McGahey v. Virginia, 135 U.S. 662 (1890)

135 U.S. 662
10 S.Ct. 972
135 U.S. 685
34 L.Ed. 304

MCGAHEY
v.
STATE OF VIRGINIA.
BRYAN
v.
SAME.
COOPER
v.
SAME.
ELLETT
v.
SAME.
CUTHBERT
v.
SAME.
In re BROWN.
HUCKLESS
v.
CHILDREY.
VASHON
v.
GREENHOW, Treasurer.
May 19, 1890.

[Syllabus from pages 662-664 intentionally omitted]
BRADLEY, J.

1

These cases, like the Virginia Coupon Cases, decided in April, 1885, and
reported in 114 U. S. 269, 5 Sup. Ct. Rep. 903, 923, 924, 925, 928, 931, 932,
962, 1020, and like Barry v. Edmunds and other cases argued at the same time,
decided in February, 1886, and reported in 116 U. S. 550, etc., 6 Sup. Ct. Rep.
501, arise upon certain tax-receivable coupons attached to bonds of the state of
Virginia, issued in reduction and liquidation of the state debt under the acts of
March 30, 1871, and March 28, 1879. The present appeals are a continuation of
the controversy arising upon said coupons as receivable and tendered in
payment of taxes and other state dues. The origin of these bonds and coupons
has been fully explained in former cases; but the proper disposition of the cases
now to be considered will be greatly facilitated by presenting a connected r
esum e of the legislative acts relating to and effecting the said securities, and of
the decisions heretofore made in reference to said acts.

2

The state debt of Virginia amounted, prior to the late civil war, to more than
$30,000,000. After the war, it became a matter of great importance to arrange
this debt in such manner as to bring it within the control and means of the state.
West Virginia had recently been separated from the parent state, and had
participated in the advantages of the money raised by the issue of the state
securities. It was supposed by those who were best qualified to know the facts
that at least one-third o th e state resources was lost by this excision of territory,
and the legislature of Virginia deemed it nothing more than equitable that the
new state should bear one-third of the state debt. A proposition was therefore
made to the bondholders of the state to receive two-thirds of the amount due
them in new bonds, payable 34 years after date, with coupons, attached thereto,
receivable, after becoming due, in payment of taxes and other claims and
demands due to the state. This scheme was formulated by the act of March 30,
1871, entitled 'An act to provide for the funding and payment of the public
debt,' and was acquiesced in by the public creditors, or the great majority of
them, who accepted and received the bonds provided for in the act, which were
looked upon as a favorite security, in consequence of the value attached to the
coupons as legal-tender instruments in the payment of taxes and public dues.
The act, among other things, provided as follows: 'Sec. 2. The owners of any of
the bonds, stocks, or interest certificates heretofore issued by this state, which
are recognized by its constitution and laws as legal, [except certain specific
securities named,] may fund two-thirds of the amount of the same, together
with two-thirds of the interest due or to become due thereon to the first day of
July, 1871, in six per centum coupon or registered bonds of this state, * * * to
become due and payable in thirty-four years after date, but redeemable * * *
after ten years, the interest to be payable semi-annually on the first days of
January and July in each year. The bonds shall be made payable to order or
bearer, and the coupons to bearer, and registered bonds payable to order may be
exchanged for bonds payable to bearer, and registered bonds may be exchanged
for coupon bonds, or vice versa, at the option of the holder. The coupons shall
be payable semi-annually, and be receivable at and after maturity for all taxes,

debts, dues, and demands due the state, which shall be expressed on their face.
* * *' Provision was made in the third section of the act for the issue of
certificates for one-third part of the debt which was not funded in said bonds,
the payment of which certificates, it was declared, would be provided for in
accordance with such settlement as should thereafter be had between the states
of Virginia and West Virginia in regard to the public debt of the state existing
at the time of its dismemberment. By the fourth section the treasurer was
authorized and directed to cause to be prepared, engraved, or lithograped,
registered bonds, and bonds with coupons, and certificates of the character
mentioned in the second and third sections, and, when prepared, to commence
the issuance of the same. It was further enacted that the bonds and certificates
should be signed by the treasurer, and countersigned by the auditor; that the
coupons should be signed by the treasurer, or that a fac simile of his signature
should be stamped or engraved thereon. The bonds were to be issued in series,
and those of each series to be numbered from 1 upwards, as issued; and the
coupons, in addition to the number of the bond to which they were attached,
were to be numbered from 1 to 67. The surrendered bonds were to be canceled,
and deposited in the office of the state treasurer. By section 5, certain assets
belonging to the state, when realized or converted into money, were to be paid
into the treasury to the credit of a sinking fund created for the purchase and
redemption of the bonds issued under the act; and after 1880, inclusive, a tax of
2 cents on $100 of the assessed valuation of all property in the state was to be
applied in like manner. The treasurer, the auditor of public accounts, and
second auditor were appointed commissioners of the sinking fund.
3

It has always been contended on the part of the bondholders that this statute
created a contract between them and the state, firm and inviolable, which the
legislature had no constitutional right to violate orimp air; and such was for
several years the uniform holding of the supreme court of appeals of Virginia.
See Antoni v. Wright, 22 Grat. 833, (November term, 1872;) Wise v. Rogers,
24 Grat. 169; Clarke v. Tyler, 30 Grat. 134. A different view, however, has
since been taken by the court of appeals, which now holds that the act of 1871
was unconstitutional from its inception, being repugnant to certain provisions
of the contitution of the state adopted in 1869. An elaborate argument to this
effect is contained in the opinion of the court rendered in one of the cases now
before us. Vashon v. Greenhow, [81 Va. 336,] decided January 14, 1886. In
ordinary cases the decision of the highest court of a state with regard to the
validity of one of its statutes would be binding upon this court; but, where the
question raised is whether a contract has or has not been made, the obligation of
which is alleged to have been impaired by legislative action, it is the
prerogative of this court, under the constitution of the United States and the act
of congress relating to writs of error to the judgments of state courts, to inquire
and judge for itself with regard to the making of such contract, whatever may
be the views or decisions of the state courts in relation thereto.

4

The decisions of this court, therefore, in reference to the question whether a
valid contract was made by the statute in question between the state of Virginia,
and the holders of the bonds authorized by said act, are to be considered as
binding upon us, although a contrary view may have been taken by the courts
of Virginia; and in view of this principle of constitutional law, and of the
decisions made by this court, we have no hesitation in saying that the act of
1871 was a valid act, and that it did and does constitute a contract between the
state and the holders of the bonds issued under it, and that the holders of the
coupons of said bonds, whether still attached thereto or separated therefrom, are
entitled, by a solemn engagement of the state, to use them in payment of state
taxes and public dues. This was determined in Hartman v. Greenhow, 102 U. S.
672, (decided in January, 1881;) in Antoni v. Greenhow, 107 U. S. 769, 2 Sup.
Ct. Rep. 91, (decided in March, 1883;) in the Virginia Coupon Cases, 114 U. S.
269, 5 Sup. Ct. Rep. 903, 923, 924, 925, 928, 931, 932, 962, 1020, (decided in
April, 1885;) and in all the cases on the subject that have come before this court
for adjudication. This question, therefore, may be considered as foreclosed, and
no longer open for consideration. It may be laid down as undoubted law that
the lawful owner of any such coupons has the right to tender the same after
maturity in absolute payment of all taxes, debts, dues, and demands due from
him to the state. The only question of difficulty which can arise in any case is as
to the mode of relief which the owner of such coupon is entitled to in case they
are refused when properly tendered in making his payment, or as to the cases
which may be excepted from the operation of his right; for, almost from the
start, the legislature of Virginia has from time to time enacted various laws
calculated to embarrass the holders of said coupons in the free use of them for
the payment of taxes and other dues. As early as March, 1872, an act was
passed prohibiting the officers charged by law with the collection of taxes from
receiving in payment anything else than gold and silver coin, United States
treasury notes, and notes of the national banks, and repealing all other acts
inconsistent therewith. This law was under consideration in the case of Antoni
v. Wright, 22 Grat. 833, before referred to; and the supreme court of appeals of
Virginia decided that in issuing these bonds the state entered into a valid
contract with all persons taking the coupons to receive them in payment of taxes
and state dues, and that the act of 1872, so far as it conflicted with this contract,
was void. In Clarke v. Tyler, 30 Grat. 134, (decided in 1878,) it was said that
this decsio n in Antoni v. Wright 'must be held to be the settled law of this
state.'

5

By an act passed March 25, 1873, it was declared that every officer charged
with the collection of taxes should deduct from the matured coupons which
might be tendered to him in payment of taxes, or other dues to the state, the tax
upon the bonds from which the coupons were cut, which tax was decared to be
50 cents on the $100 market value of said bonds. This law was repeated in the
act of 1876, and bore oppressively upon the holders of the coupons, inasmuch
as it compelled them to pay the tax due on bonds of which they were not the
owners, and of the owners of which they had no knowledge. It was a clear
impairment of the obligation of the contract with the holders of the coupons.
The validity of this act came before this court for consideration in the case of
Hartman v. Greenhow, 102 U. S. 672, and it was held to be unconstitutional.
Mr. Justice FIELD, speaking for the court in that case, said: 'We are clear that
this act of Virginia of 1876, requiring the tax on her bonds issued under the
funding act of March 30, 1871, to be deducted from the coupons originally
attached to them, when tendered in payment of taxes or other dues to the state,
cannot be applied to coupons separated from the bonds, and held by different
owners, without impairing the contract with such bondholders contained in the
funding act, and the contract with the bearer of the coupons.'

6

By an act of the legislature of Virginia approved on the 28th of March, 1879,
another plan for the settlement of the public debt was promulgated. By the first
section it was enacted 'that, to provide for funding the debt of the state, the
governor is hereby authorized to create bonds or the state, registered and
coupon, dated the 1st day of January, 1879, the principal payable forty years
thereafter, bearing interest at the rate of three per cent. per annum for ten years,
and at the rate of four per centum per annum for twenty years, and at the rate of
five per centum for ten years, payable in the cities of Richmond, New York, or
London, as hereinafter provided, on the 1st days of July and January of each
year, until the principal is redeemed.' 'The coupons on said bonds shall be
receivable at and after maturity for all taxes, debts, dues, and demands due the
state, and this shall be expressed on their face. The holder of any registered
bond shall be entitled to receive from the treasurer of the state a certificate for
any interest thereon due and unpaid, and such certificate shall be receivable,
etc. All obligations created under this act shall be forever exempt from all
taxation, direct or indirect, by the state or by any county or corporation therein;
and this shall be expressed on the face of the bonds.' 'The bonds hereby
authorized shall be issued only in exchange for the outstanding debt of the state,
as hereinafter provided.' Bonds were issued under this act in conformity with its
requirements, and some of the coupons thereon are the subject of controversy in
one or more of the suits now before us for consideration. The questions relating
to their receivability for taxes and other public dues, and to the validity of
subsequent laws passed in derogation or obstruction thereof, are the same as
those which arise under like circumstances upon the coupons of the bonds
issued under the act of 1871.

7

At the session of the general assembly held in 1882 still another scheme for
funding and reducing the state debt was formulated by an act approved
February 14th, of that year, which specified the amount of each class of
indebtedness supposed to be obligatory upon the state of Virginia in relation to
the corresponding obligation of the state of West Virginia, and the rate of
percentage at which new bonds were proposed to be issued to the public
creditors according to the different classes of the debts. These new bonds were
to be dated July 1, 1882, and payable July 1, 1892, with interest at 3 per cent.
per annum. The commissioners of the sinking fund were authorized to issue
them either as registered or coupon bonds, but no security was proposed for the
payment of the bonds or coupons except the pledged faith of the state. This act
was called the 'Riddleberger Act,' and was declared to be the final proposition
which the state would make to its creditors. Of course, it was not to be expected
that those who held bonds issued under the acts of 1871 or 1879, with coupons
invested with the quality of legal tender for the payment of taxes and other
public dues, would willingly surrender their bonds in exchange for the bonds to
be issued under the Riddleberger act; and for the purpose, apparently, of
creating motives to induce such bondholders to make the exchange, several
ancillary bills were passed at the same session, calculated to discourage and
hamper the use of the tax-paying coupons of 1871 and 1879. One of these bills,
approved the 14th of January, 1882, (recited in full in Antoni v. Greenhow, 107
U. S. 771-774, 2 Sup. Ct. Rep. 91,) required that whenever any tax-payer
should tender to any person whose duty it was to collect or receive taxes, debts,
or demands due the commonwealth, any papers purporting to be coupons
detached from bonds of the commonwealth issued under the act of 1871, in
payment of any such taxes, debts, and demands, the person to whom such
papers were tendered should receive the same, giving the party tendering a
receipt stating that he had received the same for the purpose of identification
and verification, but that he should at the same time require such tax-payer to
pay his taxes in coin, legal-tender notes, or national bank bills, and give him a
receipt therefor. In case of his refusal to pay, the taxes should be collected as all
other delinquent taxes were collected. The act then provided for a proceeding
in the county court or hustings court of the city to ascertain whether the
coupons tendered were genuine legal coupons receivable for dues or not. This
proceeding was to be instituted by the petition of the tax-payer, and defended
by the commonwealth's attorney, and the matter was to be tried by jury. If the
decision should be in favor of the tax-payer, the judgment was to be certified to
the treasurer, who thereupon was required to receive the coupons for taxes, and
refund the morey paid by the tax-payer out of the first money in the treasury.
The law further provided that, if any tax-payer should apply for a mandamus to
compel the collector to receive his coupons for taxes, a similar proceeding
should take place for the purpose of ascertaining the identity and validity of the
coupons, and, when found to be genuine, a mandamus might issue. The
suggestion upon which this law was based, as recited in the preamble thereof,
was that many spurious, stolen, and forged bonds were in circulation, which

made it imprudent to receive coupons in payment of taxes without an
investigation first had with regard to their genuineness and validity. It is
apparent that such a cumbrous mode of proceeding was a very awkward
substitute, so far as the tax-payer was concerned, for the reception of his
coupons as so much money when presented.
8

Another act, approved on the 26th of January, 1882, provided that, in case of
proceedings instituted against a tax-payer for the collection of his tax,
notwithstanding his tender of coupons in payment thereof, he should be
authorized to pay the tax under protest, in lawful money, and might within 30
days thereafter sue the officer for the amount, and, if it should be determined
that it was wrongfully collected, the amount should be returned; and it was
declared that no writ of injunction, supersedeas, mandamus, prohibition, or
other writ whatever, should be issued to hinder or delay the collection of tax.

9

Another act, approved on the 7th of April in the same year, changed the general
law of mandamus to coincide with the provisions of the act of January 26th.

10

The validity of these acts came before this court for consideration n t he case of
Antoni v. Greenhow, and the question in that case was whether they so far
affected the remedy of the holder of coupons as to impair the obligation of the
contract made by the state to receive them for taxes and other dues. This was
the general question presented, although it is true that the particular question in
that case was whether the proceeding by mandamus to compel the acceptance
of the coupons in payment of taxes and other dues was unconstitutionally
obstructed. The case was instituted by Antoni, a tax-payer, by a petition to the
supreme court of appeals of Virginia for a mandamus against Greenhow, the
treasurer of the city of Richmond, to compel him to accept a coupon tendered
by the petitioner in part payment of his taxes. The treasurer answered that he
was ready to receive the coupon as soon as it had been legally ascertained to be
genuine, and by law receivable, referring, of course, to the law as it then stood,
prescribing the special proceedings before mentioned for ascertaining the
genuineness and validity of coupons. To this answer a demurrer was filed.
Upon the hearing the court was equally divided on the questions involved, and
denied the writ. The judgment was brought by writ of error to this court, and
the precise question was whether the acts of 1882 unconstitutionally impeded
the remedy by mandamus. The court, in discussing the question, discussed the
general effect of the said statutes, and came to the conclusion that they did not
interpose any material obstructions to the proceeding, so as to be obnoxious to
the charge of impairing the obligation of the contract. Under all the obstacles
with which the holders of coupons now had to contend in utilizing those
instruments in the payment of taxes and public dues, (the only way in which
any satisfaction thereof could be obtained,) they still succeeded in disposing of
many of them; and more stringent legislation was finally resorted to, for the

evident purpose of suppressing their use altogether. In the session of 1884,
several acts of the general assembly were passed to this end. By an act
approved March 12, 1884, it was made the duty of the attorneys for the
commonwealth to defend the suits brought by tax-payers, and, if decided
against the commonwealth, to carry the case to the higher courts by appeal; to
defend all suits brought in the federal courts; and to carry judgments against the
commonwealth or the collector of taxes by appeal to the supreme court of the
United States. An act approved March 13, 1884, declared that no action of
trespass or on the case should be brought or maintained against any collecting
officer for levying upon the property of any tax-payer who had tendered in
payment, in whole or in part, any coupons cut from bonds of the state for such
taxes, and who should refuse to pay his taxes in gold, silver, United States
treasury notes, or national bank notes. Another act, approved on the 15th of
March, 1884, required all licenses to be paid in lawful money of the United
States. Still another act, approved March 19, 1884, required that all coupons
received for taxes beyond what they would have been exchanged for under the
Riddleberger act, should be charged to the bond from which they were clipped
as a payment on the principal of the bond. Finally, by the tax act approved
March 15, 1884, (section 65,) it was declared that no person should sell taxreceivable coupons from bonds of the state of Virginia without a special license,
for which privilege he should pay $1,000 for each office or place of business
kept for that purpose, and in addition thereto a tax of 20 per centum upon the
face value of all tax-receivable coupons sold by him, and should give to the
purchaser a certificate stating that he had sold such coupons to the purchaser,
naming him, and specifying the number and amount of the coupons and date of
sale; and, whenever such coupons should be tendered for taxes, the broker's
certificate should be delivered to the collector. This section was subsequenly
amended by an act passed May 23, 1887, so as to include in the prohibition not
only the selling, or offering to sell, tax-receivable coupons, but the tendering,
passing, or offering to tender or pass for another any such coupons, without a
special license therefor; and the license fee was made $1,000 for the privilege
of selling, or offering to sell, coupons in each county, city, or town of over
10,000 inhabitants, and $500 for each county, city, or town of under 10,000
inhabitants, and the privilege was confined to selling, tendering, and passing
such coupons to tax-payers residing, or owning property subject to tax, within
the county, city, or town in which the license was obtained; and it was declared
that any person violating this provision should be deemed guilty of a
misdemeanor, and upon conviction should be fined, at the discretion of a jury,
not less than $500 nor more than $2,000. Section 91 declared that every
attorney at law should pay an annual license fee of $15 if under five years'
practice, and $25 if over five years' practice, but that no attorney thus licensed
should be allowed to bring suit against the commonwealth, or any treasurer or
collector of taxes, for the recovery of money for coupons tendered for taxes,
unless he took out a special license therefor, for which privilege he should pay a
specific license tax, in addition to the tax before required, of $250.

11

In April, 1885, after the passage of these various acts, the Virginia Coupon
Cases, so called, reported in 114 U. S. 266, et seq., 5 Sup. Ct. Rep. 903, 923,
924, 925, 928, 931, 932, 962, 1020, came before this court for consideration.
There were eight of these cases. One of them (Poindexter v. Greenhow, the
leading case in the report) was an action of detinue, brought by Poindexter, a
tax-payer, against Greenhow, treasurer of Richmond, for a desk of the plaintiff,
of the value of $30, seized and taken by Greenhow on the 25th or April, 1883,
for the purpose of raising the taxes due from the plaintiff after he had tendered
coupons in payment thereof. Upon an agreed statement of facts, no dispute
being raised as to the genuineness of the coupons, judgment was given in the
hustings court of Richmond for the defendant, on the ground that the plaintiff
should have paid his tax in lawful money, and pursued the remedy pointed out
in the acts of 1882. As this was the highest court in the state in which a decision
in the case could be had, the judgment was brought by writ of error to the
supreme court of the United States; and the question was now directly raised
whether the restraining acts passed by the legislature of Virginia were of such
force and validity as to prevent the taxpayer from suing the collecting officer
for taking his goods in satisfaction of taxes after a tender of coupons for the
payment thereof, without adopting the proceedings required by the said acts.
This court held that the acts were unconstitutional so far as they prohibited the
collector or receiver of the taxes from accepting coupons issued under the act of
1871 in payment of taxes, according to the contract contained in said act, and
imposed upon the tax-payer the circuitous and onerous proceeding of
establishing the genuineness of his coupons in court; that the tender of the
coupons was equivalent to the tender of legal money in payment of the tax, and
exonerated the tax-payer from further molestation in respect thereof; and that,
if he continued to hold himself in readiness to pay said tax in the coupons
tendered, his* property could not lawfully be taken in satisfaction of the same.
The court distinguished this remedy of the tax-payer from that which was in
question in the case of Antoni v. Greenhow, in that in the latter case the
proceeding by mandamus alone was under consideration, and that from of
proceeding for relief was held not to be materially obstructed by the acts of
1882; and it was held that nothing in the decision of that case concluded the
rights of tax-payers and coupon holdersin reference to other remedies which the
law gave them for the unlawful seizure of their property in satisfaction of the
tax, after having duly tendered coupons in payment thereof. Therefore, without
expressly overruling the case of Antoni v. Greenhow, the court decided that the
acts referred to were unconstitutional, so far as they had the effect of depriving
the tax-payer of his remedy by detinue or trespass or case, or other proper
action, for unlawful seizure of his goods after tendering tax-receivable coupons
in payment of his taxes. The judgment of the hustings court was therefore
reversed. The question was very fully and elaborately discussed by Mr. Justice
MATTHEWS in delivering the opinion of the court, although there was a
dissenting opinion on the part of the chief justice and three of the associate
justices.

12

Two other of the coupon cases (White v. Greenhow and Chaffin v. Taylor)
were cases of trespass for taking the property of the tax-payers in payment of
taxes after they had tendered coupons in payment thereof, and were in all
substantial respects similar to the case of Poindexter v. Greenhow, and were
decided in the same way. In olne of them (Chaffin v. Taylor) the act of March
13, 1884, which expressly forbids an action of trespass or case against a
collecting officer, was referred to and relied on by the defendant in the action.

13

A fourth case, that of Allen v. Railroad Co., auditor of accounts of the state of
Virginia, was a bill for injunction, filed in the circuit court of the United States,
to prevent the defendant from seizing the cars and other personal property of
the complainant in satisfaction of taxes alleged to be due, for the payment of
which the railroad company had tendered tax-paying coupons. An injunction
was granted by the circuit court to prevent the seizure of the complainant's
property, and the decree was affirmed by this court upon the same grounds
which were taken in the case of Poindexter v. Greenhow.

14

The fifth case (Carter v. Greenhow) was an action brought in the circuit court
of the United States, and founded upon section 1979 of the Revised Statutes of
the United States, by which every person who, under color of any statute, etc.,
of any state or territory, subjects a citizen of the United States, or other person
within the jurisdiction thereof, to the deprivation of any rights, privileges, or
immunities secured by the constitution and laws of the United States, shall be
liable to the party injured in an action at law, suit in equity, or other proper
proceeding for redress. The plaintiff in said action set forth that in May, 1883,
he tendered certain tax-paying coupons of the state, in payment of taxes due
from him, to the defendant Greenhow, treasurer of the city of Richmond, who
refused to receive the same in payment, and unlawfully entered upon plaintiff's
premises, and seized and took certain property of the plaintiff, to sell the same
in payment of said taxes; that the plaintiff had a right, under the constitution of
the United States, to pay his said taxes in the coupons referred to, and the
defendant refused to receive the same under the color of, and by the command
of, the act of assembly of the state of Virginia, approved January 26, 1882,
which forbids collectors of taxes due the state to receive in payment thereof
anything except gold, silver, etc.; and that he levied on said property under the
command of the eighteenth section of another act of assembly, approved April
1, 1879, and of other statutes enacted by the general assembly of the state of
Virginia, which statutes he alleged to be repugnant to the constitution of the
United States, and void. The amount of damages claimed in the action was less
than $500, and therefore was not within the jurisdiction of the circuit court of
the United States, unless it should be sustained by the section of the Revised
Statutes referred to. Judgment was given for the defendant, and was affirmed
by this court on the ground that the case did not come wthi n section 1979,
because the right claimed was not one of the rights referred to in that section.

15

The sixth case (Pleasants v. Greenhow) was a bill for injunction, filed in the
circuit court of the United States, to restrain the defendant Greenhow from
levying on plaintiff's property for taxes after coupons were tendered therefor.
The amount of taxes being less than $500, relief was prayed for on the same
ground, or deprivation of rights, which was preferred as the cause of action in
the case of Carter v. Greenhow. The bill was dismissed by the circuit court, and
its decree was affirmed by this court for the same reason which prevailed in
that case.

16

The seventh case was Marye v. Parsons. Parsons, a citizen of New York, filed a
bill in equity in the circuit court of the United States against Marye, auditor of
the commonwealth of Virginia; Greenhow, treasurer of the city of Richmond;
Hill, treasurer of the city of Norfolk; Dunnington, treasurer of the city of
Lynchburg; Munford, commissioner of revenue of Richmond; Price,
commissioner of Lynchburg; and Langley, commissioner of Norfolk. He
alleged that he was the owner of a large amount of coupons cut from bonds of
Virginia issued under the act of 1871, and receivable by that act in payment for
taxes, debts, and demands due the state, a list of which coupons was appended
to the bill. He claimed that they constituted a contract with the state, and, after
setting forth the laws which had been passed by the state of Virginia for
preventing or interfering with the use of such coupons in the payment of taxes
and other state dues, which laws he alleged to be unconstitutional and void, he
prayed that the defendants, as officers of the state, might be compelled
specifically to perform the contract of the state with regard to said coupons, and
to receive them in payment of taxes and other dues, and that a mandatory
injunction for that purpose might be issued. The defendants filed a demurrer,
plea, and answer to the bill; and a perpetual injunction, as prayed for, was
awarded by the circuit court. The complainant did not allege that he owed any
taxes or other demands to the state of Virginia for which he had offered
coupons in payment, but his ground of action was that the coupons held by him
were valueless so long as the officers of the state, in obedience to its laws,
refused to receive such coupons in payment of taxes, and hence he sought the
relief prayed for in his bill. This court reversed the decree of the circuit court,
holding that the injury complained of was of an abstract nature, damnum
absque injuria, and that the bill should have been dismissed on that ground, and
that none but tax-payers, or those who are indebted to the state upon some other
claim or demand, are in a position to complain of the refusal of the officers of
the state to receive coupons in payment of such taxes and demands.

17

The remaining case was that of Moore v. Greenhow, being a petition for a
mandamus to compel the defendant to receive coupons in payment of a license
tax as a sample merchant; the petitioner not having pursued the course pointed
out by the act of January 14, 1882, for establishing the genuineness of the
coupons tendered by him. The petition was denied by the circuit court of
Richmond; and its decision was affirmed, in conformity with the conclusion
arrived at in the case of Anotoni v. Greenhow, that the act of January 14, 1882,
as applicable to the remedy of mandamus, did not violate the constitution of the
United States.

18

Several other coupon cases came before this court in October term, 1885, and
were decided in February, 1886. They were Barry v. Edmunds, 116 U. S. 550, 6
Sup. Ct. Rep. 501; Chaffin v. Taylor, 116 U. S. 567, 6 Sup. Ct. Rep. 518;
Royall v. Virginia, 116 U. S. 572, 6 Sup. Ct. Rep. 510; and Sands v. Edmunds,
116 U. S. 585, 6 Sup. Ct. Rep. 516. These cases do little more than repeat the
views of the court contained in the Coupon Cases decided in the previous year,
except, perhaps in deciding, in the case of Royall v. Virgina, that the license tax
of a practicing lawyer was a tax within the meaning of the act of 1871, and
payable in coupons attached to bonds issued under that act.

19

In another case (Royall v. Virginia, 121 U. S. 102, 7 Sup. Ct. Rep. 826) it
appeared that an information was filed against Royall for practicing as a lawyer
without first having obtained a revenue license. He pleaded payment of the
license fee partly in a coupon cut from a bond issued under the act of 1871, and
partly in cash. The commonwealth demurred to this plea, and it was held that
the demurrer admitted that the coupon was genuine, and bore on its face the
contract of the state to receive it in payment of taxes, etc., and that this showed
a good tender, and brought the case within the ruling in Royall v. Virginia, 116
U. S. 572, 6 Sup. Ct. Rep. 510.

20

In the session of the general assembly of Virginia of 1886, several additional
acts were passed, all having for object the imposition of further obstructions
and impediments in the way of using the tax-paying coupons. An enumeration
of these acts, with a general indication of their purport, is all that it is necessary
to state. By the act of January 21, 1886, it was declared that expert evidence
shall not be received of the genuineness of any paper or instrument made by
machinery, or in any other manner than by the actual or personal handwriting of
the party to be charged, or his agent. By the act of January 26, 1886, it was
declared that, in the trial of any issue involving the genuineness of a coupon
purporting to have been cut from any bond authorized by law to be issued by
the state, or by any city, county, or corporation, the defendant may demand the
production of the bond, and thereupon it shall be the duty of the plaintiff to
produce such bond, with proof that the coupon was actually cut therefrom. On
the same day another act was passed, declaring that any person who shall

solicit or induce any suit or action to be brought against the state of Virginia, or
any citizen thereof, by verbal representations or by writing or printing, shall be
deemed guilty of the offense of champerty, and subject to fine and
imprisonment. By the act of March 1, 1886, it was declared that any person
licensed to practice law in Virginia who shall solicit or induce any suit or action
to be brought against the state, or any citizen thereof, by verbal representations,
or by writing or printing, shall be deemed guilty of barratry; and, if found
guilty, it is made the duty of the court to revoke his license, and disbar him
forever from practicing law in the commonwealth. By an act of March 4, 1886,
it was declared that all license fees required for the transaction of any business
in the state shall be paid in coin, legal-tender notes, or national bank bills; and,
if coupons shall be tendered in payment thereof, they shall be received by the
officer for identification by the proceedings prescribed in the act of 1882, but
no license shall issue to the applicant, nor shall he have the right to conduct
business or pursue his profession until said coupons have been verified in the
manner prescribed by said act; and by another act, passed February 27, 1886, it
was declared that after the 1st day of July, 1888, no petition shall be filed, or
other proceeding instituted, to try the question whether any paper purporting to
be a coupon detached from any bond of the state is genuine, and legally
receivable for taxes and other state dues, except within one year from said 1st
day of July, 1888, if such coupon first became receivable prior to that time, and
within one year from the time the coupon becomes receivable, if it becomes
receivable after that date. This law became incorporated in the Code of 1887 as
section 415. Finally, as, according to the decisions of this court in 1885 and
1886, the collecting officers were liable to action for proceeding against the
property of the tax-payers who had tendered coupons in payment of their taxes,
on the 12th of May, 1887, an actwas passed authorizing suits to be brought
against such tax-payers for taxes due from them, which suits were to be in the
name of the commonwealth, and to be commenced by a notice served on the
party liable for the tax, or on the agent of such party who may have tendered
the coupons. It the defendant relies upon the tender of coupons as payment, he
shall plead the same specifically in writing, and file the coupons tendered with
the clerk; and the burden of proving the tender and genuineness of the coupon
shall be on the defendant. If established, the judgment shall be for the
defendant on the plea of tender. If the defendant fail in his defense, there shall
be judgment for the commonwealth for the taxes due, and interest and costs,
and execution shall issue thereon as in other cases; and, if judgment be against
the defendant, a fee of $10 is allowed to the attorney for the commonwealth as
part of the costs in the case, but the commonwealth is not to be liable for any
fees or costs. The act is set forth in full in the case In re Ayers, 123 U. S. 451, 8
Sup. Ct. Rep. 164. Since the passage of this act the cases In re Ayers, In re
Scott, and In re McCabe, Id., have come before this court for consideration.
They were decided in December, 1887. These cases came before us on
applications for habeas corpus directed to the marshal of the United States for
the eastern district of Virginia, who held the applicants,—one of them the

attorney general of Virginia, another the auditor of the state, and the third the
commonwealth's attorney for Loudoun county,—who had been committed for
contempt by the circuit court of the United States for disobedience to a
restraining order. The case in which said order was made was this: James P.
Cooper and others, subjects of Great Britain, filed their bill of complaint in the
circuit court of the United States for the district aforesaid against Marye,
auditor of the state of Virginia, Ayers, attorney general therof, and the
treasurers of counties, cities, and towns in the state, and the commonwealth's
attorneys of counties, cities, and towns therein, in which bill it was alleged,
among other things, that the complainants, on the faith of the decisions of this
court that the state of Virginia could not impair the value of the coupons issued
under the acts of 1871 and 1879 as a tender for taxes, had bought a large
quantity of said coupons in open market in London and elsewhere, amounting to
more than $100,000, for the purpose of selling said coupons to the tax-payers
of Virginia, believing that they would be able to sell them at considerable
advance. The bill then set forth the act of assembly of May 12, 1887,
authorizing and requiring suits to be brought in the name of the commonwealth
against tax-payers who should have tendered coupons in payment of their taxes.
It further alleged that this act is repugnant to the constitution of the United
States, for the reason that, taken in connection with the act of January 26, 1882,
it first commands the state's officers to refuse to receive those coupons, and
then commands them to bring suits against those who have tendered them, as
well as against those who have tendered spurious coupons; that it imposes upon
the defendants heavy costs and fees, etc. It further set out the provisions of
various other acts, before referred to, tending to embarrass the holders of
coupons in the use of the same, and in the proceedings for establishing their
genuineness. The bill prayed that the defendants might be restrained and
enjoined from bringing or commencing any suit provided for by the said act of
May 12, 1887, or from doing any other act to put said statute into force and
effect, and that until the hearing of a motion for said injunction a restraining
order might be made to that effect. A restraining order was accordingly made
by the court in pursuance of the prayer of the bill, and it was for disobedience
to this order that the parties in the Cases of Ayers, Scott, and McCabe were
committed for contempt. This court, after a very full and careful examination of
the questions arising in the cases, decided that the suit of Cooper and others
against Marye, Ayers, and others, in which the said restraining order and order
of commitment for contempt were made, was virtually, and in effect, a suit
against the state of Virginia, and therefore in violation of the eleventh
amendment of the constitution of the United States, which declares that the
judicial power of the United States shall not be construed to extend to any suit
in law or equity commenced or prosecuted against one of the United States by
citizens of another state, or by citizens or subjects of any foreign state; and the
judgment of the court was that the circuit court had no jurisdiction to entertain
said suit, and that its acts and proceedings were void; and the petitioners, Ayers,
Scott, and McCabe were discharged. The cases in which the question has been

considered in this court as to when a proceeding against the officers of a state
may be considered as a proceeding against the state itself, or only as a
proceeding against the officers for a violation of a clear duty imposed upon
them by law, were carefully reviewed and distinguished in the elaborate
opinion of the court delivered by Mr. Justice MATTHEWS, and may be
referred to as throwing much additional light upon that vexed and interesting
question; but it is particularly referred to here, in connection with the other
cases cited, for the purpose of showing the conditions, circumstances, and
aspects in which the questions arising on these tax-paying coupons have
presented themselves to the court.
21

Without committing ourselves to all that has been said, or even all that may
have been adjudged, in the preceding cases that have come before the court on
the subject, we think it clear that the following propositions have been
established: First. That the provisions of the act of 1871 constitute a contract
between the state of Virginia and the lawful holders of the bonds and coupons
issued under and in pursuance of said statute. Second. That the various acts of
the assembly of Virginia passed for the purpose of restraining the use of said
coupons for the payment of taxes and other dues to the state, and imposing
impediments and obstructions to that use, and to the proceedings instituted for
establishing their genuineness, do in many respects materially impair the
obligation of that contract, and cannot be held to be vaild or binding in so far as
they have that effect. Third. That no proceedings can be instituted by any
holder of said bonds or coupons against the commonwealth of Virginia, either
directly, by suit against the commonwealth by name, or indirectly, against her
executive officers, to control them in the exercise of their official functions as
agents of the state. Fourth. That any lawful holder of the tax-receivable
coupons of the state issued under the act of 1871, or the subsequent act of 1879,
who tenders such coupons in payment of taxes, debts, dues, and demands due
from him to the state, and continues to hold himself ready to tender the same in
payment thereof, is entitled to be free from molestation in person or goods on
account of such taxes, debts, dues, or demands, and may vindicate such right in
all lawful modes of redress,—by suit to recover his property, by suit against the
officer to recover damages for taking it, by injunction to prevent such taking
where it would be attended with irremediable injury, or by a defense to a suit
brought against him for his taxes, or the other claims standing against him. No
conclusion short of this can be legitimately drawn from the series of decisions
which we have above reviewed without wholly overruling that rendered in the
Virginia Coupon Cases, and disregarding many of the rulings in other cases,
which we should be very reluctant to do. To the extent here announced, we feel
bound to yield to the authority of the prior decisions of this court, whatever
may have been the former view of any member of the court. There may be
exceptional cases of taxes, debts, dues, and demands due to the state which
cannot be brought within the operation of the rights secured to the holders of
the bonds and coupons issued under the acts of 1871 and 1879. When such

cases occur, they will have to be disposed of according to their own
circumstances and conditions. It was earnestly contended in the dissenting
opinion in the Coupon Cases that the defense of a tender of coupons set up by a
tax-payer, when prosecuted for the payment of his taxes, was in the nature of a
set-off, and could not be enforced against a state any more than a suit could be
prosecuted against it; in other words, that a set-off is in reality a cross-suit, and
as such subject to the prohibition of the eleventh amendment. But the majority
of the court held, and perhaps with better reason, that, where a set-off or
counterclaim is made by virtue of an agreement or contract between the parties,
it no longer has the character of a mere set-off, but becomes attached to the
primary claim as pro tanto a defeasance thereof. At all events, such was the
decision of the court, and it is not our purpose to question the authority of that
decision so far as it may apply to the cases now before us.
22

It remains to apply the law as we conceive it to be to the several cases now
under consideration.

23

1, 2, 3. With regard to three of these cases,—Bryan v. State of Virginia, Cooper
v. Same, and McGahey v. Same,— we have very little hesitation or difficulty in
coming to a conclusion. They are suits brought by the commonwealth of
Virginia, against the persons severally named, under the act of May 12, 1887,
for the recovery of taxes due from them, respectively. The proceedings in the
last-named case may be described as a sample of them all. The case was
instituted in the circuit court of Alexandria, Va., in the name of the
commonwealth, by the following notice: 'To John McGahey: Take notice that
on the 23d day of March, 1888, in accordance with the statutes in such cases
made and provided, I shall move the circuit court of Alexandria city for a
judgment against you in favor of the commonwealth of Virginia for the sum of
$12.60, with interest on $6.40, part thereof, from the 15th day of December,
1886, till paid, and on $6.20, the residue, from December 15, 1887, till paid,
that being the sum due by you to the said commonwealth of Virginia for taxes,
together with the penalty thereon, in payment of which papers or instruments
purporting to be coupons detached from bonds of the state of Virginia have
been tendered and not accepted as payment, and which taxes have not been
otherwise paid, due on certain real and personal property in the city of
Alexandria; the said taxes being the same assessed according to law by the
commonwealth of Virginia for the years 1886 and 1887 upon the property
aforesaid. LEONARD MARBURY, for the Commonwealth of Virginia.' To
this notice the defendant filed the following plea: 'For a plea in this behalf, the
defendant says that the plaintiff ought not to maintain its action, because he
says that heretofore, viz., on the 1st day of December, 1886, and on the 1st day
of December, 1887, when the taxes sued for became respectively due and
payable, and prior to the commencement of this action in said city, he was
willing and ready to pay, and then and there tendered and offered to pay, to the
plaintiff, tax-receivable coupons, then due and payable, cut from bonds issued
by the plaintiff under the act of the general assembly of Virginia, approved
March 30, 1871, entitled 'An act to provide for the funding and payment of the
public debt,' together with lawful money of the United States, as follows, viz.:
For the said tax of $6.40, one (1) coupon, No. 23, cut from bond No. 5,684, due
January 1, 1883, for $3; one (1) coupon, No. 23, cut from bond No. 4,213, due
January 1, 1883, for $3; and forty cents (40c.) lawful money of the United
States; and for the said tax of $6.20, one (1) couon, No. 29, cut from bond No.
1,048, due January 1, 1886, for $3; one (1) coupon, No. 28, cut from bond No.
2,899, for $3, due July 1, 1885; and twenty cents (20c.) lawful money of the
United States; to receive which the plaintiff then and there refused. And the
defendant further says that always from the times when the said taxes became
respectively due and payable, hitherto, he has been ready and willing to pay,
and is still ready and willing to pay, to the plaintiff the said tax-receivable
coupons and lawful money, and he now brings into court here said coupons and
lawful money, ready to be paid to the plaintiff if it will accept the same; and
this he is ready to verify. Whereupon he prays judgment,' etc.

24

Upon the issue thus joined a trial by jury was had, and a verdict given for the
commonwealth for $13.96, and judgment entered thereon, with costs. A bill of
exceptions was taken at the trial, which shows that the defendant first moved to
quash the notice of motion, and dismiss the cause, on the ground that the act of
May 12, 1887, entitled 'An act to provide for the recovery by motions of taxes
and certain debts due the commonwealth,' etc., is repugnant to section 10, art. 1,
of the constitution of the United States, which motion was overruled. The
defendant then, to maintain the issue on his part, proved that, when said taxes
became respectively due and payable, he tendered in payment thereof to the
proper collecting officer the coupons and lawful money described in and filed
with his plea, which coupons on their face purported to have been originally
attached to bonds issued by the state of Virginia under the act of March 30,
1871, being then respectively due and payable, and having each upon its face
the following language: 'Receivable at and after maturity in payment for all
taxes, debts, and demands due the state,' which said coupons and money the
officer refused to receive. The said coupons were then offered in evidence, and
are in the form following, printed wholly from an engraved plate: 'Receivable
at and after maturity for all taxes, debts, and demands due the state. The
commonwealth of Virginia will pay the bearer three dollars' interest, due 1st
January, 1883, on bond No. 4,213. GEORGE RYE, Treasurer of the
Commonwealth of Virginia.' The other coupons offered were of similar form in
all respects. The defendant further proved that he never owned the bonds from
which the coupons were cut, and knew nothing whatever in respect to their
ownership; that the coupons when purchased by him were already detached
from the bonds; and that he bought them in open market as genuine coupons,
and without any reason to doubt their genuineness. He further proved that prior
to September 1, 1879, the state had issued bonds of the kind and in the form
authorized by said act to the amount of many millions of dollars; the coupons
thereon being wholly printed from engraved plates, and not signed manually.
He further offered to prove the denominations and numbers of the bonds issued
under the act of March 30, 1871, and the act of March 28, 1879. He offered and
read in evidence to the jury senate document 15, senate journal 1881-82, which
contained a report of H. H. Dixon, second auditor of the commonwealth of
Virginia, directed to the president of the senate, in answer to certain questions
which had been proposed to him by the senate for its information, in which
report, among other things, the said second auditor stated: 'I have the honor to
report that I have no knowledge of any spurious or forged bonds or coupons
issued, or purporting to have been issued, under either of the said acts. As to
any bonds or coupons that may have been stolen, I have heard of none issued
under the act of March 28, 1879; nor have I any knowledge of any issued under
the act of March 30, 1871, except such information as may be contained in the
report made to the legislature March 30, 1874, by the joint committee to
investigate the sinking fund, in which a deficiency of $15,939.89 of bonds and
of $1,325.45 of interest is stated.' Another report of said auditor was offered in
evidence by the defendant, in which he stated as follows: 'I have the honor to

report that no counterfeit or forged obligations, bonds, coupons, or certificates
of the state of Virginia have in any way come to my knowledge.' The defendant
then offered to prove by the testimony of an expert witness that the coupons
issued were genuine coupons; but the court refused to receive such testimony or
to allow it to go to the jury, because of the act of the general assembly
approved January 21, 1886, to which ruling the defendant excepted on the
ground that said act was repugnant to the constitution of the United States. The
defendant then rested, and thereupon the commonwealth demanded of the
defendant the production of the bond from which the coupons tendered
purported to have been cut, with proof that said coupons were actually cut
therefrom. The defendant moved the court to overrule and disallow such
demand on the ground that the act of assembly approved January 26, 1886,
under which the demand was made, was repugnant to the constitution of the
United States, and void. But the court overruled said motion, and sustained the
demand, to which the defendant excepted. The evidence being closed, the
defendant prayed the court to instruct the jury that the production of the bonds
from which the coupons in issue were cut, together with proof that the coupons
were cut therefrom, was not necessary to establish the genuineness of the
coupons, and that the act requiring this to be done is contrary to the constitution
of the United States. But the court refused this instruction, and instructed the
jury that such production of bonds and proof, when demanded, was necessary
to establish the genuineness of the coupons, to which ruling the defendant
excepted. The defendant further prayed the court to instruct the jury that, if the
jury believe from the evidence that the state of Virginia issued her bonds with
tax-receivable interest coupons thereto attached, which coupons were made
payable to bearer, and were printed from engraved plates, and not signed
manually by any officer of the state, and if they further believe that the
defendant purchased the coupons filed with his plea of tender in open market, in
good faith, as genuine coupons of said state, then the burden is upon the state to
prove said coupons spurious, and that the act of May 12, 1887, placing upon the
defendant the burden of proving them genuine, is repugnant to the constitution
of the United States. This instruction was also refused by the court, and the
defendant excepted. The judgment in the case was removed by writ of error to
the supreme court of appeals of the state of Virginia, and was affirmed. 8 S. E.
Rep. 244. The present writ of error brings this judgment before us for
consideration.
25

Wm. L. Royall and D. H. Chamberlain, for plaintiffs in error and appellant.

26

R. A. Ayers and J. R. Tucker, for defendants in error and appellee.

27

[Argument of Counsel from pages 690-693 intentionally omitted]

28

The question is therefore presented to us whether the acts of assembly of the

state of Virginia which required the production of the bond in order to establish
the genuineness of the coupons, and prohibiting expert testimony to prove the
said coupons, are or are not repugnant to the constitution of the United States.
On this subject we think there can be little doubt. It is well settled by the
adjudications of this court that the obligation of a contract is impaired, in the
sense of the constitution, by any act which prevents its enforcement, or which
materially abridges the remedy for enforcing it which existed at the time it was
contracted, and does not supply an alternative remedy equally adequate and
efficacious. Bronson v. Kinzie, 1 How. 311; Woodruff v. Trapnall, 10 How.
190; Furman v. Nichol, 8 Wall. 44; Walker v. Whitehead, 16 Wall. 314; Von
Hoffman v. Quincy, 4 Wall. 535; Tennessee v. Sneed, 96 U. S. 69; Memphis v.
United States, 97 U. S. 293; Memphis v. Brown, Id. 300; Howard v. Bugbee,
24 How. 461. We have no hesitation in saying that the duty imposed upon the
tex-payer of producing the bond from which the coupns tendered by him were
cut, at the time of offering the same in evidence in court, was an unreasonable
condition, in many cases impossible to be performed. If enforced, it would have
the effect of rendering valueless all coupons which have been separated from
the bonds to which they were attached, and have been sold in the open market.
It would deprive them of their negotiable character. It would make them fixed
appendages to the bond itself. It would be directly contrary to the meaning and
intent of the act of 1871, and the corresponding act of 1879. It would be so
onerous and impracticable as not only to affect, but virtually destroy, the value
of the instruments in the hands of the holder who had purchased them. We
think that the requirement was unconstitutional. We also think that the
prohibition of expert testimony in establishing the genuineness of coupons was
in like manner unconstitutional. In the case of coupons made by impressions
from metallic plates, as these were, no other mode of proving their genuineness
is practicable; and that mode of proof is as satisfactory as the proof of
handwriting by a witness acquainted with the writing of the party whose
signature it purports to be. One who is expert in the inspection and examination
of bank-notes, engraved bonds, and other instruments of that character, is able
to detect almost at a glance whether an instrument is genuine or spurious,
provided he has an acquaintance with the class of instruments to which his
attention is directed. It is the kind of evidence resorted to in proving the
genuineness of bank-notes. It is the kind of evidence naturally resorted to to
prove the genuineness of coupons, and other instruments of that character. To
prohibit it is to take from the holder of such instruments the only feasible
means he has in his power to establish their validity. In addition to these
objections to the proceedings, we question very much whether the act of May
12, 1887, which authorizes and requires a suit to be brought against the taxpayer who tenders payment in coupons, as well as the other acts which require
their rejection, are not themselves laws impairing the obligation of the contract.
They make no discrimination between genuine and spurious coupons. A bank
which should refuse to receive its bills in payment of a note due from one of its
customers, but should sue him on his note, and leave him to establish the

genuineness of the bills by suit against the bank, would not be regarded with
much favor in a business community. It is the duty of its cashier or receiving
teller to judge of the genuineness of the bills offered, and to refuse them as
spurious on his peril, or rather on the peril of the bank itself. So, in regard to
these coupons, instead of relegating the tax-payer to a course of litigation, the
officers of the state charged with the duty of collecting the taxes should
themselves decide on the genuineness of the coupons offered. Penalties for
knowingly offering spurious coupons, or using them in any way, for sale or
otherwise, would probably be as effective in preventing their circulation as like
penalties are in suppressing counterfeit bank-bills, and other negotiable
instruments. In the case of Bryan v. State of Virginia, the coupons that were
tendered for the payment of the tax sued for purported to have been cut from
bonds issued under the act of March 30, 1871; and the same obstacles to the
proof of their genuineness were interposed as in the Case of McGahey, by
requiring the production of the bonds from which the coupons were cut, and by
excluding expert testimony. The same also is true of the proceedings in the case
of Cooper v. Id. We are of opinion, therefore, that the judgements in these three
cases ought to be reversed, and the records severally remanded for the purpose
of such proceedings as may be required in due course of law, according to this
opinion.

29

4. The case of Ellett v. State of Virginia was a suit brought to recover the
amount of a judgment previouly rendered against Ellett in the circuit court of
Richmond for taxes and costs; the amount of taxes being $39.52, and the costs
being $24.49. Execution having been issued upon this judgment, the defendant,
Ellett, tendered to the sheriff, in payment thereof, coupons for the whole
amount, lacking $1.49, which he tendered in lawful money. The coupons
purported to be cut from a bond issued under the act of March 30, 1871, and
were overdue; and each bore upon its face a contract of the state of Virginia that
it should be received in payment of all taxes, debts, and demands due to her.
The defendant pleaded this tender, and averred that the sheriff refused to
receive the said coupons and money, alleging that he was forbidden to do so by
the act of May 12, 1887, and that he (the defendant) has always been ready and
willing since said tender to deliver said coupons and money to the sheriff in
payment of said execution, and was still ready and willint to do so, and brought
the same into court for that purpose. This plea was rejected by the court. A
verdict was given for the plaintiff, and judgment rendered thereon, which was
affirmed by the supreme court of appeals of the state of Virginia. 8 S. E. Rep.
246. The point made in this case is that the costs included in the judgment on
which the present suit was brought were not a debt due to the state of Virginia
in her own right, but were due to the officers in whose favor they were taxed,
and whose services they were to compensate. We think that this point is
untenable. The costs were recovered by the state of Virginia in the original
action to compensate her for the fees which she had to pay to the officers for
their services. The demand of the officers for their costs was a demand against
the state of Virginia, and not against the defendant; and, by reason of this
demand against, her, she was entitled to recover the amount against the
defendant. So that in no legal sense can it be said that the costs included in the
judgment belonged to the officers, and not to the state. They were recovered by
her in form, and they belonged to her, when recovered, in substance. We are of
opinion, therefore, that this judgment must also be reversed, and the record
remanded for the purpose of such proceedings as may be required in due course
of law, in accordance with this opinion.

30

5. The next case to be considered is that of Cuthbert v. State of Virginia. This
was a presentment found against Cuthbert in the hustings court of the city of
Petersburg, Va., charging that he did on the 1st day of November, 1888, and
had continuously from day to day since that time, in said city, unlawfully sold
and offered to sell, and unlawfully tendered and passed to divers persons,
(naming them,) tax-receivable coupons from the bonds of the state of Virginia,
without having previously obtained a special license, as required by law,
authorizing him (said Cuthbert) to sell and offer to sell, and to tender and pass,
such coupons, he, in doing the same, acting as the agent and broker for another
person or persons to said jurors unknown, contrary to the act of assembly in
that behalf. The presentment contained two other counts, which were
abandoned. The defendant tendered a special plea in writing, to which the

commonwealth demurred, and the court sustained the demurrer. The defendant
then pleaded not guilty. The jury, under the rulings of the court, found him
guilty, and assessed a fine of $500. On the trial the case was submitted to the
jury upon an agreed statement of facts. The principal facts shown by this
statement were that on the 1st day of November, 1888, the defendant sold and
offered to sell, and tendered and passed, and offered to tender and pass, for
another, as charged in the presentment, tax-receivable coupons from bonds of
the state of Virginia, which were overdue, and bore upon their face the contract
of said state that they should be received in payment of all taxes, debts, and
demands due said state from tax-payers owing taxesto the said state, and that he
did not have the speciallicense therefor required by the act of May 23, 1887,
and had not paid the license tax of $1,000 provided by said act for the privilege
of selling the same, nor the state tax of 20 per centum upon the face value of
the same; also that the defendant, Cuthbert, was a member of a firm doing
business in Petersburg as insurance agents, representing various foreign
insurance companies, all of which had paid to the state all license taxes assessed
upon them; also that the defendant was not engaged in any business upon which
a license tax is charged by the state, except the business of selling taxreceivable coupons from bonds of thestate, and had not been so engaged. Upon
this agreed statement of facts the defendant moved the court to instruct the jury
that the act under which the presentment was found is repugnant to section 10
of article 1 of the constitution of the United States, and therefore void, and that
they must acquit the defendant. The court refused to give this instruction, but
instructed the jury that the said act is not repugnant to the constitution, and the
defendant excepted. After the verdict was rendered the defendant moved the
court to set it aside upon the same grounds, which motion was overruled. The
cause was carried to the supreme court of appeals, and by that court the
judgment was affirmed, and its decision is now here for review. The question in
this case is whether the act requiring a license tax for the sale of coupons was
or was not in violation of that clause of the constitution of the United States
which relates to impairing the obligation of contracts. It is manifest from the
terms of the act of 1871, as well as that of 1879, under which tax-receivable
coupons were authorized to be and were issued, that said coupons were
intended to circulate from hand to hand, being expressly made payable to
bearer, and being made receivable for taxes, debts, dues, and demands due to
the state. Any undue restraint upon the free negotiability of these instruments,
therefore, would be a violation of the clear understanding and agreement of the
parties. That the license required by the sixty-fifth section of the tax act of
March 15, 1884, as amended by the act of May 23, 1887, was a very material
interference with such negotiability, is most manifest. If sustained as a valid act
of legislation, and carried into effect, it would prevent the negotiation of such
coupons by any holder thereof. The enormous license fee of $1,000 in towns of
more than 10,000 inhabitants, and of $500 in other counties and towns, with the
exaction of 20 per cent. of the face value on every coupon sold, was absolutely
prohibitory in its effect. A material quality of the coupons—their negotiability

—was thereby destroyed. The point cannot be made any clearer by argument
than it appears by the mere statement of it. This follows whether the law is
construed as applicable to the sale by a couponholder of his own coupons, or to
the sale or passing by any person of coupons for another. An owner of coupons
residing in New York or London, under the operation of the law, if the coupons
were not paid by the state when they became due, would be obliged to go in
person to Virginia in order to dispose of them to those who might be able and
willing to use them in the payment of taxes. The judgment in this case must also
be reversed, and the record remanded for the purpose of such proceedings to be
had as law and justice may require in accordance with this opinion.
31

6. The next case to be considered is that of Ex parte Brown, which was an
application of the petitioner, Brown, to the circuit court of the United States for
the eastern district of Virginia, to be discharged from imprisonment in the
custody of R. A. Carter, the sergeant of said city and ex officio jailer thereof.
The petition sets forth that the petitioner was sentenced by the hustings court of
the city of Richmond to pay a fine of $25 and costs, amounting to $26.0, and to
remanin in the jail of the said city until the same should be paid, in the custody
of the said sergeant; that on the 3d of July, 1889, he tendered W. P. Lawton,
clerk of the hustings court, in payment of said fine, $18 in coupons and $8.70 in
lawful money of the United States; that each of said coupons was cut from a
bond issued by the state of Virginia under the act of March 30, 1871, and was
overdue, and bore upon its face the contract of the state that it should be
receivable in payment of all taxes, etc.; that the clerk refused to receive said
coupons and money in payment of said fine and costs because certain acts of
the general assembly of Virginia forbade him so to receive them; that thereafter,
on the same day, he tendered the same coupons and current money to Carter,
sergeant as aforesaid, and demanded his release from custody; that said
sergeant also refused to receive said coupons and money in payment of said
fine and costs, and he refused the same because the coupons so tendered by the
petitioner became due prior to the 1st day of July, 1888, and because section
415 of the Code of Virginia of 1887 prohibits the receipt of any coupons of said
state which became due prior to July 1, 1888, as those tendered did; that said
section 415 is repugnant to the constitution of the United States; and that the
petitioner is therefore detained in said jail, and in custody of said sergeant, in
violation of the said constitution. The petitioner therefore prayed a habeas
corpus to be directed to the said Carter, sergeant aforesaid, and that he be
discharged from custody. The writ being issued, Carter made return thereto in
substance as follows: He annexed to said return a copy of the judgment and
order of the hustings court of Richmond committing the petitioner to the jail of
the city until he should pay a certain fine imposed upon him, as stated in the
petition. He admitted that on the 3d of July, 1889, the petitioner tendered the
coupons and money set out and described in his petition to the clerk, (Lawton,)
who refused to receive the same, and that on the 3d of July, 1889, the petitioenr
tendered to him, (Carter,) $8.70 in current money of the United States, and $18

in coupons purporting to be detached from bonds of the state of Virginia; but he
denied that they were genuine coupons, legally receivable. He further stated in
his return that, by section 415 of the Code of Virginia of 1887, it is provided
that no petition shall be filed, or other proceeding had, to try whether any paper
printed, written, engraved, or lithorgraphed, purporting to be a coupon detached
from any bond of said state, is a genuine coupon legally receivable for taxes,
debts, or demands of the state, where said coupon became due prior to July 1,
1888, unless said petition was filed or proceeding had within one year from
July 1, 1888; and he charged the fact to be that the coupon held by the
petitioner became due prior to July 1, 1888. The court below refused to
discharge the prisoner, holding that section 415 of the Code of 1887 is not
repugnant to the constitution of the United States. The petitioner thereupon
appealed to this court, and the question is as to the constitutionality of the
section referred to.
32

We have already set forth the provisions of this law in a former part of this
opinion; it being the act passed February 27, 1886, and afterwards incorporated
into the Code of 1887 as section 415. Under the operation of this act, after the
1st day of July, 1889, of course, all coupons that were then more than a year
past due were absolutely precluded from being used in payment of dues to the
state, as provided for in the act of 1871. Concerning the obstacles which had
been interposed in the way of their use for that purpose, it is not difficult to
imagine that a very large proportion of the coupons attached to the bonds of
1871 had not been presented, or, if presented, had not been received for taxes,
prior to the date referred to.

33

Mr. Daniel H. Chamberlain and Mr. William L. Royall for plaintiff in error.

34

Mr. R. A. Ayers, Attorney General of the State of Virginia, and Mr. J. Randolph
Tucker for defendant in error.

35

[Argument of Counsel from pages 703-704 intentionally omitted]

36

Mr. JUSTICE BRADLEY, continuing, delivered the opinion of the court.

37

The passage of a new statute of limitations, giving a shorter time for the
bringing of actions than existed before, even as applied to actions which had
accrued, does not necessarily affect the remedy to such an extent as to impair
the obligation of the contract within the meaning of the constitution, provided a
reasonable time is given for the bringing of such actions. This subject has been
considered in a number of cases by this court, particularly in Terry v. Anderson.
95 U. S. 628, 632, and Koshkonong v. Burton, 104 U. S. 668, 675, where the
prior cases are referred to. In Terry v. Anderson, Chief Justice WAITE,
speaking for the court, said: 'This court has often decided that statutes of
limitation affecting existing rights are not unconstitutional if a reasonable time
is given for the commencement of an action before the bar takes effect.
Hawkins v. Barney, 5 Pet. 457; Jackson v. Lamphire, 3 Pet. 280; Sohn v.
Waterson, 17 Wall. 596; Christmas v. Russell, 5 Wall. 290; Sturges v.
Crowninshield, 4 Wheat. 122. It is difficult to see why, if the legislature may
prescribe a limitation where none existed before, it may not change one which
has already been established. The parties to a contract have no more a vested
interest in a particular limitation which has been fixed than they have in an
unrestricted right to sue. * * * In all such cases the question is one of
reasonableness; and we have, therefore, only to consider whether the time
allowed in this statute is, under all the circumstances, reasonable. Of that the
legislature is primarily the judge, and we cannot overrule the decision of that
department of the government unless a palpable error has been committed.' The
court in that case held that the period of 9 months and 17 days, given to sue
upon a cause of action which had already been running nearly four years, was
not unconstitutional. The liability in question was that of a stockholder under an
act of incorporation for the ultimate redemption of the bills of a bank which had
become insolvent by the disaster of the civil war. The legislature of Georgia on
the 16th of March, 1869, passed a statute requiring all actions against
stockholders in such cases to be brought by or before the 1st of January, 1870.

38

In the case of Koshkonong v. Burton, the suit was brought upon bonds of the
town of Koshkonong issued January 1, 1857, with interest coupons attached.
The coupons matured at different dates from 1858 to 1877. The action was
brought on the 12th of Nay, 1880, and the question was whether the action as to
the coupons maturing more than six years before the commencement of the suit
was barred by the statute of limitations of Wisconsin. In March, 1872, an act
was passed to limit the time for the commencement of actions against towns,
counties, cities, and villages on demands payable to bearer. It provided that no
action brought to recover money on any bond, coupon, interest warrant,
agreement, or promise in writing made by any town, county, city or village, or
upon any installment of the principal or interest thereof, shall be maintained
unless the action be commenced with six years from the time when such money
has or shall become due, when the same has been made payable to bearer or to
some person or bearer, or to the order of some person, or to some person or his
order: provided, that any such acting may be brought within one year after this
act shall take effect. This court, speaking by Mr. Justice HARLAN, said: 'It
was undoubtedly within the constitutional power of the legislature to require, as
to existing causes of action, that suits for their enforcement should be barred
unless brought within a period less than that prescribed at the time the contract
was made, or the liability incurred, from which the cause of action arose. The
exertion of this power is, of course, subject to the fundamental condition that a
reasonable time, taking all the circumstances into consideration, be given by
the new law for the commencement of an action before the bar takes effect.
Whether the first proviso of the ct of 1872, as to some causes of action,
especially in its application to citizens of other states holding negotiable
municipal securities, is or is not in violation of that condition, is a question of
too much practical importance and delicacy to justify us in considering it,
unless its determination be essential to the disposition of the case in hand; and
we think it is not.' The case was decided without determining the question
referred to. A question of the same nature frequently arises upon statutes which
require the registry of conveyances and other instruments within a limited
period prescribed, and making them void, either absolutely, or in their operation
as against third persons, if not recorded within such time. Such laws, as applied
to conveyances and other instruments in existence at the time of their passage,
are, of course, retrospective in their character, and may operate very
oppressively if a reasonable time be not given for the registry required. This
subject was discussed in the case of Vance v. Vance, 108 U. S. 514, 2 Sup. Ct.
Rep. 854, Mr. Justice MILLER delivering the opinion of the court, where the
prior cases were adverted to and commented upon. The same rule applies to
those cases as in reference to statutes of limitation, namely, that the time given
for the act to be done must be a reasonable time; otherwise it would be
unconstitutional and void.

39

It is evident from this statement of the question that no one rule as to the length
of time which will be deemed reasonable can be laid down for the government

of all cases alike. Different circumstances will often require a different rule.
What would be reasonable in one class of cases would be entirely unreasonable
in another. It is necessary, therefore, to look at the nature and circumstances of
the case before us, and of the class of cases to which it belongs. The primary
obligation of the state with regard to the coupons attached to the bonds issued
under the act of 1871 was to pay them when thty became due; but, if they were
not paid at maturity, the alternative right was given to the holder of them to use
them in the payment of taxes, debts, dues, and demands due to the state. The
very nature of the case shows that much an application of the coupons could
not be made immediately, or in any very short period of time. If all the bonds
were of the denomination of $1,000 each, it would require 20,000 of them to
make up the funded debt of $20,000,000. These 20,000 bonds would be likely
to be scattered and dispersed through many states and countries, and it would
be impracticable for the holders of them to use the coupons which the state
should fail to pay in cash in the alternative manner stipulated for in the contract,
unless they had a reasonable time to dispose of them to tax-payers. No
limitation of time was fixed by the act within which the coupons should be
presented or tendered in payment of taxes or other demands. The presumption
would naturally be that they could be used within an indefinite period, like
bank bills. Under this condition of things, a statute of limitation giving to the
holders thereof but a single year for the presentation in payment of taxes of the
coupons then in their possession, perhaps never severed from the bonds to
which they were attached, and comprising all the coupons which had been
originally attached thereto, seems, even at first blush, to be unreasonable and
oppressive. Probably not onetenth, if even so large a proportion, of the
bondholders were tax-payers of the state of Virginia. The only way in which
they could, within the year prescribed, utilize their coupons—the accumulation,
perhaps, of years—would be to sell and dispose of them to the tax-payers. How
this could be done, especially in view of the onerous laws which were passed
with regard to the sale of coupons in the state, it is difficult to see. Under all the
circumstances of the case, and the peculiar condition of the securities in
question, we are compelled to say that in our oini on the law is an unreasonable
law, and that it does materially impair the obligation of the contract. We have
spoken of the act as limiting, indifferently, the time of tendering the coupons,
and the time of commencing proceedings to ascertain their genuineness. Its
terms relate only to the latter; and, as this proceeding cannot be instituted until
the coupons have been tendered, the effect is to make a tender necessary before
the expiration of one year, which can often be done only within a few days, or
even hours, since the taxes may become due in that short period, and not
become due again until a year after wards. This puts the unconstitutionality of
the act beyond question. Without further discussion of the subject, we conclude
that the judgment of the circuit court must be reversed; and the same is
reversed, accordingly, and the cause remanded for the purpose of such
proceedings as may be required by law and justice in conformity with this
opinion.

40

7. The next case which we shall consider is that of Huchless v. Childrey, which
was an action of trespass on the case, brought in the circuit court of the United
States for the eastern district of Virginia, by Huchless, a citizen of the state of
Virginia, residing in Richmond, against Childrey, the treasurer of Richmond,
and, as such, collector of taxes and license taxes due to the state, to recover
damages for the refusal of the said Childrey to receive tax-receivable coupons
in payment or part payment of a license tax payable for a license to sell by retail
wine, spirits, and other intoxicating liquors, whereby the plaintiff was
prevented from pursuing the said business, which was a lawful business, and
and sustained damage by reason thereof to the extent of $6,000. The declaration
stated, in substance, that the plaintiff desired and intended to open and conduct
the business aforesaid at 405 West Leigh street, in said city of Richmond, for
one year from the 1st of May, 1889; that he was a fit person, and intended to
keep a orderly house, and that the place was suitable, convenient, and
appropriate for that purpose; that by the statute law of Virginia a person
desiring and in tending to conduct such business must apply to the
commissioner of revenue for the city or county, or a license therefor, who shall
ascertain the amount to be paid, and give the applicant a certificate specifying
the same, and such person shall make a deposit therefor with the treasurer or
collecting officer of the city or county of the amount so ascertained, and shall
take from him a receipt for such deposit indorsed on the certificate, or
otherwise he shall deposit with the treasurer the amount of tax assessed by law
for the license tax on said business: thereupon he shall make application in
writing for a license for such business to the commissioner of the revenue for
such city or county, accompanied by said certificate; and the person so desiring
to conduct said business is forbidden by said statutes to conduct the same until
he has appeared before the judge of the corporation or county court, and has
proved that he has made such deposit, and is a fit person to conduct such
business, etc.; that the license tax imposed by the laws of Virginia to be paid for
the business of selling by retail, for one year, wine, ardent spirits, malt liquors,
or any of them, in cities of more than 1,000 inhabitants, is $125; that on the 3d
of May, 1889, plaintiff applied to the commissioner of revenue of Richmond to
ascertain the amount to be paid by him as his license tax for selling by retail as
aforesaid, and the commissioner gave to him a certificate specifying the same
as $125; that on the same day the plaintiff presented said certificate to Childrey,
the defendant, treasurer as aforesaid, and tendered to him, in payment of said
license tax, $123 in coupons and $2 in lawful money, and demanded a receipt
stating that he had deposieted with him $125 in said coupons and money; that
Childrey refused to receive said coupons and money, andref used to give
plaintiff said receipt; that each of said coupons was cut from a bond issued by
the state of Virginia under the act of March 30, 1871, and each bore upon its
face the contract of the state that it would be received in payment of all taxes,
debts, dues, and demands due to the state; that thereafter, on the 3d day of May,
1889, the plaintiff stated to said Childrey that he desired and intended to
conduct the business aforesaid at 405 West Leigh street, and then tendered to

him, in payment of the license tax due to the state on said business for one
years, $123 in coupons and $2.75 in lawful money, and demanded of him a
certificate of such deposit, but Childrey refused to receive said coupons and
money, and refused to give such certificate, and refused to receive said coupons
and money in both cases, because sections 399, 536, and 538 of the Code of
Virginia of 1887 forbade him to receive them, and the plaintiff averred that said
sections are repugnant to section 10, art. 1 of the constitution of the United
States, which the said Childrey well knew; that he (Childrey) obeyed the
command of said sections, and declined to follow the mandate of the
constitution; that by force of the statute law of Virginia the plaintiff would have
been liable to indictment and severe penalties if he had proceeded to open and
conduct his said business before he had satified the judge of the corporation or
the hustings court of the city of Richmond that he was a fit person to conduct
said business, that he would keep an orderly house, and that the place was a
suitable one; and that the plaintiff could not apply to said court to enter on said
inquiries until he presented to said court a receipt from said Childrey for said
deposit indorsed on the certificate furnished by the commissioner of the
revenue, or the certificate of the commissioner indorsed on the receipt of said
Childrey. To this declaration the defendant filed a demurrer, which was
sustained by the circuit court, and judgment rendered for the defendant, which
judgment is brought here for review. The law under which the treasurer
justified his action in refusing to receive the coupons tendered by the plaintiff is
set forth in the declaration with sufficient accuracy and fullness for the disposal
of the case, except that it should be added that the license fee to be deposited
with the treasurer was required to be in lawful money of the United States as a
condition precedent to the granting of the license.

41

We are of opinion that the requirement that the license fee shall be paid in
lawful money of the United States does not, as contended, impair the obligation
of the contract made by the state with the holders of the coupons referred to.
Licenses for the sale of intoxicating liquors are not only imposed for the
purpose of raising revenue, but also for the purpose of regulating the traffic and
consumption of these articles, and hence the state may impose such condictions
for conducting said traffic as it may deem most for the public good. Instead of a
license fee of $125, it might have imposed a license fee of $250, or any other
amount, or it might have prohibited the sale of intoxicating liquors altogether,
as is admitted by the counsel for the plaintiff in their brief. They concede that
the state might, in her discretion, absolutely abolish the sale of spirituous
liquors, or prescribe on what terms they shall be sold. In this view there does
not seem to be any violation of the obligation of the state in requiring the tax
which is imposed to be paid in any manner whatever,—in gold, in silver, in
bank-notes, or in diamonds. The manner of payment is part of the condition of
the license intended as a regulation of the traffic. It would be very different if
the business sought to be followed was one of the ordinary pursuits of life, in
which all persons are entitled to engage. License taxes imposed upon such
pursuits and professions are imposed purely for the purpose of revenue, and not
for the purpose of regulating the traffi or the pursuit. For these considerations,
we are clearly of opinion that the judgment of the circuit court was right, and it
is therefore affirmed.

42

8. The remaining case which we have to consider is that of Vashon v.
Greenhow. This case arose upon the refusal of Greenhow, treasurer of the city
of Richmond, to receive from Vashon tax-receivable coupons in payment, or
part payment, of taxes due from him, including a certain amount due for school
taxes for the maintenance of the public free schools of the state. Upon this
refusal, Vashon filed a petition for a mandamus in the hustings court of the city
of Richmond, stating that he was tax-payer of the said city, and was indebted to
the state for state taxes of 1884 to the amount of $35.63, and tendered to
Greenhow, the said treasurer, in payment therefor, certain coupons cut from the
bonds of the state issued under the act of March 30, 1871,—one of the
denomination of $30, and one of the denomination of $3, said coupons being
past due, and being presented to the court with the petition; that he at the same
time offered to pay the treasurer the whole of said tax in legal-tender notes and
coin, and demanded that the treasurer receive said coupons, along with said
legal-tender notes and coin, for the purpose of identification and verification in
manner and form as required by the act of January 14, 1882. The petition
further alleged that by virtue of the state's contract to receive said coupons in
payment of said taxes, and by virtue of the act of assembly aforesaid, he was
entitled, upon the payment of his said tax in money, to have his said
couponsreceived for identification and verification, and pay his tax therewith,
wherefore he prayed a writ of mandamus commanding said Greenhow,
treasurer of said city, to receive the said money, and also the said coupons, and

commanding his to forward said coupons to the court for identification and
verification according to law. A rule to show cause having been granted, the
treasurer filed his answer to the petition, in which he stated the truth to be that
Vashon was indebted to the state for taxes for the year 1884, as follows, to-wit,
for tax on property, the sum of $35.63, being $9.66 for the maintenance of
public free schools, as per exhibit attached to the answer. He further stated and
admitted that the petitioner offered to pay the said tax in money at the same
time that he demanded the respondent to receive the coupons mentioned in the
petition for the purpose of identification and verification. The answer then
proceeds as follows: 'Your respondent avers that he was willing to receive the
payment of sain tax in money, but refused to receive and recepit for so much of
the coupons as were offered in payment of that portion of the tax set aside by
law, and dedicated to the maintenance of the public free schools of the states.
Your respondent assigns the following reasons for such refusal: (1) The
constitution of Virginia provides in section 7 of article 8 what specific sums
shall be set apart as a permanent and perpetual literary fund, and includes in it
such other sums as the general assembly may appropriate; (2) section 8 of the
same article provides that the general assembly shall apply the annual interest
on the literary fund, and an annual tax upon the property of the state of not less
than one mill nor more than five mills on the dollar, for the benefit of the
public free schools; (3) in pursuance of this constitutional authority the general
assembly has provided, in acts of 1883-84, p. 561, that on tracts of lands and
lots a tax of ten cents on every hundred dollars of the assessed value thereof
shall be levied, which shall be applied to the support of the public free schools
of the state; (4) again, the last general assembly, in acts of 1883-84, p. 603,
have provided that all taxes assessed on property, real or personal, and
dedicated to the maintenance of the public free schools of the state, shall be
paid and collected only in lawful money o th e United States, and shall be paid
into the treasury to the credit of the free school fund, and shall be used for no
other purpose whatsoever. Your respondent avers that to have forwarded such
of the coupons as were offered in payment of the tax dedicated to the public
free schools would have been a violation of the constitution, and the laws above
referred to. For these reasons, your respondent insists that he ought not to have
forwarded, for the purpose of identification and verification, so much of the
coupons as were tendered in payment of that portion of the tax dedicated to the
public free schools. He therefore prays that the writ of mandamus may be
denied, and the petition dismissed, with costs.' To this answer the petitioner
entered a demurrer, which was sustained by the court, and a peremptory
mandamus was a warded pursuant to the prayer of the petition.
43

The case being carried to the supreme court of appeals of Virginia the judgment
was reversed, [Greenhow v. Vashon, 81 Va. 336,] and this judgment of reversal
is now before us for review. The court of appeals placed their judgment upon
two distinct grounds. In the first place, they reviewed the former judgments of
that court, which had sustained the act of March 30, 1871, as a valid and

constitutional enactment, and binding upon the state as a contract with the bond
and coupon-holders under the same. The court were of opinion that these
decisions were based upon a mistaken presumption that the state had received
consideration for the issuing of the bond created by the act aforesaid. They
argued, and attempted to show, that the state had not received any consideration
whatever, but that the issuing of the bonds under the act of 1871 was a mere
gratuity on the part of the state, and was not binding upon it so as to prevent the
legislature from abrogating the conditions of that act. We have already
indicated our views with regard to this position taken by the supreme court of
appeals, and have referred to the decisions made by this court sustaining the
validity of the act of 1871, which decisions of this court we regard as binding
upon us. The other ground on which the court of appeals placed its decision
was that the act of 1871, as applied to the moneys due and payable to the
'literary fund' or fund for the maintenance of public free schools, was contrary
to the constitution of the state adopted in 1869. The seventh and eighth sections
of the eighth article of that constitution declare as follows: 'Sec. 7. The general
assembly shall set apart, as a permanent and perpetual literary fund, the present
literary funds of the state, the proceeds of all public lands donated by congress
for public school purposes, of all escheated property, of all waste and
unappropriated lands, of all property accruing to the state by forfeiture, and all
fines collected for offenses committed against the state, and such other sums as
the general assembly may appropriate. Sec. 8. The general assembly shall
apply the annual interest on the literary fund, the capitation tax provided for by
this constitution for public free school purposes, and an annual tax upon the
property of the state of not less than one mill nor more than five mills on the
dollar, for the equal benefit of all the people of the state.' The court, in its
opinion, held that in view of these constitutional provisions the legislature had
no power to declare of contract that the moneys due to the literary fund might
be paid in coupons attached to the bonds authorized by the act of 1871, and that
such a payment would be repugnant to the very nature of the fund. It might well
be added, that coupons thus paid into the fund would be of no value whatever
to it; for, as soon as paid into the treasury, they would become valueless, as if
canceled and destroyed, unless some provision were made for their reissue, and
the putting of them into renewed circulation. This would be opposed to the
whole tenor of the act, would be unjus to the coupon-holders themselvers, and
would probably be contrary to the acts of congress in reference to the creation
of paper currency. We think that the position of the court of appeals in this case
is well taken,—that coupons could not be made receivable as a portion of the
literary fund, and that, if they could not be received as a part of the fund, they
could not properly be made receivable for the taxes laid for the purpose of
main taining said fund. For several years after the constitution was adopted, and
after the law of 1871 had been passed, the taxes for the benefit of free schools
were mingled in the assessment and collection of taxes, and in the treasury
when received, with the other taxes and funds raised for the support of the state
government. As long as this state of things continued, the collecting officers

could not object to receiving coupons in payment of taxes, because the share
due to the school fund could easily be paid from the treasury, to the credit of
that fund, out of the lawful moneys received. But by the tax act of March 15,
1884, it was provided that all taxes assessed on property, real or personal, by
that act, and dedicated by it to the maintenance of the public free schools of the
state, should be paid and collected only in the lawful money of the United
States, and should be paid into the treasury to the credit of the free-school fund,
and should be used for no other purpose whatsoever, and to this end the auditor
of public accounts should have the books of the commissioner of the revenue
prepared with reference to the separate assessment and collection of said school
tax, and the several treasurers of the commonwealth should have the tax-bills in
their counties and corporations so made out as to specify the amount of the tax
due from each tax-payer to the public free school fund, including the capitation
taxes of whatever kind or nature, and should keep said capitation tax and school
tax separate and distinct from all other taxes or revenues so collected by him,
and forward the same, thus separate and distinct, to the auditor of public
accounts, which should be kept separate and distinct by him from all other
taxes or revenues until paid to the public free schools. Since the passage of this
act, and in pursuance thereof, the taxes and other revenues raised for the
purpose of maintaining public schools, and belonging under the constitution to
the literary fund, have been kept separate and distinct from the other taxes
raised for the general support of the state government. This was the practice
when the case of Vashon v. Greenhow arose; and in our judgment the law
requiring the school tax to be paid in lawful money of the United States was a
valid law, notwithstanding the provisions of the act of 1871, and that it was
sustained by the sections of the constitution referred to, which antedate the law
of 1871, and override any provisions therein which are repugnant thereto.
44

In Paup v. Drew, 10 How. 218, a decision was made by this court in a case not
very different in principle from the one now under consideration. It had been
decided in Woodruff v. Trapnall, 10 How. 190, at about the same time, that the
law of Arkansas which chartered the Bank of the State of Arkansas, (the whole
capital of which belonged to the state,) provided that the bills and notes of said
institution should be received in all payments of debts due to the state, was
valid and irrepealable, and that, although this provision was subsequently in
terms repealed, the notes of the bank which were in circulation at the time of
the repeal were not affected by it, and that the undertaking of the state to
receive the notes of the bank constituted a contract between the state and the
holders of these notes which the state was not at liberty to break or impair,
although notes issued by the bank after the repeal were not within the contract,
and might be refused. After this decision the case of Paup v. Drew came up, in
which it was held that, although the notes of the bank wer re ceivable in
payment of all debts due to the state in its own right, and could not be refused,
yet, where the state sold lands which were held by it in trust for the benefit of a
seminary, and the terms of the sale were that the debtor should payin specie or

its equivalent, such debtor was not at liberty to tender the notes of the bank in
payment. The question arose in this way: Congress in 1827 had passed an act
'concerning a seminary of learning in the territory of Arkansas,' by which two
entire townships of land were directed to be set aside and reserved from sale,
out of the public lands within the said territory, for the use and support of a
university within the said territory. In 1836 congress passed another act entitled
'An act supplementary to the act entitled 'An act for the admission of the state
of Arkansas into the Union, and to provide for the due execution of the laws of
the United States within the same, and for other purposes," by which last act
the lands so reserved for the use and support of a university were vested in the
state of Arkansas. On the 28th of December, 1840, the legislature of Arkansas
passed an act entitled 'An act to authorize the governor to dispose of the
seminary lands;' and in 1842 the then governor of the state sold to John W.
Paup the right to enter and locate 640 acres of said land, and received from him
therefor bonds payable at different dates in specie or its equivalent. In 1847 the
governor of the state brought a suit upon these bonds, and the defendants
brought into court the sum of $6,050 in notes of the Bank of the State of
Arkansas, and pleaded a tender of the same in discharge of the debt. The
plaintiff demurred on the ground that the proceeds of the bonds were part of a
trust fund committed to the state by congress for special purposes, over which
the state had no power except to collect and disburse the same in pursuance of
the objects of the grant, and the state had no power to apply said funds to the
payment of ordinary liabilities, and was not bound to accept in payment of such
bonds any depreciated bills, bank paper, or issues, even though she might be
ultimately liable to redeem them. This demurrer was sustained, and judgment
given that the fund was a trust fund held by the state of Arkansas for the
purposes to which it was devoted, and therefore the state could not properly
contract to receive other than lawful money for property disposed of belonging
to said fund. We think that the principle of this case sustains the decision of the
court of appeals of Virginia in the case now under consideration, and the
judgment of that court is affirmed.

45

It may be argued that the principle involved in the last case is equally
applicable to all taxes raised for the support of the state government, inasmuch
as the funds necessary for that purpose, as well as those raised for the purpose
of maintaining public free schools, are required to be paid in cash. But there is
this difference: that the tax for school purposes is set apart for that specific use,
under the express requirement of the constitution, while the general tax for
carrying on the government is, or should be, adequate to meet not only the
actual expenses of the government itself, but also the outstanding debts and
obligations that may be due and payable during the fiscal year, of which the
coupons are themselves a part. If the tender of tax-receiving coupons to any
considerable amount is apprehended, the rate of taxation should be raised so as
to produce a sufficient surplus over and above such coupons to meet the
expenses of the government. If the influx of coupons should be so uncertain
that so safe calculation could be made on the subject, an arrangement could
probably be made with the couponholders for limiting the proportion of tax
which would be received in coupons. It is certainly to be wished that some
arrangement may be adopted which will be satisfactory to all the parties
concerned, and relieve the courts, as well as the common welth of Virginia,
whose name and history recall so many interesting associations, from all further
exhibitions of a controversy that has become a vexation and a regret.