Keith v. Clark/Dissent Bradley

by Joseph P. Bradley

United States Supreme Court

97 U.S. 454

Keith  v.  Clark

MR. JUSTICE BRADLEY.

The question in this case is so fundamental in its character, that I cannot suffer the opinion of the majority to be read without expressing my earnest dissent from it.

The bank-notes issued by the Bank of Tennessee, which are claimed to be legal tender for taxes, in this case, were issued during the late civil war. Of course, whether they were new bills or old, whilst they were in the possession of the bank they were of no value. Being the obligations of the bank itself, they had no force or value until they were issued and put in circulation,-any more than the note or bond of an individual has value, whilst it is in his possession. In this respect they were totally different from the notes and obligations of others held by the bank. The latter had value when in the bank's possession, and were property. The bills in question were not property. When the bank issued them, then, and only then, they became property, by becoming obligations of the bank.

The issue of these bills, therefore, was the creation of new obligations on the part of the bank; just as much so as if the bank had made its bonds and issued them. And everybody who took them knew this. The thing was not done in a corner. It was known that these bills were of the 'new issue,' or the 'Torbet issue,' of the bank.

These bills, being thus new obligations of the bank, were issued for the purpose of raising funds for the bank or its owners. They were not given away. They were promises to pay, delivered to various parties for the sake of the consideration received therefor; and that consideration was sought for and received by the bank for the purpose of being used,-for the purpose, in other words, of furnishing the bank, and thereby of furnishing its owners, with revenue for carrying on its and their operations and business.

Now, it appears on the record that this bank belongs to the State of Tennessee, and has no private stockholders. The first section of the charter, passed by the legislature in 1838, is in these words: 'A bank shall be, and is hereby, established in the name and for the benefit of the State, to be known under the name and style of 'The Bank of Tennessee;' and the faith and credit of the State are hereby pledged for the support of the said bank, and to supply any deficiency in the funds hereinafter specifically pledged, and to give indemnity for all losses arising from such deficiency.'

The second section shows how the capital of the bank was constituted:--

'The capital of said bank shall be five millions of dollars, to be raised and constituted as follows: The whole of the common-school fund, . . . as well as the proceeds of the Ocoee lands, shall constitute a part of the capital of the Bank of Tennessee; the surplus revenue on deposit with the State . . . shall also constitute a part of the stock of said bank; and, in addition, . . . a sum shall be raised in specie, or funds convertible into specie at par value, on the faith of the State, sufficient to make the whole capital five millions of dollars,' &c.

The sixth and seventh sections provided for the appointment of the directors of the bank, by the nomination of the governor and confirmation of the General Assembly.

The bank thus became the fiscal agent of the State. All its funds and property, all its resources of every kind, belong to the State, subject to the payment of its debts. The State, it is true, according to the decision in Curran v. The State of Arkansas, has no constitutional authority to appropriate the capital of the bank to the prejudice of its debts; and it is not to be presumed that any lawful government of the State will do so. If it does, there are generally means, under the provisions of the Constitution, for preventing such a result.

The State, then, being the proprietor of the bank, and the latter being the fiscal agent of the State, it follows that the business operations of the bank inure entirely to the benefit of the State. The property and resources which were obtained by the issue of the bills in question were obtained for the benefit of the State. The bills were issued in the interest and for the benefit of the State.

In pursuance of the idea that the bank was the property of the State, and that the faith of the State was pledged for its obligations, it was provided, by the twelfth section, 'that the bills or notes of the said corporation, originally made payable, or which shall have become payable, on demand, in gold or silver coin, shall be receivable at the treasury of this State, and by all tax-collectors and other public officers, in all payments for taxes and other moneys due to the State.'

The question in this case is, whether the State government as reconstructed after the late rebellion, is absolutely and irretrievably bound by the twelfth section to accept for taxes and other public dues the bills issued by the bank when under the control of the insurgent government during the war.

If by the operation of general public law, or of any thing contained in the Constitution of the United States, the reconstructed and lawful government is so bound, it is more than the insurgents themselves ever expected, and more than the loyal people of the State supposed, when in 1865 they met together in convention, and adopted those ordinances and regulations which the changed condition of things required. They then declared that 'all laws, ordinances, and resolutions of the usurped State governments, passed on or after the sixth day of May, 1861, providing for the issuance of State bonds, also all notes of the Bank of Tennessee, or any of its branches, issued on or after the sixth day of May, 1861, and all debts created or contracted in the name of the State by such authority, are unconstitutional, null, and void.'

In favor of the proposition that the lawful State government, reorganized after the rebellion, is bound to recognize the bills in question, it is contended that the State of Tennessee has always remained the same State; and that unless it be shown affirmatively that its acts and proceedings were intended to aid in the prosecution of the rebellion, they are all valid and binding on the reconstructed State.

The latter proposition I deny. The State can only act by its constituted authorities,-in other words, by its government; and if that government is a usurping and illegal government, the State itself and the legal government, which takes the place of the usurping government, are not bound by its acts.

In the case before us, the actual government of the State, for the time being, standing behind the direction of the bank, and creating that direction, exercised complete control over the operations of the bank. When the State government was in want of money, or other resources, for its immediate purposes, the bank, in obedience to its will, issued its obligations, and procured what was wanted.

The process by which this was done was equivalent, in the substance of the transaction, to the government issuing its own obligations, and thereby filling its treasury.

In the exigencies of the war, the then government of Tennessee was in need of every possible resource that could be compelled into contribution. It cannot reasonably be doubted that the very object of this extraordinary new issue of bank circulation was intended for the purpose of enabling the government to carry on its operations. The fact that the bills themselves commanded only a fraction of their par value is proof that they were not issued in the regular course of business, but that the proceeds received therefor were destined for other uses than legitimate banking.

But in my view of the case, it is not necessary to invoke any presumptions of this sort, to deny to these bills the quality of legal tender in the payment of taxes imposed by the lawful government of the State. The original contract contained in the charter of the bank, to the effect that its circulation should be receivable in payment of taxes, was based on the consideration that the State, as proprietor of the bank, received the benefit of the circulation, and was pledged for its redemption. Hence it followed, by an almost necessary implication, that it should honor that circulation so far as to take it for cash, when offered in payment of its own taxes. It never could have been the intent or implication that if a usurping government should at any time obtain the control of the State and its finances, including this very fiscal agency, the issues of the bank made during the period of such usurpation should be honored in the same manner.

Now if the position of the majority of the court is correct, that there never was any usurpation of the State government in Tennessee during the late civil war, and that the State had all the time a lawful government of its own ( for that is what the argument amounts to), then I concede that the conclusion reached is unavoidable. If this be true, then I do not see why all the obligations issued by the State during the war, whether in the shape of bonds, or certificates of indebtedness or otherwise, are not equally obligatory as these bills. How is it to be proved which of them was issued for carrying on the war, and which were not? Upon the assumption made, they are all prima facie valid. But this, of course, is only a collateral consideration.

I deny the assumption that the governments of the insurgent States were lawful governments. I believe, and hold, that they were usurping governments. I understand this to have been the opinion of this court in Texas v. White, 7 Wall. 700. The very argument in that case is, that whilst the State as a community of people remained a State rightfully belonging to the United States, the government of the State had passed into relations entirely abnormal to the conditions of its constitutional existence. 'When the war closed,' says Mr. Chief Justice Chase, speaking for the court, 'there was no government in the State except that which had been organized for the purpose of waging war against the United States. That government immediately disappeared. The chief functionaries left the State. Many of the subordinate officers followed their example. Legal responsibilities were annulled or greatly impaired.' Again he says: 'There being then no government in Texas in constitutional relations with the Union, it became the duty of the United States to provided for the restoration of such government.' Again, in speaking of the power and duty of Congress to guarantee to each State a republican government, and the necessary right which follows therefrom to decide what government is established in each State, the Chief Justice makes the following quotation from the opinion of Mr. Chief Justice Taney in the case of Luther v. Borden (7 How. 1), who says: 'Under the fourth article of the Constitution, it rests with Congress to decide what government is the established one in a State. For as the United States guarantee to each State a republican government, Congress must necessarily decide what government is established in the State, before it can determine whether it is republican or not.'

Mr. Chief Justice Chase proceeds to say, 'This is the language of the late Chief Justice, speaking for this court, in a case from Rhode Island, arising from the organization of opposing governments in that State. And we think that the principle sanctioned by it may be applied with even more propriety to the case of a State deprived of all rightful government, by revolutionary violence; though necessarily limited to cases where the rightful government is thus subverted, or in imminent danger of being overthrown by an opposing government, set up by force within the State.'

The actual course of things taken in the seceding States, so fully detailed by the Chief Justice in Texas v. White, are demonstrative, it seems to me, of the position which I have assumed. The several State governments existing or newly organized at the times when the ordinances of secession were respectively adopted, assumed all the branches of sovereignty belonging to the Federal government. The right to declare war, raise armies, make treaties, establish post-offices and postroads, impose duties on imports and exports, and every other power of the government of the United States, were usurped by the said State governments, either singly, or in concert and confederacy with the others. They assumed to sever the connection between their respective communities and the government of the United States, and to exercise the just powers belonging to that government. That such governments should be denominated legal State governments in this country, where the Constitution of the United States is and ought to be the supreme law of the land, seems to be most remarkable. The proposition assumes that the connection between the States and the general government is a mere bargain or compact, which, if broken,-though unlawfully broken,-still leaves the States in rightful possession of all their pristine autonomy and authority as States.

I do not so read the constitution of government, under which we live. Our government is a mixed government, partly state, partly national. The people of the United States, as one great political community, have willed that a certain portion of the government, including all foreign intercourse, and the public relations of the nation, and all matters of a general and national character, which are specified in the Constitution, should be deposited in and exercised by a national government; and that all matters of merely local interest should be deposited in and exercised by the State governments. This division of governmental powers is fundamental and organic. It is not merely a bargain between States. It is part of our fundamental political organization. Any State attempting to violate this constitution of things not only breaks the fundamental law, but, if it establishes a government in conformity with its views, that government is a usurping government,-a revolutionary government,-as much so as would be an independent government set up by any particular county in a State. If the city of New York should set up a separate government independent of the government of the State, it would be a usurping and revolutionary government. It might succeed, and make itself independent, and then there would be a successful revolution. But if it did not succeed, if it were put down, every one would call it a usurping and unlawful government whilst it lasted, and none of its acts would be binding on the lawful government.

I do not mean to say that States are mere counties or provinces. But I do mean to say, that the political relation of the people of the several States to the Constitution and government of the United States is such, that if a State government attempt to sever that relation, and if it actually sever it by assuming and exercising the functions of the Federal government, it becomes a usurping government.

We have always held, it is true, that, in the interests of order and for the promotion of justice, the courts ought to regard as valid all those acts of the State governments which were received and observed as laws for the government of the people in their relations with each other, so far as it can be done without recognizing and confirming what was actually done in aid of the rebellion. This is required by every consideration of justice and propriety. But this is only what is always conceded to the acts and laws of any actual government, however invalid.

The action of all the States, after the rebellion was over, shows that they did not consider the insurrectionary governments as legal governments, nor the laws by them enacted as having any binding force or validity proprio vigore. In every case, it is believed, ordinances or laws were passed either adopting the laws passed during the insurrection, with certain exceptions duly specified, or declaring them all to be invalid, with the exception of such as it was deemed proper to retain. This was done in Tennessee. It was done in all the other States.

The proceedings and acts of Congress and the Executive after the war was at an end, having in view the reconstruction of the insurgent States, are all based on the same idea; viz., that the governments of those States when in rebellion were usurping governments, and that their acts were void. The various pardons and proclamations of amnesty, and acts of rehabilitation to citizenship, passed by Congress, all look in the same direction.

In England, at the close of the Commonwealth, and the restoration of Charles II., no act passed during that whole period of twenty years, from 1640 to 1660, was ever received or admitted as law. Not one of them is found in the statute-book. Some laws which were of great public concern, and actual improvements in the legislative code, were re-enacted, and became laws under Charles II.

It is said that the national obligations of the English government, created during the period in question, were recognized by the restored government. But it is well known that this was a matter of compromise and concession. General Monk held the reins in his own hands as commander of the army, and refused to surrender them until all proper measures for insuring the public tranquillity and satisfaction were agreed to. The royalists were glad to get back into power on these terms. As to the public relations of the kingdom, it would have been arrant folly not to have adopted what had been done. Besides the fact that these relations came under the operation of general public law, in which other nations were deeply concerned,-one cardinal rule of which is, that every nation in its relations with other nations is bound by the acts of its actual government, whether legal or de facto, it was the clear interest of the English nation to stand to the public negotiations of Cromwell; for no English sovereign had ever wielded the sceptre of public affairs with greater ability and energy.

There is nothing, therefore, in this historical instance to support the opinion of the court.

It is undoubtedly true that, when revolutions in governments occur, the new governments do often, as matter of policy, and to prevent individual distress among the citizens, assume the obligations of the governments to which they succeed. But this is done from motives of public policy only, and is not submitted to as a matter of absolute right. Such was clearly the relation of the lawful State governments to the obligations of the usurping governments, at the close of the civil war in this country. They could assume them or not, as they saw fit. In the case before us, the obligation in question was expressly repudiated. And it seems to me that, in addition to the express repudiation of the Convention of 1865, that part of the [[Additional amendments to the United States Constitution#Amendment XIV|[[Additional amendments to the United States Constitution#Amendment XIV|Fourteenth Amendment]]]] of the Constitution of the United States which prohibits the United States or any State to assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, applies to the case.

Whether the community of people constituting the several States remained States during the insurrection is of no consequence to the argument. The question is, whether the State governments were or were not legal governments, and whether the obligations by them assumed are binding upon the lawful government of the State.

That the acts of secession were void, of course no one denies. The civil war was carried on by the United States government to demonstrate their nullity. But neither has that any thing to do with the question as to the validity of the State governments which waged war against the United States, except to make it more certain and indubitable that they were usurping governments.

It seems to me that the attempt to fasten upon the lawful government of Tennessee an obligation to receive as cash bills that were issued under the authority of the usurping government of that State whilst it was engaged in a deadly war against the government of the United States, is calculated to introduce evils of great magnitude; that it will ultimately lead to the recognition of the war debts of the seceding States, notwithstanding the prohibition of the [[Additional amendments to the United States Constitution#Amendment XIV|[[Additional amendments to the United States Constitution#Amendment XIV|Fourteenth Amendment]]]] of the Constitution. But this I would regard as a far less evil than the establishment of doctrines at war, as I think, with the true principles of our national government, as well as with the established rules of public law.