De Saussure v. Gaillard
The complaint in this case, filed in the court of common pleas in the county of Charleston, S.C.., alleged that the plaintiff was the owner and holder of three bonds of the state of South Carolina, two designated by the numbers 850 and 851, for $500 each, and one by the number 2,290, for $1,000; that thereby the state of South Carolina promised to pay to the bearers the sums therein named on the 1st day of July, 1893, with interest at the rate of 6 per cent. per annum, payable semi-annually, on the 1st day of January and July of each year, on the presentation of the proper coupons thereto annexed, bearing the signature of the state treasurer, said coupons being receivable in payment of all taxes due the state during the year in which they mature, except for the tax levied for the public schools, the words following being indorsed on each of the said bonds, viz.: 'The payment of the interest and the redemption of the principal of this bond is secured by the levy of an annual tax of two mills upon the entire taxable property of the state. The faith, credit, and funds of the state are hereby solemnly pledged for the punctual payment of the interest and redemption of the principal of this bond by the act of general assembly, approved December 22, 1873.' And upon each of said coupons was indorsed the following: 'State of South Carolina. Receivable in payment of all taxes except school tax.' That the plaintiff became the holder for value of the three bonds mentioned, in the year 1878, and of all the coupons thereto annexed, including the coupon which matured on each, respectively, on the 1st day of January, 1882; that notwithstanding the contract of the state expressed in the act of December 22, 1873, recited in said consolidation bonds, the general assembly of South Carolina, by an act entitled 'An act to raise supplies and make appropriations for the fiscal year commencing November 1, 1881,' approved February 9, 1882, has prohibited the county treasurers of the state from receiving the coupons of said bonds in payment of the taxes levied by the said act, which last-mentioned act the plaintiff charges to be void as repugnant to article 1, § 10, Const. U.S., forbidding the states to pass any law impairing the obligation of contracts. The complaint further alleges that the defendant is the county treasurer for Charleston county, whose duty it is to collect and receive the taxes due to the state of South Carolina upn the property situate in that county; that the plaintiff is the owner of property in said county, upon which taxes were levied under the provisions of the act to raise supplies for the fiscal year commencing November 1, 1881, in the sum of $153.86, of which sum $29.34 were levied by the said act for the public schools; that on the 18th day of December, 1882, the plaintiff tendered to the defendant, as county treasurer, in payment of said taxes, $131.97 in cash, and the remainder, viz., $60, in the coupons of the said consolidated bonds Nos. 850, 851, and 2,290, which matured on the 1st day of January, 1882; that the defendant wrongfully and illegally refused to receive the said coupons, and assigned as a reason therefore that he was forbidden so to do by the provisions of the said act; whereupon the plaintiff paid to the defendant, under protest, the sum of $191.97 in legal-tender notes of the United States, in pursuance of the provisions of an act of the general assembly of said state, approved the 24th of December, 1878, entitled 'An act to facilitate the collection of taxes.' Plaintiff therefore demands judgment 'that it be adjudged that the amount of sixty dollars in United States currency, paid by the plaintiff to the defendant on the 18th day of December, 1882, was wrongfully and illegally collected, and ought to be refunded, and that a certificate of record thereof be issued accordingly to the plaintiff; that he have such further relief in the premises as the nature of the case may require, and to the court may seem meet and proper.'
The answer of the defendant sets forth the history of the legislation of the state of South Carolina on the subject subsequent to the passage of the act of December 22, 1873, known as the 'Consolidation Act,' as follows: 'Defendant, further answering, alleges that subsequent to the passage of said act the general assembly of the said state, by a 'joint resolution to raise a commission to investigate the indebtedness of the state,' approved June 8, 1877, provided a commission to make a complete and thorough investigation of the entire amount of consolidated bonds and certificates of stock which had been issued under the 'consolidation act' aforesaid, and of the bonds, coupons, and certificates of stock which had been surrendered to the state treasurer in exchange for the consolidated bonds and certificates of stock issued under said act, and to report to the general assembly any illegality or non-conformity to law in the issue of consolidated bonds and certificates of stock, and the grounds of the same, which commission is known as the 'Bond Commission;' that the said commission made a report to the general assembly of the result of the investigation made by them under the joint resolution aforesaid, with schedules annexed showing the different classes of bonds and certificates of stock which had been surrendered in exchange for consolidated bonds and certificates of stock; Schedule 6 showing the consolidated bonds and certificates of stock which, in the judgment of the said commission, were not issued in accordance with law, and were not authorized to be consolidated under the 'Consolidation Act.' And thereupon the general assembly, by a 'joint resolution, providing a mode of ascertaining the debt of the state, and of liquidating the same,' approved March 22, 1878, created a special court, known as the 'Court of Claims,' to hear and determine any case or cases made up or brought to test the validity of any of the consolidated bonds or certificates of stock, or of any of the various classes of bonds or certificates of stock, mentioned in the said report of the 'bond commission' as not issued in accordance with law. It was further provided by the joint resolution aforesaid that there should be the same right of appeal from the said 'court of claims' to the supreme court of South Carolina as from the circuit courts of the said state, and with a right of appeal, by writ of error or otherwise, as provided by law to the supreme court of the United States. That said special court shoul have the same right to enter judgment, issue execution, punish for contempt, and enforce its mandates as was then possessed by the circuit courts of the state of South Carolina.
That the state should be represented in said special court by the attorney general and two associate counsel to be selected by the joint vote of the general assembly. That the attorney general and his associates, with the consent of the creditors of the state, or so many of them as shall be necessary, might make up a case or cases to be heard and determined in said court, in which, if practicable, the state should be the defendant, to test the validity of the said consolidated bonds, coupons, and certificates of stock mentioned in Schedule 6 of the report of the 'bond commission,' bringing before the court the various classes of vouchers which it is stated in the said report impair the validity of the said consolidated bonds, coupons, or certificates of stock, or any of them. The said joint resolution further provided for the levy for the current year of a tax sufficient to pay the coupons and interest orders maturing on the outstanding consolidated bonds and certificates of stock during the said fiscal year, the interest on the consolidated bonds and certificates of stock mentioned in Schedule 5 of the report of the 'bond commission' as subject to no valid objection to be paid, and the payment of the interest on the several classes of consolidated bonds and certificates of stock mentioned in Schedule 6 of said report, whenever there should be a final adjudication as to the validity of the several classes of bonds and stocks in the manner therein provided, and none other. That in pursuance of the provision of the said joint resolution actions in which the state of South Carolina was the defendant, were, with the consent of the attorney general and his associates, brought in the said 'court of claims' on coupons of the bonds of the various classes mentioned in Schedule 6 of the report of the 'bond commission.' That after trial and hearing of the said causes the said 'court of claims' rendered judgment in favor of the state. From the judgments of the 'court of claims,' in these several cases, appeals were taken to the supreme court of the state of South Carolina, as privided in the joint resolution establishing the said 'court of claims.' That upon the hearing of the said appeals the supreme court of the state of South Carolina, at the April term, 1879, in the cases entitled G. M. Walker, Cashier, Appellant, v. The State of South Carolina, Respondent,' and F. J. Pelzer, Appellant, v. The State of South Carolina, Respondent,' decreed and adjudged-First. That all the bonds issued under the 'consolidation act' are valid obligations of the state of South Carolina, except as follows: (1) Such as were issued in exchange for bonds issued under the act entitled 'An act to authorize a loan for the relief of the treasury,' approved February 17, 1869, or for the coupons of such bonds; the said act being repugnant to section 7, article 9, of the constitution of the state of South Carolina, in that it purports to create a debt which was not 'for the purpose of defraying extraordinary expenditues,' and the debt sought to be created not being 'for some single object,' and such object not being 'distinctly specified therein,' as required by the said section and article of the constitution. (2) Such as were issued in exchange for the second issue of bonds under an act entitled 'An act to authorize a state loan to pay interest on the public debt,' and which were indorsed, 'Issued under act approved August 26, 1868,' or the coupons of such bonds, the said bonds and coupons being absolutely void, even in the hands of bona fide holders, because issdued without any authority whatever. (3) Such as were issued in exchange for those conversion bonds which were issued in exchange for either of the bonds or coupons of the two classes mentioned. Second. That if any consolidated bond rests wholly upon any of the three objc tionable classes of bonds therein mentioned, then it is wholly void; but if it rests only in part upon such objectionable bonds and coupons, then it is void only to the extent which it does rest upon such objectionable bonds or coupons, and for the balance it is a valid obligation of the state. Third. That the burden of proof is upon the state to shown that any particular bond which may be brought into question does rest either in whole or in part upon such objectionable bonds and coupons, and if in part only, then the state must show what part is so affected. III. Defendant further alleges that by an act entitled 'An act to provide for the settlement of the consolidated debt of the state in accordance with the decision of the supreme court of the state of South Carolina,' approved December 23, 1879, after reciting the legislation and the decision of the supreme court of the state of South Carolina in relation to the consolidated debt of the state hereinbefore set forth, and that it is to the interest of the state and her creditors that the principles established in the said decision of the supreme court should be accepted as final, and forthwith applied in the elimination from the consolidated debt of the state of all invalid material, a special commissioner was appointed to ascertain and establish the exact percentage and amount of the invalidity of each and every consolidated bond and certificate of stock of the state consolidated debt, and of the interest thereon, in accordance with the principles laid down in the said decision of the supreme court of the state. And it was therein further provided that the said special commissioner should at least once in each month during the period of said ascertainment make a detailed report to the state treasurer, setting forth therein by their numbers the consolidated bonds, coupons, certificates of stock, and interest orders investigated by him during the previous monty; also whether the same, under the decision of the supreme court aforesaid, be wholly valid or only partially valid, and where only partially valid in each case he should also set forth the exact percentage, amount, and character of the invalidity; that he should continue to make such detailed reports to the state treasurer until he should have investigated and reported upon the entire consolidated debt of the state. It was further therein provided that every holder of any consolidated bond or certificate of stock, or of the interest thereon, reported by said special commissioner as partially invalid, shall have the right to surrender to the state treasurer for cancellation such bonds, certificates of stock, and interest; and upon such surrender and cancellation he shall be entitled to receive from the state treasurer, who is authorized and required to issue the same, a new bond or certificate of stock equal in amount to the exact amount of the valid portion of such bond, certificate of stock, coupon, or interest order; such new bonds and certificates of stock to be in all respects similar and of like validity to, and having the same benefits and privileges as, those provided for in the 'consolidation act, approved 22d December, 1873, saving and except that the first coupon or interest to mature thereon shall mature on the 1st of January, 1879, and the same rights and privileges are likewise given to the holders of detached coupons and interest orders. And it was further thereby declared 'that the bonds and stocks reported by the special commissioner as valid, and the portions of the bonds and stocks also reported by him as valid, but exchanged by their holders, as hereinbefore provided, for new consolidated bonds or stocks, are hereby declared to be valid and unquestioned obligations of the state.' (And the bonds and stocks so declared to be unquestionable obligations of the state are designated and known as 'brown consols.') That the special commissioner appointed under the act aforesaid did perform the duties required of him by said act, and did make to the state treasurer from tie to time the report of his investigations until he had investigated and reported upon the entire consolidated debt of the state, as required by the said act, which reports of the said special commissioner remain in the office of the state treasurer. That by an act entitled 'An act to extend the time for funding the unquestionable debt of the state,' approved December 24, 1880, the comptroller general of the state is required to examine into the character and material of all consolidated bonds and certificates of stock of the state issued since the 1st day of January, 1866, together with the coupons and interest orders thereon, which may be presented to him for this purpose by the holders thereof, and to report to the state treasurer how the said bonds, certificates of stock, coupons, and interest orders are affected by the decision of the supreme court of the state hereinbefore stated, and the exact percentage of invalidity in the material reported upon as established by the said decision. And the state treasurer is authorized and required, in lieu of the bonds, stocks, coupons, and interest orders so surrendered, to issue consolidated bonds and certificates of stock for fifty per cent. of the face value of valid material surrendered. That the state has since provided for the levy of an annual tax upon the taxable property of the state, and for the payment by the state treasurer, from the proceeds of said tax, of the interest on the entire consolidated debt of the state, ascertained and reported by the special commissioner aforesaid to be valid, in accordance with the decision of the supreme court aforesaid, and also upon such portions of the same as shall have been ascertained and reported by said special commissioner to be valid and justly due by the state, as the same shall appear from the certificates of the said special commissioner filed in the office of the state treasurer. That by joint resolution approved 9th February, 1882, it was resolved as follows: 'Whereas, the consol bonds bear upon their face the contract of the state to receive the coupons of the same for taxes; and whereas, from the fact that the green consols outstanding are more or less tainted with invalidity, varying with each security, (which has been established by the courts and acquiesced in by the holder,) the coupons from this class of bonds cannot be received by the tax collector, but can only be paid at the state treasury, where access to the registry permits the amount of invalidity in each coupon to be ascertained: Now, therefore, in order to hasten the process now going on of the conversion of green consols into brown consols, which latter represent the unquestioned consol debt of the state, and the coupons from which are now being received in payment for taxes: Be it resolved, that on and after the 1st day of January, 1883, the interest upon the green consol bonds and stocks of the state shall not be paid at the treasury until said securities have been converted into brown consol bonds and stocks."
The answer then proceeds to set forth the particulars in which it is claimed that the consolidated bonds described in the complaint are not valid obligations of the state of South Carolina, and further alleges 'that the holders of the bonds Nos. 850, 851, and 2,290, mentioned in the complaint, did not bring the same before the special 'court of claims,' and that they have never surrendered the same to the commissioner, or the comptroller general, or the state treasurer, to asscertain and establish the exact percentage and amount of the invalidity of the said bonds in accordance with the principles laid down in the decision of the supreme court of the state of South Carolina aforesaid, as provided by law, and have never received new consolidated bonds or certificates of stock equal in amount to the valid portions of said bonds, as provided by law, known as 'brown consols." The answer further alleges that the act entitled 'An act to raise supplies and make appropriations for the fiscal year commencing November 1, 18 1,' approved February 9, 1882, 'provides that all taxes assessed and payable under the said act shall be paid in the following kinds of funds, and no other: Gold and silver coin, United States currency, national bank notes, and coupons which shall become payable during the year 1882 on the valid consolidated bonds of the state knowen as 'brown consols:' provided, however, the jury certificates and the per diem of state witnesses in the circuit courts shall be received for county taxes, not including school taxes;' and the defendant admits and justifies under the terms of said act his refusal, as county treasurer of Charleston county, to receive the coupons tendered by the plaintiff in payment of taxes. The cause came on for trial before a jury, who, under the instructions of the court to that effect, found a verdict for the defendant, on which judgment was accordingly rendered. On appeal to the supreme court of the state this judgment was affirmed. To review that judgment the present writ of error has been sued out.
Saml. Lord, C. A. Seward, and T. M. Mordecai, for plaintiff in error.
J. P. H. Earle, Atty. Gen., for defendant in error.
Mr. Justice MATTHEWS, after stating the facts as above, delivered the opinion of the court.