Thomas v. City of Richmond - 79 U.S. 349 (1870)
U.S. Supreme Court
Thomas v. City of Richmond, 79 U.S. 12 Wall. 349 349 (1870)
Thomas v. City of Richmond
79 U.S. 349
1. Where the issue of bills as a currency (except by banking institutions) is prohibited, a municipal corporation has no power, without express authority, to issue such bills; and if it does issue them, the holders thereof cannot recover the amount, either in an action on the bills themselves or for money had and received.
2. Especially is this so, where the receiving, as well as issuing, of unlawful bills is expressly prohibited.
3. A law authorizing and requiring the redemption of such bills, passed by the legislature of one of the late Confederate states in aid of the rebellion, cannot be recognized or enforced.
4. Semble that a bank or other private corporation issuing bills contrary to law, might be compelled to pay the holder in an action for money had and received, although the bills themselves were void, if the receiving of the bills were not expressly prohibited.
5. But if the receiving as well as issuing were prohibited, both parties would be in pari delicto, and no action could be sustained for the amount of the bills.
6. The law as to the recovery of money paid on an illegal contract stated and defined.
A statute Virginia passed in 1854, and reproduced in the code of 1860, thus enacts:
"SECTION 15. All members of any association or company that shall trade or deal as a bank or carry on banking without authority of law, and their officers and agents therein, shall be confined in jail not more than six months, and fined not less than $100, nor more than $500."
"SECTION 16. Every free person [Footnote 1] who, with intent to create a circulating medium, shall issue, without authority of law, any note or other security, purporting that money or other thing of value is payable by or on behalf of such person, and every officer and agent of such person therein, shall be confined in jail,"
"SECTION 17. If a free person pass or receive in payment any note or security, issued in violation of either of the two preceding sections, he shall be fined not less than $20 nor more than $100."
"SECTION 19. In every case where a note of a less denomination than $5 is offered or issued as money, whether by a bank, corporation, or by individuals, the person, firm, or association of persons, corporation, or body politic so issuing, shall pay a fine of $10."
By the charter of the City of Richmond, [Footnote 2] that city "may contract or be contracted with," and is endowed generally with "all the rights, franchises, capacities, and powers appertaining to municipal corporations." The charter also provides that
"The council of the city may in the name and for the use of the city contract loans and cause to be issued certificates of debt or bonds. [Footnote 3] "
In this state of things, the City of Richmond, in April, 1861, upon the breaking out of the rebellion, passed an ordinance for the issue by the city of $300,000, of corporation notes of $2, $1, 50 cents, and 25 cents, and the notes were accordingly issued, the city receiving in exchange the bank notes of the state then in circulation, between which and gold the difference at the time, compared with what it became subsequently, was small; five percent to ten percent
On the 19th March, 1862, and the 29th of the same month and year, a so-called "Legislature of Virginia," the body being composed of representatives from parts of the state in rebellion against the federal government, passed an act, by whose language the issue of the sort of notes in question was made valid, and the city obliged to redeem them.
In October, 1868, the rebellion being now suppressed, and the city refusing to pay the notes, one Thomas and others, holders of a quantity of them, brought assumpsit against the City of Richmond, in the court below, to recover certain ones which they held. The declaration contained a special count on the notes and the common money counts. The defendants pleaded the general issue and the statute of limitations. A jury being waived, the case was tried by the court, which found:
1st. That the notes were void when they were issued, because they were issued to circulate as currency, in violation of the law and policy of the state of Virginia, and
2d. That the said notes were not made valid or recoverable by the acts of the 19th March, 1862, and 29th March, 1862, or either of them, because the said acts were passed by a legislature not recognized by the United States, and in aid of the rebellion.
The court accordingly gave judgment for the defendant. To review that judgment, the case was brought here by the plaintiff.