Thorington v. Smith - 75 U.S. 1 (1868)
U.S. Supreme Court
Thorington v. Smith, 75 U.S. 8 Wall. 1 1 (1868)
Thorington v. Smith
75 U.S. (8 Wall.) 1
1. A contract for the payment of Confederate States Treasury notes, made between parties residing within the so-called Confederate States, can be enforced in the courts of the United States, the contract having been made on a sale of property in the usual course of business, and not for the purpose of giving currency to the notes or otherwise aiding the rebellion.
2. Evidence may be received that a contract payable in those states during the rebellion in "dollars" was in fact made for the payment in Confederate dollars.
3. The party entitled to be paid in these Confederate dollars can only receive their actual value at the time and place of the contract in lawful money of the United States.
In November, 1864, Thorington, being the owner of a piece of land adjoining the City of Montgomery, Alabama, sold it to Smith and Hartley, all parties being then resident of Montgomery. At the time of this sale, the late rebellion was still in active operation and had been so for more than three years. Alabama, or this part of it, was at the time in the occupation of the military and civil authorities of the rebel states, and the federal government exercised no authority there. There was no gold or silver coin in use nor any notes of the United States such as made the circulation
of the loyal portion of the country. The only currency in any ordinary use or in which current daily business could be at all carried on were Treasury notes of the Confederate States, notes in form and general aspect like bank bills, and by which the Confederate States of America promised to pay the bearer the sum named in them, "two years after the ratification of a treaty of peace between the Confederate States and the United States of America."
"The whole State of Alabama," said the testimony in the case,
"was in a revolutionary condition, politically and financially. The value of all kinds and species of property was changing from week to week and from day to day, and there was no standard of value for property. A large advance frequently took place in the price of property of different kinds within a day or two, say one hundred to two hundred percent. Speculation pervaded the whole community, and individuals asked whatever they thought proper for any and everything they had to sell. There was no standard value or regular price for real estate at the time mentioned. Prices changed with the fortunes of war. As the prospects grew dark, the prices advanced. While, however, the Confederate States Treasury notes were the general and really the only currency used in the common transactions of business, there were occasional instances where sales of property were made on the basis of gold and of notes of the United States."
The Confederate notes, though in fact imposed upon the people of the Confederate States by its government, were never declared by it to be a legal tender.
The price agreed to be paid by Smith and Hartley for the land which they purchased was $45,000. Of this sum, $35,000 were paid at the execution of the deed in Confederate States Treasury notes, and for the residue a note was executed thus:
"MONTGOMERY, November 28, 1864"
One day after date, we or either of us promise to pay Jack Thorington or bearer ten thousand dollars for value received
in real estate sold and delivered by said Thorington to us this day, as per his deed to us of this date; this note, part of the same transaction, is hereby declared as a lien or mortgage on said real estate situate and adjoining the City of Montgomery.
"W. D. SMITH"
"J. H. HARTLEY"
The rebellion being suppressed in 1865, the Confederate States Treasury notes became, of course, worthless, and Thorington, in 1867 filed a bill in the court below against his purchasers, who were still in possession, for the enforcement of the vendor's lien, claiming the $10,000 in the only money now current, to-wit, lawful money of the United States.
The answer set up by way of defense that the negotiation for the purchase of the land took place and that the note in controversy was made at Montgomery, in the State of Alabama, where all the parties resided, in November, 1864, at which time the authority of the United States was excluded from that portion of the state and the only currency in use consisted of Confederate Treasury notes, issued and put in circulation by the persons exercising the ruling power of the states in rebellion, known as the Confederate government.
It was also insisted that the land purchased was worth no more than $3,000 in lawful money; that the contract price was $45,000, that this price, by the agreement of the parties, was to be paid in Confederate notes, that $35,000 were actually paid in those notes, and that the note given for the remaining $10,000 was to be discharged in the same manner, and it was asserted on this state of facts, that the vendor was entitled to no relief in a court of the United States.
On the hearing below, a witness who negotiated the sale of the land was offered to show that it was agreed and understood that the note should be paid in Confederate States Treasury notes, as the $35,000 had been. This witness described the note, however, as one payable at thirty days.
The court below, admitting the evidence to prove that the
note was in fact made for payment in Confederate States Treasury notes, and sustaining, apparently, the view of the purchasers that the contract was illegal because to be paid in such notes, dismissed the bill.
The questions before this Court upon the appeal were these:
1. Can a contract for the payment of Confederate notes, made during the late rebellion between parties residing within the so-called Confederate States, be enforced at all in the courts of the United States?
2. Can evidence be received to prove that a promise expressed to be for the payment of dollars was in fact made for the payment of any other than lawful dollars of the United States?
3. Did the evidence establish the fact that the note for ten thousand dollars was to be paid, by agreement of the parties, in Confederate notes?
A point as to the measure of damages was also raised at the bar.
The case was twice argued.