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Opinion of the Court.

quent act of 1870. In giving such effect was the obligation of the contract between the parties impaired thereby?

If the State had passed no act, the question of contract could not have been raised in this court, the payments might have been repudiated, and the court have held them illegal, and we would have no jurisdiction to review its judgment. But the State has passed a statute, and said that if the company would pay interest and a certain proportion semi-annually upon the aggregate amount of the loan as it stood May 1, 1870, no further exaction would be made. The court has construed this to mean that if the company will pay such proportion semiannually on the amount of the loan, to be ascertained by striking out the payments in warrants, then no default will be incurred, but if not, then it will have made default, and the act of 1870 provides in such case for proceedings to collect the amount due. We say the court below has so construed the act, and we say so notwithstanding it has not mentioned it in any such connection. It has said so, however, by implication necessarily arising from the judgment it has given when taken in connection with the provision of the act which permits proceedings only to be taken on a default, which does not exist in this case if the company be credited with these warrants as payments. By permitting the proceedings the court has necessarily construed the act as meaning that there is a default when payments are not made on the basis of the invalidity of the payments in warrants. The obligation of the contract which we hold existed between the State and the company growing out of the transactions mentioned has therefore by this construction of the act by the state court been materially impaired.

It is alleged on the part of the State that the acceptance of the treasury warrants in payment of money loaned from the school fund was a violation of the constitution of the State of Texas, as being an illegal diversion of that fund. Upon that point we agree with the court below, (which held that there was no such diversion,) for the reasons given by that court.

We have examined the various objections of the defendant in error which it has made because of the alleged failure of the

MR. JUSTICE BROWN, concurring.

plaintiffs in error to properly bring the Federal question before the court, but we think they are not well taken.

We are of opinion that the judgment of the Court of Civil Appeals should be reversed and the case remanded to that court with directions to remand the case to the District Court, with directions to reverse its judgment and for further proceedings not inconsistent with the opinion of this court, and is so ordered.

MR. JUSTICE BROWN concurring:

I concur in the conclusion of the court, but from so much of the opinion as holds that the treasury warrants in question were not bills of credit within the meaning of the Constitution of the United States, I am constrained to dissent.

It is admitted that these warrants fulfill all the conditions of bills of credit, except, as it is said, they were not intended to circulate as money. I am unable to concur in this view of the intent of the legislature. By the act of February 14, 1860, authorizing interest bearing warrants on the treasury, it was expressly provided that these warrants should not circulate as money, but might be assigned. This act was repealed, however, in 1862, by another act providing that warrants should be drawn for legal claims against the State, and payment made, if there were money in the treasury; but if not, the comptroller was authorized to issue warrants payable to the party entitled to payment, or bearer, which warrants should be of such proportions of the claim as were required by the holder, one-tenth of the whole amount of which might be issued in warrants of one dollar each, and the residue in warrants of five dollars or more each. There was an omission in this act, which appears to me extremely significant, of the proviso of the former act that such warrants should not circulate as money. By another act, approved the following day, it was provided that treasury warrants of the State, not bearing interest, should be receivable "as money" in the payment of taxes, office fees (including fees for patents) and land dues payable in the general land office of Texas, and all other dues to be collected for the State, with

MR. JUSTICE BROWN, Concurring.

certain specified exceptions. By another act of December 16, 1863, the comptroller was authorized to receive from the railroad companies indebted to the special school fund all interest on their bonds that might be or might thereafter become due in state treasury warrants. This act was amended May 28, 1864, by providing that the act of 1863 should not apply to railroad companies which refused to receive these bonds or treasury warrants at par for freight or passage, at the prices or rates established by law.

The railway companies were thus compelled to receive these warrants as money from their patrons in order to be able to avail themselves of them in payment of interest upon their bonds. In addition to this, the warrants were in the form of bank notes, printed upon peculiar paper, such as is ordinarily used by banks for their circulating notes, and contained a brief and unconditional promise of the State to pay the amount to a party named, or bearer, and were declared on their face to be receivable for public dues.

If these facts be not decisive of an intention that these warrants should circulate as money, it is difficult to say what additional facts were needed to manifest that intent. Indeed, the opinion of the court seems to me to practically eliminate from the Constitution the provision that the States shall not emit bills of credit, as well as to overrule the opinion of this court in Craig v. Missouri, 4 Pet. 410. In that case, the legislature of the State of Missouri authorized the officers of the state treasury to issue certificates, of denominations not exceeding ten dollars, nor less than fifty cents, in the following form: "This certificate shall be receivable at the treasury of any of the loan offices in the State of Missouri, in discharge of taxes or debts due to the State, for the sum of dollars, with in

terest for the same, at the rate of two per cent per annum from this date." These certificates were receivable at the treasury in payment of taxes, or moneys due to the State, or to any municipality, and by all officers, civil and military, in the discharge of salaries and fees of office. If simple certificates of the State, containing no promise to pay, are bills of credit, much more, it seems to me, should these obligations of the State of

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Statement of the Case.

Texas issued in denominations of one dollar and upwards, in the size, shape and color of bank notes, and receivable in discharge of all taxes and debts due the State, to which a forced circulation was given as between railways and their patrons, be held to be obnoxious to the same provision of the Constitution. As was said by Chief Justice Marshall in that case: "The denominations of the bills, from ten dollars to fifty cents, fitted them for the purpose of ordinary circulation; and their reception in payment of taxes, and debts to the government and to corporations, and of salaries and fees would give them currency. They were to be put into circulation; that is, emitted, by the government. In addition to all these evidences of an intention to make these certificates the ordinary circulating medium of the country, the law speaks of them in this character, and directs the auditor and treasurer to withdraw annually one-tenth of them from circulation. Had they been termed 'bills of credit' instead of 'certificates' nothing would have been wanting to bring them within the prohibitory words of the Constitution."

But I fully concur with the court upon the second point, that the State, having issued these warrants for a valuable consideration, having put them in circulation, having expressly authorized the railroad companies to pay them in discharge of their interest upon their bonds, and having received them without objection at the time, it is too late now to claim that they did not operate as payment. Though the warrants may have been issued without authority, it was competent for the State to recognize them, and to refuse now to admit them as payment upon these bonds appears to me a plain violation of the public faith. Upon the theory of the Court of Civil Appeals, I see nothing to prevent the State, unless there be a statute of limitations operative against it, from bringing suit against everybody who paid these warrants to the State for taxes or for dues, and recovering the amount a second time.

GALVESTON, HARRISBURG AND SAN ANTONIO RAILWAY Co. v. TEXAS. Error to the Court of Civil Appeals for the Third Supreme Judicial

Statement of the Case.

District of the State of Texas.

cided March 26, 1900.

No. 82. Argued with No. 81. De

This involves precisely the same questions that have just been determined in the foregoing case, and the same judgment will, therefore, be entered. Same counsel as in No. 81.



No. 35. Argued October 13, 16, 1899.-Decided March 26, 1900.

United States v. Ortiz, 176 U. S. 422, affirmed and followed, to the point that, in order to justify the confirmation of a claim under an alleged Mexican grant, under the act of March 3, 1891, c. 539, 26 Stat. 854, it is essential that the claimants establish, by a preponderance of proof, the validity of their asserted title.

The mere approval, by the governor, endorsed on a petition presented to him for a grant, before a reference to ascertain the existence of the prerequisites to a grant, is not the equivalent of a grant.

In order to vest an applicant under the regulations of 1828, with title in fee to public land, it was necessary that the grant should be evidenced by an act of the governor, clearly and unequivocally conveying the land intended to be granted, and a public record in some form was required to be made of the grant; and the action of the legislative body could not lawfully be invoked for approval of a grant, unless the expediente evidenced action by the governor, unambiguous in terms as well as regular in character. The mere indorsement by a Mexican governor of action on the petition, before any of the prerequisite steps mentioned in the regulations of 1828 had been taken to determine whether, as to the land and the applicants, the power to grant might be exercised, was a mere reference by the governor to ascertain the preliminary facts required to justify an approval of an application, and had no force and effect as an actual grant of title to the land petitioned for.

Although the documents in question in this case, executed by the prefect and the justice of the peace, fairly import that those officials assumed authority to grant something as respected the land in question, they did not, in 1845, possess power to grant a title to public lands.

THE alleged Mexican grant which forms the subject of this controversy relates to a tract of land situate in the county of

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