Article IX, § 10, of the Constitution of South Carolina of 1868,
forbidding, except as specially authorized in the constitution, the
issue of scrip or other evidence of state indebtedness except for
the redemption of existing indebtedness of the state, forbade the
issue of scrip under an act passed in 1872 to take up the state's
guaranty of railroad bonds under an act passed in 1868 subsequent
to the ratification of the constitution, notwithstanding that acts
had been passed in 1852 and 1854 authorizing such guaranty, it
appearing that the guaranty had not actually been endorsed on the
bonds prior to the ratification of the constitution and that the
act of 1868 was not an adjustment of an old debt, but the granting
of new aid to the railroad and the authorizing of an original issue
of bonds.
The facts are stated in the opinion.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is an action to recover land, brought by Robinson, the
defendant in error, a citizen and resident of North Carolina,
against Lee, a citizen and resident of South Carolina, on the
ground that Robinson had purchased the land at a tax sale.
Page 196 U. S. 65
The value of the land is alleged and found to be more than
$2,000. The defense is that a tender was made of the amount of the
taxes before the sale. This tender included, as a part of it,
revenue bond scrip of the State of South Carolina for five dollars,
purporting on its face to be receivable in payment of taxes, and
the question is whether the tender was good -- or, more precisely,
whether the bond scrip was receivable for taxes under the
Constitution of the United States and the Constitution and laws of
South Carolina. The circuit court held the tender bad on the double
ground that the issue of the scrip was in contravention of the
constitution of the state and that the scrip was a bill of credit
within the prohibition of Article I, § 10, of the Constitution of
the United States. 122 F. 1012. Judgment was given for the
plaintiff, Robinson, and this writ of error was brought, setting up
that the contract rights of the defendant under the Constitution of
the United States were impaired by the laws hereafter mentioned
which excluded the reception of the scrip for the tax.
Counsel other than those representing the parties was permitted
to file a brief as
amicus curiae, and urged that this was
a collusive suit. But the circuit court held that it was not, 122
F. 1010, and we accept the finding for the purposes of disposing of
the case.
The revenue bond scrip was issued under an Act of March 2, 1872,
entitled
"An Act to Relieve the South Carolina of All Liability for Its
Guaranty of the Bonds of the Blue Ridge Railroad Company, by
Providing for the Securing and Destruction of the Same."
This act purported to authorize the issue to the amount of
$1,800,000,
"which revenue bond scrip shall be signed by the state
treasurer, and shall express that the sum mentioned therein is due
by the State of South Carolina to the bearer thereof, and that the
same will be received in payment of taxes and all other dues to the
state, except special tax levied to pay interest on the public
debt."
But the supreme court of the state held that the scrip
constituted bills of credit within the prohibition of the
Constitution of the
Page 196 U. S. 66
United States, Article I, § 10.
state ex Rel. Shives v.
Comptroller General, 4 S.C. 185. The pledge of the state's
credit and the provisions for the redemption of the scrip were
repealed by the legislature, and, under the fiscal laws of the
state, the scrip had not been receivable for taxes since 1873.
We are of opinion that the issue of the scrip was forbidden by
the constitution of the state. When the scrip was issued, the
Constitution of South Carolina, ratified on April 16, 1868, in
Article IX, § 10, provided as follows:
"No scrip, certificate, or other evidence of state indebtedness
shall be issued except for the redemption of stock, bonds, or other
evidence of indebtedness previously issued, or for such debts as
are expressly authorized in this constitution."
There was also a further provision that
"any debt contracted by the state shall be by loan on state
bonds, of amounts not less than fifty dollars each, on interest
payable within twenty years after the final passage of the law
authorizing such debt."
The guaranty from which the scrip was to relieve the state was a
guaranty of bonds of the Blue Ridge Railroad Company, which was
indorsed upon them by authority of an act approved September 15,
1868. The state long had favored this road, and had held its stock.
It had authorized the guaranty of bonds in 1852, and again in 1854,
repealing the former act. But the act of 1868 recited that the
comptroller general of the state had not indorsed any of the bonds
issued under the act of 1854, and that the conditions imposed upon
such indorsement had become impossible and injudicious. So it might
be assumed from the face of the statute of 1868 that there was no
outstanding liability represented by the guaranty under that
statute, and we see no ground for doubt that the guaranty must be
considered as a new contract, made for the first time, in substance
as well as form, after the Constitution of 1868 went into
effect.
The guaranty under the act of 1868 cannot be put under the head
of "such debts as are expressly authorized in this Constitution,"
since it was not in the form required for debts
Page 196 U. S. 67
contracted under the Constitution of 1868. We are of opinion
that it equally little satisfies the other exception in Article IX,
§ 10, quoted above, of a contract made for the redemption of an
"evidence of indebtedness previously issued." Whether the word
"previously" refers to the date of the Constitution or to the date
of issuing the guaranty, the guaranty of 1868 is not, and does not
purport to be, made for the redemption of a previous evidence of
debt.
It is argued that, whether there was a liability or not, the
acts before 1868 having purported to pledge the credit of the state
to secure the bonds of the railroad company, as they did, there was
color of liability, and the act of 1868, or at any rate, the act of
1872, authorizing the bond scrip, was the adjustment of a claim
against the state under Article XIV, § 4, of the state
constitution. But the act of 1868 did not purport to be an
adjustment. On the contrary, it purported, as we have said, to give
new aid to the railroad, and to authorize an original issue. The
act of 1872, again, dealt only with the supposed liability under
the act of 1868, and provided for the satisfaction of that. If that
liability did not exist, the statute no more could ratify it than
it could call it into being. The liability for which scrip could be
issued was required by the constitution to be one existing before
the issue was made. Moreover, the act of 1872 did not purport to be
an adjustment of a matter in dispute, or an adjustment in any
sense. It simply assumed that there was an outstanding liability,
and provided for the satisfaction of it. The question is not
whether payment of the bond scrip would be valid, but whether the
bond scrip was issued under the conditions which the state
constitution imposed.
Judgment affirmed.