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http://www.potowmack.org/texvwh2.html

REPORTS OF THE DECISIONS

of the

Supreme Court of the United States.

April 12, 1869


THE STATE OF TEXAS

V.

GEORGE W. WHITE, JOHN CHILES, JOHN A. HARDENBERG,
SAMUEL WOLF, GEORGE W. STEWART,
THE BRANCH OF THE COMMERCIAL BANK OF KENTUCKY,
WESTON F. BIRCH, BYRON MURRAY, JR., AND SHAW.

(See S. C., 7 Wall., 700-743.)


[The Civil War produced three constitutional amendments. None dealt with secession. In 1869, Chief Justice Salmon Chase used the opportunity of a boring case involving government bonds to rule on the illegality of secession and make the illegality a part of constitutional doctrine. Richard McLaren, now in federal prison, of our present secessionist Republic of Texas organization mentioned Texas v. White with hostility as he acted out his secessionist/libertarian fantasies in a hostage-taking situation in 1997. It also gets hostile mention on the Sons of Confederate Veterans site.

This case is long, dense, mind-numbing, and difficult to decipher, but it is of monumental significance. The "personal right" that the district court has found in US v. Emerson has secessionist implications for the individual. The right to secession applied even to individuals is a plank in the Libertarian Party Platform.]

[Part 1: Statement of the Case. 17K]

Part 2: Attorneys for the Complainant. THIS FILE

[Part 3: Attorneys for the Defendants. 30K.
Part 4: Opinions of Chief Justice Salmon Chase and Justice Robert Grier and Justice Noah Swayne. 61K.]


Messrs. J. B. Brent, R. T. Merrick, Geo.W. Paschal, George Taylor, and B. H. Epperson, for the complainant:

Upon the whole case made by the bill, answers and evidence, the defense rests entirely upon the validity of the possession of the bonds by White & Chiles; for no defendant stands in any better position than these original possessors. In none of the original answers is there a real attempt to rest the possession upon color of law. But in a supplemental answer of Chiles, he invokes the Act of Jan. 11, 1862, found on the 55th page of the Session Laws of that year. It creates a Military Board, and gives the right to defend the State "By means of any bonds and coupons which may be in the Treasury on any account, and may use such funds or their proceeds, and, therefore, may sell, hypothecate or barter such bonds and coupons, provided such disposal shall not exceed the amount of $1,000,000 of such bonds and coupons," etc.

But to this Act we answer:

1. That it cannot reasonably be construed to relate to the bonds in question.

2. For previous Acts of the same Legislature clearly show what was intended.

3. That if such could be the construction, the 2d section of the Act itself would make any such use void, for that declares that "Any bonds which may be disposed of under the provisions of this Act, shall be substituted by equal amounts of the bonds of the Confederate States of America," etc.— thus showing the illegal purpose.

This Act cannot be construed to change the special dedecations of the bonds to school purposes.

Act of the Legislature of Texas, approved Jan. 31, 1854; Pasch. Annot. Dig., art., 3434, p. 571: Idem, arts. 3484, 3498; Act of the 13th of August, 1856; Pasch. Annot. Dig., art. 3499.

It cannot be pretended that, by a general law created for rebel purposes, it was intended to repeal the dedication and to destroy the Military Board. In contemplation of law, the bonds were not in the Treasury for the purposes of the Act of the 11th January, 1862. The State Constitution forbids this.

A de facto government is vested with certain political powers, which it may lawfully exercise; but does it acquire rights of property by reason of its overthrow of the government de jure?

What are its powers, is impossible to determine by any rule which will be applicable to any case and all conditions. They are limited by necessity, and it is difficult, if not impossible, to give them any precise definition.

It is contended in the brief of the counsel for the defendant, that unless the government de facto possessed the power of making the contract in question in this case, it could possess no legislative nor executive nor judicial authority whatever; and that all it did on the assumption of such authority is absolutely null and void; that marriages solemnized during its existence should be held null; that the judgments of the courts in civil and criminal cases should be held null, and all concerned in their execution responsible, civilly and criminally, for an usurpation of power. Such consequences are not the logical result of the position. Whatever was necessary to be done in order to preserve the social community from anarchy, and to guard and protect its members In their intercourse with each other, might lawfully be done by such a government. Amidst all the mutations that have occurred In France, where the government has passed from one revolutionary hand to another in the sudden and rapidly succeeding convolutions of society, the judicial hierarchy has remained undisturbed, And even when revolutionary tribunals were at times executing the wrath of a faction, the judicial officers, as far as circumstances would permit, administered the law.

But whatever Is not necessary for the preservation of the order and peace of the community, and especially whatever is done for the purpose of strengthening the de facto government in the contest with the government de jure, cannot be held valid in the courts of the de jure government, after it has been restored to lawful authority in the State.

The Acts of sovereignty exercised by the usurper may have been in obligatory force, not by virtue of his right, for he had none; but because it is very probable that the lawful sovereign, whether it be the People themselves or a King or a Senate, chooses rather that the usurper should be obeyed during the time, than that the exercise of the laws and justice should be interrupted, and a State thereby exposed to the disorder of anarchy. But in those things which are not so necessary for the public good, and which "contribute toward establishing the usurper in his unjust position, if by disobedience we run no great hazard, we must not obey." Grotius, De Bello ac Pacis., L. L., ch. 4. sec. 15.

The acts of sovereignty done by the usurping government which will be recognized as obligatory by the restored government, are such only, therefore, as are necessary to protect the community from anarchy; and the recognition of these, even, is within the discretion of there restored government de jure. For, as Grotius says, the usurping government does not act by virtue of right, for it has none; but by permission or sufferance of the lawful sovereign, whether it be King, People or Senate.

Shortridge v. Mason, 2 Am. Law Rev., 95; Keppell v. Petersburg R. R. Co., B Am. Law Rev., 889.

That all acts done by the rebel authorities which were in contravention of the Constitution, laws and policy of the United States, or in aid of the rebellion are void, has generally been decided by the Supreme Courts of the seceded States themselves.

Thus all these courts have held, that contracts founded upon Confederate Treasury Notes comes under the maxim, ex dolo malo non oritur actio; and that such contracts are void because issued to aid the rebellion, and upon their faces expressly look to dissolving the Union. For this reason their vicious character adhered to every contract which they touched, not alone because of the illegal dealing of the parties, but because the thing dealt in could not be permitted to have any value.

Peltz v. Long, 40 Mo., 586; Schmidt v. Barker, 17 La. Ann., 264; Stillman v. Looney, 3 Cold. (Tenn.). 20; Thornburg v. Harris, Id. 157; Gill v. Creed, Id. 295; Schurer v. Green, Id. 419; Potts v. Gray, Id., 468; Henly v. Franklins, Id., 472; Linder v. Barbee; Smith v. Smith, cited in 80 Tex., 754; and McGehee v. Goodman, unpublished, in Texas.

These cases have generally proceeded upon the analogies of illegal dealings against public policy, and dealings between alien enemies.

Kennett v. Chambers, 14 How., 38; Scholefield v. Eichelberger, 7 Pet, 586-593; Griswold v. Waddington, 16 Johns., 439; Musson v. Fales, 16 Mass., 832; White v. Burnley, 20 How., 249 (61 U. S., XV., 889); The Prise Cases, 2 Black, 668 (69 U. S., XVII.. 477); Mrs. Alexander's Cotton, 2 Wall., 419 (69 U. S., XVII., 919); and the war cases generally.

While this is the case of White & Chiles, we maintain that under the case made and proved, those who hold under them are in no better condition than themselves. This is irresistibly so from the very nature of the case, from the notice necessarily carried home, and from the possession obtained after the bonds had become due and had been dishonored. It is not the case of ordinary dealings between the parties. It is an effort to appropriate a fund dedicated by public law to a charitable use. On their faces, the bonds payable in coin were overdue; and when purchased they were bought at a price which showed a knowledge of the fact that payment was disputed.

It is a sound legal principle, that where the parties purchased the bonds after their maturity being due by a government which punctually pays all its bonds, against which there is no valid objection, such purchasers took them subject to all the equities existing between the original parties and to all the claim of legal ownership by the original payee. And notwithstanding some seeming conflict. Hardenberg got no better title than White & Chiles held.

Murray v. Lardner, 2 Wall, 110 (69 U. S., XVII., 857); Thompson v. Lee Co., 3 Wall., 330 (70 U. S., XVIII., 178); Swift v. Tyson, 16 Pet., 1; Andrews v. Pond, 13 Pet., 65; Goodman v. Simonds, 20 How., 365 (61 U. S., XV., 941); Brown v. Davis., 3 T. R., 83; Boehm v. Sterling, 7 T. R, 426; Brown v. Turner, 7 T. R., 630; Armory v. Meryweather, 4 Dow. & R., 86; 2 B. & C., 573; Down v. Halling, 4 B. & C., 333; Crosley v. Ham, 18 East, 498; Bridge v. Hubbard, 15 Mass., 96; Root v. Godard, 8 McLean, 102; Governor v. Fox, 3 Eng. L. & E., 420; Chit., Bills, 95; Weathered v. Smith, 9 Tex., 625; Whithed v. McAdams, 18 Tex., 551.

Birch, Murray & Co., and Hardenburg, claim to be bone fide purchasers of these bonds without notice, and set up in their answers that they purchased them in the market of New York for value, ignorant that they had ever been the property of the State of Texas.

That the bonds purchased by them were the upon same as those transferred to White & Chiles by the de facto government of Texas, is admitted.

It appears, then, that Hardenberg purchase the bonds of the United States nearly two years after their maturity, with overdue coupons attached; paid for the same much less than their face, and he now asks from this court that he the may be protected as a purchaser, in good faith, of commercial paper, without notice of the invalidity in the title of the party from whom he bought.

Overdue paper is withdrawn from the protection of commercial law, and thrown back into the mass of ordinary property subject to common law rules.

A bond may be negotiated after its maturity; but the party who takes it can derive no better title than that of the party from whom he received it. The party who sells thereby warrants his title, and if it is defective, the purchaser may have recourse for any loss against the vendor, but cannot defeat the claim of the rightful owner.

In this case there can be no better title in any or of these parties than there was in White & Chiles, the other defendant having purchased the bonds after their maturity.

Goodman v. Simonds, 20 How., 385 (61 U. S., XV., 941), where the cases of , via 13 Pet., 65. and Swift v. Tyson, 16 Pet., 1, are considered and approved; Murray v. Lardner, 2 Wall., 121 (69 U. S., XVII., 859); Brown v. Davis, 3 T. R., 80; Down v. Halling, 4 Barn. & C., 332.

The proof in the case affects Hardenberg with of actual notice.

The court, to the which question of good or all bad faith is submitted as a question of fact, can- be not fail to perceive that Hardenberg must have as bought the bonds and coupons with knowledge of the defective title of the vendor, and trusted th to the chances of overcoming that defect by representing himself at the Treasury Department as a bone fide purchaser, and obtaining payment by successful negotiation.

It is objected in his behalf that the bonds have been paid and, therefore, cannot be reached by any decree that may be passed in this case. He so avers in his answer.

1. If the bonds have been paid and he has received the proceeds, the complainant is entitled to a personal decree against him.


Part 1: Statement of the Case. 17K.
[TOP, Part 2, THIS FILE]
Part 3: Attorneys for the Defendants. 30K.
Part 4: Opinions of Chief Justice Salmon Chase and Justice Robert Grier and Justice Noah Swayne. 61K.]


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