Case Name: The Governor et als. vs. M'Ewen and sureties
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1844-12
Citations: 5 Hum. 241
Docket Number: 
Parties: The Governor et als. vs. M‘Ewen and sureties.
Judges: 
Reporter: Tennessee Reports
Volume: 24
Pages: 241–289

Head Matter:
The Governor et als. vs. M‘Ewen and sureties.
1. A bill was filed in the name of the Governor of the State and the Commissioners of Common Schools against the Superintendent of Public Instruction, and against two sets óf sureties, for different periods, for an account of the sums of money received by such functionary during his administration of the common school fund. It is held,
1st. That a Court of Chancery war the more appropriate forum for the settlement of the various and complicated transactions involved, and adjusting the respective liabilities of the two sets of sureties. And 2d. That the bill was not multifarious.
2. The Superintendent of Public Instruction and his subordinate Agents are bound to collect the moneys due the Common School Commissioners, in such funds, and such only, as are receivable by the State through its agents in discharge of taxes.
3. Where funds current at the time and place of the reception of them, became in a reasonable time thereafter uncurrent, by unforeseen events, in the hands of the Superintendent or subordinate Agents, the loss to the extent of its diminished value shall not fall on them, if it appear, that at the time'and under the circumstances, the reception of the funds was prudent and proper, and for the probable benefit of the State.
4. A public collector shall b« held responsible if he fails by negligence to collect k sums of money which, by the use of reasonable diligence, he might have collected.
5. When a public functionary uses public moneys for his own private purposes, he is chargeable with compound interest.
6. The Legislature of the State, in the absence of constitutional prohibition, has the supreme and unrestricted control over the property and money of the Stale, and when they, or either of them, are in the hands of a citizen, it has the power to dismiss or compromise suits instituted for the recovery thereof according to its own sense of the interest of the State and right to the citizen, and this power may be delegated.
7. A resolution of the legislature, appointing commissioners to settle and compromise a suit against the sureties of the Superintendent of Public Instruction, “upon principles of right and justice towards the sureties, and to the best interest of the school fund,” and directing that the report of said commissioners should be made the judgment of the court in which the suit was depending, is not in violation of the 10th section of the 11th article of the Constitution ofthe State.
8. The board of commissioners of school funds have the power to make all contracts in reference to the school fund, not prohibited by law, and may compromise a doubtful claim for the better security of the fund, yet it being a public corporation, subject to legislative modification or total repeal, the vesting it with such power, does not deprive the legislature of a similar power, when itmay choose to exert it by act or resolution.
The 10th section of the 11th article of the constitution, provides, tbat the fund “called the school fund, shall remain a, perpetual fund, the principal of which shall never be diminished by legislative appropriation, and the interest thereof shall be inviolably appropriated to the support and encouragement of common schools throughout the State; and no law shall be made authorizing said fund, or any part thereof, to be diverted to any other use than the support and encouragement of common schools; and it shall be the duty of the General Assembly to apppoint a board of commissioners for such term of time as they may think proper, who- shall have the general superintendence of said fund, and who shall make a report of the condition of the same from time to time, under such rules, regulations and restrictions as may be required by law.”
In 1836,’the legislature in execution of this provision of the constitution, passed an act entitled, “an act to appoint a Board of Commissioners of Common Schools, and to secure the common school fund.”
This act created, the Treasurer of the State, the Comptroller of the Treasury and an Executive officer, to be called the Superintendent of Public Instruction, “a body politic and corporate, by the name and style of the Board of Commissioners of Common Schools,” which “may hold and possess property of any kind in trust for the use of common schools,” &c. &c. “and may do and execute all acts which a corporation or body politic, in law, can lawfully do and execute.”
This act constituted the Superintendent the President of the Board of Common Schools, and directed all notes, bonds, &c. executed by the board to be signed by him.
The second section provides, that the Superintendent shall be elected for two years, and shall give bond with sureties for the faithful discharge of his duties in the sum of $100,000, payable to the Governor.
The 4th section directs him to make settlements with all the officers previously intrusted with the administration of this fund, and directs all those having the property, notes, obligations, &c. &c., of the school fund, to deliver them to the Superintendent, and directs the said Superintendent to collect the funds and proceed in the administration of the same as directed by law.
The 11th section is as follows:
“As fast as the curtailments and interest shall be paid, or any of the school funds shall be otherwise collected, it shall be paid by the person collecting, or having possession of the same, into the hands of the Superintendent of Public Instruction, who shall invest the same by subscribing for stock of the Planters’ Bank of Tennessee, in the name of the Board of Common School Commissioners; and who shall in like manner re-in vest the profits as they accrue on the capital stock, or deposit the same upon the best terms, and for the highest rate of interest he may be able to obtain, or he may deem most advisable.”
Under this state of legislation R. H. McEwen was elected Superintendent for two years, in accordance with law, with O. B. Hays and others as his sureties in a bond, conditioned as follows:
“The condition of the above obligation is such, that whereas, by an act of the General Assembly of the State of Tennessee, passed on the 19th day of February, 1836, entitled “An Act to appoint a Board of Common School Commissioners, and to secure the Common School fund, the office of Superintendent of Public Instruction is created and his duties are therein and thereby defined: And whereas, Robert H. McEwen has been appointed to that office by a joint vote of both branches of the General Assembly for the term of two years, and until his successor shall be elected and qualified agreeably to the provisions of said act. Now, if the said Robert H. McEwen shall truly and faithfully discharge the duties of said office of Superintendent of Public Instruction as. required by said act, during his continuance therein, then the above obligation to be void, otherwise to remain in full force and virtue.”
At the expiration of two years he was again elected for two years, and again gave bond with sureties, conditioned as the law directs, as follows:
“The condition of the above obligation is such, that whereas, by an act of the General Assembly of the State of Tennessee, passed on the 19th day of February, 1836, the office of Superintendent of Public Instruction was created, and whereas, the said R. H. McEwen was elected to that office for the term of two years from the 20th February instant, and until his successor is elected and qualified, by joint vote of both Houses of the General Assembly of 1837-8. Now, if the said R. H. McEwen shall truly and faithfully discharge the duties of his office as required by said act, during his continuance therein, then the above obligation to be void, otherwise to remain in full force and virtue.”
In 1839 the legislature directed a bill to be filed against the Superintendent for an account.
This bill was thereupon filed in the Chancery Court at Franklin, which so far as is necessary to be set out, is as follows:
“Humbly complaining, show to your honor, your orators, James K. Polk, Governor of the State of Tennessee and successor in office to Newton Cannon, late Governor of said State, and the Board of Commissioners of Common Schools for the State of Tennessee, who sue in behalf and for the use of Common Schools and Academies for the State of Tennessee, and for all other persons and corporations interested in the subject of tire suit, who may come in and contribute to the costs, &c., that some time about the 24th of February, 1836, one Robert H. McEwen, a citizen of Davidson county, was by joint vote of both Houses of the General Assembly of the State of Tennessee, elected Superintendent of Public Instruction for said State, and ex officio President of the Board of Commissioners of Common Schools for the term of two years, and until a successor should be elected to said office and qualified.
“Your orators would represent that said McEwen, on the 24th of February, 1836, entered into bond, with Oliver B. Hays, John Scott, Robert C. K. Martin and John Trimble, of Davidson county, and William Edmiston and Samuel E. Gilleland, of Lincoln county, his sureties, payable to Newton Cannon, then Governor of said State and his successors in office, with a penalty of $100,000, conditioned for the faithful discharge of the duties of his office.
“After the execution of said bond, which was received and approved of by the Governor, the said McEwen qualified and entered upon the discharge of the duties .of his office. At the time said Superintendent entered upon the duties of his office, there was a very large amount of money belonging to and accruing to the Common School fund by the constitution and laws cf the State, viz, from the dividends and bonds and bonuses of the Planters’ and Union Banks, the Life and Trust Insurance Company, Marine and Fire Insurance Company; from Mason Lee’s estate, debts due the old Bank of Tennessee at Nashville an A at Knoxville; from Joel Parish’s sureties; from the county common school commissioners and county bank agents, bonds, notes, stocks, and other effects in the hands of county school commissioners and agents appointed to close the concerns of the bank of the State, moneys due for taxes on tippling houses, and from many other sources and persons, as well as a large amount of other stocks, debts, and effects, all of which it was made the duty of the Superintendent to receive and collect without delay.
“By the 11th section of the act of 1835, ch. 23, it is made the duty of the Superintendent, as fast as any of the school funds should be received by him, to invest the same by subscribing for stock of the Planters’ Bank of Tennessee in the name of the Board of Common School Commissioners, and in like manner to re-invest the profits as they arise on the capital stock, or to deposite the same upon the best terms and for the highest rate of interest he could obtain.
“Your orators would represent, that shortly after said Superintendent entered upon his trust, he received very large sums of money from the various sources above stated and others; but in violation of his trust and duty, failed either to vest the same as he received it in Planters’ Bank stock, or to deposite it at the highest rate of interest which he could have obtained. But on the contrary thereof, though he made some investment in stock, as they have been informed and believe, he constantly kept large balances in his hands after paying the expenses incident to his office.
“The sum retained by the Superintendent, was never attempted to be deposited by the Superintendent at the highest rate of interest he could obtain from the Bank, or at any rate of interest, as they arc informed; but the same was kept in his own hands, used in trade, loaned out at usurious interest at times and at other times at legal interest to his friends, acquaintances and connexions.
“Your orators would represent that these balances retained in the hands of the Superintendent began gradually to increase some few months after the date of his bond, and continued to increase gradually or nearly so until the expiration oftwo years from his qualification, when the balance withheld from investment and deposite as before stated, amounted to one hundred and forty or fifty thousand dollars or more, as they are informed and believe.
“By this unjustifiable breach of trust on the part of the Superintendent, the Common School fund has sustained much loss.
“In the first place, bad.the Superintendent invested the funds in his hands, as he received them, in Planters’ Bank stock, and then re-invested the dividends in that stock, the fund would have made compound interest.
“Or if he had deposited the money in Bank at the highest rate of interest, they are informed and believe he could have obtained six per cent, payable semi-annually, and by depositing this interest on the same terms he could have made for the fund compound interest or more, and thushandsomely increased the fund.
“The Superintendent had his residence and the funds in Nashville where the Bank was located and doing business, and no obstacle existed to immediate investment or deposite so as to make the funds produce interest immediately after it came to his hands from time to time.
“Your orators have been informed and believe that the said Robert H. McEwen, from time to time, within the period of the first two years, of his acting as Superintendent, loaned out to divers persons a large portion of said funds in his hands to different persons or friends, and took from them their bonds, notes, bills of exchange, or other securities, with endorsers or securities for the same. But the amount loaned, the times when loaned, to whom loaned, the securities or evidences thereof taken, when due or payable, they are not informed, as the same are in' the hands and possession of said McEwen.
“By thus loaning out the school funds, the said McEwen has endangered their ultimate collection, and has placed the same beyond the control of the present Superintendent and the Board of Commissioners of Common Schools, whose duty it is by by law to apportion them among the different counties of the State and have them collected and paid into the State Bank, to be paid out upon the warrant of the Comptroller, that the benevolent objects of the State may be carried into effect.
“This conduct of the Superintendent, R. H. McEwen, has further lessened the security of said fund by abstracting so large a sum from it beyond the penalty of his bond, and thereby defeating your orator’s redress in a court of law against his securities for the excess, and thereby placing and resting the same upon his own responsibility, or compelling your orators to come into your honorable court and have said securities placed' under the control of your honor, and placed in the hands of a receiver, that they may be collected without delay, and with as little loss as possible, and paid into the Bank of the State for the use of common schools.
“Your orators have been informed and believe, that the defendant, -R. H. McEwen, has, during the term of his continuance in office as well in the first two as in the second term of two years, loaned out other portions of said school fund to the same and other persons, and has received for the same more than six per cent, per annum for the times said moneys were loaned. The amount of said interest so received, or times when, or the persons from whom received, they are not informed of, and have no means of knowing, except by the discovery of the defendant.
“They are informed and believe the said McEwen did not keep' any regular account of said loans and receipts of interest, or if he did, he has wholly failed and refused to furnish the same to the present Superintendent, the Board of Commissioners for Common Schools, or Joint Select Committee of the Senate and House of Representatives of the State, who were appointed to investigate his accounts with him, and who called upon him for said account, as they are informed and believe.
“Your orators are also informed and-believe that the said R. H. McEwen, in continuing the loans upon the notes, bills, drafts and securities before mentioned; and in renewing the same from time to time, has received by way of interest or discount more than'six per. cent per annum on many of said loans, but the amount thereof, or on which or when, they have no means of knowing but by the discovery said McEwen.
“They are also informed that in certain instances, butin how many they are not informed, the said McEwen has loaned out said fund to his friends without requiring them to account for or pay any interest, when said funds could have at any time been placed on interest, if said McEwen had properly discharged his trust.
“Your orators have no means of ascertaining the amount or dates of these latter loans, or the times they were kept up, but by the discovery of said McEwen.
“Your orators have likewise been informed that the said Mc-Ewen has from time to time, used said funds, or apart thereof, in trade or speculations, either in his own name, or in the name of McEwen, Whiteman & Co., John Scott, William B. Robinson & Co., or in some other name or names; but what amount was so used or invested they are not informed, and have no means of knowing but by the discovery of said McEwen, nor do they know what time said moneys were used in trade or speculations; nor the form in which they were so invested, whether in the shape of loans or otherwise, all which they require the defendant to make a full disclosure of, with' an exact and full account, containing persons, dates and amounts, with the character of the business and description and locality of any property real or personal, purchased with any portion of said funds in this State or elsewhere.
“Your orators would further represent, that in the month of February, 1838, the said Robert H. McEwen was again elected Superintendent of Public Instruction for the next ensuing two years, ending the 19 th of February, 1840, andón the 19th of February, 1838, qualified and entered into bond and security in the penalty of one hundred thousand dollars, payable to Newton Cannon, then Governor of the State of Tennessee and his successors in office, with the said Oliver B. Hayes, John Scott, Samuel E. Gill eland, and John Trimble, and John La-nier, of Lincoln county, and E. McEwen and Samuel Rose-borough, of said county, his securities, conditioned for the faithful performance of the duties of his office for said term of two years, which said bond is here exhibited by a copy thereof filed, marked B, and prayed to be taken as a part of this bill, which said bond was also received and approved of by the then Governor.
“The said McEwen then entered upon the duties of the second official term; and although it was his duty to have immediately proceeded and collected all the moneys he had before that time loaned out, and called in all of said moneys he had vested in trade or, property, and vested the same in Planters’ Bank stock, or deposited them in bank at the best interest he could obtain, he wholly failed and refused so to do, but continued to indulge said debtors, and to keep said moneys in trade or on loan; and during the said last term likewise loaned out other moneys, and appropriated them to his own use, in violation of his duty as Superintendent.
“For these last loans, as well as the former, they are informed the said Robert H. McEwen received more than legal interest in many cases, and in others he may have loaned to his friends without interest; but to what amount he loaned, to whom and for what times and what amounts of interest he received, or the rate of interest per annum, they are not informed, and can only rely on the discovery of said defendant; but they have been informed, and believe, that in many instances he received as much as, or more, than nine per cent, per annum.
“Your orators are informed, and believe, that the said R. H. McEwen continued pretty much the same course of dealing with the moneys in his hands during the last two years that he did in the first two, though they believe the amount by him paid out in his current expenses, and by him paid into bank as required by law, was greater, compared with the moneys on hand, than in the two previous years, though of this they have no certain means of information, as the said McEwen did not keep any regular account of all his receipts and disbursements, which were many and varied, forming a long and complicated account as well for as against himself.
“Nor are your orators enabled, from the reasons aforesaid, to know or state what remains in the bands of said McEwen, nor the amount of his receipts above, which difficulty was in part produced by the failure to give duplicate receipts for all moneys by him received, that a duplicate thereof might, by the agent,. school commissioner, bank, or other person making the payment, be transmitted and filed with the Comptroller of the Treasury.
“But from the best'lights your orators have been able to obtain, the said McEwen received, as Superintendent, for the first two years of his term, between three and five hundred thousand dollars.
“Of this sum he invested in Planters’ Bank stock, at various times and in various amounts, about two hundred and thirty-one thousand seven hundred dollars, for all which he has, as he alledges, the certificates of stock, but which he has failed to hand over to the present Superintendent, R. P. Currin, but retains them in his possession, with his books and accounts, which he refuses to surrender up to him, although he has been applied to for that purpose, as they are informed and believe,
“The said R. H. McEwen has also made various payments to county agents for their salaries, and other expenses attending the collection of the funds, and his duties as Superintendent, from five to ten thousand -dollars, but the amount thereof is not known to your orators.
“During the second term of two years, the said McEwen, as they are informed and believe, received and collected from sources other than the proceeds of the sales of the Ocoee lands, between one hundred and two hundred and fifty thousand dollars, not taking into account about fifty thousand dollars of bank stock received from the county commissioners of common schools during the four years.
“They are also informed and believe, the said McEwen received from the sales of the Ocoee lands about three hundred and sixty or seventy thousand dollars, or more, at various times and in various amounts, and during said term he paid in at different times to the Bank of Tennessee, as capital stock, about four hundred and seventy-two thousand five hundred and fifteen dollars, and as sinking fund, about thirty-five thousand two hundred and twenty-nine dollars, for which he holds the evidences.
“Said R. H. McEwen has also, during said two- years, paid out various small sums of money to county agents and others, as necessary expenses attending his duties as Superintendent, the amount of which they are not informed.
“The above statement of receipts and disbursements are not made upon the knowledge of your orators, and may be inaccurate in many particulars, and they reserve to themselves the right to correct the same whenever they shall find any errors.
“Your orators would further represent to your honor, that as they have been informed and believe, and so charge the fact to be, the said McEwen has been guilty of great neglect during the whole time of his service as Superintendent, in failing to collect large sums of money due the school fund by good and solvent men, which could have been collected by reasonable diligence.
. “Ampng others, the debts due the eld State Bank at Nashville, and from Joel Parrish’s securities, and he ought in equity to be charged with all the funds due which he has so failed to collect, and which he could have collected by reasonable diligence.
“They are also informed, that he has collected several thousand dollars of the Academy fund, which he has failed to account for, and pay over according to law.
“Your orators would further represent, that as they are informed and believe, the said McEwen has in his possession and control, all the books and original papers pertaining to his office, without which the present Superintendent is much embarrassed in the discharge of the duties of his office, and the withholding of which is very injurious to the school fund and its officers; and said McEwen, though applied to for that purpose, refuses to deliver them to the present Superintendent.
“Your orators are advised, that from the uncertainty of the amount that may turn out to be due from R. H. McEwen, over and above the sum by him admitted to be due from him, in his report to the last General Assembly of the State, when he stated it at $107,101 08, they deem they have a just right in equity to have the notes and claims due the fund .in the hands of said McEwen, brought into court and placed .in the hands of a receiver, collected and paid over to your orators or in bank, and hold McEwen and his securities responsible for all such sums as cannot be collected by the receivers, and for all balances unaccounted for.
“Yourorators are advised, they have aright to consider said claims as belonging to the school fund, though improperly placed in that situation by R. H. McEwen, not as a satisfaction or discharge of the securities from any part of their liability on their bonds, but as school moneys thus vested, and they have a clear right to hold said McEwen and his securities responsible for all eventual losses, as well in the collection of said funds as in his other breaches of trust.
And may it please your honor, on a final hearing hereof, to decree that an account be taken of all said trust moneys by said Rob’t H. McEwen, received as Superintendent aforesaid, during his continuance in office.
And in taking said account, he and his said securities be charged with all sums of money by him received, and all moneys which he could have recovered by reasonable diligence, and which he has failed to invest and pay over according to law; with compound interest, with annual or semi-annual rests, as to your honor shall seem equitable.
That your honor will decree that said defendants shall pay the balances found in the hands of said Rob’t H. McEwen into the Bank of the State for the use of common schools and academies, or to your orators for the purpose of being paid over.
“And may it please your honor to declare the rights of parties; and decree that said McEwen deliver up all stocks and effects and evidences of debts in his hands belonging to the common school fund, together with all certificates of stock, and that he deliver up to the President of the Board of Commissioners of Common Schools, the present Superintendent of Public Instruction, or to your orators, all the books of original entries and others pertaining to the office of Superintendent, together with all other matters and things in his hands, or under his control, belonging to the common school fund, or connected with the office of Superintendent.”
To this bill there was a demurrer by the defendant McEwen and a portion of the sureties, on the ground that the obligee in tho bonds had a plain and unembarrassed remedy by a suit at law on the bonds; and, second, that the bill was multifarious.
This demurrer was overruled and the defendants ordered to answer.
McEwen answered as follows.
“It being made respondent’s duty to redeem the circulation of the Bank of the State of Tennessee, he retained in his hands, at all times, a sum.which he regarded to be adequate to that purpose, the amount of said circulation being, according to the books of said bank, the sum of $13,973 70 cents. Respondent made no deposits of the surplus funds in his hands in the Planters’ or any other Bank, because neither that institution nor any other bank in the State, so far as respondent has been informed, would receive deposits bearing interest at all, much less if the deposits were subject to be withdrawn at the will of the depositor. This being the- case, respondent therefore thought himself at liberty, according to the letter, or at least the spirit of the act of 1835, c. 23, s. 11, to loan to individuals, as often' as it could be done with safety, any of the surplus profits of the stock belonging to the school fund, or any of the uninvested capital of the school fund which remained at any time on hand. He pursued this course from the first; making generally on the first of every month investments of some portion.of the fund in Planters’ Bank stock. The collection of the fund being embarrassed with many difficulties, -went on tardily; on which account, respondent addressed a circular to the county agents, dated September 5, 1836, a copy of which is herewith filed, and to be taken as part of this answer, marked Exhibit No. 2. This not being understood, or misunderstood by some, respondent addressed a third letter of instructions to them on the 24th of December, 1836, a copy of which is also herewith filed, and to be taken as part of this answer, marked Exhibit No. 3. From these circulars the court will see what measures respondent adopted, to advance the collection of the • fund, and in general to discharge the- duties of his office. On the 17th of October, 1836, respondent reported to the General Assembly, in obedience to a resolution, the amount due to the commissioners of common schools from the several counties; the amount received from the several counties by him; the amount of bank and turnpike stock, and their-productiveness; also the amount received by him from the Bank of Tennessee, and from individuals, &c. &c.: to which report, printed in the senate’s journal of the called session of the legislature, pages 41, 42, respondent begs leave to refer the court, as part of this his answer. From this report it will be seen, that respondent had then collected, from the counties, in money, $38,425 45 cents; from the Bank of the State of Tennessee and from individuals, $105,264 49 cents; together, $143,790 74 cents; and had invested in Planters’ Bank stock, $141,700 00 cents. On the 2d of October, 1837, respondent, at the stated session of the legislature, made his regular biennial report to that body, which will be found printed in the senate’s journal, from page 501 to page 506, inclusive; to which he begs to refer the court, as part of this his answer.- This report shows, that his receipts had been to that time, from all sources, $300,346 15 cents; and his expenditures, on all accounts, $239,678 78. On the 21st of November, 1837, he again reported to the General Assembly, in obedience to a resolution of that body, when he,stated his receipts, down to that day, at $326,720 16 c„ents; and his disbursements at $239,968 88 cents, of which $231,700 00 cents had been invested in Planters’ Bank stock; and, deducting disbursements from receipts, leaving a balance in respondent’s hands of $86,751 28 cents, errors excepted. The general suspension of specie payments by the banks in the United States had occurred in May, 1837, to which, and its operation on the collection of the school fund, respondent called the attention of the legislature in the following terms: ‘It may here be further remarked, that a considerable amount of the money received by him, since the general suspension of specie payments by the banks, consisted in notes of the Mississippi and Alabama banks, and other uncurrent bank paper, which had been taken by the agents previous to, or about the time of the suspension, or since, in the payment of doubtful debts. These notes have been at a discount of from 2 to 25. per cent, and in their disposition required considerable negotiation, to avoid the sustaining of a loss; this has been effected with no other than that arising from delay in the use of the money.’ Respondent conceived it to be his duty to malte the negotiations here alluded to; and will state to the court, that they consisted of such negotiations as are usually resorted to for the purpose of effecting such an object, including loans of unbankable money to individuals on time, sometimes without interest, to be repaid in bankable funds. These negotiations were not undertaken to make private gain for respondent, but to save the school fund from loss, as well as himself: for without these, respondent must have suffered severely from this source, since he has always charged himself with the full amount of money received, without noticing the kind of funds in which it was paid. This is one of the reasons why there was, at that time, and for some time af-terwards, considerable amounts of money on hand uninvested. In the same report to the legislature, respondent laid before that body another cause of the accumulation of a surplus in his hands, in the following words: ‘He might have invested more than he has done in bank stock, but considering its depreciation in .market, and that the bank has ceased to declare any dividend since the first of January last (1837), and as the legislature would shortly convene, he thought it prudent not to extend such investments beyond those already made.’ Before respondent, however, had made this report, the legislature had, by resolution, on the 2nd of October, 1837, (see pamphlet laws of 1837-8, page 437) directed respondent not to invest any common school fund which might be in his hands, or which he might afterwards receive, in the stock of the Planters’ Bank of Tennessee, but that he should retain the same in his possession until otherwise directed by the General Assembly. Respondent looked upon this resolution as an approval of his omission to invest the school fund in Planters’ Bank stock. In respondent’s said report he called the attention of the legislature to the course which he had pursued, not only as above stated with regard to his omitting to invest the fund in stock, but also in regard to loans of the fund on the following termsr ‘What money, not invested in bank stock, could be safely and securely used to advantage by being loaned, or in the dis count of paper, has mostly, with the above exception, been so applied; thereby producing a profit upon the sum thus employed, of $3,537 50 cents, above stated. But in times so disastrous to the mercantile community, great caution was necessary; and no loans have been made, or paper discounted, where there was believed to be any hazard, or where any loss has been incurred.’ In the course thus pursued, he considered himself authorized by the 11th section of the act creating the office which he holds, and prescribing its duties. Respondent begs to refer the court to said report, as the same stands printed in the journal of the senate of the legislature of 1837-8, from pages 517 to 520, and prays that it may be'taken as part of this his answer. The legislature did not condemn respondent’s proceedings in the premises. The receipt of unbankable funds was not forbidden. The conversion of those funds into those that might be bankable, was not prohibited. The e,m-ployment of the fund in loans and discounts was not disapproved. The negotiations necessary to convert the fund from bad to good, were left, he thought, to his discretion. And on the 19th of January, 1838, in the third section of the act to establish a State Bank, &c. it was enacted, ‘that the money belonging to the common school fund, which now may be in possession of the Superintendent of Public Instruction, or which may hereafter come into his possession, shall be handed over to the-President and Directors of the Bank of Tennessee, as capital in said Bank,’ &c. The Bank commenced its operations on the 5th of July, 1838, on which day respondent deposited in it $46,893 78 cents, and continued to make deposites therein till the 29th of November, 1839, when his said deposits amounted to six hundred and fifty-five thousand eight hundred and sixteen dollars and ninety-eight cents ($655,816 98 cents.) In the meantime the collection of the school fund went on; and as the course previously pursued and reported to the legislature had, as he thought, been approved, he continued to follow it, the same causes still continuing to exist and operate, which had led to its adoption at first: accordingly in his biennial report, submitted to the legislature on the 8th of October, 1839, he detailed his proceedings as he had done to the legislature of of 1837. He begs to make said report a part of this his answer, and to refer the court for the same to the journal of the House of Representatives, from page 771 to 784, inclusive. Respondent was surprised to find that what had not been looked upon as irregular, much less criminal, by the legislature of 1837-8, was now esteemed illegal and utterly indefensible. The receipt of uncurrent money on any account, or for whatever reason, was now pronounced unauthorized; and it was laid down, that your respondent was liable for interest on all sums received by him and not invested in bank stock, or not deposited in bank, notwithstanding it might have' been received in unbankable' funds, and so must have been converted before invested or deposited: for it was said, that the receipt of unbankable funds was originally illegal,'and the approval of that course by the legislature of 1837-8, and their resolution that your orator should keep the funds in his hands till the Bank of Tennessee should be in a condition to receive it, as well as all that they did in the premises, would go for nothing. But your respondent avers, that loans and discounts of the common school fund in his hands, held and retained there because he deemed it inexpedient to invest it in Planters’ Bank stock, as well as loans of said fund made for the purpose of converting it into bankable funds, and all the negotiations thereof made for that purpose, were within the spirit of the act of 1835, above referred to; that the approval of the said loans, discounts and negotiations, -by the legislature of 1837-8, is equivalent to an authority to make the same; that a principal cannot at one moment approve and ratify the act of his agent, and in the next pronounce the same-act illegal and unauthorized, and hold the agent responsible as if his act had never been approved and ratified; that the securities taken for such loans and discounts, and in the course of such negotiations Iona fide on behalf of theprincipal and in the regular course of the dealings reported to the principal, and acquiesced in and approved by the principal, are binding upon the principal, and the agent is not responsible for the result of them, and that this is the case, both as to those loans, discounts and negotiations which were made and had before the report, and to those after it. And your respondent shows to your honor, that all the securities enumerated and particularly designated in the bill, and therein averred to have been taken on loans or discounts of school funds, were either taken upon such loans or discounts, or were taken in order to enable this respondent to convert unbankable funds into bankable; and he avers, that the whole of said loans, discounts and negotiations were approved by the legislature: some of them were within the spirit of the act of 1835 aforesaid, and'ihe rest were within the letter, as incident to the power and duty of investing the'school fund in bank stock and of depositing it in the Bank of Tennessee as capital. Much the largest part of said loans, discounts and negotiation, occurred in the two first years of your respondent’s service; but he has not preserved the original securities given for said loans and discounts, and he kept no book of such loans and discounts, so that he cannot state with precise accuracy how often they have been renewed, but he can state that the interest paid on such renewals has been fully accounted for. It is true, respondent was elected to the office of Superintendent of Public Instruction in the month of February, 1838, and that he qualified and gave bond as stated in the bill. Respondent denies that it was his duty immediately upon his re-election to collect the money loaned out -by him, and he avers that it was neither his duty nor in his power to collect it till the expiration of the credit allowed on said loans. He denies that it was his duty to invest any part of said fund in Planters’ Bank stock at any time after the commencement of his second term of service, or to deposit the same in said bank. He denies that he has invested any part of said fund in property on his own account, nor otherwise invested it in property than as it may be said to be invested when property has been taken in mortgage or trust to secure the repayment. Respondent continued to deal with the school fund during his second term of service, just as he ■had done in the first, so far as the same causes existed to justify it, and no farther.”
This answer contains the substance of the defence made by defendant McEwen and sureties.
Some proof was taken which need not be set forth here.
The case was argued before Chancellor Bramlett, at the May term, 1841, on bill, answers, replications and proof, when a decree was entered, which is as follows.
“It appeared to the court, that said Superintendent had, previously to the time of suspension of specie payments by the banks in May, 1837, invested large sums of money which he had collected in stock of the Planters’ Bank of Tennessee, and after the creation of the Bank of Tennessee, had invested large sums of money in stock of the Bank of Tennessee, as required by law, and that he had from time to time collected large sums of money over and above expenses and disbursements, which had not been invested either in stock of the Planters’ Bank or in stock of the Bank of Tennessee, and that he had loaned out to different persons at different times large sums of money so collected, and in particular to John Scott, with whom he was connected in business, and McEwen, Whiteman & Co. of which firm he was a partner. It is ordered, adjudged and decreed, that it be referred to the Clerk and Master, to take an account of all sums of money collected by said Robert H. McEwen as Superintendent of Public Instruction, belonging to the common school fund, colleges or academies, during the time of his continuing in office, or which by reasonable diligence he might have collected, and of whom and when the same was received, and how invested and disposed of, and what reasonable expenses have been paid by him and disbursements made, and how much was invested in Planters’ Bank stock and when, and how much was invested in stock of the Bank of Tennessee or deposited in said Bank, and at what time; and in taking said account, the Clerk and Master may examine the defendant upon oath, and require the production of all books, papers and vouchers, and take the depositions of witnesses for plaintiffs and 'defendant, and state separate accounts for the first two years, to the time of executing the second bond, and an account subsequent, from the date of second bond; and the following directions will be observed by the Clerk and Master in taking and stating the account: Upon the money loaned John Scott, compound interest will be calculated, and also on the money loaned to McEwen, Whiteman & Co. and also if any balances remained in bis hands over six thousand dollars (which sum the court think it reasonable for him to retain in his hands for the redemption of the notes of the old Bank of Tennessee, and other contingent expenses) before the time of the suspension of specie payments in May, 1837, which was not invested in stock of the Planters’ Bank of Tennessee, compound interest shall be calculated in the same manner. The court is also of the opinion, that the investment in Planters’ Bank stock should have been made in a reasonable time after the redemption of the money, which would be one' month, and interest should be calculated after such period had elapsed; and subsequent to May, 1837, it was no breach of trust to cease to invest the moneys collected in Planters’ Bank stock, as the same had become depreciated. This court is also of opinion, that the defendant had a right to receive of all his agents such funds as were received by them previous to the time of suspension of specie payments, if the same were current and passing at par when they received them and for a reasonable time afterwards; and the defendant was authorized to loan such uncurrent funds, with or without interest, for a reasonable time, to be returned in good funds; but if any loans were made before the month of May, 1837, they were unauthorized, and the defendant is tobe liable therefor, as the paper was up to such time uncurrent. Defendant is not liable'for receiving in depreciated bank paper any debts if the same were doubtful as to the solvency of the debtors, if he used such means as a prudent man would have done in his own business under like circumstances, or if he used the same modes of collection as other agents of monied institutions; and defendant will be permitted to show the kind of funds he received in payment of any debts, and the circumstances under which the same was received, and if it shall appear he acted with a view to the security of the fund in such particular case, then he is not to be charged with good funds when he received the debts in depreciated paper, except from the time when he converted the same into good funds after the suspension of specie payments, unless the debts were well secured, in which event he was not authorized to receive uncurrent money. The court is of opin ion,' that the defendant was not authorized to loan money or funds to the Holly Springs Bank, or to any other persons in Mississippi, and is properly chargeable with any loss that happened thereby. The defendant is not to be charged with interest on any money in his hands after the sqspension of specie payments, to the time when the State.Bank went into operation in 133S, unless the said money was loaned or used by him in his own business, or in trade; and where interest or profit was receivable, defendant must account for principal and interest secured, except in cases where defendant can show before the Master that the fund thus loaned was received in depreciated paper under the circumstances before stated, and the object of the loan was to convert it into good funds,- and then, if the same was secured and deemed good at the time, defendant is not to be charged therewith, except as before stated; but all other loans would be without authority. The Clerk and Master will charge the defendant with simple interest in all cases except the money loaned to John Scott and McEwen, Whiteman & Co. and when it appeared to have been used by defendant himself in his own trade or speculations. And the Clerk and Master will take an account of all the property, of every description, belonging to the common school fund, colleges or academies, which was under the control of the defendant during the time of his continuance in office, making to the defendant all just allowances, and will make his report to the next term of this court, until which time all other matters are reserved.”
The defendants appealed.
At the December term, 1841, the case was argued by the Attorney General and F. B. Fogg for the State, and R. J. Meigs for the defendants; when the following opinion was delivered.
Reese, J. delivered the opinion of the court.
The 10th section of the 11th article of the 2-eformed constitution of Tennessee declares, that the fund there called the common school fund, “shall remain a perpetual fund, the principal of which shall never be diminished by legislative appropria tion, and the interest thereof shall be invariably appropriated to the support and encouragement of common schools throughout the State, and for the equal benefit of all the people thereof; and no law shall be made authorizing said fund, or any part thereof, to be diverted to any other use than the support and encouragement of common schools; and it shall be the duty of the General Assembly to appoint a board of commissioners for such term of time as they may think proper; who shall have the general superintendence of said fund,” &c. The legislature, in 1835, in pursuance of this constitutional mandate, organized such a board, to consist of the Treasurer of the State, and a Superintendent of Public Instruction, the latter to be elected by the legislature for a period of two years, to be the President of the board, to give bond for the faithful performance of his duty, and to possess the powers and to discharge the duties more particularly enumerated in the act referred to, ch. 23. On the 24th of February, 1836, R. H. MeEwen, having been previously elected Superintendent of Public Instruction, gave bond with six others as his sureties, for the faithful performance of his duty according to law, and on the 19th day of February, 1838, the said R. H. MeEwen, having been re-elected to said office, gave bond as before, with the same six sureties, parties to the first bond, and two other additional sureties. 'The complainants, in their bill, in substance alledge, that MeEwen has omitted and failed to collect debts, which by reasonable diligence might have been collected; that of the sums by him collected he omitted to vest a portion in bank stock, according to law, and that he also omitted to deposit the same in banks on the best terms, or to deposit the same at all; that he retained large sums of money in his hands, employed large sums in mercantile and manufacturing establishments, in which.he was interested as a partner, and loaned out, and vested in notes, bonds and bills of exchange large sums; sometimes receiving a greater rate of interest than six per cent, and sometimes stipulating for no interest; and that he withholds from his successor the moneys, securities and books belonging to the office, and refuses to disclose the dates and amounts connected with the above transactions; and the bill prays an account, and that a receiver be ap pointed, &c. To this bill a demurrer was filed, because the plaintiffs had, it is said, an adequate remedy at law upon the bonds. But it is most obvious, from the case made out in the bill, not only that a court of equity has jurisdiction, but that it is the more appropriate forum for investigation and relief; the cause presenting numerous and varied enquiries, touching difficult and" complicated matters of account. The jurisdiction of the court can admit of no serious question.
But it is contended, in the second place, that the bill is multifarious. In what does this consist? The plaintiffs have a common claim against R. H. McEwen and six of the other defendants as to both bonds, and as to the whole time covered by account sought, and as to every particular thereof; and as to the the two additional sureties in the second bond, the claim, although circumscribed in time and amount, is identical in character with that effecting the others, involving questions of charge and discharge of the same nature and description. This doctrine of multifariousness, in each particular instance, peculiarly refers itself to the sound legal discretion of the Court, to be guided by the analogies of the decided cases, the principle of which, however, is the attainment of justice, by means the most convenient and least embarrassing. To have one bill against McEwen and six of the defendants, and another bill against said McEwen and those six with two others, would promote neither justice nor convenience; because if the latter two defendants had not a right as parties to examine and superintend the taking of the first account, the interest of the six would be to throw as much as possible of the responsibility, properly falling within the first period, upon the second period, so the one account is susceptible of being not only more conveniently, but more justly taken. We cannot, therefore, hold this bill to be multifarious.
The grounds of defence set forth in the answers, and in the argument of counsel here, although stated in resistance to the account prayed for in the bill, would have been more properly presented to our consideration, if urged with a view to ascertain and regulate the principles upon which the account should be taken. Those grounds in general are, that the duties imposed ;upon this officer by the actofl835,ch.23, are of great variety and much difficulty, involving necessarily the concession as the exercise of discretion; that the funds to be collected had been previously in the hands of public agents, and that the act itself provided that by-means of public agents the Superintendent should collect the funds; that the funds, scattered over the whole State, might be properly received by those agents, in a local currency, good at the points where received, although not bankable in Nashville; that in May, 1837, there was a general suspension of specie payments, involving in its consequences great fluctuation in the nominal value of bank paper, and disastrous changes in the credit and circumstances of individuals; that the stock of the Planters’ Bank, in which the Superintendent was directed by the statute to invest the money by him collected, greatly depreciated, and that he ceased to invest in it; that under these circumstances he loaned out the money in his hands, some of it being uncurrent at the time, without interest, for a limited period, payable in better funds, and some of it upon interest, and that he communicated these facts and circumstances to the legislature in his report early in October afterwards, and that they thereupon adopted a resolution that he should not invest any further funds in the stock of the Planters’ Bank; that they were silent on the subject of his system of loans, and that he was af-terwards re-elected by that legislature to the office which he then filled.
These facts and circumstances, particularly the last referred to, are of very great value to the principal defendant, especially in their bearing upon the question of personal character involved in these transactions; but they do not, any of them, nor all of them taken together, constitute a bar to the account prayed for in the complainants’ bill.
If it was deemed by the Superintendent inexpedient after the suspension, to invest the funds under his charge in Planters’ Bank stock, he ought to have done the next thing indicated in the same statute, — deposited the money for the best interest he could, in those banks which were the public depositories of the State, and from which the proof shows he could have received six per cent, interest. If a portion of his funds were uncurrent, he should have deposited so much as would have been received. It was never contemplated by the legislature, that the large sums which it was known he would receive should continue in his hands and under his control; all experience having shown, that very large amounts of the funds of others can seldom, if ever, be securely kept, and interest paid thereon, for any length of time, by any individual, however prudent and honest. The constitution itself intended the principal to be a perpetual and permanent fund and the interest to be certainly paid; for upon the punctual payment of the latter and the certain preservation of. the former, would depend the success and prosperity of the common school system, so far as the fund and its proceeds could contribute to such an end. It needs no reasoning, therefore, to establish that the complainants are entitled to have an account; and the only consideration of importance remaining is, as to the principles upon which it should be taken.
Those principles must be sought in- the nature of the duties to be performed, and the characters and circumstances of the transactions as shown in the pleadings and proofs. The measure of fiduciary responsibility, in the view of a court of chancery, will be the same, whether arising from public or private relations. The absence of mala f des in either, will be regarded as an important circumstance. Where that is absent, and we assume'that it is absent in the present case, the public, high and impressive as is the motive to preserve a just accountability in all its agents, is yet without adequate motive, when compelled to enforce this accountability, for its refusal to extend to the case those fair and equitable principles of adjustment which belong to the subject of agency in general.
In the first place, then, as to the character of the funds to be collected, we are of opinion that the defendant was prima fade bound to collect such funds, and such funds only, as were at the time and place receivable by the State, through its agents, in the collection of its public revenue according to law. This was also prima facie the duty of the subordinate agents, specified in the act, and employed in making the primary collections. This being the prima facie duty of all, that duty as a matter of fact will be presumed, prima facie, to have been done, and that money of this description was in fact received. And where money of this description was in fact received, current at the time and place of reception and ■ by subsequent events, and before the lapse of reasonable time in which to invest or deposit it, it became uncurrent, either in the hands of the Superintendent or of the subordinate agents, the loss to the extent of its diminished value shall not fall upon the Superintendent; and where money has been received by the Superintendent or the subordinate agents, not current at the time and place of its reception, the loss to the extent of its diminished value shall not fall on the Superintendent, if he can make it appear that his reception of it, or that of his subordinate agents, was at the time and with reference to the circumstances and situation of the debtors prudent and proper for the probable benefit.of the public.
As to sums which the defendant has omitted to collect, he will be held responsible, where it can be shown that the collection might have been made by the use of reasonable diligence.
As to interest, it results from the principles already stated, that the defendant will in general be held to account. In the cases where, for the purpose of converting uncurrent into current money, the defendant loaned out money for a specified time, without interest, he shall not during such time be charged interest therefor, if the remission of interest in the particular case amounted to a fair equivalent for the discount on the money.
The defendant will in general be charged with six per cent. only. But we think the principle of compound interest was properly applied by the Chancellor to so much of the funds as were used in the mercantile and manufacturing establishments in which the defendant was interested as a partner.
The sum of six thousand dollars, without interest, directed by the Chancellor to be considered as a fund in the hands of the defendant for the purpose of taking up and redeeming the outstanding notes of the old bank, we think a reasonable and proper amount.
BECKEE.
This cause came on to be heard this 8th of January, 1842, upon the bill, answers, replications, exhibits and proofs in the cause, and after hearing the transcript of the record, from the Court of Chancery at Franklin, read, and the argument of counsel on both sides, this Court is of opinion and doth declare, that the complainants are entitled to an account of the matters stated in the bill, from the defendant McEwen, former Superintendent of Public Instruction, and that the securities in both bonds were properly made parties, and that so much of said decree as orders an account to be taken, be affirmed. And this Court is of opinion, that if it was deemed inexpedient by. the defendant McEwen to invest the funds under his charge in Planters’ Bank stock, after the suspension of specie payments in May, 1837, it was his duty, in accordance with the provisions, to have deposited the money for the best interest he could in those banks which were the public depositories for the State and from which, as is proved in this case, he could have received interest, at the rate of six per cent. per annum; and if a portion of the funds were uncurrent, he should have deposited so müch as would have been received. This Court is of opinion, and do declare, that the defendant McEwen was prima facie bound to collect such funds as were at the time and place receivable by the State, through its agents, in the collection of its public revenue according to law; and this was also the pri-ma facie duty of the subordinate agents specified in the act, and employed in making the primary collections; and in taking the account, that duty, as a matter of fact, will be presumed to have been performed, and money of this description to have been received; and when money of this description was in fact received, which was current at the time and place of reception, and subsequent events, and before a reasonable time in which to invest and deposit it, it became uncurrent either in the hands of the Superintendent or the agents, the loss, to the extent of its diminished value, shall not fall upon the Superintendent; those circumstances being proved by him. And where money has been received by the Superintendent or the agents, not current at the time and place of its reception, the loss to the extent of its diminished value shall not fall upon the Superintendent, if he can make it appear that the reception of it at the time, and with reference to the circumstances and situation of the debtors, prudent and proper, and for the probable benefit of the public. This Court is also of opinion, that as to sums which the defendant McEwen has omitted to collect, he will be held responsible, where it can be shown that the collection might have been made by the use of reasonable diligence. The defendant will in general be charged with simple interest, upon the sums received by him, except the sum of six thousand dollars, which was directed in the decree below to be considered as a fund in the hands of defendant, for the purpose of taking up or reducing the outstanding notes of the old bank, for which no interest shall be charged, during the period it was the duty of the defendant by law to redeem such notes, and after that time interest will be charged on the 6000 dollars also; and as to the sums of money used in the mercantile and manufacturing establishments in which defendant was interested as a partner, and those loaned to McEwen, Whiteman & Co. and John Scott, compound interest will be charged.'
It is therefore ordered, adjudged and decreed, that it be referred to Benjamin Litton, a- commissioner, or in case of his refusal or inability to act, to some other commissioner to be appointed by one of the Judges of this Court, as the Clerk and Master is related by consanguinity to one of the defendants in this case, to take an account of all sums of money collected by Robert H. McEwen as Superintendent of Public Instruction, belonging to the common school fund, colleges or academies, -during the time of his continuance in office or afterwards, or which by reasonable diligence he might have collected and of whom and when the same was received and how invested and disposed of, and what reasonable expenses were paid by him and disbursements made, and how much was invested in Planters’ Bank stock and when and how much was invested in stock of the Bank of Tennessee or deposited in said bank and at what time, and how much was deposited in other banks and when; and in taking said account, the commissioner will observe the directions heretofore given, and shall examine the defendant upon oath, and require the production of all books, papers and vouchers and take the depositions of witnesses for complainants and defendants, and state separate accounts for the first two years, to the time of executing the second bond; and an account subsequent to the date of the second bond, to the time when defendant McEwen ceased to be the Superintendent, and showing the balances due from him at each of those periods. In case any money remained in the hands of the Superintendent over the sum of 6000 dollars, previous to the 27th of May, 1837, which was not invested in Planters’ Bank stock at the expiration of a month after it was received, interest is to be calculated thereon after the expiration of the month, until the time it was invested, and after that period of the suspension of specie payments by the bank, if the money in his hands was not deposited upon interest, then interest is to be calculated upon the sums received by him from the date of their reception, except in cases where for the purpose of converting uncurrent money, which he proves he has received, under circumstances before stated, into current money, the defendant loaned out the money for a specified time, without interest, he shall not during such time be charged interest therefor, if the remission of interest in the particular case amounted to a fair equivalent for the discount upon the uncurrent funds.
The Court further order, adjudge and decree, that the said R. H. McEwen is not chargeable with interest on any sums in his hands on the 2nd day of October, 1837, (when the resolution of the legislature was adopted, directing him to invest no more money in bank stock till otherwise directed by the General Assembly;) nor any interest on any sums collected by him between the 2nd of October, 1S37, and until the 5th of July, 1838, when the Bank of Tennessee went into operation, unless it shall appear that said money was, during that period, used by said R. H. McEwen in his private business, or loaned out by him, and if loaned out, the Superintendent is to be charged with whatever interest it shall appear he has received; or in case he received no interest, he is to be charged with interest, upon the principles herein before stated. And the commissioner will take an account of all tho property, of every de- scriplion, belonging ,to the common school fund, colleges or academies, which was under the control of the defendant during the time of his continuance in office, making all just allowances, and make his report to the next term of this Court; and the receiver appointed by the court below will continue to discharge the duties of his office, and deposit the money collected by him in the Bank of the State, as ordered by the Court of Chancery. - And the complainants are entitled to have the notes and claims due the fund, in the receiver’s hands, appropriated to payment of the balances due; and the receiver will make his report from time to time, to the clerk of this Court in vacation, and also to the next term of this Court; and all other matters are reserved until the coming of the report of the commissioner, or the further order of this Court.
Benjamin Litton was appointed special .commissioner to take the account.
The case was continued on affidavit of defendant at the December term, 1842; and on the 30th November, 1843, the commissioner made a report to the Supreme Court.
This report states, that it appeared from the proof taken, that Alabama and Mississippi bank paper, and the paper of other southern States, constituted the principal circulation of the State of Tennessee in 1837,8 and 9, and that the depositions of such of the county agents as had been taken state that they took in payment of debts due the school fund such paper as was in circulation, and that they received Alabama and Georgia money and that they remitted the same to the Superintendent, but no one of them states the amount so remitted, the kind of paper or what proportion thereof was uncurrent; and as the defendants had not proved the reception of any particular sum of money of any particular kind, the commissioner could make no estimate as to whether the interest of the money was a fair equivalent for the discount upon the uncurrent money.
The commissioner reported a balance in the hands of defendant McEwen of $154,370 14.
This report was excepted to by the defendant.
On the 19th day of January, 1844, the General Assembly adopted the following resolutions:
“Whereas a suit is now depending in the Supreme Court of this State, in the name of the Governor of the State and others against Robert H. McEwen and his securities; and some of said securities have petitioned the legislature for relief, for reasons set forth in their memorial: therefore
“Resolved by the General Assembly of the State of Tennessee, that William Carroll, Willoughby Williams and Nicholas Hobson of Davidson county, and John Marshall of Williamson county, be and they hereby are appointed commissioners' to compromise and settle with the securities of Robert H. Me Ewen, late Superintendent of Public Instruction the matters in controversy in said suit, upon principles of right and justice towards the securities and to the best interest of the school fund.
, “Resolved further, that the compromise and decision of said commissioners, or a majority of them, when made and returned into said court, shall become the judgment of the court so far as the securities are concerned; and for any sum that may be awarded against them, they may have time, in the discretion of the court or the commissioners, to pay the same upon its being secured to«the satisfaction of the court: provided, however, that in the compromise and settlement proposed, the securities shall admit and recognize the validity and force of the bonds given by them as the securities of said Superintendent; and provided further, that the securities of Robert H. McEwen shall cause him to secure to the satisfaction of the court, by a lien on his lands in this or any other State, or otherwise, the amount of college and academy funds or claims received by him, for which his securities may be liable; provided, that nothing herein contained shall be construed to stop proceedings or lessen the liability of Robert H. McEwen, late Superintendent of Public Instruction.
“Resolved, that two months shall be allowed as time for the return of the report of the commissioners, and for the securities to give the security required; and if the whole shall not be accomplished in the time prescribed, the securities shall be liable as though this resolution had not passed.”
Under these resolutions, the commissioners (Marshall and Williams having declined acting and others being appointed in their stead) allowed a credit of $56,474 38, moneys deposited in the State Bank by the receivers appointed to collect the notes and' obligations taken by defendant McEwen to secure the sums loaned; and being allowed $50,000 for losses by the reception of uncurrent money and interest on said abatement, reported a balance against the securities of $10,797 86.
This report the securities moved the court to have entered as the judgment of the court against them.
This was resisted by the Attorney General and F. B. Fogg, on behalf of the State.
B. F. Fogg, for the complainants.
The intention of the framers of the constitution, as expressed in the 10th section of the 11th article, was to provide a permanent security for the common school fund and to prohibit any action by the legislature that would diminish the principal, or prevent any appropriation of the interest otherwise than for the support and encouragement of common schools, and for the equal benefit of the people of this State in the diffusion of education. It made it the duty of the legislature to appoint a board of commissioners who was to have a general superintendence of the fund, which consisted both of public and private donations, and which previously was subject to the uncontrolled discretion of the legislature. This clause protects this fund to the same extent as individual property is protected by law; was intended to prohibit legislative interference, and to afford the same security that belonged to private rights. The Assembly could increase, but not diminish the fund. In accordance with this provision in the constitution, the legislature, by the act of 1835, c. 23, incorporated the “Board of Commissioners of Common Schools for the State of Tennessee,” with power to “sue and be sued, and execute all acts, matters and things which a corporation or body politic in law may and can lawfully do and execute.” With the exception of modification, alteration or repeal, this contains the grant of a charter. Though repealed, it still continued to be the duty of the legislature to comply with the provisions of the constitution. The legislature is prohibited from authorizing the fund or any part of it to be diverted to any other uses than the support of common schools. When a corporation is established in whom the whole of this fund is invested, with full authority to preserve and collect the amount due, the ordinary courts of justice are designed and established for the purpose of enforcing the laws and constitution, and resort is to be had to those tribunals for relief against or in favor of the corporation. It has been decided by this court, that a special tribunal could not be constituted for the determination of suits commenced by the Bank of the State against its officers, that the courts established by law had the whole jurisdiction, and that the judicial power was granted by the constitution, and was separate and distinct from the legislative. 2 Yerger, 590, B.anJc vs. Cooyer. It is conceded by the counsel for complainants, that if the matter in controversy in this cause was a portion of the public revenue of this State, or of any other property to which the State had a complete right, the legislature could give or grant it away as it pleased, or appoint commissioners to do so. But this fund is pledged to a particular purpose, legislative control is taken away, it is vested for the benefit of common schools, and the resolution of the Assembly interfering with the decree of this court is partial in its operation, takes away vested rights, and gives certain individuals privileges that are not extended to others. It substitutes an award of commissioners for a decree of this court, and orders this court to register the edict. If this power is in the legislature, could it not act directly and release the securities altogether? The Board of Commissioners as a corporation could compromise doubtful claims; and where a portion of the fund was likely to be lost, it could secure a part and release the balance, and such a course would be sanctioned by the established principles of courts of equity, without the necessity of introducing a new system-for the benefit of particular persons. To guard against such dangers arising from acts of legislation was the design of the provisions in the constitution.
Public corporations are such as am created for particular pur poses, as counties, cities, towns and villages, and are subject to the control of the legislature; but when empowered to take or hold • private property for municipal uses, such property is invested with the security of other private rights. 2 Kent’s Com. 295, 4th edition. So the same author says, Corporate franchises attached to public corporations are legal estates coupled with an interest, and are protected as private property. So in Dartmouth College vs. Woodward, 4 Wheaton, 697,' 700, it is said, that grants of property, and of franchises coupled with an interest, to public or political corporations, are beyond legislative control, equally as in the case of the property of private corporations. See also Terrell and others vs. Taylor, 9 Cranch, 42.
The corporation created by the act of 1835 makes the cor-porators trustees, not for the public merely, as connected with the administration of the government, but for the use of common schools. The constitution is imperative, that the fund shall be sacred, and therefore, we contend that it is placed beyond legislative control.
Edwin H. Ewing, for defendants.
Attorney General, for the complainants.
1. It was the intention of the framers of the constitution by the adoption of the 10th section of the 11th article, to withdraw the common school fund from the fluctuation incident to ordinary legislation, as in their judgment it was not likely that any thing would occur which would render a change of policy on so vital and enduring a subject necessary. They commanded the legislature to create a board of commissioners and vest them with the control and superintendence of this fund. The words of the constitution amount to a direction to the legislature to create a permanent quasi corporation, and to vest such corporation with certain power and rights in trust for the benefit of common schools. A. & A. on Corporations, 17; 2 Kent, 221; 15 Mass. 192; 5 Cowen, Grant vs. Fancher.
This was done by the legislature in the first session after the adoption of the constitution. A body politic and corporate was created, consisting of three public officers, and the fund vested in their hands. See act of1835, ch. 23.
The legislature reserved the power to alter, modify or repeal this charter. If the position assumed be true, to wit, that the constitution commanded the creation of a quasi corporation, and that quasi corporation be established by the legislature, it follows, by well established principles, that though the legislature had the power to alter or modify the constitution of the corporation, It had no power totally to abolish the corporation, resting, as it did, on the basis of the constitution, without providing at the same time an equivalent corporation, succeeding eo instanti to its powers, rights and privileges. He did not insist, that these officers, who were the constituent parts of the corporation, had any private right vested in them to the fund, but that the constitution and the law, in pursuance thereof, had created a permanent trust fund and the corporation a permanent trustee, in whose hands were lodged the control and superintendence of it.
This fund was thus lodged in the hands of a board of men composed of public officers limited in their tenure of office and periodically responsible to the legislature by the expiration of their terms. They were at all times for malversation in office subject to supervision and correction by the judiciary, at the instance of the legislature or any one of the corporators, or any inhabitant of any school district in the State. Lowry vs. Francis, treas. 2 Yerger, 535; Cooper’s Eq. 40; 2 Humphreys, 433. It was intended by the framers of the constitution to be lodged in the hands of the permanent and constitutional trustee, and the perpetuation of the fund secured by those general rules of law and evidence which are the safeguards of all trust estates; and whether the legislature or the judiciary was the better depositary of the power of enforcing those rules of law .and evidence, the convention chose to decide.
2. The constitution having commanded the legislature to create a quasi corporation and vest it with the control of the fund, and such corporation having been created and vested with such power, and suit having been instituted by the Governor and Board of Commissioners against individuals liable to them for a portion of the fund, and the question as to the legal administration of the trust having been referred to the judiciary, the question is presented, whether the legislature have the power to divest this quasi corporation of all power over the fund, supersede the operation of the rules of law and evidence, and vest an absolute power over the fund in the hands of a body of men unknown to the constitution and law, and not responsible in any way? This quasi corporation is in full constitutional and legal existence. It is a complainant now before the court, represented by an attorney, and having full power to do all acts and things which an individual may lawfully do, claiming the protection which the rules of law and evidence give to the security and perpetuity of this fund. Can a mere resolution which is required to be read only once in each house, and which does not require the usual formalities of a law, abrogate and annul the powers which are vested in this legally existing corporation, and withdraw this fund, not only from its hands, but from the control of the rules of law and evidence? He thought not. If these commissioners were designed as a court of justice, proceeding according to the rules of law and evidence, the appointment of such a court was unconstitutional and void. See Cooper vs. State Bank, 2 Yerger, 619.
3. But admitting that the legislature had the power whilst the corporation was in existence, to annihilate by a resolution all its power over the subject matter of the school fund, and as the original and primary trustee of the fund to resume its trust, it is contended, that the legislature had no power to delegate to a body of men unknown to the constitution and the laws, an absolute power over the fund, uncontrolled by the rules of law and evidence, because the legislature itself had not such power over the fund. The constitution provides, that the fund shall be perpetual; that it shall never be impaired by legislative appropriation, and that no law shall be passed diverting it to any other use than the support of common schools. This is a direct prohibition upon legislative power, and there is a fulness and variety in the phraseology used which shows the convention did not intend the provision should be evaded by quibbles about the meaning of the terms used indicating the extent of the restriction. The fund shall be perpetual, and shall never be lessened by direct appropriation or indirect diversion. Admitting that the legislature is the primary trustee and retains much residuary power in reference to the general management of the fund, it is insisted that the question now involved affects the principal of the fund and not its mere regulation or management; that the question involved affects the integrity and perpetuity of the fund. This is too plain to admit of argument, because the validity of the bonds has been adjudicated upon in the last resort: the discharge of them is a discharge of the evidences of debt and of the liability. It is therefore a question as to the power of the legislature to surrender the fund by act or resolution. That a direct surrender would be unconstitutional and void, would not be contested. The substance of the constitutional provision is, that the fund should not be impaired or in any way diminished by legislative action. The adoption of this report as the judgment of the court, will impair, divert and diminish this fund. The thing the constitution declares shall not be done, is to be done. But it is contended, that the legislature had the power to manage and control the fund, and that it has the power of all trustees to compromise and settle doubtful claims and debts, and that the claim in this case, the solvency of the defendants being doubtful, presents a case in which, the fund being in jeopardy, the legislature had the right to surrender a part in order to save the balance. This argument is founded on an erroneous assumption of law and fact.
In the first place, it is an adjudicated point, that the legislature, previous to the amendment of the constitution in 1835, was a trustee of at least a portion of the .school fund. It was settled, in the case of Lowry vs. Francis, 2 Yerger, 535, that “the State of Tennessee held the legal title to the school lands in trust for the people of the respective townships, the proceeds to be appropriated to the support of schools in the same;” and that the acts of the General Assembly ordering the sale of such lands, were in violation of the compact with the State of North Carolina, made in 1789, and void. The attitude of the State of Tennessee in regard to a portion of this fund, may be there fore regarded as fixed by adjudication and the legislature constituted a trustee. The constitution was altered, to secure permanently the whole fund. Now, admitting that the legislature remains the primary trustee of the fund for the benefit of all the people of Tennessee, is its power supreme and uncontrollable? Can the legislature vest an arbitrary and uncontrolled discretion over the funds in the hands of a body of men who may act in defiance of the rules oí’ law and evidence in the disposition of the fund? Can the legislature itself disregard the rules of law and evidence, or in other words, is the conduct of the legislature not subject to be revised by the judiciary, at the instance of the inhabitants of the townships? It is. The conduct of the legislature in reference to a portion of this fund was revised and overruled by the Supreme Court in the case above alluded to, of Lowry vs. Francis. Admitting, then, that the State of Tennessee is a trustee for the fund, and the legislature is the rightful organ for the administration of the trust, and that “under certain circumstances the trustee is held capable of exercising the discretionary powers of a bona fide proprietor for the preservation of the estate,” (Levin on Trusts; 209,) yet it is contended, that such questions are judicial and not legislative questions, and are in all cases referable to the judiciary, either at the instánce of the trustee to obtain the direction of the court, or at the instance of the cestuis que trust to restrain the illegitimate action of the' trustee. The trustee in this case interferes and attempts to dismiss the suits, or control the action of the court in regard to them. It is demanded on behalf of those beneficially interested in the preservation of the fund, that the suit be permitted to be controlled by the rules of law and evidence; and that if so done, there will be no impairment or diversion of the fund; and that if the report is adopted, as the action of the legislature on the subject, the fund is necessarily impaired. Now, it is contended, upon well settled principles, that before the court would direct that to be done which results in a surrender of a portion of the fund for the alledged purpose of securing the balance, the trustee should make out a state of facts, which would show that the adoption of the report or the action of the legislature; as the judgment of the court, was necessary for the preservation of the fund and not for its destruction or impairment. There is no purpose manifested in the face of the resolutions of the General Assembly, that it was necessary to surrender a part of this fund to secure the balance, except as to the validity of the bonds. This amounted to nothing, because the validity of the bonds had been before that time duly established and decreed. Nor is there any thing in the report of the commissioners which would sanction the idea that such a surrender of the fund was necessary. On the contrary, they give the credit, (which is resisted here) on the grounds of justice to the defendants, to wit, that the Superintendent had received uncurrent money, the loss on which he had suffered.
No such state of facts is alledged either in the face of the resolutions, or the report; nor is there any proof in the record to justify such an assumption. This is therefore a case where the adoption of the action of the legislature will be to sanction “the ruinous and mischievously exercised discretion of the trustee;” and is a proper case for the exercise of the injunction powers of a chancery court; and, under the circumstances, should be disregarded by this court. Levin on Trusts and Trustees; Sugden on Powers, ch. 7; 1V. & B. 359; 2 V. & B, 138; 7 Yes. 480; Walker vs. Smallwood,, Amb. 676; lOVesey, 104.

Opinion:
Tuklby, J.
delivered the following opinion of the court.
The legislature of the State of Tennessee, actuated by the universally received opinion, that the education of the masses is the only basis upon which our free institutions can be safely rested, has assiduously labored for a series of years, extending from 1826 to 1835, to create a fund for the establishment of a system of common schools, for the education of the citizens of the State. Great anxiety has at all times been shown by this body, not only for the creation, but for the preservation of this fund: every available means, after making proper provision for the administration of the government of the State, has been appropriated to it, and proper steps taken to preserve and make it effectual. A board of common school commissioners in each county was appointed to superintend it; and by the act of 1827, ch. 64, s. 1, it was appropriated forever to the purposes for which it was designed.
In the year 1835, a convention of the State was called, for the purpose of amending the constitution; and among other important things to which the attention of that body was called, that of education seems to have occupied a prominent position.
In the 10th section of the 11th article of the constitution as amended, it is declared, that knowledge, learning and virtue are essential to the preservation of republican institutions, and that the diffusion of the opportunities and. advantages of education, throughout the different portions of the State, are highly conducive to the promotion of this end. For the furtherance of which, it makes it the dut3r of the General Assembly, in all future periods of this government, to cherish literature and science: and to insure this, it provides, that the fund, commonly called the school fund, and all the lands and proceeds thereof, dividends, stocks, and other property of every description whatever, heretofore by law appropriated by the General Assembly of this State for the use of common schools, and all such as shall hereafter be appropriated, shall remain a perpetual fund, the principal of which shall never be diminished by 'legislative appropriation; and the interest thereof shall be inviolably appropriated to the support and encouragement of common schools throughout the State, and for the equal benefit of all the people thereof; and that no law shall be made, authorizing said fund, or any part thereof to be diverted to any other use' than the support and encouragement of common schools; and that it shall be the duty of the General Assembly, to appoint a board of commissioners, for such term of time as they may think proper, who shall have the general superintendence of said fund, and who shall make a report of the condition of the same, from time to time, under such rules, regulations and restrictions as may be required by law.
The first General Assembly of the State, after the adoption of the new constitution, met in October, 1835, and by an act of that date, chap. 23, made provisions for carrying into effect the requisitions of the said 10th section of the 11th article of the constitution. The first section of the act provides, "that the Treasurer of the State, the Comptroller of the Treasury, and an executive officer, to be called the Superintendent of Public Instruction, who shall be appointed, by joint vote of both branches of the General Assembly, shall be, and they are hereby created and constituted a body politic and corporate, by the name and style of the Board of Commissioners-of Common Schools for the State of Tennessee, who shall have perpetual succession, and by the name and style aforesaid may hold and possess property of every kind, in trust, for the use of common schools, may sue and be sued, plead and be impleaded, answer and be answered unto, defend and be defended, in all courts of record, or in any other place whatever; and also to make, have and use a common seal, and the same to break, alter and renew at their pleasure; and generally to do and execute all acts, matters and things which a corporation or body politic in law may and can lawfully do and execute." -It further provides, that the Superintendent of Public Instruction shall be President of the Board of Commissioners, and that all notes, bonds, obligations, transfers, or other instruments of writing, made or executed by the Board, shall be signed by him, and when necessary, sealed with the corporate seal of the Board; which Board shall be subject, nevertheless, to legislative modification or repeal."
The second section provides, that "the Superintendent of Public Instruction shall hold his office for two years, and until his successor shall be elected and qualified, and shall, before entering on the discharge of his duties, enter into a bond, with good and sufficient security, to be approved of by, and made payable to the Governor of the State, in the sum of one hundred thousand dollars, conditioned for the faithful discharge of the duties of his office."
In pursuance of the provisions of this statute, the General Assembly of the State elected Robert H. McEwen, one of the defendants, Superintendent of Public. Instruction, in the year 1836, who entered into bond, with the other defendants as his sureties, to Newton Cannon, the then Governor of the State, with the penalty prescribed by law, and entered upon the performance of the duties of his office. At the expiration of the term for which he was thus appointed, he was re-elected by the General Assembly; and having again executed his bond, with the same securities, in like penalty, he continued for the space of two years more to discharge the duties of Superintendent of Public Instruction, when another was elected in his stead, and he ceased to have any further connection with the Board of Common School Commissioners.
In the year 1840, the Attorney General, in pursuance of instructions from the General Assembly, given at its session of 1839-40, filed this bill, in the name of James K. Polk, Governor of the State, and successor of Newton Cannon, and in the name of the then existing Board of School Commissioners, seeking to charge the defendant McEwen and his sureties upon the bond, for his alledged malversation in office as Superintendent of Public Instruction.
The case was brought to a hearing in the Chancery Court at Franklin, and an account decreed by the Chancellor, from which an appeal was prosecuted to this court. At the December term, 1841, the case was brought to hearing in this court, an account ordered, and the bases upon which it was to be taken specified, in an opinion delivered by one of the Judges of the court; but before this account could be taken, and acted upon by the court, the General Assembly again met, viz, in October, 1843, when the defendants the sureties of the said Robert H. McEwen, petitioned that body for relief, assigning as reasons therefor, the impossibility of taking the account upon legal principles, without doing them great injustice, and this arising from the deranged state of the currency at the time the common school fund was collected by the Superintendent, from which it necessarily resulted that a large amount of money was received by him in paper of different banks of the United States greatly depreciated, and from the manner in which they had been kept it was impossible to ascertain within any thing approximating to certainty what the loss thus sustained by the fund was, — and for other causes, not necessary here to.specify.
On the 19th day of January, 1844, in accordance with the prayer of the petitioners, it was resolved by the General Assembly, that William Carroll, Willoughby Williams, Nicholas Hobson, and John Marshall, should be appointed commissioners to compromise and settle with the sureties of Robert H. McE.wen, late Superintendent of Public Instruction, the matters in controversy in said suit, upon principles of right and justice towards the sureties, and to. the best interest of the school fund; and that the compromise and decision of said commissioners, or a majority of them, when made and returned into the Supreme Court of the State, should become the judgment of the court, so far as the sureties were concerned.
• On the27thday of January, 1844, it was further resolved by the General Assembly, that if either of the commissioners before appointed should, from, unforeseen circumstances, be unable to act, or should decline to aet, the Governor of the State is authorized to appoint other commissioner or commissioners, in the place of such commissioner or commissioners, as shall thus be unable or unwilling to act. Accordingly, John Waters and M. W. Brown were appointed commissioners by the Governor, in the place of Willougb'y Williams and John Marshall, who declined acting under the resolutions of the 19th of January, 1844.
On the 3rd day of February, 1844, said commissioners, viz, William Carroll, N. Hobson, John Waters and M. W. Brown, made their report of compromise, which was filed in court, and a&ked to be made the decree of the court upon the matters in controversy, so far as the rights and interest of the sureties were effected thereby. This is resisted by the counsel for the complainants, upon constitutional grounds.
It is argued, that the 10th section of the 11th article of the constitution places the school fund beyond the control of the General Assembly, and vests in the Board of Commissioners of Common Schools, who alone have_ the power to collect, compromise, and arrange any debts or demands belonging to thisN fund, and placed under their supervision by the act of 1835, chapter 23, and that therefore the resolutions of the General Assembly of January 19th and '27th are in violation of the .provisions of the constitution, and null and void.
la the argument of this proposition it becomes important to enquire, 1st, What was the power of the General Assembly over the common school fund previous to the adoption of the amended constitution of 1834: 2d, What alterations has the instrument made as to this power, and what prohibitions has it introduced in regard to its exercise.
That the legislature of the State, in the absence of constitutional prohibition, is the proper guardian and protector of its funds, no matter for what purpose, appropriated, and that, as such, it is its duty to watch over them, to see that they are properly secured, vested, and applied, as the law may direct, is a proposition so palpably in accordance with reason and necessity, that it were a waste of time to enter into an argument to prove it. It necessarily follows, that if these funds, or any portion of them, be out of the treasury, and in the hands of a citizen, the power to collect, compromise, and arrange the same with the citizen, belongs to the legislature, to be exercised according to its best judgment, for the security and prosperity of the State, and upon principles of right and justice to the citizen.'
This power on the part of the legislature is supreme, and when exercised, cannot be revised, or called in question by any other power whatever; and it may be exercised by that body in its collective capacity, or it may be delegated to a commission, — the decision of which, when made in pursuance of the power delegated, is equally final and conclusive, if the delegation extend thus far. There is in this respect no difference arising out of the nature of the fund. The power is the same, be the fund appropriated or unappropriated — whether it has been set apart for internal improvement, banking operations, common schools, or any other purpose whatever. This power is inherent in the legislative department of the State, and it is neither lost nor diminished by the fact, that curators may have been appointed for the safe keeping of the funds, or to superintend the distribution of them in pursuance of appropriations made by law, such as a treasurer, commissioners of internal improvements, president and directors of a bank founded upon State funds, board of commissioners of common schools, &c. Then the power of the legislature over the school fund, previous to the adoption of the constitution of 1834, was absolute and uncontrollable. It might have been diverted from the purposes for which it was created, at any time, and directed in an entirely different channel: it might have been squandered and wasted upon any wild scheme of speculation or improvement: it might have been appropriated to the payment of our public debt: it might have been distributed in bounties and premiums to our citizens: it might have been given to asylums: it might have been applied to lighten the burden of taxation for the time being; or disposed of in any other way, that might have seemed meet and proper to that body.
Such was the power over this fund, on the part of the General Assembly, at the adoption of the constitution of 1834.
2nd, What is it since?
We have seen that the legislature of the Slate had evinced for years much anxiety to promote a system of common schools; that great attention had been paid to the accumulation of sufficient funds for that purpose; that all available means had been appropriated to it; that a board of common school commissioners had been established in the different counties to superintend it, and that in 1827 legislative provision had been made for the appropriation of this fund forever to the use of common schools.
What change upon this question has been effected by the constitution of 1834? But two. The legislature of 1827 had appropriated the fund forever to the purposes for which it was created. This was a legislative promise, that it should be held sacred; but inasmuch as this promise was not legally binding on subsequent legislatures, the framers of the constitution of 1834 were determined to make it sure, by establishing it as a fundamental principle, not to be violated by legislative enactment. Accordingly, the 10th section of the 11th article makes the fund perpetual, the principal of which shall never be diminished by legislative appropriation, and the interest of which shall be inviolably appropriated to the support and encouragement of common schools throughout the State, and prohibits the passing of any law authorizing said fund, or any part thereof, to be diverted to any other use than the support and encouragement of common schools.
This, then, is one change made upon the system as it existed at the time the constitution was adopted. What is the other?
It is made the duty of the General Assembly to appoint a general board of commissioners for the State, (in place of the board of common school commissioners previously appointed in each county of the State,) who shall have the general superintendence of said fund, and who shall make report of the condition of the same from time to time, under such rules, regulations and restrictions as may be required by law.
The constitution of 1S34, then, prohibits the legislature from doing one thing in relation to the subject, which it might have done previously, to wit, passing any law diverting either the principal or interest of the fund from the purpose for which it was designed, — the support of common schools. And it makes it the duty of the legislature to do one thing which it was not previously bound to do, viz, to appoint a board of commissioners for the State, to have the general superintendence of the fund. All other things are left as they were previously to the adoption of the constitution; that is, subject to the control and discretion of the legislature.
The question then arises at once, Is the adoption of the resolutions of the General Assembly of the 19 th and 27th of January, in relation to the matter in controversy, a violation of either the prohibitory or mandatory provisions of the 10th section of the 11th article of the constitution of 1834? We have seen, that these resolutions are for the appointment of commissioners to compromise and settle with the sureties of Robert H.'McEwen the matters in controversy, upon principles of right and justice towards the sureties, and to the best interest of the school .fund. We have endeavored to show, that the power to settle, arrange and compromise any suit, or demand for money due from a citizen to the general treasury of the State, or which may have been appropriated by the State to any public institution or charity, is inherent in the legislative department of the State, and may be exercised without supervision or control, and that this power may be delegated. The exercise of this power, like all others belonging to the legislative department, can only be restricted by constitutional provision. Is the exer cise of it, in the present case, in conflict with the constitutional prohibition to pass any law diverting the school fund, or any part thereof, to any other use than the support of common schools? We think most clearly not. It is not an attempt at appropriation, but an effort to arrange, compromise and secure a portion of the school fund in the hands of an individual citizen, which was in jeopardy, and but for the existence of this power, and its exercise, might have been entirely lost. It is not an attempt to divert the fund to improper uses, but merely the surrendering a portion, in order to secure the balance. That the power to do this ought to exist, and does exist somewhere, is not denied by the counsel who appear for the complainants: but it is argued that it properly belongs to the Board of Commissioners of Common Schools; that it is dangerous to trust it with the legislature, and that by fair implication it has been taken -from it.
To this, it is to be answered: 1st, That the power of the legislature cannot be restricted by implication; it must be by express prohibition. 2nd, The argument that a power may be abused, is no argument against the vesting it. All human power is liable to abuse, no matter where it is vested; and in the present case there is as much safety in the exercise of it by the legislature as by the Board of Commissioners of Common Schools; perhaps more. If public opinion, and the responsibilities of the members to their constituents, will not guarantee a proper- exercise of it, what assurance have we that a Board of Common School Commissioners may be entrusted with it? In avoiding Scylla, let us be careful that we do not fall upon Charybdis.
But is this power given to the Board of Common School Commissioners, either expressly or impliedly? Most assuredly it is not by the constitution. Is it by the act of 1835, chap. 23?
The General Assembly has thought proper to incorporate the Board of Commissioners for Common Schools, as a matter of convenience, not that the constitution directed it, and has authorized them, as a body corporate and politic, to hold and possess property of every kind in trust for the use of common schools, to sue and be sued, &c. and makes the Superintendent the President of the corporation. Now, that this board has the power to make all contracts relative to the school funds, which are not prohibited by law, and that they may sue and be sued upon them, as a body politic and corporate, and that it may, in its discretion, arrange, compound and compromise any debt due to it, no one will be disposed to deny; but that it has the power to institute a suit against the Superintendent of Public Instruction, for malversation in office, may, we think, well admit of much controversy, because his liability arises out of no contract with the board: he is not appointed by it; his responsibility is not to it, but to the Governor of the State. He is, himself, a member of the board, and the head of it — How shall he bring himself to account? or, shall the Treasurer and the Comptroller, the two subordinate members of the board, act upon the subject without him? Shall he compound and compromise with himself; or shall the other two do so with him? It is in vain to attempt to get rid of these dilficuties, by saying he can be removed, and another substituted in his stead. It is true, this has been done in the present case; but it is equally true, that he might be sued upon his bond without being removed, and it is a case that might easily happen. An honest difference of opinion might exist as to his liability in some particular transaction, and this might be of great moment to the prosperity of the school fund, and yet he be a very useful and honest officer, worthy of being retained, and as such retained; what would then be done? It is not necessary for us to say how this is in the present case; for, even if this power had been given by the act of 1835 expressly to this incorporated board of commissioners, yet the legislature of the State of Tennessee would not be deprived of it thereby. These public corporations are made for public convenience; no private rights are involved in them; and therefore the legislature in interfering with them is in no danger of violating the obligation of contracts or public faith; and although it may have thought proper to delegate a portion of its own legitimate power to such corporation, for the public benefit, yet the same may be resumed at any time, and exercised temporarily by the legislature,, at its discretion; or the corporation may at any moment be deprived of it altogether; and -such has been the constant practice in this State in relation to debts due our State Bank, which the legislature have been in the habit of compromising by resolution, though no one doubts that the president and board of directors have full power to do so themselves; and this constitutes an important difference between a public corporation and a private one. The one is completely under the control of the legislature, and the other is not, Because it is the creation of a contract between the State and'a private individual or individuals, which cannot be interfered with without violating that provision of the constitution which preserves the obligation of contracts.
We are therefore of the opinion, that the resolutions adopted by the legislature of the 19th and 27th of January, 1844, appointing commissioners to compromise and settle the matters in controversy in the present case, is no violation of any rights vested in the incorporated Board of Commissioners for Common Schools; nor is it a violation of that portion of the constitution which prohibits the passage of any law for diverting the school fund, or any portion thereof, -to any other use than the support and encouragement of common schools; and that the legislature had full power and authority inherent, to adopt said resolutions; that it was the proper mode to appoint the commission; that the commissioners had full power and authority delegated to them to make the compromise; that it has been made in'pursuance of that power, and is binding and obligatory upon this court and all persons concerned, and do decree accordingly.