The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1881-02-10

justment of liabilities between each other tn
'' debts of the parent State should be rataoiy az
portiOned among them. On this su3Ject Aen
e says: "Ifa State should be divided in respec
to territory, its rights and obligations are NO
Impaired; and if they have not been apportion
f ed by special agreement, their rights are TO D
enjoyed and their obligations fulfilled by a.
r parts in common."-( Commentaries, LIST yof
f 263 And Haeck, speaking of State dlvlde'
l into two or more distinct and independent soy
e ereignties, says: In that case the obligation
1 which have accrued to the whole before the Gil
vision are unless they have been the subject
special agreement, ratably binding upon TN
different parts, This principle is established
by the concurrent opinions OF teXt-Wrltels, TIL
decisions of courts and the practice OF ma
tons. X international Law, oh 3, sec. ~ F.
In conformity with the doctrine thus states
, by Haleck both States-Nirginia and Yves
pirginia-have recognized in their Constitu
tions their respective liability for an equitable
proportion of the old debt of the State, ano
have provided that measures should be tnker
for its settlement. The Constitution of Vir
ginia of 1870 declared that the General As
semlly should provide by law for adjusting
with the State of West Virginia the proportion
of the public debt of Virginia proper 10 be
t horne by the States of Virginia and West Wiz
ginia," and should provide that such sums
as shall be received from West Virginia shall
, he applied to the payment OF public debt o.
the State. TART 10, sec 1917.
The Constitution of West Virginia, which
went into effect in 1868, declared that IAN
equitable proportion of the public debt of the
Commonwealth of Virginia prior to the lat day
of January, 1861" should be assumed" by the
State, and that the Legislature should "ascer-
tain the same AS soon as practicable and pro-
vide for the liquidation thereof by sinking
fund sufficient to pay the accruing interest and
redeem the principal within thirty four years.
Art. 8, sec. g.
But notwithstanding these constitutional
requirements and various efforts made to adj
just the liabilities of West Virginia. nothing
was accomplished up to March 3d. 1871, and it
is stated by counsel that nothing has been ac
complished since. AS might have been eX
pected, the position of Virginia was not
pleasant one-being charged with the whole
| Indebtedness which accrued before the fOrma-
ton out OF her territory of new State, and
entitled to, without being able to obtain a con-
tribution from the new State Of 8 part Of it,
corresponding proportionatey to her extent
and population. She, therefore, undertook to
| effect separate adjustment with her creditors
and for that purpose on the Both Of March,
1871 passed an act known as the funding act"
of the State. 1t is entitled An act to provide
for the funding and payment of the public
debt" Its preamble rected that in the ordi-
vi tllc otdle
of West Virginia it was provided that she
should take upon hersefa just proportion of
the public debt OF the Commonwealth of Vir-
ginia prior to January /, 1861 and that this
| provision had not been fulfilled, although re-
peated and earnest efforts in that behalf had
been made by Virginia; and then declared that
ito enable the State of West Virginia to settle
her proportion of said debt with the holders
| thereof, and to prevent any complications
Il a,,tf H.,
any other manner OF settlement, and "for the
purpose of promptly restoring the credit of
Virginia, by providing for the certain and
! prompt payment OF the interest on her proper
lion of said debt, as tie same shall become
due" the Legislature enacted; that the owners
of the bonds, stocks, or interest certificates of
| the State with few eXceptiOns) might fund
two-thirtis ut the same and two-thrds of the
interest due or to become due thereon up to
July l, 1871, III 6per cent coupon or registered
bonds of the State, 10 run thirty-four years; the
bonds to be made payable to order or bearer,
and the coupons TO bearer, The act declared
that the coupons should be payable semi ,annu-
ally, and ''be receivable at and after maturity
| forall taxes, debts, dues, and demands due the
State" and that this should be so expressed on
I their face. For the remaining one-third the
amount of the bonds thus funded the act pro-
vided that certificates should be issued to the
creditors setting forth the amount of the bonds
| not funded, with the interest thereon, and that
| their payment would be provided for i'll accOr
lance with such settlement as might be subsc
quently had between the two States; and that
| Virginia would hold the bonds surrendered, so
| far as they were not funded, In trust for the
| holder or his assignets. The bonds OF the state,
with the accumulated interest, then amounted
10 over forty millions ofdolars
Under this act large number of the credi-
| r. SIaft, haiGnl; nts in
| Guiding interest thereon, to about thirty mil
| lions of dollars, surrendered them and took
new bonds for two-thilds of their amount and
certificates for the balance. A contract was
| nus cOnsummated between the State and the
| hoders ot The new bonds, and all subsequent
holders OF the coupons, from the obligation OF
which she could not, without their consent, re-
| lease herself by any subsequent legislation.
| he thus b und herself, not only to pay the
bonds when they became due, but to receive
| the interest coupons from the bearer at and af-
Ter their maturity, to their full amount, for
nv taxes or dues by him to the State This
receivability of coupons for such taxes and
iues was written on their face and accompa-
med them into whatever hands they passed
| II constituted their chief value, and WAS the
man consideration offered to the holders of
the old bonds TO surrender them and accept
new bonds for two-thirds of their amount.
In Woodruff VS.. Trapnall, reported in 10th
! Howard, a provision in an act of Arkan
| sas, similar to this one, that the bills ard
notes OF the Bank of the State of Arkansas.the
capital of which beon ged to the State, should
be received in all payments of debts due 10
the State of Arkansas, was held to be con
| tract with the holders ofsuch notes which was
| binding on the State and that the subsequent
repeal of the provision did not affect the notes
previously issued The notes" said the court.
are made payable 10 bearer; consequently
every bona file holder has right, under the
2Sth section" Qhe one making the notes re-
ceivable for dues to the State) ito pay the
State any debt he may owe it in the paper of
the bank. 1t is continuing guaranty by the
State that the notes shall be so received. Such
"A contract would be binding on an individual
and is not the less SO on the State. And that
The Legislature could not withdraw this obi
CATION from the notes in circulation at the
lime the guaranty was repealed is a position
which can require no argument" In Furman
vs. Nicoll, reported in the 9th Wallace SIM
liar provision in an act of Tennessee, declaring
that ceI tain notes OF the bank of that State
should be "reccivable' at the Treasury of the
State and by taX-collectoTs and other public
officers lin all payments for taxes and other
moneys due the State, was held by this court
unanimously to constitute a valid contract be-
tween the State and every person receiving
note ofthe bank. An attempt was make in
the case to restrain the o.; Grafton of the guar
aniy contained in the provision to.the person
who received the note in the course Of his
dealing with the bank, but the court said ::
The guaranty is in no sense personal one.
1t attaches to the note-is par. of it, as much
so AS if written on the back of it; goes with
note everywhere, and invites every one who
has taxes to pay to take it.
Yet Notwithstanding the language of the act
of March 80, 1871, providing that the interest
coupons of the new bonds should "be receiva-
BILE at and after maturity for all dues,
and demands due the State" and this was so
expressed upon their face, the Legislature of
Virginia, less than one year afterwards ION the
18th of March, 1922, passed an act declaring
that thereafter it should mot be lawful for the
officers charged with the collection of taxes or
other demands Of the State then due or
which should thereafter become due ito re-
ceive in payment thereof anything else than
gold or silver coin. United States Treasury
notes, or notes Of the national banks of the
United States This act as seen on its face,
is in direct conflict with the pledge of the State
!, of the previous year, and with the decisions of
: this court to which we have referred. Its va
, lidity. as might have been expected, was soon
, attacked in the courts as imparing the obliga-
ton of the contract contained in the funding
I~.{z 81. y