, passed in aid of the rebellion, were valid, and that the plaintiff in error took a good title under them. This argument, if sound, when carried out to its logical consequences, would validate all Acts of a rebel government.

But it is not necessary to argue this question on original grounds, as it has already been decided by this court, at the present term, in the case of Texas v. White, 7 Wall., 700 (74 U. S., XIX., 227). See, also, Thorington v. Smith 8 Wall. 1 (75 U. S., XIX., 361)

In drawing the distinction between those laws and Acts of the Confederate States, which the United States and its courts will recognize as valid, and those which they will not, the Chief Justice, in Texas v. White, says:

*

"It may be said, perhaps, with sufficient ac curacy, that Acts, necessary to peace and good order among citizens. * * * * which would be valid if emanating from a lawful gov. ernment, must be regarded, in general, as valid when proceeding from an actual, though unlaw ful government: and that Acts in furtherance or support of rebellion against the United States, or intended to defeat the just rights of citizens, and other Acts of like nature, must in general be regarded as invalid and void."

In a still more recent case, tried by Chief Justice Chase, at Charleston, during the last summer, in illustration of the same principle, he held a confiscation by the Confederate authorities of shares of stock in the Charleston Gas Light Company, to be void. See Perdicaris v. Charleston Gas Light Co., reported in the Law Times, U. S. Court R., for Aug., 1869, Vol. 2, p. 117. In that case the Chief Justice says:

"It is not claimed that the transfer of shares sequestered and sold under authority of the Confederate Government, or the government of

The witnesses all testified that the sheep would not bring, in Mar., 1863, the price that they would have brought in 1860 or 1861, though one witness testified, that at the sale one party remarked that if he could get a good title to the sheep he would give $10 or $12 a head for them." Accepting, therefore, this estimate of their average value, with a good title, the six hundred eight sheep, at $10 per head, would be worth $6,080 in specie. Adding four and one third years' interest, that is, from Mar., 1863, till June, 1867, at eight per cent., say 33 per cent., $2.026.664, and we have the aggregate amount of $8,106.66%, an amount larger than the verdict complained of, saying nothing, according to the ruling of the judge, about the difference between the value of the sheep, when estimated in gold and silver and when estimated in legal tender notes of the United States.

The case of Parker v. Davis arose in the court below, upon a bill of equity filed by the defendant in error, to compel the specific performance of a contract to convey a lot of wood land, upon the payment of a given sum of money. This contract was dated and the suit brought upon it before the Act of Congress of Feb. 25, 1862, which raises the legal questions in issue. The Supreme Court of the State decreed specific performance Feb., 1867, to wit: that the plaintiff should pay into court a certain sum of money, and the defendant should thereupon execute a deed to the defendant in error of the wood land in question.

In pursuance of that decree, the plaintiff paid into court the decreed sum in legal tender notes of the United States. The defendant refused to execute the deed required by the decree of the court, upon the ground that he was entitled to have the sum set forth in the decree paid into the court in coin, and that the payment into court of legal tender notes was not a compliance with the order of the court; whereupon the court, upon hearing of the parties, changed the decree, and ordered that the defendant should execute the deed required by his contract upon payment into court by the plaintiff of a specific sum in Treasury notes of the United States. From this decree the defendant in that court sued out this writ of error.

Mr. Benj. F. Thomas, for plaintiff in error:

1. The claim of the plaintiff in error is, that the consideration or sum of money to be paid by defendant in error to the plaintiff in error, for the conveyance of the land, did not constitute a debt, within the meaning and intent of the Act of Congress of July 11, 1862, known as the Legal Tender Law.

II. That if a debt, it was contracted before

Messrs. Benj. F. Butler, Geo. S. Boutwell, D. S. & Geo. F. Richardson, for defendant in error: First. Whether this decree of the court, or dering money to be paid into court, is a debt due to the plaintiff in error within the meaning of the Act of Feb. 25, 1862.

Second. When did the sum decreed by the court become due, or a debt to the plaintiff in error? The defendant in error says, not until the judgment of the court, which was in 1867, subsequent to the Legal Tender Act.

The plaintiff in error having refused to perform his contract, there was no debt due him from defendant in error until he performed the judgment of the court by the execution of the deed mentioned in the decree; then and not until then had he a claim upon or debt due from the defendant in error.

Third. It is submitted that this case is re lieved of all difficulty of the change of the decree of the state court ordering the plaintiff specifically to perform his contract, upon payment into court of certain legal tender notes described in the decree.

Whether it was competent for the state court, sitting in equity, to decree specific performance of the contract between the parties, on such terms as they deemed equitable and just, is not in issue upon this writ of error.

That court has decided that it was equitable and just that the plaintiff in error should execute his deed in performance of his contract, upon receiving a given sum in United States Treasury notes. This, surely, it was competent for the court to do; and that determination is not within the jurisdiction of this court to review, no law or statute of the United States being therein involved. It is submitted by the defendant in error, that quacunque via, the case is not affected by the question whether the Legal Tender Act applies to debts due before its passage. If the decree of the court created a debt, in consideration of the conveyance of the land between the parties, that debt was not in esse until after the passage of the Legal Tender Act. But the final decree of the court created an obligation upon the defendant in error only sub modo, that is, according to its terms, to pay into court a certain amount in a specific currency or notes, and therefore created only that specific liability upon the defendant in error.

These cases having been submitted to the court on April 10, 1871, Mr. Justice Clifford announced that the majority of the court make the following order in these cases.

Ordered, That Mr. Potter and the Attorney General be heard in these cases on the 12th inst. upon the following questions:

1. Is the Act of Congress, known as the Legal Tender Act, constitutional as to contracts made before its passage?

2. Is it valid, as applicable to transactions since its passage?

Mr. Potter will open, the Attorney-General will reply, and Mr. Potter will close.

Mr. Justice Clifford, dissenting

Act of Congress, known as the Legal Tender Act, is constitutional as to contracts made before its passage; as I hold that that question is conclusively settled by the case of Hepburn v. Griswold, 8 Wall., 603 (75 U. S., XIX., 513), in which the opinion was given by the Chief Justice. And I am requested to say that Mr. Justice Nelson and Mr. Justice Field concur in this dissent.

APRIL 12, 1871-Mr. Justice Clifford informed the Bar that Mr. Justice Nelson was too ill to attend court to-day; that, in consequence of his absence, the hearing in these cases, assigned for argument this morning, would be further postponed, adding that notice would hereafter be given to the counsel when they could be heard.

After the announcement of the above order, Mr. Justice Swayne made the following remarks:

The further argument of this case having been again postponed on account of the indisposition and absence of Mr. Justice Nelson, it is deemed proper by the court that a few remarks by it should be submitted. The case is one of those before us involving what is known as "The legal tender question."

The other case, Parker v. Davis, was submitted upon the printed briefs on the 13th of February last, and calls for no observation, except that it was reached in the regular order of the docket, is before us and ought to be disposed of as soon as may be, consistently with the due administration of justice. In the other case, Phoebe G. Lee and her husband recovered a judgment against Knox the plaintiff in error, in the Circuit Court of the United States for the District of Texas, at the June Term, 1867; the writ of error by which the case was brought into this court bears date Oct. 1, 1869. April 30, 1870, it was continued and ordered to be re-argued on the first Tuesday of the ensuing December Term, 1870. Nov. 17, 1870, during the fall session of this court, it having been ascertained that neither the Chief Justice nor Mr. Justice Nelson could be present at the time designated, the hearing was postponed to the first Tuesday of February, 1871. On the 23d of that month the case was argued by the counsel of the parties. All the judges were present but the Chief Justice. The counsel on both sides admitted the validity of the Legal Tender Acts. At the close of the argument, Hon. Clarkson N. Potter asked to be heard upon the constitutional question involved in desire to be heard also, if Mr. Potter were The Attorney-General expressed a

the cases.

heard.

These requests were taken into confertimes have since been fixed for the hearing, but ence, and both promptly acceded to. Several not publicly announced, for the reason that it was uncertain whether some of the judges last the announcement designating to day was would not be necessarily absent. On Monday made. We were advised that it would suit the convenience of Mr. Justice Nelson to be present. advance, and both had expressed themselves The counsel to be heard were duly notified in satisfied with the time. If the plaintiffs in the court below are entitled to the fruit of their