delivered the opinion of the Court.
Appeal from the Law side of the Common Law and Chancery Court of Madison County.
The Bank of Tennesse was chartered in the year 1838. The 12th section of its charter reads thus: “ Be it enacted, that the bills or notes of the said corporation originally made payable, or which shall have become payable on demand, in gold or silver coin, shall be receivable at the treasury of this State and by all tax collectors and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 ox-other moneys due the State.”
It w-as settled in the case of Furman v. Nichol, 8 Wall., 44, that this provision in the charter was a contract within the meaning of the Constitution of the United States, between the State of Tennessee and every holder of the issues of the bank, and that it was obligatory on the State to receive the same in payment of taxes or other moneys due the State.
The State of Tennessee, on the 6th day of May, 1861, adopted what is known as the Act of Secession by which it attempted to dissolve its relations with the government of the United States. After the 6th day of May, 1861, the general government was in the attitude of waging war against
In the case of Furman v. Kicbol the Court held that the circulating notes of the bank issued prior to this attempted disruption and the inauguration of hostilities between the State and general government were within the terms of that decision, but the Court expressly withheld any opinion as to such notes as were put in circulation by the bank after that date.
The defendant, Clarke, as Tax Collector of Madison County, demanded of Plaintiff Keith the State tax assessed against him for 1874, and Keith tendered in payment two notes of the Bank of Tennessee, each of the denomination of twenty dollars, which were issued and put into circulation subsequent to the 6th of May, 1861. These notes constituted a part of what is known in the judicial history of the State as the “ Torbett issue ” of the Bank of Tennessee. Clarke refused to accept said notes in payment of the tax, and thereupon Keith protested and paid the same in lawful money of the United States. Keith then within thirty days thereafter instituted this suit .before a justice of the peace under the Act of the General Assembly, approved March 21, 1873, entitled “an Act to facilitate the collection of revenues,” to recover the money so paid. The case was appealed to the Law side of the Common Law and Chancery Court of said County, where thé ease was tried
Among other things, the Court sustained a demurrer to a plea of the statute of limitation, and we think, correctly. This Court has repeatedly
The Court overruled a motion to dismiss for want of jurisdiction, aud sustained a demurrer to a plea to the jurisdiction. To this, we think, no exception can be taken. This suit falls within the class of actions provided for in the Act approved March 21, 1873: Tennessee v. Sneed, 6 Otto, 69. If the notes were not issued in aid of the rebellion it is manifest that it was the duty of the defendant, as Tax Collector, to receive the bills tendered by plaintiff in payment ofi his taxes: Furman v. Nichol, 8 Wall., 44. Any law directing him to do otherwise impairs the obligation of the contract of the State as expressed in the 12th section of the Bank’s charter, and is therefore unconstitutional. It has been insisted with much earnestness that the Court erred in directing, over the objection of the defendant, the jury to bring* in a special verdict or finding of facts, in the event they could not agree upon a general verdict. We see no objection to this practice. It has been frequently followed in the courts of this State, and is not without precedent or authority: Tidd’s Practice, p. 897.
The finding of facts by the jury, as recorded in the special verdict, is in substance: that the bills of the bank, tendered by plaintiff to defendant, in payment of his taxes, were regularly issued
As to whether any contract, arrangement or agreement was entered into between the Governor of the State and “ Military Board, ” or either of them on the one part, and the Bank of Tennessee in its corporate capacity on the other that the “ Torbett issue ” of the bank should be issued and put in circulation in aid of the rebellion against the Government of the United States, and if so, whether it was actually issued and put out by the bank for that purpose, the jury failed ’to agree, and announced their disagreement in the special verdict.
In considering the correctness of the judgment rendered on this verdict, the Court must necessarily assume as a fact, without, however, deciding the question, that the “Torbett issue,” of which the bills involved in this suit are a part, were
It is settled by the Supreme Court of the United States in this case that the entity of the State of Tennessee was not, during the war, or at any other time, destroyed or in any way subverted. Whether peacefully occupying her place in the family of states, or in open rebellion against the government of the United States, her identity has been the same. Whatever difference of opinion may have formerly existed, it is now authoritatively settled by repeated adjudications of the Supreme Court of the United States, that the states constituting what is known as the Southern Confederacy, had no legal or constitutional right to withdraw from the Federal Union, and the result of the war proved that.they were unable by force of arms to disrupt their relations with the general government. There is no such thing known to our system as the destructibility of a State. Justice Miller, in the opinion delivered by the Supreme Court of the United States, in this case, says: “ The political society, which in .1796, became a State of the Union by the name of the State of Tennessee, is the same which is now represented as one of those states in the Congress of
The logical deduction from this premise is, that the legality of an act or contract of the State of Tennessee, is not to be determined by its date or the period in the existence of the State when it was made or done, but on the quality of the act or contract. It was unlawful for the State of Tennessee to engage in w.ar against the Govern - ment of the United States, and whatever she did iu carrying on or promoting the war, or in furtherance of her hostile aims and purposes, was and is, in a legal sense, void. On the other hand, all the legislation of the State, the judgments of its courts and the acts of its Executive, in short, every thing done by any of the departments of the State G-overnment, not in violation of the Constitution of the United States, or in
It logically follows, and the Supreme Court of the United States so decides, that it is just as •obligatory on the State to receive in payment of' “ taxes, or other moneys due the State,” the circulating notes of the Bank of Tennessee issued after May 6th, 1861, as those issued prior thereto, provided the same were not issued in support of the rebellion.
It follows, then, that the whole question is resolved into one of fact to be determined by a jury according to the ordinary rules of evidence.
The law presumes that the Bank of Tennessee put. into circulation the “Torbett issue” in the-ordinary course of its business for lawful purposes. The law will not presume the illegality of a transaction, but the illegality must be made to appear by proof.
The direct question to be resolved by the jury in this case is, were the two bills tendered by the plaintiff to the defendant in payment of his taxes issued by the Bank of Tennessee in aid of the rebellion ? This may be shown by proof that the identical bills were issued in aid of the rebellion, •or that the class of notes to which they belong were issued and circulated in aid of the rebellion. In either case the burden of proof is on the defendant.
On the other hand, we do not think it incumbent on the defendant to show by proof that the two bills tendered to him by' the plaintiff were actually issued by the bank in aid of the rebellion under a contract or agreement, either expressed or implied, with the State. Had the bank issued its notes and put them in circulation in aid of ’the rebellion without the knowledge, consent or procurement of the State, such a transaction would be just as obnoxious to public policy as if they had been issued under an express contract with the State. Suppose they had been issued and delivered by the bank, either voluntarily or for a consideration, to the Confederate Government, to enable it more effectually to prosecute the war, would not such a transaction have been as flagrantly illegal as to have issued them to the State for the same purpose under an express contract V
’We have already announced that because of the disagreement of the jury we are to assume for the purpose of this opinion that the “ Torbett
The bank and the State are entirely different entities. While the State owned all the -stock in the hank, appointed its officers, received the benefit of the profits it made, and dictated its management, yet it was merely a private corporation, and it is to be held .and treated accordingly. This was expressly determined by this Court in the case of Watson v. The Bank.
In considering the legality or validity of any act or contract of the • bank, we are to judge of it precisely- as we would of a private individual. That public policy which repels from the courts parties 'who seek the enforcement of contracts prohibited by law or founded in immorality, is only intended for the guilty, and by no means embraces within its reason or ’operation innocent persons who are interested in such contracts.
The facts set out in the special verdict of the-jury conclusively show that the plaintiff is an innocent holder, who purchased these notes in open market, without knowledge, on his part that they were issued in aid of the rebellion, and that, too, after the “ Torbett issue,” of which they are a part, was placed in circulation and again received
Does the same rule apply to the State? It is declared in the Fourteenth Amendment to the Constitution of the United States: “That neither the United States nor any State shall assume or pay any debt .or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slaves, but all such debts, obligations and claims ■shall be held illegal and void.”
It will be observed that corporations and individuals are not within the inhibitions of this clause of the Constitution.
In determining whether a corporation or private person is liable on a contract made in aid of the rebellion, we must look to the requirements of public policy, and be governed by the established rules of common law. In determining whether we will give effect'to the contract of a State made in aid of the rebellion, we must look beyond the ordinary rules of law to the provision of the Con
A bond of the State of Tennessee, made and executed in the usual way, if issued in aid of the rebellion, would be just as obnoxious to this clause of the Constitution in the hands oí a holder however innocent, as a bond reciting the fact on its face that it was made and executed to enable the State to carry on war against the United States. Its language is most comprehensive and was intended to absolutely prohibit, in any event, the States from carrying out, or in any way paying any such debt or executing any such contract.
The 12th section of the Bank’s charter, as already stated, is a contract of the State within the protection of the Constitution of the United States. It is in the nature of a continuing guaranty. It took effect the moment each circulating note was issued and delivered by the bank to the holder thereof. Each and every bill of the bank issued for lawful purposes, and in due course of business is embraced in this guaranty, and the obligation will rest upon the State to receive the same in payment of taxes or other moneys due it. Should it appear, however, on another trial, that the two bills of the bank tendered by plaintiff to defendant in payment of his taxes, were issued and put in circulation in aid of the l’ebellion, then the 12th section of Bank’s charter, as to these bills, would
It results from the conclusions we have reached, that the judgment must be reversed and the cause remanded for a new trial.
Clarke v. Keith.
delivered the following opinion:
The question whether the particular notes in controversy were issued and put in circulation in aid of the rebellion was material. If this fact had been found by the jury it would not have been met by the ' finding, that the plaintiff bought the notes in open market without notice. If the notes were void upon grounds of public policy, because made and put in circulation in aid of the rebéllion, then they would be void in whosesoever hands they might come.
The jury failed to agree as to whether the “ Torbett issue,” of which the notes in controversy were a part, were made and issued for an illegal purpose. They do find that there was no proof directly in reference to these particular notes.
It is clear that the question was as to these particular notes, and a finding of illegality that did not include these particular notes would be
Whatever may be said upon the effect or sufficiency of the proof on this subject, I cannot say that there was no proof for the consideration of the jury. Whatever this or any other Court may have decided upon similar evidence, it was a question for the jury in this case, the party having the right to trial by jury.