Whaley v. Gaillard
| Decision Date | 14 November 1884 |
| Citation | 21 S.C. 560 |
| Parties | WHALEY v. GAILLARD, COUNTY TREASURER. DESAUSSURE v. SAME. |
| Court | South Carolina Supreme Court |
1. The legislation of this state in relation to the public debt beginning with the joint resolution of June 8, 1877, was designed to ascertain judicially, by the rules and principles of law that regulate contracts between individuals, what was the valid debt of the state, and to make ample provision for the punctual payment of interest thereon.
2. The state having by statute constituted a special court for the purpose of determining the validity of any of her obligations declared by the bond commission to be invalid, and having permitted herself to be sued therein, and suits having been then brought against the state by certain persons claiming to be her creditors and representing every class of the securities so reported to be invalid, and an adjudication having been made by the Supreme Court of this state, and no writ of error taken to the Supreme Court of the United States, as was authorized by such statute, the state by subsequent legislation provided a mode by which the percentage of invalidity in its outstanding bonds under this decision of the court should be ascertained, and then directed other bonds to be issued by the state treasurer for so much of the outstanding bonds as were found to be valid and in exchange therefor, and prohibited county treasurers from receiving any coupons in payment of taxes, except those of such new issue of bonds. Held , that this legislation did not impair the obligation of a contract by the state with her bondholders, whereby she had agreed to receive the coupons of her bonds in payment of taxes, but only provided a mode by which it would be definitely and easily ascertained whether a coupon so offered represented any portion of her valid debt, and was therefore receivable in payment of taxes.
3. The state having permitted herself to be sued in a prescribed mode, and having invited all persons asserting certain claims against her to appear and establish them, a person holding such claims but neglecting to appear and litigate them cannot afterwards maintain an action against the state by another proceeding not permitted by the state; nor can he maintain an action against the officers of the state for refusing to do that which the laws of the state forbid.
4. The act entitled " an act to facilitate the collection of taxes," (16 Stat. , 785) was not designed to afford the bondholders a means of reopening the question of what is the valid debt of the state (which has been otherwise finally determined), and does not, therefore, apply to cases where coupons of bonds issued by the state are tendered in payment of taxes.
5. Besides, such act afforded a remedy only where the treasurer illegally and wrongfully refused to receive payment of taxes in the " funds and moneys" tendered; and refusal by such officer to receive coupons declared by the Supreme Court of this state to be invalid is not an illegal or wrongful refusal. And if such decision of the Supreme Court should now be reversed, such reversal could not make illegal the acts of an officer previously done under a statute of the legislature passed in accordance with the decision of her court of last resort.
6. A statute which conflicts with any provision of the constitution is a nullity, although there are other provisions with which it does not conflict. Therefore, where this court decided that the (14 Stat. 182) did not violate the last two clauses of art. IX., § 7 of the constitution (Morton, Bliss & Co. v. Comptroller General , 4 S.C. 430); and afterwards decided (Bond Debt Cases , 12 S.C. 200) that this act was null and void, because in conflict with two other clauses of this same section of the constitution, bonds issued under this act which were acquired between the filing of these two decisions are affected by the later decision, and are not valid claims against the state.
7. This act for the relief of the treasury attempted to create a public debt which was not for the purpose of defraying any " extraordinary expenditures of the state," nor was it authorized " for some single object," nor was such object " distinctly specified therein." The act, therefore, was in conflict with art. IX., § 7, of the constitution, and null and void.
8. Whether the expenditure to be defrayed is " ordinary" or " extraordinary" is not left exclusively to the determination of the legislature, but will be adjudicated by the courts when the question is raised.
9. Under an act which authorized the governor to borrow $1,000,000 on coupon bonds of the state, $1,000,000 in bonds were issued, and subsequently there was a second issue of like amount. Held , that the bonds of this second issue were invalid; for the act did not authorize the substitution of new bonds for the debt incurred by the issue of the first bonds, nor did it authorize a new and additional debt to be created by a second or other issue.
10. The consolidation act (15 Stat. , 518) was not passed as is required by the constitution where a public debt is to be created, and, therefore, did not make anything a public debt that was not at that time a valid obligation of the state.
11. An act of the legislature cannot create a public debt of the state unless the constitutional requirements are complied with, notwithstanding the fact that the effect of such act as a whole reduces the volume of the public debt.
12. The legislature cannot contract a debt except as authorized by the constitution, and the consolidation act not having been so passed as to create a debt, any contract, whether by compromise or otherwise, attempted by that act was without authority and not binding upon the state.
13. This consolidation act was a proposition addressed to bondholders individually, and not to them as a class, nor did it require from any person a surrender of all his bonds in order to be entitled to an exchange of any of them. It cannot, therefore, be called a composition by the state with her creditors. This case distinguished from Lost Bonds Case , 15 S.C. 224.
14. Bond Debt Cases (9, 11, 21, 29), 12 S.C. 200, affirmed.
Before KERSHAW, J., Charleston, February, 1883.
These were two actions, under the act of December 24, 1878 (16 Stat. , 785), to recover money paid for taxes, one being by B. J. Whaley against P. C. Gaillard, treasurer of Charleston county, and the other by L. D. DeSaussure against the same defendant. They were tried together.
The plaintiffs requested the presiding judge to charge as follows:
1. That the provisions of the act of December 22, 1873, were in the nature of proposals to the creditors of the state, and when the consolidation bonds were issued under said act and taken by the creditors, a contract was consummated between them and the state as fully as if all the provisions of the act had been embodied as express stipulations in the most formal instrument signed by the parties.
2. That the pledge that the coupons of the bonds so issued should be received in payment of all taxes due the state during the year in which they matured, except for the taxes levied for the public schools, formed a part of the contract, and was the security offered to the creditors. That the act of the legislature of South Carolina, entitled " an act to raise supplies and make appropriations for the fiscal year commencing November 1, 1881," in so far as it prohibited the county treasurer from receiving the coupons of the consolidated bonds referred to in the complaint in payment of the taxes levied by said act, is null and void, as repugnant to article I., section 10, of the constitution of the United States.
3. That the validity of the bonds for the relief of the treasury, issued under the act of 1869, which were surrendered to the state by the Yonkers Savings Bank in May, 1875, must be determined according to the law as it was judicially construed to be in the case of Morton, Bliss & Co. v. The Comptroller General , and were valid obligations of the state. That the decision subsequently made by the Supreme Court of the state in the State Bond Cases cannot receive a retroactive effect without impairing the obligation of contracts long before entered into.
4. That by the act of August 26, 1868, the governor of the state was authorized to borrow on the credit of the state, on coupon bonds, within twelve months from the passage of the act, a sum not exceeding $1,000,000, or as much thereof as he might deem necessary to pay interest on the public debt. That the governor was invested with full discretion, and was clothed with full authority, in determining the necessity for the issue of the bonds, the mode of their issue, and the amount of bonds to be issued in order to raise the sum of money required; and bona fide holders for value of the bonds issued by him, or of the coupons of such bonds, had no means of knowing in what manner the governor exercised this discretion, and they cannot be affected by any abuse of authority by him. That by the recital on the face of the bonds that they were issued under the act approved August 26, 1868, the state, as against a bona fide holder for value, was estopped from disputing the truth of such representation.
5. That the legislature having, with a full knowledge of all the facts connected with the alleged over-issue of the bonds for the payment of interest on the public debt, authorized the funding of the said bonds, has waived said objections and validated the bonds.
6. That the settlements made between the state and the Yonkers Savings Bank of New York, in May, 1875, and between the state and Levy & Borg, on October 13, 1875, were such compromises of...
To continue reading
Request your trial