United States v. State of North Carolina

• Decision Date: 19 May 1890
• Citation: 10 S.Ct. 920,136 U.S. 211,34 L.Ed. 336
• Parties: UNITED STATES v. STATE OF NORTH CAROLINA
• Court: U.S. Supreme Court

136 U.S. 211

10 S.Ct. 920

34 L.Ed. 336

UNITED STATES v. STATE OF NORTH CAROLINA.

May 19, 1890.

This was an action of debt, brought in this court on November 5, 1889, by the United States against the state of North Carolina, Upon 147 bonds under the seal of the state, signed by the governor, and countersigned by the public treasurer, for $1,000 each, payable in 30 years from date, with interest at the yearly rate of 6 per cent., alleged in the declaration to be payable half-yearly until payment of the principal,—19 of the bonds dated January 1, 1854, and payable January 1, 1884, and 7 bonds dated January 1, 1855, and payable January 1, 1885, issued under the statutes of North Carolina of January 27, 1849, and December 22 and 25, 1852; and the remaining 121 bonds, dated April 1, 1855, and payable April 1, 1885, issued under the statute of North Carolina of February 14, 1885, and all these bonds, differing only in date of execution and in day of payment, being in the following form: 'It is hereby certified that the state of North Carolina justly owes to the North Carolina Railroad Company or bearer one thousand dollars, redeemable in good and lawful money of the United States at the Bank of the Republic, in the city of New York, on the first day of January, 1884, with interest thereon at the rate of six per cent. per annum, payable half-yearly at the said bank on the first days of January and July of each year, from the date of this bond and until the principal be paid, on surrendering the proper coupons hereto annexed. In witness whereof, the governor of the said state, in virtue of the power conferred by law, hath signed this bond, and caused the great seal of the state to be hereto affixed, and her public treasurer hath countersigned the same, this first day of January, 1854.' The material provisions of the statutes under which the bonds were issued are copied in the margin.¹

The declaration alleged that, at the dates when the bonds became payable, payment of the principal was demanded by the United States, and refused by the state of North Carolina. The state of North Carolina pleaded payment of the prin- cipal sums of the bonds after they became payable, together with all interest accrued thereon to the days when they became payable. The United States moved for judgment as by nil dicit, because the plea did not answer so much of their demand as was for interest after the bonds became payable. The case was submitted to the decision of the court upon a case stated, signed by the attorney general of the United States, and by the attorney general of North Carolina, as follows: 'The parties to the above-entitled case stipulate that, upon the issue joined, the facts are that payment of the bonds was demanded and refused at the several times in the years 1884 and 1885 in the declaration alleged; but subsequently, upon or about the 2d day of October, 1889, all coupons upon the bonds were paid, and that, besides, $147,000 was paid upon account of whatever might then remain due upon the bonds; the United States then contending that, because of interest at six per cent. per annum, which at that time had accrued upon the principal of the bonds since their maturity, such payment left still unpaid upon the debt the sum of $41,280, while the state then contended that no interest had accrued upon the principal of the bonds after their maturity, and therefore that such payment was in full of such debt. The parties submit to the court that in case, as matter of law, the principal of said bonds did so bear interest after maturity, judgment is to be entered for the plaintiff for $41,280, but that, if it did not so bear interest, judgment is to be entered for the defendant."

Atty. Gen. Miller, S. F. Phillips, J. G. Zachry, and F. D. McKennery, for plaintiff.

T. F. Davidson, Atty. Gen., (N. C.,) and S. G. Ryan, for defendant.

Mr. Justice GRAY, after stating the facts as above, delivered the opinion of the court.

This is an action brought in this court by the United States, against the state of North Carolina, upon bonds issued by the state, and held by the United States. By the case stated, it appears that the state, some time after the maturity of the bonds, paid the principal, together with interest thereon to the time when the bonds became payable; and the only question presented for our decision is whether, as matter of law, the principal of the bonds bore interest after maturity, and, according to our opinion upon this question, judgment is to be entered for the one party of the other.

Interest, when not stipulated for by contract or authorized by statute, is allowed by the courts as damages for the detention of money or of property, or of compensation, to which the plaintiff is entitled, and, as has been settled on grounds of public convenience, is not to be a warded against a sovereign government unless its consent to pay interest has been manifested by an act of its legislature, or by a lawful contract of its executive officers. U. S. v. Sherman, 98 U.S. 565; U.S. v. Bayard, 127 U. S. 251, 260, 8 Sup. Ct. Rep. 1156, and authorities there collected; In re Gosman, 17 Ch. Div. 771. In Gosman's Case, just cited, where the personal property of a deceased person had been taken possession of by the crown for want of known next of kin, and was afterwards recovered by petition of right by persons proved to be the next of kin, who claimed interest for the time the crown held the property, Sir GEORGE JESSEL M. R., speaking for the court of appeal, summed up the law of England in this short judgment: 'There is no ground for charging the crown with interest. Interest is only payable by statute or by contract.' In U. S. v. Sherman, the circuit court of the United States for the district of South Carolina had certified that there was probable cause for an act done by an officer of the United States, for which judgment had been recovered against him in thatc ourt; and consequently, by express acts of congress, 'the amount so recovered' was to 'be provided for and paid out of the proper appropriation from the treasury.' Acts March 3, 1863, c. 76, § 12, (12 St. 741;) July 28, 1866, c. 298, § 8, (14 St. 329.) This court held that the judgment creditor was entitled to receive from the United States the amount of the judgment only, without interest; and Mr. Justice STRONG, in delivering the opinion, said: 'When the certificate is given, the claim of the plaintiff in the suit is practically converted into a claim against the government, but not until then. Before that time the government is under no obligation, and the secretary of the treasury is not at liberty, to pay. When the obligation arises, it is an obligation to pay the amount recovered; that is, the amount for which judgment has been given. The act of congress says not a word about interest. Judgments, it is true, are by the law of South Carolina, as well as by federal legislation, declared to bear interest. Such legislation, however, has no application to the government, and the interest is no part of the amount recovered. It accrues only after the recovery has been had. Moreover, whenever interest is allowed, either by statute or by common law, except in cases where there has been a contract to pay interest, it is allowed for delay or default of the debtor. But delay or default cannot be attributed to the government. It is presumed to be always ready to pay what it owes.' 98 U. S. 567, 568. In U. S. v. Bayard, this court held that on money received by the secretary of state from a foreign government under an international award, invested by him in interest-bearing securities of the United States, and ultimately paid to the petitioner, interest was not payable, because the money was, in effect, withheld by the United States; and Mr. Justice BLATCHFORD, delivering judgment, said: 'The case, therefore, falls within the well-settled principle that the United States are not liable to pay interest on claims against them, in the absence of express statutory provision to that effect. It has been established as a general rule, in the practice of the government, that interest is not allowed on claims against it, whether such claims originate in contract or in tort, and whether they arise in the ordinary business of administration, or under private acts of relief passed by congress on special application. The only recognized exceptions are where the government stipulates to pay interest, and where interest is given expressly by an act of congress, either by the name of interest or by that of damages.' 127 U. S. 260, 8 Sup. Ct. Rep. 1160. In U. S. v. McKee, where a claim against the United States for moneys and supplies furnished during the Revolutionary War had been referred by congress to the court of claims, with directions to be governed in its adjustment and settlement 'by the rules and regulations heretofore adopted by the United States in the settlement of like cases,' interest was allowed by that court, and by this court on appeal, because congress was shown to have allowed interest in many private acts for the settlement of similar claims. 10 Ct. Cl. 231, 235, 91 U. S. 442, 451. In U. S. v. Bank of Metropolis, 15 Pet. 377, cited at the bar, no question of interest was suggested by counsel or considered by the court.

In North Carolina, as elsewhere, in an action against a private person to recover a sum certain and overdue, interest may doubtless he recovered, either according to the dictum in Devereux v. Burgwin, 11 Ired. 490, 495, on the ground of a 'promise to pay being implied from the nature of the transaction;' or, as more accurately stated in other cases, as damages for nonperformance of the defendant's contract. State v. Blount, 1 Hayw. 4; Hunt v. Jucks, Id. 173; McKinlay v. Blackledge, 2 Hayw. 28. See Young v. Godbe, 13 Wall. 562, 565; Holden v. Trust Co., 100 U. S. 72, 74; Price v. Railway Co., 16 Mees. & W. 244, 248; Cook v. Fowler, L. R. 7 H. L. 27, 32, 36 3...