Staunton spectator. [volume] (Staunton, Va.) 1849-1896, 1881-02-01
Virgfn1a's Debt.
IMPORTANT DECISION BY THE UNITED
STATES COURT-LAW IMPOSING TAXES
ON COUPONS OF THE STATE BONDS DE-
CLARED UNCONSTITUTIONAL.

LIZ
WASHINGTON, January 4.-The fol-
lowing is among the business transact.
ed by the United States Supreme Court
to-day:
No. 154, H. G. g. Hartman, plaintiff
in error, VS.. Samuel G. Greenhow, Trea-
surer of the City of Richmond, Va in
error to the Virginia Supreme Court OF
the 30th of March, 1871,
the Legislature of Virginia passed an
act entitled IAN act to provide for the
funding and payment of the public
debt" By the provisions of this act the
State agreed that if her creditors would
come forward and surrender to her her
old bonds she would issue to them new
coupon bonds for two thirds of the a.
mount due upon the old bonds payable
at the expiration of thirty four years,
with interest at six per cent. payable
semi-annually, the semi annual interest
to be represented by coupons attached
to the bonds, which coupons should be
receivable at and after maturity in
payment of all taxes, debts, dues and
demands due to the State, which shall
be so.expressed on their face" For the
other third the Commonwealth was to
give the bondholder certificate setting
forth that payment of the amount will
be provided for in accordance with such
settlement as shall hereafter he had be-
tween the States of Virginia and West
Virginia in regard to the public debt q
the State of Virginia existing at the Tina
of its ACKNOWLEDGMENT"
BONDS FUNDED.
Under this act the holders of bonds OF
the Commonwealth amounting to about
$50, 100000 had funded their bonds by
March, 1872, so that at that time there
were out bonds of the State for about
$40, 900 900, bearing six per cent. inter-
est, with tax receivable coupons attach
ed. On the 18th of March, 1872, the Leg
islature of Virginia passed an act declar-
ing that nothing should be received in
payment of taxes except gold or silver
coin, United States Treasury notes, OF
notes of United States National banks.
In the case of Antoni VS.. Wright the
Virginia Court of Appeals held that this
aforementioned act wac unconstitutional
and void in that it impaired the obliga.
ton of the States contract with her bond
and coupon holders. On the 25th OF
March, 1873. the State Legislature pass
ed an act providing that there should be
deducted from the coupons of the fund
ing bonds issued under the act of 1871
when such coupons were presented in
payment of any dues to the State, a
State equal to tax of One:half of one
per cent. on the market value of the
bonds from which said coupons had been
cut. This act was slightly modified in
1874, but was re- enacted in its original
form in 1876. Shortly subsequent &c
that time the plaintiff in error, Hart
man, a citizen and property holder o.
Richmond, Va, rendered to Greenhow,
the tax collector of the city, in payment
of taxes, $24 in coupons cut from tht
aforesaid funding bonds and 1888 il
money, that being the amount of taxes
due by him to the State. The tax col
lector refused to receive the coupons a
their face value in payment of Hart
mans taxes, on the ground that the &C
of 1876 required him to deduct from thu
coupons the State tax of one half of ont
per cent. Hartman thereupon applied
to the Supreme Court of Appeals for |
writ of naanddnaus to compel the tax col
lector to receive the said coupons ant
money in payment of his taxes. By al
equally divided court the mandarin
was refused. Hartman thereupon ap
pealed to this court,
OPINION OF THE COURT.
In long and carefully written opin
ion Justice Field, after reviewing tn
history of the debt of Virginia and tn
Legislation of the State with reference
thereto, expresses the opinion of thi
court, in substance, as follows:
The power Of the State to impose ,
tax upon her own obligations is a sub
ject upon which there has been aidiffer
ence of opinion among jurists and states
men. But whatever may be the Wises
rule as to the taxability of securities
is settled that any tax levied upon then
cannot be withheld from the interes
payable thereon. This was the judg
ment in the case of Murray vs.. Charles
ton (96 United States 445, where tn
court held that by the Legislation OF tn
city its obligations to its creditors wa
impaired, and, however great its powe
of taxation, it must be exercised, bein,
a political agency of the State, in sub
ordination to the inhibition of the Fed
eral Constitution against legislation i'm
pairing the obligation of contract
|
present case, but the present case is still
stronger for the creditor. The Fundin
act made the bonds issued under it pay
able to order or bearer, and made tn
coupons payable to bearer. The bond
and coupons were SO far distinct and in
dependent contracts that they could b
separated from each to her and transfer
red to different hands. This court la
l hold hot oh h,x
all the essential attributes of CONNER
cial paper that they are separate claim
against the State, and may be used t
support separate and independent &C
| tiOns.
COUPONS DISTINCT CONTRACTS.
The coupons held by Hartman, th
petitioner, were distinct contracts, i'm
posing their own separate obligation
upon the State. Hartman was not tn
owner of the bonds to which they ha'
been originally attached. In his hand
they were as free and discharged from
all liability on those bonds as though
they had never been connected witt
them. And argument is hardly neces
sary to prove that an act which require
the holder Of one contract to pay th
| taxes Levied upon another contract hell
| by a stranger cannot be sustained. Sucl
| an act is not legitimate exercise of tn
taxing power. It undertakes to impos
upon one the burdens which should fall
| if at all, upon another. The Fundin,
act stipulated that the coupons shouli
| be receivable for all taxes and dues T.
the State for their full amount. and up
on this pied &c the holders of the bond
of the State surrendered them and tool
new bonds for two thirds of this amount
The act of 1879 declares that the coupon
shall not be thus received for taxes TO
their full amount, but only for such por
ton as may remain after q tax subse
ouently levied upon the bonds to which
they were originally attached is deduct
ed. If this act does not impair the con
tract with the bondholder, who was au
thorized to transfer to others the coup
ons with the quality of receivability fol
taxes annexed, it is difficult to see il
what way it would be impaired, ever
though the tax on the bond should
equal the whole face of the coupon. |
against the express terms OF its contrac
the State can take portion of the in
terest in the shape of tag On the bong
it may at its pleasure take the whole
This Court is clear, therefore, that the
act of the Legislature ofthe State of Vir
GINA of 1876 requiring the tax on bel
bonds issued under the Funding act Of