Delmas v. Insurance Company - 81 U.S. 661 (1871)
U.S. Supreme Court
Delmas v. Insurance Company, 81 U.S. 14 Wall. 661 661 (1871)
Delmas v. Insurance Company
81 U.S. (14 Wall.) 661
1. On a writ of error to a state court, this Court cannot revise a decision founded on the ground that a contract is void on the general principles of public policy or morality when that is the only ground on which the contract is held to be void.
2. But if the decision of a state court is based upon a constitutional or legislative enactment passed after the contract was made, this Court has jurisdiction to inquire whether such legislation does not impair the obligation of the contract, and thereby violate the federal Constitution.
3. In the prosecution of that inquiry, this Court must decide for itself whether any valid contract existed where the legislation complained of was had, and in making up its judgment on that question, is not concluded by the decisions of the state court.
4. This Court is of opinion that the notes of the Confederate States, in ordinary use as money during the rebellion, might constitute a valid consideration for a contract, and that a provision in the Constitution of a
state, subsequently adopted, declaring such contracts void was an impairing of the obligation of such contract within the meaning of the federal Constitution.
5. A judgment of a state court holding such a contract void, expressly based on the constitutional provision and not on general ground of public policy, must be reversed in this Court.
J. Menard, of New Orleans, gave to one Delmas an obligation the consideration of which (as was said) was Confederate money. On this obligation Delmas obtained a judgment. Subsequent to the date of the obligation given, as above said, the State of Louisiana adopted a new constitution of government, the 127th article of which thus ordained:
"All agreements, the consideration of which was Confederate money, notes, or bonds are null and void, and shall not be enforced by the courts of this state."
So far as to Delmas and the debt to him.
The same Menard, above mentioned, gave also, May 28, 1857, to the Merchants' Insurance Company a note payable at one year and secured by mortgage. On the 16th March, 1866, the note was thus endorsed:
"The payment of this note is without novation extended to 1st of December, 1866."
The mortgage also was reinscribed, but to neither the extension of the note nor to the reinscription of the mortgage was there any stamp affixed.
The Stamp Act of June 30, 1864, [Footnote 1] it is here perhaps necessary to remind the reader, specifies in a schedule a great number of instruments of writing (not including, however, either the extension of the time of payment of a promissory note, or the "reinscription" of a mortgage) on which
stamps must be affixed, and prescribes the amount of the stamp, and says also:
"Agreements or contracts other than those specified in this schedule, 5 cents."
In this state of things, one Henderson -- having in his hands a sum of money belonging to Menard on which both Delmas and the insurance company set up respectively liens under the judgment and mortgage above mentioned -- filed a bill in one of the state courts of Louisiana in the nature of an equitable bill of interpleader to have it determined by the court to which of the claimants upon it the money should rightfully be paid. Coming in to interplead, the insurance company, on the one hand, impeached the judgment of Delmas because it was based upon a contract the consideration of which was Confederate money, and Delmas, on the other, impeached the mortgage of the insurance company because neither the extension of the note nor the reinscription of the mortgage had a stamp affixed to it.
The court where Henderson filed his bill decided both matters in favor of the insurance company, and the Supreme Court of Louisiana, where the matter went on appeal, did the same.
As respected the matter of the consideration of Delmas' note, it said (assigning no other reason):
"His judgment was based on a contract or agreement the consideration of which was Confederate money. To render the decree asked for would be to enforce a prohibited agreement. (Article 127 Constitution.)"
In thus stating the reasons of its judgment, the Supreme Court of Louisiana followed the Code of Practice of the state, which requires it to state those reasons by citing as exactly as possible the law on which it founds its opinions. [Footnote 2]
As respected the stamps, it decided that the extension of time on the note was not such an agreement as required
stamps; nor the reinscription of the mortgage either. From this decision Delmas brought the case here as within the 25th section of the Judiciary Act, [Footnote 3] alleging that the validity of the Article 127 of the Constitution of Louisiana had been drawn in question as impairing the provision of the federal Constitution forbidding any state to pass a law violating the obligation of contracts, and that the Supreme Court had decided in favor of its validity, and also because the construction of an act of Congress about stamps had been drawn in question, and that the court below had decided that it was inapplicable.