Townsend v. Townsend

• Citation: 7 Tenn. 1
• Parties: TOWNSEND v. TOWNSEND AND OTHERS.
• Decision Date: 31 May 1821
• Court: Tennessee Court of Appeals

7 Tenn. 1

TOWNSEND

v.TOWNSEND AND OTHERS.

Supreme Court of Errors and Appeals of Tennessee.

May Term, 1821.

The Act of 1819, 19, 1, directing that no execution shall issue upon a judgment until two years after its rendition, unless the plaintiff shall indorse upon the execution that the sheriff may receive in satisfaction the notes of certain banks, is void, because in conflict with the Constitution of the United States, article 1, section 10, which prohibits the States from making anything but gold and silver coin a tender in payment of debts. (Acc. Lowry v. McGhee, 8 Y., 245, and Farnsworth v. Vance, 2 Cold., 118, both citing this case.)

The law is the source of the obligations of contracts; and the extent of the obligation is defined by the law in use at the time the contract is made, and can not be changed by subsequent legislation without violating the provision of the Constitution of the United States, article 1, section 10, and of our Bill of Rights, section 20, which interdicts laws impairing the obligation of contracts. The Act of 1819 is void upon this ground. (Cited approvingly Smith v. Brady, 7 Y., 451. Cited, also, in Greenfield v. Dorris, 1 Sn., 550, where the principle is thus stated: “Those laws that give force and effect to a contract, are incorporated in and form a part of it.” But denied in Farnsworth v. Vance, 2 Cold., 119, citing Woodfin v. Hooper, 4 Hum., 13, which, however, was a case involving only the remedy.)

It is not unconstitutional to alter existing remedies, and vary their nature and extent, so always that some substantive remedy be in fact left. (Acc. Woodfin v. Hooper, 4 Hum., 13.)

But as regards antecedent contracts, remedies are not to be so altered as to be rendered less efficacious or more dilatory, than those ordained by the law in being when the contract was made, if such alteration be the direct and special object of the Legislature, apparent in an Act made for the purpose. Aliter, perhaps, if the alteration were the consequence of a general law and merely incidental to it. (So held in 1861 at Jackson, in a case not reported, upon the Act of that year, the constitutionality of which was afterwards sustained in Farnsworth v. Vance, 2 Cold., 108.)

The Act of 1819, is also violative of the State Constitution, article 1, section 17 (Bill of Rights), which provides for the administration of right and justice without denial or delay, for these terms clearly comprehend the case of execution suspended by act of the Legislature, in every instance where justice requires that it should immediately issue.

But it does not violate section 8 of the Bill of Rights, which declares that no freeman shall be deprived of his property but by the judgment of his peers or the law of the land.

Nor section 20, that no man's property shall be taken without the consent of his representatives, or without just compensation being made therefor.

Nor the same section, so far as it prohibits retrospective laws; for the whole clause and both sentences together mean, that no retrospective law which impairs the obligation of contracts, or any other law which impairs their obligation, shall be made. (Acc. Wynne v. Wynne, 2 Sw., 410, citing this case, and giving several examples of retrospective laws which are not unconstitutional. To same effect Bell v. Perkins, Peck, 266; and Jones v. Jones, 2 Tenn., 2.)

If the debtor has specially contracted for payment to be made in bank paper, or if such was the meaning of the contract and the understanding of the parties, at the time of its formation, it would be highly unconscionable in the creditor to enforce a payment in gold and silver, and equity will interfere to specifically execute the contract as made. (See Thorington v. Smith, 8 Wall., 1.)

[Cited in: 2 Cold., 120;4 Heis., 391;6 Heis., 101, 103;7 Heis., 46;9 Heis., 848; 4 Bax., 522; 7 Bax., 338; 11 Lea, 500;10 Pickle, 148.]

The clerk of the Supreme Court of the second circuit had been requested to issue an execution on a judgment between these parties, rendered in the Supreme Court, without the indorsement required by the Act of 1819, ch. 19. On his refusal to do so the Court was moved to order their clerk to grant the execution, disregarding the said Act as being unconstitutional.

Haywood, J., delivered the opinion of himself and Emmerson, J.

The Act of 1819, ch. 19, directs that, upon any judgment thereafter to be obtained, execution shall not issue until two years after the rendition of such judgment, unless the plaintiff shall indorse upon the execution that the sheriff or other officer shall and may receive, in satisfaction of said execution, notes on the State bank of Tennessee and its branches, and the Nashville bank and its branches, or any of them, and such other notes as pass at par with them, &c.

The same or a similar provision is made by a law of 1820 for forming a new bank and for loaning out the moneys that it may issue. These acts of the Legislature are urged to be unconstitutional and void. And various clauses of the State Constitution and of the Constitution of the United States are said to be in direct repugnance to these Acts; and, if so, it is well to admit in the outset that the Acts, like every other act whose basis is authority, are void if the authority be not given. We will take up these several clauses one after another, and examine each in its turn, to discover whether the Acts in question are really unconstitutional, as they are alleged to be.

First, then, let us take into consideration Art. 1, section 10, of the Constitution of the United States: “No State shall, &c., emit bills of credit or make anything but gold and silver coin a tender in payment of debts, pass any, &c., ex post facto law, or law impairing the obligation of contracts,” &c. The first two sentences respect tender laws and paper money; the construction to be put on them should repress and prevent the evils they were intended to obviate; and what these are, must be understood by the actual evils which paper money and tender laws produced in the time of the colonial governments; in time of the war of the revolution and after that war, before the adoption of the Constitution of the United States; and also by the effects which these clauses produced after the adoption of the Constitution; and then by considering what will be the effect of the act of Assembly now under contemplation should the same be deemed valid, we shall be able to discover whether these effects are the ones intended to be prevented by the clauses of the Constitution in question.

What, then, is the history of paper money and tender laws under the colonial governments. North Carolina issued paper money in 1713, £ 8,000, and the money depreciated. The lord's proprietors would not receive it for quit rents, though issued to defray the expenses of the Tuscarora war. It could not be remitted to England, they said, at the same time peltry was received by them. The next North Carolina emission was in 1722, £>>>>>1,200; the next in 1729, £40,000; the next in 1734, £1,000; treasury notes in 1756, 1757, 1758 and 1759; one emission in 1760, of £12,000; one in 1761, of £>>>>>20,000; one in 1771, of £ 60,000, to defray the expenses of suppressing the regulators. At this time there was already afloat £75,000. In 1729 the money depreciated and could never be raised to its original value. In 1730 the depreciation was three and a half for one; in 1735 it was five for one; in 1739 it was seven and a half for one; in 1740 it was received in payment for taxes at the rate of seven and a half for one, and thus the Government redeemed and got clear of it. The Treasury notes depreciated. There is no instance of paper money which did not depreciate, let the plan for sustaining its credit be of whatever description it might. Paper money, in the time of the colonial governments, was issued in most of the provinces, and in some of them depreciated more than it did in North Carolina.

The attempt was made in Massachusetts to issue bank bills, loaning them out on interest and on real and personal security, to be redeemed gradually by the payment from the borrowers of one twelfth, making the bills a tender, and the refusal of them to incur the loss of the debt. These provisions did not delay the depreciation for one instant. The rate of exchange in the first year was 150 and in the second 200 per cent. In 1729 Massachusetts, Rhode Island and Connecticut had issued paper money. It depreciated. There was an immense quantity afloat, but the people still clamored for more. Massachusetts and New Hampshire were restrained from further emissions by royal instructions to the Governors. Rhode Island could not be restrained because she chose her own Governor, and she issued £100,000. It instantly depreciated from 19 to 27 shillings per ounce silver, the former being the settled value before the emission. In 1741, in Massachusetts, the paper money being about to be redeemed by gold and silver remitted from England to reimburse the colonies for the exertions made in the late war above her quota, an apprehension of the scarcity of money and consequent distress of individuals excited a great uneasiness in the colony; a bank was forthwith proposed to supply the place of the paper money thus to be redeemed. Every borrower was to mortgage a real estate in proportion to the sums he should take from the bank, or, at his option, give personal security when the sum should exceed £>>> 100, to pay annually three per cent. on the sum borrowed, and four per cent. of the principal. To prevent the general confusion which was anticipated from this institution the Parliament interfered and suppressed the company. The Massachusetts currency was redeemed at the rate of 50 shillings per ounce of silver, instead of 19 shillings per ounce, the rate at which it was issued. At this time the popular leaders were using their best endeavors to make further emissions. In 1722 Pennsylvania issued...