86 U.S. 548 (1874), The Confederate Note Case

Citation:86 U.S. 548, 22 L.Ed. 196
Party Name:THE CONFEDERATE NOTE CASE. THE ATLANTIC, TENNESSEE AND OHIO RAILROAD COMPANY, THE CHARLOTTE AND SOUTH CAROLINA RAILROAD COMPANY, JOSEPH WILSON AND ANDERSON MITCHELL, v. THE CAROLINA NATIONAL BANK OF COLUMBIA, SOUTH CAROLINA, L. D. CHILDS, AND C. H. MANSON.
Case Date:April 13, 1874
Court:United States Supreme Court

Page 548

86 U.S. 548 (1874)

22 L.Ed. 196

THE CONFEDERATE NOTE CASE.

THE ATLANTIC, TENNESSEE AND OHIO RAILROAD COMPANY, THE CHARLOTTE AND SOUTH CAROLINA RAILROAD COMPANY, JOSEPH WILSON AND ANDERSON MITCHELL,

v.

THE CAROLINA NATIONAL BANK OF COLUMBIA, SOUTH CAROLINA, L. D. CHILDS, AND C. H. MANSON.

United States Supreme Court.

April 13, 1874

OPINION

APPEAL from the Circuit Court for the District of North Carolina; and case being thus:

In May, 1862, the Atlantic, Tennessee and Ohio Railroad Company, a corporation chartered by the State of North Carolina, issued its coupon bonds, in sums of $500, to the amount of $151,000, payable at different periods from November, 1869, to November, 1875, with interest at the rate of six per cent. a year, payable semi-annually. The bonds were indorsed and their payment guaranteed by the Charlotte and South Carolina Railroad Company, a corporation also chartered by the State of North Carolina; and they stated on their face that they might be converted into the stock of the company issuing them, at par, by the holder. The bonds were payable to the company last abovementioned, or bearer, and were secured by a deed of trust of the railroad, buildings, and franchise of the company executed to Joseph Wilson and Anderson Mitchell. The deed stipulated that, in case the company failed to pay the principal and interest on the bonds as they became due, the trustees should, upon request of the holders of the bonds, or of their guarantor, proceed to sell the property, or so much thereof as might be necessary, and apply the proceeds of the sale to the payment of the bonds.

The Carolina National Bank, L. D. Childs, and C. H. Manson, having become the holders and owners of $25,000 of these bonds, and the railroad company having failed to pay either principal or interest, they requested the trustees to proceed and sell the property covered by the trust deed, and to distribute the proceeds pursuant to its provisions. With this request the trustees declined to comply, alleging as a reason that the parties differed as to the amount to be paid. The above-named holders of the bonds, accordingly filed a bill in the court below against the two railroad companies, and the trustees, Wilson and Mitchell, to enforce the execution of the trusts of the deed.

In their answer, the railroad companies averred that they had at all times been and now were both able and ready to adjust their debt to the complainants upon a just basis of

Page 550

the value of their bonds and of the coupons due in lawful money of the United States, as soon as their value could be ascertained; but that the complainants deemanded payment in full of said bonds and all accrued interest in the said lawful money, with which demand the defendants had refused to comply.

The trustees in their answer admitted that they had received notice from the complainants of the default of the Atlantic, Tennessee and Ohio Railroad Company, in paying its alleged debt to the complainants, and that for the payment thereof they, the trustees, had been requested to take steps for the sale of the property conveyed to them by the deed of trust; but that they had been prevented from so doing on account of the conflict between the complainants and the officers of the said company as to the measure of value of the bonds; the complainants claiming payment in full in lawful money of the United States, and the former asserting that the bonds were solvable in Confederate currency, and, as such, were legally liable to be scaled to their true value in money of the United States.

By a convention assembled in North Carolina in October, 1865, an ordinance was on the 18th of that month adopted, bearing the title of 'An ordinance declaring what laws and ordinances are in force, and for other purposes.' The third section was as follows:

'It shall be the duty of the General Assembly to provide a scale of depreciation of the Confederate currency from the time of its first issue to the end of the war; and all executory contracts, solvable in money, whether under seal or not, made after the depreciation of said currency before the 1st day of May, 1865, and yet unfulfilled (except official bonds and penal bonds payable to the State) shall be deemed to have been made with the understanding, that they were solvable in money of the value of the said currency; it shall be competent for either of the parties to show by parol or other relevant testimony, what the understanding was in regard to the kind of currency in which the same are solvable; and in such case, the true understanding shall regulate the value of the contract: Provided, That in case

Page 551

the plaintiff in any suit upon such contract, will make an affidavit that it was solvable in other currency than that above referred to, then such presumption shall cease, and it shall be presumed to be payable in such currency as shall be mentioned in the affidavit, subject to explanation by evidence as aforesaid.'

The legislature, on the 12th of March in the ensuing year, passed two acts connected with the subject. The first was as follows:

'An Act relating to Debts contracted during the late War.

'WHEREAS a great many debts, which were contracted during the war are yet unsettled, said debts having been incurred for property bought at irregular and extravagant prices, or for currency of a depreciated value. And whereas the late State convention made it obligatory on this General Assembly to provide a scale of depreciated currency for the settlement of these debts. And whereas this General Assembly finds great difficulty in fixing a scale which will secure justice to citizens of all sections of the State. And whereas, in the opinion of this General Assembly, no scale which will do justice to all sections of the State can be adopted, therefore.

'SECTION 1. Be it enacted, That in all civil actions which may arise in courts of justice for debts contracted during the late war, in which the nature of the obligation is not set forth, nor the value of the property for which...

To continue reading

FREE SIGN UP