Knoxville daily chronicle. [volume] (Knoxville, Tenn.) 1870-1882, 1879-03-09

On the point now referred to, Vattel, a
well known writer on the law of nations,
says (pages 225 and 226), "a sovereign
State is subject to the same rules as private
individuals in matters of contract" So
also the Supreme Court of the United
States lays down the rule. When the Uni
ted States by their authorized officers, be
come party to negotiate paper, they have
all the rights and incur the responsibility
of individuals who are palties to such
instruments. UNITED States VS.. Metropoli
Is Peters, 377.
In the case of Mississippi vs.. johnson
Us Mississippi Rep, 764.) When the va
lidity of bonds issued by the State of Mis-
sissippi was the question before the court
Chief Justice Smith says in delivering the
unanimous opinion of the court: "The
same principles which govern in matters Of
contract between private individuals apply
to all contracts to which State has be
come a party. This rule is founded upon
the presumption that sovereign States, who
are supposed to be always ready to perfor N
their undertakings and to discharge their
Just obligations, could desire no better
rules by which to ascertain their own obi
cations and rights and those according to
which they dispense justice to their citi-
zens.' Assuming, then that the liability
of the State upon the bonds issued in her
name is a question that rests upon the law
and the facts of the case. as in a cOntroyer-
sy between private persons, / proceed to
examine the grounds upon which
the committee exonerates her. No ques-
ton is made as to the power of the
Legislature to order the issuance OF
bonds in the name of the State. To deny
this power is to deny the ability of the
State to contract at all, since she can only
contract through the legislative department
of the government, and to deny the power
of making contracts is to withhold from her
the means of self preservation. Further, if
the Legislature has not an inherent power
of making contracts it cannot communicate
such power to the corporations, private and
public, that it creates. The detenses, then
as | understand the report of the comittee,
may be stated as follows:
/. That as to the $ll ,27l,000 Of railroad
bonds, as they are called, the State, if
liable at all, is only secondariIy liable.
2. That the bonds issued in funding in
terest on the bonds of the State accruing
during the war, and past due interest
coupons, are void.
3. That the acts of the Legislature,
authorizing the issuance of war bonds are
void, as having been procured by fraudulent
or other corrupt means, or as having been
enacted when the mass Of the people were
denied their political rights, and could have
no voice in the legislation of the State.
4. That the provisions of the various
laws under which the bonds were issued,
and which were conditions precedent to
their issuance, we're not complied with, and
they were, therefore, improperly and illegally
issued.
5. That as the bonds referred upon their
face to the several acts under which they
we're respectively issued, these recitals make
t the duty Of every purchaser to see that
he requirements had been complied with,
md excludes the plea Of innocent holders.
6. That the Legislature, in lS69-7O, in
stituted inquiries into the circumstances
IndeF which the bonds, and especially those
N aid Of railroads, were issued, with a view
to declare them illegal and void, and were
deferred from so doing by apprehension Of
and menaces on the part Of
the Federal Government amounting to
1uresS.
7. That the State Is not est0ppcd by any
or ratification Of these bonds by
the Legislature or BY any officers or agents
of the State, from now denying the validity
of the bonds, especially as to those that
were referred to in the several funding and
other acts, as not legally issued.
3. Another ground assumed by the com
mittee Is not presented so much as a legal
question affecting the validity Of the bonds,
IS a loose equity on behalf of the State
Of I1r, ut
q forced sale of the defaulting railroads,
which sale it is intimated, if not charged,
was brought about for fraudulent and specu-
ative purposes.
Referring to these various positions as
sumed by the committee in the order in
which they are stated, ! remark:
l. All the boads issued, | believe, with
1ut exception, are the bonds of the State.
The State is in legal contemplation, so far
as the bonds indicate, the primary and only |
party liable. As to the several railroads. in |
aid of which the bonds were issued, the |
State no doubt occupies the position only |
IF surety or guarantOr, and took occasion in |
every instance 10 protect herself against |
Ultimate liability by a stringent statutory |
under which the road, with all its |
fixtures and appurtenances, was liable to be !
sold. Whether the holders Of the bonds |
IAN avail themselves Of the benefit of this |
mortgage and enforce the lien acquired by |
he State, is a question now in process Of
judicial investigation, and | fOrbear to ex-
press any opinion on the subject, but ] can
lot, as a legal proposition, understand up
N what ground the State expects to escape
liability as the maker of negotiable in
trument.
,. As to the invalidity of bonds issued for
unding interest accruing during the war,
nd interest coupons, can only say that |
NOW Of no principle of international Jaw
hat suspends interest on an interest-bear-
NC debt due by one of the belligerents to
he other, or by belligerent to any third
'erson. Public policy requires that during
be war the citizens or subjects Of one
elligerent shall not contract with, or pay
money to, a citizen or subject of the other
but this is duty that each belli-
erent enioins upon It's own citizens or sub
ects for its own protection, and as it thus
ecomes unlawful to pay interest, it is re-
arded as suspended during the war. But
MS rule certainly has no application to the
ayment of interest by the bellgerent itself.
S to interest coupons, it is a question now
20 we'll settled to admit of argument that
ley draw interest after maturity the same
5 any other debt. t
3. The third ground of defense is that the
cts of the Legislature Immediately sue
eeding the war, authorizing the issuance Of !
0nds are void for fraud practiced in their