United States v. Insurance Companies

• Citation: 22 L.Ed. 816,22 Wall. 99,89 U.S. 99
• Parties: UNITED STATES v. INSURANCE COMPANIES
• Decision Date: 01 October 1874
• Court: United States Supreme Court

89 U.S. 99

22 L.Ed. 816

22 Wall. 99

UNITED STATES v. INSURANCE COMPANIES.

October Term, 1874

APPEALS from the Court of Claims.

The Home Insurance Company and the Southern Insurance and Trust Company, both being corporations created by the legislature of Georgia in 1861 and 1863, while the State was in armed rebellion against the government of the United States, brought suit in the court below against the United States, under the Captured and Abandoned Property Act (an act which, by its terms, gives a right to sue only to persons who have borne true faith and allegiance to the government and have never voluntarily aided, abetted, or given encouragement to rebellion), to recover the proceeds of the sale of cotton captured at Savannah, in 1864, and now in the treasury of the United States. The United States pleaded the general issue, and statute of limitations, but no other plea.

On the argument, however, of the case, the counsel of the government set up that the courts of the United States would not recognize the competency of those bodies known as the legislatures of the insurgent States, to create corporations, such as insurance, banking, and trust companies; and as the plaintiffs in the court below were incorporated under acts passed after the attempted secession of Georgia from the Union, and before the close of the war, it was argued that they could have now no legal existence. The question thus raised, in the argument—the grounds made by the pleas not having been at all supported by the evidence, and, in fact, not pressed—was accordingly whether such corporations as were now suing could be recognized as having a legal existence with capacity to own cotton and to sue in the Court of Claims.

That court thought that they had, and gave judgment against the government. The case, therefore, was now here on its appeal; the same question being now presented here in the argument, along with the further point, that if these plaintiffs were competent to sue in the Federal courts, they could not sue under the Captured and Abandoned Property Act, because as corporations they could not bear true faith and allegiance; that capability, as well as the contrary one of voluntarily aiding, abetting, or giving encouragement to rebellion being predicable of natural persons only; for whom and not for corporations the act must be meant. This point, however, was not made in the court below, nor its decision thereon assigned for error. The errors assigned were that the court erred——

'1st. In holding that the claimants had a legal existence; and

'2d. In holding that the rebel legislature of Georgia could create a corporation capable of suing the United States after the suppression of the rebellion.'

Mr. G. H. Williams, Attorney-General, and Mr. John Goforth, Assistant Attorney-General, for the United States; Messrs. C. F. Peck and W. W. McFarland, contra.

Mr. Justice STRONG delivered the opinion of the court.

It may well be doubted whether under the pleadings in the court below the appellants have any right to raise the objection here that the companies plaintiff have now no legal existence, because incorporated after the attempted secession of Georgia from the Union, and before the close of the war. There was no plea that traversed directly the corporate existence of the plaintiffs. A general denial of the averments of the petition was hardly sufficient. Notwithstanding the old rule that a corporation suing must prove its corporate existence, it has been many times decided that a plea of the general issue admits its capacity to sue, as does going to trial upon the merits.¹ And such is the established practice in the Court of Claims.²

We do not, however, rest our decision upon this ground. We prefer answering the question which the appellants attempt to raise. No doubt the legislature of Georgia in 1861 and 1863, when the enactments were made for the incorporation of these plaintiffs, was not the legitimate legislature of the State. The State had thrown off its connection with the United States, and the members of the legislature had repudiated, or had not taken, the oath by which the third section of the sixth article of the Constitution requires the members of the several State legislatures to be bound. But it does not follow from this that it was not a legislature, the acts of which were of force when they were made, and are in force now. If not a legislature of the State de jure, it was at least a legislature de facto. It was the only lawmaking body which had any existence. Its members acted under color of office, by an election, though not qualified according to the requirements of the Constitution of the United States. Now, while it must be held that all their acts in hostility to that Constitution, or to the Union of which the State was an inseparable member, have no validity, no good reason can be assigned why all their other enactments, not forbidden by the Constitution, should not have the force which the law generally accords to the action of de facto public officers. What that is was well stated by Kent in the second volume of his Commentaries.³ 'In the case of public officers,' he says, 'who are such 'de facto,' acting under the color of office by an election or appointment not strictly legal, or without having qualified themselves by the requisite tests, or by holding over after the time prescribed for a new appointment, as in the case of sheriffs, constables, &c., their acts are held valid as it respects the right of third persons who have an interest in them, and as concerns the public, in order to prevent the failure of justice.' And thus this court has ruled in regard to the legislatures of the insurgent States in...