Court Opinion

ID: 5555018
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:39:35.188022+00
Date Added: 2024-06-11T08:35:18.125679
License: Public Domain

Warner, J.
This was an action brought upon a promissory note by the plaintiff against the defendant. The note was executed on the 12th day of July, 1862, the consideration of which was the loan of three thousand dollars Confederate Treasury notes. The defence set up against the plaintiff’s right to recover is, that the consideration for which the note was given, was illegal and void, for the reason, that said notes were originally issued by the assumed authority of the Confederate States, then in rebellion against the Government of the United States, for the purpose of aiding and abetting said rebellion, and that the plaintiif had knowledge thereof. It may be conceded, that the issuing of Confederate Treasury notes by the assumed authority of the Confederate Government, for the purpose of aiding and abetting the rebellion against the Government of the United States, was illegal,‘as against that Government and the citizens thereof, who, during the *469war, were under the actual protection of that Government, outside of the military lines of the assumed Confederate authority; still, the question to be answered and decided is, whether a contract made between two citizens residing within the military lines of the assumed Confederate authority, in their ordinary business transactions, having no connection with the prosecution of the war, the consideration of which contract was Confederate Treasury notes, is to be held illega and void, as between the contracting parties themselves, in view of the facts which existed at the time the contract was made. At the time of making this contract between the plaintiff and defendant, the authority of the Government of the United States had been displaced within certain defined limits, and another government had been organized, which assumed to exercise dominion and control over the territory and people thereof. Although the Confederate Government may have been an illegal usurpation of authority, as against the Government of the United States, still, it was in fact an organization capable of making war, and maintaining its authority for a time, over the territory and people embraced within its military lines. The Government of the United States, in recognizing belligerent rights during the war, recognized the fact that a regular organized war existed, that the authority of the Government of the United States had been, for a time, displaced, by an organization of such formidable dimensions as to amount to an organized war.' During this state of things, the contract in question was made. Under the law which existed at the time and place of making the contract, Confederate Treasury notes were not illegal as between the contracting parties themselves. In fact, such notes constituted the only circulating medium in the country at that time, and the purchasing power thereof, at the time of making this contract, was but very little below that of specie. The contract was made between the parties in view of the law which then existed, and the consideration of the note was lawful, and recognized to be so by the actual governing authority then over them, whether rightful or wrongful, is not now the question; the contracting parties were bound to *470obey it for the time being, and the contract was made in good faith in view of the law which was prescribed for their government by the governing authority which was over them at the time, and which had the power to enforce it. Therefore, as between the contracting parties themselves, at the time and place of making the contract, the consideration of the note was not illegal.
It does not appear that either of the contracting parties had any agency whatever in the issuing of the Confederate Treasury notes; they only dealt with “them as the common currency of the country after the same had been issued and put into circulation by the organized authority which assumed to govern them, and which in fact did govern them at the time when the contract was made, which assumed authority they did not have the power to control or resist. This question came before the Supreme Court of North Carolina at its June Term, 1867, in the case of Phillips vs. Hooker, North Carolina Rep., 194. Chief Justice Pearson, in delivering the opinion of the Court in that case, says: “ In 1862 the contest had assumed the magnitude and proportions of Avar, each party in its territorial limits had the boundaries of a mighty nation, and each party counted its people by millions. The Confederate States Avas recognized by the nations, and by the United States itself, as a belligerent power, entitled to the rights of Avar, and, in the exercise of its powers, it had issued paper as the representative of money, which excluded all other currency and constituted the only circulating medium of the country. The Government of the United States was unable to protect the people, and there was no currency but Confederate Treasury notes. In- this condition of things, was every man to stay his ordinary avocations and starve, or else be tainted with treason, and be deemed guilty of an illegal act if he received a Confederate Treasury note ? Was a judge to cease to do those duties required by the interests of humanity, the performance of which can never be considered as criminal, or was he to perform the duties and starve rather than commit an illegal act by receiving his salary in Confederate Treasury notes? Was the merchant to close his store? *471the blacksmith and shoemaker to quit work, and the farmer to let his tobacco and surplus grain rot on his hands, and allow his family to suffer for clothing and the other necessaries of life, or do an illegal act by receiving Confederate notes ? Really, unless the receiving of such notes can be connected wdth a criminal intent to aid the rebellion, the question seems to me too plain to admit of argument. A naked statement exposes the absurdity of the proposition. The Courts must act on the presumption that Confederate notes were received in ordinary dealing, hot for the purpose of aiding the rebellion, but because there was no other currency. It cannot be held that the mere receiving a Confederate note was illegal and base without involving in the imputation of baseness every man and woman in the State. The ministers of the Gospel, the judge who received his salary,-the physician, the merchant, the mechanic, the farmer, who carried on his ordinary business, the poor seamstress who, at the end of the day, received her hard earned wages, were all guilty of an act so base that the doors of the courts of justice must be shut against them. The proposition is monstrous!!”
But it was insisted on the argument of this case that dealing in Confederate Treasury notes gave them credit and circulation, and thus aided and encouraged the rebellion. As well might it be said that the dealing in smuggled goods by a merchant or tradesman would aid and encourage smuggling. It is not pretended that either of the contracting parties now before the Court had anything to do with the original act of issuing and putting into circulation Confederate Treasury notes by the assumed Confederate Government. After the Confederate Treasury notes had been issued and put into circulation as currency by the assumed Confederate authorities, the parties dealt with it as they found it, the same being the only circulating medium in the country as the representative of money. Their contract was a new and independent transaction, after- the illegal act of issuing the currency by the assumed Confederate authorities for the purpose of aiding and promoting the rebellion against the United States had *472been done. The distinction between the original illegal act and & new, independent contract is thus stated by Story in his Treatise on the Conflict of Laws, “ If the new contract is wholly unconnected with the illegal act, and is founded on a new consideration, and is not a part of the original scheme, it is not tainted by the illegal act, although it may be known to the party with whom the contract is made. Thus, if after the illegal act is accomplished, a new contract (not being unlawful in itself) is made by the importer for a sale of goods to a retail merchant, and the merchant afterwards sells the same to a tailor, or to a customer who had no participation whatsoever in the original illegal scheme, such new contract will be valid, although the illegality of the original importation is known to each of the venders at the time when he entered into the new contract.” Story’s Conflict of Laws, 375, section 248. Armstrong vs. Toler, 11th Wheaton’s Rep., 258. Orchard vs. Hughes, 1st Wallace’s Rep., 73. Rawdon vs. Toby, 11th Howard’s Rep., 493. In the case last cited, the payment of a note was resisted on the ground that it was given in Texas for the purchase of negroes illegally imported from Africa some years before and sold into slavery. The Court said in that case: “ If the defendant should be sued for his tailor’s bill, and come into Court with the clothes made for him on his back, and plead that he was not bound to pay for them because the importer had smuggled the cloth, he would present a case of equal merit.” So here the defendant borrowed the Confederate Treasury notes of the plaintiff the purchasing power of which, at the time he received them, was nearly equal to specie, and who no doubt used them profitably in trade or otherwise, and now pleads that he ought not to pay the note, because the currency which he received from the plaintiff, and which he has profitably used was illegally issued by the assumed Confederate Government, which, in point of fact, exercised dominion and control over both of them at the time the contract was made, and recognized the validity of the currency for which the note was given. The contract was made in view of the state of facts which existed at the time it was made, and not *473having any connection whatever with the prosecution of the war against the United States, it was a legal and valid contract as between the parties themselves.
But it is contended that the Constitution of 1868 declares this contract to be illegal and void. If the Constitution of 1868 had declared that the issuing of Confederate Treasury notes by the assumed Confederate Government, or that the notes which have been so issued, was illegal and void, then the contract now sued on would be a mere nudum pactum. The Constitution of 1868, however, does not declare that the issuing of Confederate Treasury notes, or that the Treasury notes issued by the assumed authority of the Confederate Government, shall be illegal and void, but on the contrary, impliedly at least, recognizes that currency, in the sixth section of the tenth article thereof, when it declares that judgments rendered during the war shall be subject to be explained “ as to the meaning of the word dollars as used in the same,” that is to say, whether the word dollars meant gold or silver dollars or Confederate Treasury note dollars. The bald, naked assumption is, that the Constitution of 1868 “not only declares this contract to have been, and to be illegal, when the Confederate Government, in aid of the rebellion, issued these evidences of debt to a citizen or subject of that Government, but it also declares the evidences of debt so issued or used to be null and void. The assumption is, it will be perceived, that the Constitution of 1868 declares this contract now sued on to have been, and to be, illegal, when the Confederate Government, in aid of the rebellion, issued these evidences of debt, (to-wit,) Confederate Treasury notes to a citizen of that Government; that is the first assumption to maintain the illegality of this contract. The second assumption is, that the Constitution declares the evidences of debt so issued or used, (to-wit,) Confederate Treasury notes, to be null and void. Now let us examine the Constitution of 1868, and see whether “the evidences of debt” mentioned therein embraces, or was intended to embrace, Confederate Treasury notes issued by that assumed Government. The consideration of the contract now sued on is Confederate Treasury notes. The evidence of *474the debt now sued on is the promissory note made by the defendant. The Constitution of 1868 declares that “All contracts made and not executed during the late rebellion, with the intention and for the purpose of aiding and encouraging said rebellion, or where it was the purpose and intention of any one of the parties to such contract to aid or encourage such rebellion, and that fact was known to the other party, •whether said contract was made by any person or corporation with the State or Confederate States, or by a corporation with a natural person, or between two or more natural persons, are hereby declared to have been, and to be illegal, and. all bonds, deeds, promissory notes, bills, or other evidences of debt, made or executed by the parties to such contract, or either of them, in connection with such illegal contract, or as the consideration therefor, or in furtherance thereof, are hereby declared null and void, and shall be so held in all Courts of this State when attempt shall be made to enforce any such contract, or give validity to any such obligation or evidence of debt.” It is not pretended that the contract between the parties now before the Court was made with the intention, or for the purpose, of aiding or encouraging the rebellion, but on the contrary, it was a contract made between two citizens in the ordinary course of business, having no connection whatever with the rebellion, and the promissory note now sued on is not such an evidence of debt as is declared'to be illegal and void by the Constitution. The contracts declared illegal by the Constitution are such as were made with the intention,' and for the purpose, of aiding apd encouraging the rebellion — contracts for the purchase of artillery or cavalry horses, contracts for the employment of substitutes in the army, or contracts for the purchase of munitions of war, and other contracts of like character, and not contracts made between two citizens for the loan of Confederate Treasury notes, the common currency of the country, which had no connection whatever with the rebellion, and the contracting parties had no intention or purpose to aid or encourage the same. The fatal error in the argument to sustain the illegality of this contract is in assuming that the Constitution *475declares that the issuing of Confederate Treasury notes by that assumed Government is illegal, and that somebody has made a contract with that Government for the issuing such notes, and that such notes being the consideration of the note now sued on, therefore, the contract between the parties in this case is null and void, a mere nudum pactum. There being no evidence in the record going to show that the contract between the parties in this case is embraced, or was intended to be embraced within the provisions of the Constitution, declaring void all contracts made with the intention, and for the purpose of aiding and encouraging the rebellion, it is the judgment of a majority of the Court that the judgment of the Court below be affirmed.
Judgment affirmed.
Warner, J.
— The case of the Georgia Railroad and Banking Company vs. F. M. Eddleman, involved the same question as that in Miller vs. Gould, both cases were argued together, and the judgment of the Court in that case controls this. Judgment affirmed.
McCay, J., concurred, but wrote out no opinion.