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
Page 81 U. S. 662
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."
"J. MENARD"
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
Page 81 U. S. 663
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
Page 81 U. S. 664
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.
Page 81 U. S. 665
MR. JUSTICE MILLER delivered the opinion of the Court.
The plaintiff in error relies upon two propositions ruled
against him by the Supreme Court of Louisiana as bringing the case
within the revisory power of this Court.
1. The first of these is that the court below decided that a
judgment in his favor, which was otherwise conceded to be a valid
prior lien, was void because the consideration of the contract on
which the judgment was rendered was Confederate money.
2. That the note under which the insurance company claimed had
been extended as to time of payment, and the mortgage given to
secure it reinscribed, without having the stamps affixed which such
agreements required.
1. In regard to the first of these propositions, this Court has
decided, in the case of
Thorington v. Smith, [
Footnote 4] that a contract was not
void because payable in Confederate money, and notwithstanding the
apparent division of opinion on this question in the case of
Hanauer v. Woodruff, [
Footnote 5] we are of opinion that on the general
principle announced in
Thorington v. Smith, the notes of
the Confederacy actually circulating as money at the time a
contract was made may constitute a valid consideration for such
contract.
The proposition involved in this conclusion, however, does
Page 81 U. S. 666
not of itself raise one of those federal questions which belong
to this Court to settle conclusively for all other courts. When a
decision on that point, whether holding such contract valid or
void, is made upon the general principles by which courts determine
whether a consideration is good or bad on principles of public
policy, the decision is one we are not authorized to review. Like
in many other questions of the same character, the federal courts
and the state courts, each within their own spheres, deciding on
their own judgment, are not amenable to each other.
Accordingly, in several cases coming here on writ of error to
the state courts where the same question of the sufficiency of
Confederate money and the sale of slaves as a consideration for a
contract was the error complained of, we have dismissed the writ
because it appeared that the state court had rested its decision on
this ground of public policy, tested by which the contract was void
when made. [
Footnote 6]
In
Bethel v. Demaret, the first of these cases, the
opinion of the supreme court of the state was expressly based on
the general doctrine and the previous decisions of that court, and
not on the constitutional provision. In the next case,
Bank of
West Tennessee v. Citizens' Bank of Louisiana, that court
speaks both of the constitutional provision and the adjudications
of that court made prior to the adoption of the article 127 of the
constitution. And as it was apparent from the record that the
judgment of the court of original jurisdiction was rendered before
that article was adopted, we could not entertain jurisdiction when
the decision in that particular point was placed on a ground which
existed as a fact and was beyond our control and was sufficient to
support the judgment, because another reason was given which, if it
had been the only one, we could review and might reverse.
In the case before us, that court said in express language that
they hold the judgment of the plaintiff in error void
Page 81 U. S. 667
because the 127th section of the state constitution declares
that it shall be so held. That article reads as follows:
"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."
This provision was made a part of the Constitution of Louisiana
after the contract now in dispute was made, and if the contract was
valid then, this provision clearly not only impairs, but absolutely
destroys, its obligation within the meaning of the tenth section of
the first article of the Constitution of the United States.
It has long been settled that under the act of Congress of 1824,
and by reason of the peculiarity of the practice in the courts of
that state, the opinions delivered by the appellate court of
Louisiana are treated by us as part of the record, and are looked
into to learn what they decided when their judgments are brought
here by writs of error. [
Footnote
7] So long as they in those opinions placed the invalidity of
this class of contracts on the ground of a public policy existing
at the time the contract was made, or so long as they left us to
infer that such was the ground, having once before so decided, the
decision presented no question over which we had any revisory
power. But when, going a step further, they expressly rest the
decision of the same question on the constitutional provision we
have quoted and on no other ground, the question necessarily arises
is that provision in conflict with the Constitution of the United
States? And the answer to this question depends solely on the
validity of the contract when made, for if valid then, the federal
Constitution protects it from all subsequent acts of state
legislation, whether in the form of constitutional or ordinary
legislative enactments. [
Footnote
8]
It may be said that since we know that the Supreme Court of
Louisiana has in other cases held this class of contracts void in
their inception, for the very reasons for which
Page 81 U. S. 668
the constitution annuls them, we are bound to follow the state
courts in that decision. But, as we have already said, this is not
the class of questions in which we are bound to follow the state
courts. It is not based on a statute of the state, or on a
construction of such a statute, nor on any rule of law affecting
title to lands, nor any principle which has become a settled rule
of property, but on those principles of public policy designed for
the protection of the state or the public, of which we must judge
for ourselves, as they do when the question is fairly
presented.
Besides, this Court has always jealously asserted the right,
when the question before it was the impairing of the obligation of
a contract by state legislation, to ascertain for itself whether
there was a contract to be impaired. If it were not so, the
constitutional provision could always be evaded by the state
courts' giving such construction to the contract, or such decisions
concerning its validity, as to render the power of this Court of no
avail in upholding it against unconstitutional state legislation.
[
Footnote 9]
These views are in precise conformity to what has been held by
this Court in the analogous subject of slaves as a consideration of
contracts made before the abolition of slavery. The case of
Palmer v. Marston, decided at this term, was a writ of
error to the Supreme Court of Louisiana on the ground that that
court had held such a contract void. And it was urged that it was
so held by that court under Section 128 of the Louisiana
Constitution, which declared contracts for slaves void in the same
terms that section 127 declared contracts for Confederate money
void; but this Court dismissed the writ of error for want of
jurisdiction because the Supreme Court of Louisiana had said in its
opinion that it did not place the decision on the constitutional
provision, but on the ground that the same principle had been
promulgated and acted on in that court before the constitutional
provision was adopted.
Page 81 U. S. 669
Yet, in the case of
Hart v. White, [
Footnote 10] in which the Supreme Court of
the State of Georgia held such a contract void by reason of a
provision in the Constitution of that state, adopted after the
contract was made, this Court entertained jurisdiction and reversed
the judgment. This was done on the ground taken in the present case
-- namely that, the contract being in our judgment valid when made,
any constitutional provision which made it void was in violation of
the federal Constitution on the subject of impairing the obligation
of contracts, and any judgment of a state court resting on such
enactment of a state constitution, after the date of the contract,
must be reversed in this Court on error.
We are of opinion for these reasons that there was error in the
Supreme Court of Louisiana in deciding that the judgment of Delmas
was void by reason of the constitutional provision of that state
concerning contracts for which Confederate notes were the
consideration.
As the case must be reversed for this reason, we might pass
without examination the question raised in regard to the necessity
of stamps on the extension of time for the payment of the note, and
on the reinscription of the mortgage, but as that may arise again
in the further progress of the case, we will dispose of it now. As
regards the latter, which is the mere act of the party who holds
the mortgage, we are at a loss to perceive any ground on which this
act of reinscription -- the same as recording a deed the second
time -- can be held to be an agreement requiring a stamp. The
assent of the mortgagor is not necessary, nor was it asked or
given. Nor do we believe it was the purpose of the Stamp Act to
hold a mere extension of the time of payment, endorsed on the note,
without any consideration for such extension, or change in any
other term or condition of the contract, to be an agreement
requiring a stamp.
In the case of
Pugh v. McCormick, [
Footnote 11] it was held that the endorsement of
a note by which the bill passed to the endorsee,
Page 81 U. S. 670
did not require a stamp, and also that a writing on the back of
the note by the endorser waiving demand, protest, and notice and
agreeing to be liable without them was good without a stamp. We
think this ample authority for holding that a gratuitous extension
of time did not require a stamp, as both the writings relied on in
that case have more of the elements of an agreement than the one
before us. In the matter of the stamp, we think the court committed
no error.
But for the error first considered the judgment is
Reversed and the case remanded for further proceedings in
conformity to this opinion.
[
Footnote 1]
13 Stat. at Large 298.
[
Footnote 2]
Code, article 909.
[
Footnote 3]
See the sections,
supra, 81
U. S. 5-6.
[
Footnote 4]
75 U. S. 8 Wall.
1.
[
Footnote 5]
77 U. S. 10 Wall.
482.
[
Footnote 6]
Bethel v.
Demaret, 10 Wall. 537;
Bank of West Tennessee
v. Citizens' Bank, supra, 81
U. S. 9;
Palmer v. Marston, supra, 81
U. S. 10;
Sevier v. Haskell, supra,
81 U. S. 12;
Jacoway v. Denton, not reported.
[
Footnote 7]
Cousin v. Blanc's
Ex., 19 How. 207;
Almonester
v. Kenton, 9 How. 9.
[
Footnote 8]
Hart v.
White, 13 Wall. 650.
[
Footnote 9]
Bridge Proprietors v.
Hoboken Co., 1 Wall. 145;
Jefferson Branch Bank v.
Skelley, 1 Black 456.
[
Footnote 10]
80 U. S. 13 Wall.
646.
[
Footnote 11]
Supra, 81 U. S. 361.
