Furman v. Nichol
75 U.S. 44 (1868)

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U.S. Supreme Court

Furman v. Nichol, 75 U.S. 8 Wall. 44 44 (1868)

Furman v. Nichol

75 U.S. (8 Wall.) 44


1. A cause can be removed from a state court into this Court under the twenty-fifth section of the Judiciary Act of 1789 whenever some one of the questions embraced in it was relied on by the party who brings the cause here, and when the right which he asserted that it gave him was denied to him by the state court, provided the record show either by express averment or by clear and necessary intendment that the constitutional provision did arise, and that the court below could not have reached the conclusion and judgment it did reach, without applying it to the case in hand.

2. It need not appear that the state court erred in its judgment. It is sufficient to confer jurisdiction that the question was in the case, was decided adversely to the plaintiff in error, and that the court was induced by it to make the judgment which it did.

3. The provision in section 12 of the charter of 1838 of the Bank of Tennessee,

"that the bills or notes of said corporation, originally made payable, or which shall have become payable on demand, in gold or silver coin, shall be receivable at the treasury of the state, and by all tax collectors and other public officers, in all payments for taxes or other moneys due to the state,"

made a contract on the part o� the state with all persons, that the state would receive for all payments for taxes or other moneys due to it, all bills of the bank lawfully issued, while the section remained in force. The guaranty was not a personal one, but attached to the note if so issued -- as much as if written on the back of it. It went with the note everywhere, as long as it lasted, and although after the note was issued, Section 12 were repealed.

4. Section 603 of the Tennessee code of 1858, which enacted that besides federal money, controllers' warrants, and wildcat certificates, the collector should receive "such bank notes as are current and passing at par," did not amount to a repeal of the above quoted 12th section; the words of the code having no words of negation, the two enactments being capable of standing together, and implied repeals not being to be favored.

5. This decision does not apply to issues of the bank while under the control of the insurgents.

Page 75 U. S. 45

In 1838 the Legislature of Tennessee chartered a bank, enacting as follows:

"A bank shall be, and is hereby established in the name and for the benefit of the state, to be known under the name and style of 'The Bank of Tennessee,' and the faith and credit of the state are hereby pledged for the support of said bank."

The capital of the bank, which was five million dollars, consisted chiefly of the school fund of the state and of surplus revenue of the federal government. The deficiency was to be made up by funds raised on the faith of the state. The dividends which the bank should make were to be applied to common schools and academies, and the bank itself was to be managed in aid of internal improvements. Any losses arising to the trust funds used to make the capital were to be made good by the state. The governor was to nominate to the general assembly, for confirmation or rejection, twelve directors, to serve for two years, as officers to manage its affairs.

The twelfth section of the charter contained this important provision:

"That the bills or notes of 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, and other moneys due to the state."

The bank went into operation with branches in different parts of the state, and was employed largely in various ways as the fiscal agent of the government.

In May, 1858, the legislature of the state passed an act to revise the statutes of the state, and so established its "code." In this code were certain enactments, thus:

"Section 603. The collector shall receive, in discharge of public

Page 75 U. S. 46

taxes and other dues to the state, besides the constitutional and lawful currency of the United States,"

"1st. Such bank notes as are current at par in this state."

"2d. Warrants issued by the comptroller."

"3d. Certificates from the county court for killing a wildcat."

"Sec. 41. All public and general acts passed prior to the present session of the General Assembly, and all public and special acts, the subject whereof are revised in this code, are hereby repealed."

"Sec. 42. Local, special, and private acts, and acts of incorporation heretofore passed, are not repealed, unless it be herein so expressed."

From the character of its organization, the newly incorporated bank was capable of being placed much under the control of the governor and legislature of the state, and at the outbreak of the late rebellion in Tennessee, May 6th, 1861, it passed into the control of the rebel agents, who then managed to possess themselves of the state government. They issued its notes to an indefinite amount, advanced immense sums to the rebel state authorities, and when the federal army were approaching with superior power, left the bank, carrying with them its coin, and all its assets, except real estate and some uncollected debts. The bank was thus ruined, and its bills became largely depreciated.

In February, 1865, the rebel powers being now driven away, the people of the state reorganized the state government, and declared, in their amended constitution, that "all notes of the Bank of Tennessee, or any of its branches, issued on or after the 6th day of May, 1861," were null and void; and an act of the legislature in the following June, repealed by express terms, the already quoted twelfth section of the chartering statute of 1838, which made the notes of the bank receivable in payment of taxes. Finally came an Act of February 16, 1866, by which the directors were directed to take in payment of debts due to it its notes,

"which were issued prior to the 6th day of May, 1861, and studiously to refuse and exclude all issues or reissues after that date; also all issues signed by G. C. Torbett; also, all reissues made after the 6th day of May, 1861, as utterly void. "

Page 75 U. S. 47

In this state of things, with these statutes, relative to the subject of the sort of money in which taxes &c., might or might not be paid upon the statute book -- and with other statutes of the state in force, which made the privilege of merchandising taxable, and enacted that anyone who wished to engage in that calling must obtain a license from the clerk of the county court where he proposed to carry on the business, and give bond that he would pay a certain percentage on the invoice cost of all goods brought into his mercantile establishment for sale during the year -- one Francis Furman, of Nashville, who had obtained, in August, 1865, from the county clerk, a license as a wholesale merchant for the ensuing year, and now purposed forming a partnership before the expiration of his license (a purpose which made it necessary for him to discharge his obligation to the state for the business of the store up to that time), appeared, on the 3d of August, 1866, before the clerk of his county, with Green, his proposed partner, and tendered to the clerk the amount due the state for taxes, in the notes and issues of the Bank of Tennessee, issued prior to the 6th of May, 1861, and tendered also the bond as required by law, and demanded that a license be issued to them as wholesale merchants. But the clerk declined to comply with this request, because these notes were depreciated, and informed the parties that he would not issue the license, unless the taxes were paid in par funds.

Thereupon Furman & Green applied to one of the circuit courts of the state for a mandamus to compel the clerk to receive their bank notes.

Their petition, after setting forth the charter of the bank, and particularly the provisions of the twelfth section, the ownership of the notes, and that they were issued in conformity with the section just named, and issued "prior to the 6th day of May, 1861," alleged the tender to the defendant, his official character, and his refusal to receive them, "because the same were not at par," and issue the license; adding that the

"said charter was a contract made with the people of the state, and every person into whose possession the

Page 75 U. S. 48

said notes and issues of the said bank might come, that the same should be received by all collectors of taxes, and in payment of all dues to the State of Tennessee, and it is not in the power of the legislature of the said State of Tennessee, to impair or annul the validity or binding force of said contract."

The petition referred to the Act of February, 1866, by which the directors were directed to take in payment of debts due to it notes issued prior to May 6, 1861, and to exclude reissues made after that day, and it made the act part of it, so far as the act might be in conflict with their rights. But the petition did not state at what time the notes had come into the bands of the petitioners.

The county clerk demurred:

1. Because the petition did not show a contract between the State of Tennessee and petitioners, or either of them, that the notes in question should be received in payment of state taxes, and

2. Because it failed to show ownership of the notes before the passage of the Tennessee code, 1858, with its section 603, or before the repealing act of 1865.

The local circuit court thought the demurrer bad and awarded the mandamus, but the supreme court of the state on appeal considered it good, and reversed that decree; the judgment having been in these words, and without any assignment of reasons.

"The court being of opinion that there is error in the judgment of the court below, in overruling the demurrer in this cause, doth order and adjudge that the said judgment be reversed, and the demurrer sustained, and the petition dismissed."

The case was now brought here on appeal, under the 25th section of the Judiciary Act, which gives this Court jurisdiction to review decrees in the highest court of the state,

"where is drawn in question the validity of the statute of, or an authority exercised under any state, on the ground of its being repugnant to the constitution, treaties, or laws of the United States, and the decision is in favor of such their validity. "

Page 75 U. S. 49

Two questions were here argued:

1. Whether under the 25th section just quoted, jurisdiction existed in this Court?

2. Whether the act of incorporation amounted to a contract with these petitioners, their petition not showing that they had themselves received the notes prior to either the statute of 1858, making the code having section 603; or the act of 1866, repealing the 12th section of the original charter.

Page 75 U. S. 55

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